Craigard (Dartford) Limited and another v Westbury Homes (Holdings) Limited and another
| Court | High Court of Justice, Business and Property Courts of England and Wales, Technology and Construction Court, King's Bench Division |
| Judge | His Honour Judge Keyser KC, sitting as a Judge of the High Court |
| Judgment | 29 September 2026 |
| Hearing | 4, 8, 9, 10 and 11 June 2026 |
| Jurisdiction | England and Wales |
| Claimants | Craigard (Dartford) Limited and Craigard (Dartford) Nominees Limited, the freehold owners and landlord |
| Defendants | Westbury Homes (Holdings) Limited, the former tenant, and Westbury Limited, its surety |
| Lease | Dated 9 July 2003, expired 8 July 2023 |
| Premises | Two storey office building of 14,916 square feet at Crossways Business Park, Dartford |
| Case reference | HT-2024-000377 |
| Damages | 648,141.47 pounds, with interest and costs still to be agreed |
Summary
This was a terminal dilapidations claim. The tenant had let the air conditioning system run down and handed the building back out of repair. The landlord had decided to replace the whole system to market the offices as modern and energy efficient, and it did so at a cost of 566,089.15 pounds.
The tenant said the system could have been repaired for far less, and that the landlord's plans meant most repair work would have been ripped out anyway. On the first point the landlord failed to prove otherwise. The court rejected the second as an answer to the cost of repair, but the same intention defeated the claim for lost rent.
Background and facts
The claimants bought the freehold in March 2021 for 3.1 million pounds. The first defendant held a lease granted in 2003 and had sub-let the offices. Clause 3.7.1 required it to keep the premises in good and substantial repair and condition. The second defendant was surety.
The lease expired on 8 July 2023. The landlord replaced the old heating, ventilation and air conditioning plant with a new VRF system and mechanical ventilation with heat recovery. A schedule of dilapidations dated 1 February 2024 was served with a quantified demand of 1,571,187 pounds.
The claim pleaded 1,335,980.15 pounds for remedial works, 218,145.38 pounds for lost rent and 55,000 pounds for fees. By trial the tenant put the remedial works at 344,440.39 pounds and the statutory cap at 123,161 pounds.
The issue
The landlord said the system was beyond repair, so replacement was the measure of its loss. Its valuer said the cap under section 18(1) of the Landlord and Tenant Act 1927 did not bite.
The tenant said the system needed a new chiller and modest remedial work, costed by its engineer at 163,504 pounds. It then argued supersession: because the landlord was always going to refurbish, only 123,161.07 pounds of the 360,931.39 pounds it accepted as attributable to disrepair would have survived. Both sides agreed that the second limb of section 18(1), which bars damages where the premises are to be pulled down, or altered so as to make the repairs valueless, did not apply. The judge accepted that without needing to say why.
The decision
The judge found that the tenant had not properly maintained the system, that this was a calculated failure, and that the system was out of repair at the end of the lease. He also found that the landlord had decided to replace it and had no interest in repair.
The primary question is whether replacement was necessary to achieve a result consistent with the repairing obligation. The burden lies on the claimants to prove that the answer to that question is in the affirmative.His Honour Judge Keyser KC, paragraph 112
The landlord did not discharge it. The witness the landlord relied on for its condition had never been asked to consider repair. The report the judge found most reliable favoured replacement as the long-term answer, but it itemised and costed remedial works, which made sense only if repair was viable. The landlord led no evidence of the cost of repair.
It follows that, if either repair or replacement could have been recommended by a reasonable specialist, damages will fall to be assessed on the basis of repair.His Honour Judge Keyser KC, paragraph 113
On supersession the judge accepted the facts but not the law. On the balance of probabilities the landlord would have stripped out a repaired system anyway. That did not reduce the cost of repair as the primary measure. If intention alone defeated the claim at common law, the second limb of section 18(1) would never have been needed.
Where the second limb applies, it operates to extinguish the right to damages. Where it does not, the common law rules of damages apply, though the award is capped by the limit in the first limb of section 18(1). The common law does not extinguish the damages on account of the landlord's intentions.His Honour Judge Keyser KC, paragraph 129
Consequential loss was treated differently. The rent lost while the works were carried out would have been lost anyway, because of the landlord's own plans to improve the building. Nothing was awarded for it. The professional fees were recoverable under the indemnity in clause 3.31.
On the cap, the judge accepted the landlord's valuer that a hypothetical purchaser would have been content with a working system in proper repair. He applied the tenant's valuer's method on that footing and left the arithmetic to the parties. The award was 648,141.47 pounds.
Practical implications
A landlord who plans to refurbish is not thereby stripped of its common law claim for the cost of repair. The protection for the tenant lies in the second limb of section 18(1) and in the diminution cap, not in a free-standing causation argument against the primary measure.
The same intention can still sink the consequential heads, such as rent lost during works the landlord would have done anyway.
For landlords the danger is evidential. The tenant may perform its covenant in the way least onerous to it, and the landlord must prove repair was not a reasonable option. With no costed repair option of its own, this claimant had to work from the tenant's figures for the cost of repair.
Practice points
- Before replacing plant at lease end, obtain an independent condition and validation report that costs repair as well as replacement.
- Brief your building services engineer on the repairing covenant, not on the refurbishment you want to carry out.
- Keep contemporaneous notes. A report written later to look contemporaneous will weaken the author's evidence.
- Tenants: do not rely on the landlord's refurbishment plans as a common law answer to the cost of repair. Put the argument through section 18(1) and the valuation evidence.
- Tenants: challenge claims for lost rent and decant costs where the landlord's own works would have emptied the building anyway.
- Landlords: separate works caused by the breach from improvement works in the programme, the tender and the final account, so the consequential loss can be traced to the breach.
- Instruct valuers to report on each side's case on the remedial works, not only on your own. A valuation tied to one case can leave the court without a usable figure.
- Tenants: a burst of minimal works in the last weeks of a lease will not put plant into repair. The court called this tenant's late works minimal and found the plant out of repair.