This point leads to there being two types of obligations to decorate. The first type of obligation will come within the scope of a repairing covenant (eg if repair is needed, and decoration is part of that repair work). The second type of covenant is simply to redecorate at the time specified in the lease (irrespective of disrepair).

In practice, a lease may well contain both types of covenants. The importance of the distinction is that the latter type of covenant (with specified decorating obligations – irrespective of disrepair) is not linked to a repairing obligation, and so is outside the cap on damages imposed by s18 LTA 1927 (which says that the amount of damages awarded to L for T’s breach of a repairing covenant cannot exceed the amount by which it reduces the value of L’s reversion). In other words, the general view has always been that specific redecoration obligations have to be carried out, and T cannot argue that the cost of redecoration will exceed L’s loss. Conversely, if redecoration is part of a repair covenant then T can raise those s18 arguments.

That simple and long-standing distinction has been thrown into confusion by a recent CA decision which appears to have held that a breach of a covenant to decorate could be treated as a breach of a repairing covenant (and so subject to s18). The lease itself contained both types of covenant (i) a covenant to maintain (to keep ‘the painting and decoration thereof in good and tenantable repair’) and (ii) specific repainting obligations (to paint every third year and in the last year). The latter covenant would normally be regarded as outside the scope of s18 and would thus give L a stand-alone claim for damages not capped by s18.

But, the court said:

‘It should treat a failure to repair the decorative state of the premises as a breach of the covenant to repair for the purposes of s18… even if that failure also constitutes a breach of a covenant for periodic decoration in the same lease.’

An article in the Property Law Journal argues that the CA’s analysis is simply wrong because it goes against a whole line of well-established authorities on what is meant by the concept of ‘repair’. In any event, it remains to be seen whether this decision will be treated as a binding precedent or not. But, there is now confusion as to whether or not an s18 cap applies in L’s claim for damages when T has not redecorated in accordance with a specific lease obligation. No doubt Ts will now vigorously argue that s18 does apply (eg if L is planning to redevelop the building then the reversionary loss will be negligible). For a discussion of Ferguson Latimer v Carney [2006] EWCA Civ 1417 see [2007] 187 Property Law Journal 19. © Practical Lawyer