When selling or leasing property it is absolutely vital to answer pre-contract enquiries accurately and the consequences of not doing so can be severe indeed. In one case, a Tenant of warehouse premises was awarded seven-figure compensation after asbestos was discovered shortly after the Lease was signed.
In reply to the Tenant’s enquiries prior to execution of the Lease, the Landlord stated that it was unaware of any environmental problems relating to the premises. The Landlord had in fact received an email from a specialist firm which reported a health and safety risk arising from the presence of asbestos. Soon after the Lease was signed, the Tenant discovered the asbestos problem and very substantial remedial works were required before it could take up occupation.
The High Court acknowledged that Landlords do not generally warrant the state or condition of premises before they are let and that it is for Tenants to make their own enquiries, by survey or otherwise. However, the statement that the Landlord knew nothing of any environmental issues, when they had in their possession information that clearly pointed to a serious problem, amounted to a misrepresentation.
A term of the Lease stated that the Tenant acknowledged that the Lease had not been entered into in reliance on any statement or representation made by the Landlord. However, the Court found that that provision was highly unreasonable and did not enable the Landlord to escape liability.
The Tenant was awarded the costs of the remedial works and of arranging alternative warehouse accommodation during the period that it took to complete them.
It is important to understand that once a Tenant takes occupation of premises, it will be obliged to comply with all statutory obligations in relation to its use and occupation of the premises, including the obligations under the Control of Asbestos at Work Regulations.
It is imperative therefore for a potential Tenant (or Purchaser) to be provided with an Asbestos Report as it will become the “dutyholder” under the Regulations (because it will then have control of the premises).
This means that it must take all reasonable steps to determine the location and condition of materials likely to be asbestos containing materials, keep an up to date written register of any asbestos containing materials and monitor their conditions, assess the risk of anyone being exposed to fibre from asbestos containing materials, prepare a plan setting out how the risks posed by the asbestos containing materials are to be managed and put the plan into action, review and monitor it periodically. If there are asbestos containing materials in the premises, the Tenant (or owner) must provide information on the location and condition of any such materials to anyone who is likely to work on them or disturb them e.g. employees or contractors who carry out work at the premises.
The Regulations apply to occupied and vacant (and even derelict) premises.
There are two important messages in this story:
1. As a Landlord (or Seller), you must reply to pre-contract enquiries honestly and provide the information that you have in your possession.
2. As a Tenant (or Purchaser), you must comply with the obligations as “dutyholder” in the Regulations from the date of occupation/ownership. As well as being a contractual breach of the Lease by the Tenant, a failure to comply with the Regulations can result in substantial penalties, which is a criminal offence, punishable in the Magistrates Court with a fine of up to £20,000 and/or imprisonment for up to six months and, where there is a more serious breach, in the Crown Court, by an unlimited fine and/or imprisonment of up to two years. Personal liability can also attach to directors and officers, where breaches have been committed by their company with their consent, connivance or neglect.
For more information, please contact Shilpa Unarkat on 0121 746 3300 email, s.unarkat@sydneymitchell.co.uk or complete our online enquiry form.
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