Sub-leases: interpreting repair and reinstatement provisions

Sub-leases: interpreting repair and reinstatement provisions

What is the extent of a local authority’s obligations to remove alterations and reinstate premises under the terms of a sub-lease of commercial property? Ross Thomson of Harper Macleod comments on a Supreme Court ruling which provides useful guidance and clarification in relation to what is a key issue for landlords and tenants in commercial leases.

Original news

L Batley Pet Products Ltd v North Lanarkshire Council [2014] UKSC 27[2014] All ER (D) 57 (May)

The parties disagreed on whether the respondent council was obliged to remove its alterations and reinstate the sub-let premises on the expiry of the sub-lease when the request to do so was made orally and not put in writing before the sub-lease expired. The Extra Division of the Inner House of the Court of Session held that writing was required and the appellant appealed. The Supreme Court, in allowing the appeal, held that neither the sub-lease nor a minute of agreement authorising alterations to the sub-let premises had required such request to be in writing.

What issues did this case raise?

The decision relates to the extent of North Lanarkshire Council’s (NLC) obligations to remove alterations and reinstate premises under the terms of a sub-lease of commercial property where Batley was the landlord and NLC the tenant.

The Supreme Court considered the correct interpretation of what is quite standard wording in commercial leases and minutes of agreements (licences for works) dealing with consent to alterations. In this case, the minute of agreement between the parties consenting to alteration works by NLC (the agreement) did not expressly require Batley to give notice in writing to NLC of its requirement for NLC to remove the alterations at the expiry of the lease between the parties to which the agreement related

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