Repair and maintenance obligations in commercial leases have featured in a number of recent cases. Let’s take a close look at one…
In Brian Green Properties (1971) Limited v Bindon Holdings Limited CA484/2016 [2017] NZCA 284 (6 July 2017), the Court of Appeal gave its view on a repair and maintenance covenant. It said, “the lessee will during the said term, keep and maintain in good and tenantable condition and repair all buildings, fences, erections and drains now or hereafter erected or laid upon or under the said land”.
Background
The lease was for land adjacent to the Stadium in Dunedin. It commenced in 2001 and was renewed in 2009. Repairs to the roof and other general repairs were at issue. The issue under consideration, in the Court of Appeal was whether the lessee needed to carry out the repairs. It was part of a larger dispute around rent review and relief from forfeiture. The lessee argued this was not required. The reason being that it would mean putting the roof and other parts of the premises into good repair; a condition they were not in at commencement of the current lease term.
Considerations
The lease requirement had to be considered against:
- Firstly, section 223 of the Property Law Act 2007 (PLA 2007). This provides that unless the context otherwise requires a covenant to keep leased premises in good condition, it does not require the lessee to put them into good condition if they are not so at the date of commencement of the term; and
- Secondly, a clause in the lease that provided that the implied terms of the PLA 2007 are negatived or modified, in so far as they were inconsistent with the express terms of the lease; and
- Thirdly, the common law rule under Payne v Haine (1847), which is part of New Zealand law, means an obligation to keep premises in good repair included an obligation on the tenant to put them into good repair if they are not so at commencement of the term. That is what Section 223 of the PLA 2007 is intended to negative.
Court analysis included careful consideration of the PLA 2007 and the express lease clauses, to work out what prevailed.
Did the effect of the clause in the lease excluding implied covenants contained in the PLA 2007, mean that the repair and maintenance obligation included putting the premises into good repair (as per Payne v Haine)? Even if the premises were not in good repair at the commencement of the current term? Or did section 223 prevail? Which would mean that the tenant did not need to put the premises into good repair.
Court of Appeal decision
The Court held that the exclusion of the implied terms in the PLA 2007 in this lease, was not effective to exclude section 223 of the PLA 2007.
Query: Which other provisions of the PLA 2007 are not excluded by the general exclusion of implied terms typically used?
