Term implied into lease re. safety of electrical installations

J N Hipwell & Son v Szurek [2018] EWCA Civ 674

Mrs Szurek ran a café in the Grendon Lodge Farm Complex in Kettering. In 2013 she experienced problems at the premises which she said were the result of unsafe electrical wiring. These problems led her to close her business and she started proceedings against her landlord (J N Hipwell & Son) to recover the losses she incurred in closing her business. These totalled £22,750.

Mrs Szurek argued that J N Hipwell & Son were under an implied obligation in the lease to keep the electrical installations in the café safe, and they had not done so. In their defence J N Hipwell & Son argued that a term could not be implied because there was an entire agreement clause in the lease.

Mrs Szurek won in the County Court but J N Hipwell & Son appealed the decision and it therefore went to the Court of Appeal.

Mr Justice Hildyard in the Court of Appeal said that the lease was an ‘oddly balanced document’ because it imposed on Mrs Szurek far more extensive covenants than upon the landlord, and there was a ‘plain and obvious gap’ in the lease because there was no express provision setting out who was responsible for the repair and maintenance of the exterior of the premises, its plumbing, or the electrical installation and supply. In the judgment he worked through the law relating to implying terms into leases, in particular focussing on Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and another [2016] AC 742, and held that to ensure the lease did not lack commercial or practical coherence, or, ‘in other words, as a matter of business necessity’, the gap in the lease should be plugged by implying a covenant on behalf of J N Hipwell & Son to the effect that the electrical installation and other service media provided was safely installed.

As such, by a different route to that of the judge in the County Court, the Court of Appeal held that a term had to be implied in the lease, the appeal was dismissed and Mrs Szurek got judgment in the sum of £22,750 plus interest and costs.

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