OPM Furniture Limited (www.opmfurniture.co.uk) v RLUKREF Nominees (UK) One Ltd RLUKREF Nominees (UK) Two Ltd [2021]

Another resounding result for APA’s clients.

RLU (the landlord) instructed Richard Melling MRICS of J3 Partners to prepare and serve a schedule of dilapidations.  OPM appointed Philip Antino prior to the service of a tenant break clause and had advised Mr. Melling not to prepare a schedule of dilapidations until such time as the property was handed back as there was a clear intention to execute repairing obligations subject to and arising out of the lease.

Within one week of serving the tenant break clause, Mr. Melling undertook an inspection of the roof claiming that this would form part of his dilapidations claim.  He was advised by Philip that he could do so, but it would be at the landlord’s risk.  Shortly thereafter in or around July/August Mr. Melling served a list of works which he indicated as being works that the landlord required to be carried out to the property.

The lease contained two very important clauses, which protected the tenant, these were found at 36.3 “the tenant does not have to put or keep the property in any better condition than that recorded in the schedule attached to the lease”.  Under decoration exactly the same wording was used in clause 37.2.

Mr. Melling had completely overlooked these very important points.  Mr. Melling had also ignored the comprehensive photographic schedule of condition recorded which extended to some 181 photographs.

Mr. Melling had also overlooked the fact that when OPM took the property in the first instance it was an 11,000 sq ft building shell.  They had constructed (subject to a license) office accommodation, health and welfare facilities, toilets, boardroom, all the ancillary stuff that a modern company would require.  The tenant also installed lighting and heating in the warehouse.

The schedule of dilapidations did not comply with the Civil Procedure Rules pre-action protocols, the schedule was only partly costed so, in essence, the claim of £68,600 was potentially substantially higher.

Mr. Melling required the tenant to undertake a CCTV survey of drains to establish if any defects exist, which as any experienced dilapidations surveyor will know is not a valid claim.  It is not for the tenant to demonstrate that a defect does not exist, it is for the landlord to carry out those investigations.  If those investigations show that there is no defect then that cost is attributable wholly to the landlord.  Only when they have demonstrated disrepair exists and subject to it being related to the lease, does there become a liability for the tenant to carry out any activities or pay any compensation.

Mr Melling had not carried out a section 18(1) Landlord & Tenant Act 1927 diminution valuation.  Philip Antino did, and found that aside from the fact there was no diminution, there was in fact an uplift on the value of the property by approximately £50,000 to reflect the improvements that the tenants had carried out since the beginning of the lease.

Mr. Melling had also included within the schedule of dilapidations a claim that the tenants should leave their two large gas heaters which serviced the 11,000 sq ft factory unit, each of which were valued at £11,500 each, were in facts tenants goods and chattels.

Mr. Melling also wanted the tenants to leave all their electrical lighting.  Despite the fact that the walls to the commercial unit were not decorated at the commencement of the lease Mr. Melling wanted those decorated.  The list was endless and simply wrong.

Philip Antino responded to the alleged schedule rejecting each and every item and indeed submitted a counter claim of £48,838.33.  The counter claim was served upon the landlords advising that OPM would adopt adjudication to resolve the dispute if the counter claim was challenged, Mr. Melling’s response was “I will not discuss this with you”.

Philip prepared an application to the Chartered Institute of Arbitrators for the appointment of an adjudicator on the 25th January 2021 and 48 hours later the landlords withdraw the claim in its entirety for the dilapidations.  No liability.