Can you explain the source of the definition of ‘repair’ and ‘beyond economic repair’ which you use in your website?

By | 05.10.2018

Reader’s E-mail:
I am a leaseholder and have applied to the First Tier Tribunal to dispute a service charge resulting from Major Works by my landlord. I have found your website incredibly helpful so thank you. In one of your published responses to a Reader’s question (titled “I think the Council’s planned major works are unnecessary”), you state that some leases (including my own lease) only permit ‘repair’ costs to be recharged to leaseholders but not ‘improvement’ works to be recharged. The replacement of an item is taken to be a repair if the existing item is ‘beyond economic repair’ (which means that it is either impossible to repair or that it would cost more to repair than to replace). Please could you advise of the source of your definition of ‘repair’ and ‘beyond economic repair’. Thank you

Reply from Service Charge Dispute Guide

In our post entitled ‘I think the Council’s planned major works are unnecessary‘ we were specifically considering the issue of whether the replacement of single glazed windows with double glazed windows fell within the repair covenant of a Lease. Our point in this respect was that Case Law indicates that the answer to this question very much depends on the condition of the existing windows at the point when the window replacement occurred, and whether the work which was undertaken was a reasonable response to the Landlord obligations to repair the windows as set out in the relevant Lease.

There are lots of legal cases on this point. Because of the Decent Homes Standard, which requires the installation of double glazed windows, it has been a ‘hot issue’ for local authority Service Charge payers. The decisions in these cases are not all the same, partly because they involved differently worded leases and different scenarios, however, they all do all point to the importance of considering whether the work done to is a proportionate response to the condition which the Landlord finds the windows to be in. There is no one standard definition of what makes a window replacement a proportionate response to a Landlord’s repair covenant. It is a matter of degree, and often a matter of looking at the precise wording of a lease.

The emphasis we place on an assessment of the current condition of the window, and the question of whether the window is beyond economic repair (as means of determining whether a replacement of single glazed windows with double glazed windows consitutues a ‘repair’) is based in large part on the guidance given by the Lands Tribunal in the case of Wandsworth London Borough Council v Griffin and Another [2000] 2 EGLR 105. We have focussed on this case as we believe this case may be the most influential one in terms of guiding the approach taken by the First Tier Tribunal in deciding this issue, and it is referred to very often by local authorities as a leading legal authority when they are challenged over window replacements programmes.

In the Wandsworth case the Lands Tribunal was asked to consider whether the replacement of flat roofs with pitched roofs, and single glazed windows with double glazed windows, fell within the repair covenant of the Council’s leases. The Lands Tribunal decided that they did, even though the Leaseholders concerned argued that such works went well beyond simply repairing what was already there.

In reaching the decision that both roof and window repalcement works were in fact ‘repairs’ the Lands Tribunal considered what options were available to the Council at the time in respect of fulfilling its obligations to repair both roof and windows. In deciding whether the works undertaken were ‘repairs’ the Lands Tribunal considered that it was important that the work which was undertaken was more cost effective than the other options available in respect of fulfilling the Landlord’s repair obligations. A much quoted passage from this Decision sums the point up succinctly:

it does not seem to me that a repair ceases to be a repair if it also effects an improvement. In my judgment, the works carried out by the appellants did constitute repair, if they were indeed cheaper than the alternatives, taking into account both initial and future costs

It is worth noting the last part of the passage quoted above (”initial and future costs”). In determining the relative cost effectiveness of work, the analysis undertaken by the Lands Tribunal looked not only at the cost of carrying out works initially, but also whether over a longer period the cost was less than the alternatives.

To illustrate the point consider two approaches to repairing wooden framed windows: one approach would be cut out the rotten parts of a frame and fill them with resin, replace seals, re-paint etc; another approach would be to replace the entire window with a superior double glazed unit. The first approach would in the short run undoubtedly be cheaper. However, if the building were tall and required scaffolding, and the wooden windows likely to rot further, it might well be the case that over a 30 year period the costs would have been less simply to have changed the windows at the outset, rather erecting the scaffolding twice to carry out two sets of works: the first being the initial ‘patch’ repair with resin, and the second being a full replacement of the windows when the remainder of the wooden frames had rotted say 5 to 10 years down the line.

This point underpins the concept of something being ‘beyond economic repair’. If the cost of repairing an existing part is (for the type of reason given in the illustrative example we have used above) more expensive than simply effecting a replacement, then the commonly used term is that the thing which needs fixing is ‘beyond economic repair’.

Going back again to the quote given above from the Decision in the Wandsworth case, it is helpful also to understand the thinking behind the first part of the passage (“it does not seem to me that a repair ceases to be a repair if it also effect an improvement“). This statement is a direct response to the thinking that because the replacement of a single glazed with a double glazed window (or indeed a flat roof with a pitched roof) involves installing something better than was there before this makes it an ‘improvement’.

In deciding that in this situation this argument was not correct, the Lands Tribunal considered what would materials it would be reasonable to use when carrying out replacement works. The Lands Tribunal’s conclusion was using the standard materials of the day and complying with current building standards was reasonable, using inferior materials and not meeting current standards would not be reasonable. Therefore, the Lands Tribunal concluded that aa a matter of course it was reasonable to expect that replacement works are likely to result in the new part of the building being better than the part which was replaced, and that this does not stop those replacement works being a repair.

As a final point we would like to emphasise that the Wandsworth decision does not automatically mean that all window replacement works are repairs. If there is no real evidence that the existing windows were near the end of their life expectancy, or ‘beyond economic’ repair, the approach adopted in the Wandsworth case would in fact lead to the conclusion that replacement works were not covered by the repair covenant in the Lease. Leaseholders who are concerned that window replacement might be an ‘improvement’ rather than a repair need to focus on the Landlord’s evidence that windows were in such a bad condition that this put them ‘beyond economic repair’, and consider whether the residents themselves have evidence to provide (particularly photographs) which might suggest otherwise.