Carmel Southend Ltd v Strachan & Henshaw Ltd

INTRODUCTION

The Claimant, Carmel Southend Limited (‘Carmel’), is the freehold owner of industrial premises known as Units B and C, Ashton Vale Road, Ashton Gate, Avon (‘the property’). Built in about 1979, the property was constructed from a steel portal frame, with a combination of metal cladding and cavity brickwork to external walls beneath an asbestos cement covered roof. That roof construction was of shallow pitch, in traditional design, with support afforded by galvanised steel purlins which spanned between the primary structural steel portal frame. The covering itself comprised a built-up system with prefinished plasterboard panels set within a galvanised steel grid internally, a layer of fibreglass or mineral wool quilt insulation of unknown thickness, and profiled asbestos cement corrugated sheeting to the external skin, securely positioned with metal hook bolts. GRP roof lights were provided to approximately 10% of the roof surface area to provide daylight to the inside of the property. The experts are agreed that the roof design was typical of the era (about 1979) and in keeping with other industrial units on the estate and other properties in close proximity.

By a lease dated 14^th December 1990, the property was demised to the Defendant, Strachan & Henshaw Limited (‘SH’), for a term of 15 years from 25^th December 1989 to 24^th December 2004. During the course of their tenancy, in 2000, SH sublet the property to a company now known as Metso Minerals UK Limited (‘Metso’). Metso remained in occupation following the expiry of the lease in December 2004. On 7^th July 2005 Carmel relet the property to Metso on the basis that Carmel would pay for the overcladding of the roof with new profile metal sheeting fixed to the existing roof structure. This overcladding work was carried out in 2005 and is at the heart of the remaining disputes between the parties.

It was Carmel’s case that SH were in breach of various covenants in the lease and that, as a result, the property was in disrepair when it was yielded up. On 9^th August 2005 a Schedule of Dilapidations was formally served on SH’s surveyor. The parties were unable to reconcile their differences and on 4^th July 2006 Carmel started these proceedings for damages for breach of covenant.

Happily, agreement has now been reached in relation to all items included in the Schedule apart from those items of disrepair relating to the roof. As to that issue, Carmel’s case is that the only way of successfully meeting SH’s obligations under the lease at the time of its expiry was to overclad the original roof using new profile metal sheeting panels together with repairs to the gutters and pipes. In contrast, whilst they accept that they were in breach of covenant, SH deny that wholesale re-covering was necessary and that the main problem, namely the deterioration of the roof lights, could have been dealt with by the installation of entirely new roof lights with waterproof joints. SH maintain that very few of the original roofing sheets were damaged and that the sheeting as a whole had not reached the point where it could not be repaired in accordance with their obligations in the lease.

Now that SH admit liability, the principal remaining issue between the parties concerns the work which would have been required in order for the premises to have been yielded up in December 2004 with the roof in good repair and condition for the purposes of the relevant covenants in the 1990 lease. In order to deal with that issue, I propose to set out the relevant covenants in the lease (section B below), identify briefly the relevant principles of law (section C below), summarise the factual background and the history of the roof (section D below), identify the state of the roof as at 24^th December 2004 and the works that were subsequently carried out (section E below), and then analyse whether the overcladding or the patch repairs scheme was required by the repairing covenants in the lease (section F below). Finally, in section G below, I address the outstanding issues of quantum.

THE LEASE

The relevant covenants in Clause 3 of the lease were as follows:

RELEVANT PRINCIPLES OF LAW

There was a certain amount of debate about the relevant principles to be applied in a case of this type. I set out below what I consider to be the appropriate principles of law.

Standard of Repair Generally

Repair Alternatives

Futility

Incoming Tenant

FACTUAL BACKGROUND

There were a number of events concerning the roof of the property which occurred between 1990 and 2005. Although ultimately this dispute will turn on the expert evidence, I consider that the factual background is of some importance (Footnote: ¹)^{Note 1}. I therefore set out that background in some detail below, but before I do so I should add one note of caution. Many of the events over this period were not the subject of any direct oral evidence, and therefore the only material available to the court comes from the disclosed documents. It is important, therefore, to note at the outset that some of the details of these events, including matters of potential significance, are simply unknown.

Attached to the lease agreed in 1990 was a Schedule of Works to be carried out by SH. This included replacement of all cracked roof lights and all cracked and temporarily repaired roof sheets. It also involved cutting out the mastic seals to the roof lights and the sealing of the valley gutter joints. It appears that this work had to be carried out and completed by 30^th April 1991. There are no documents evidencing precisely what was done and when.

In May 1993 SH procured the carrying out of the wholesale remedial coating of the asbestos cement roofing using a liquid applied compound. This work was carried out by Rentokil Roofing and was the subject of a 10-year guarantee. It appears that this work had the effect of enhancing the performance of the roof sheets because, as we shall see, even 10 years on, nobody suggested that anything other than a handful of the sheets themselves needed to be replaced.

The roof lights were a different matter. It appears that intermittent water ingress continued to occur around the roof lights. In the summer of 2000 Rentokil Roofing returned to site to carry out further repair work to those roof lights. In their letter of 21^st July 2000, they said their principal task had been to reseal the laps to the lights. The remedial work that was carried out was apparently the subject of a guarantee, although Rentokil were at pains to make clear that the life of those roof lights ‘must be drawing to an end’. In contrast, Rentokil said that the waterproofing treatment, i.e. the coating that had been applied a few years earlier, was ‘in generally good order’.

The following month there were further problems with the roof, this time in the location of the valley gutters and downpipes. On 17^th August Rentokil Roofing wrote again to SH to propose the addition of two new outlets to the valley gutter. The quotation was in the sum of just under £2,000. It appears that this work was done by 13^th September and was also the subject of a guarantee.

At just this time, SH were in negotiation with Metso (then called Svedala Limited) concerning the possible subletting of the property. They obtained a survey of the roof from Davis Blackburn dated 7^th September 2000, which contained the following conclusions:

It appears from the documents that although, as we have seen, the number of rainwater outlets was increased (see paragraph 16), no steps were taken to replace the existing downpipes with downpipes of a wider diameter. Despite that, in October 2000, Metso became the subtenants of the property.

It seems that the problems continued with the roof. On 6^th March 2003, Mr Rickards, Metso’s general manager, wrote to Rentokil Roofing to complain about ‘the same leaks in the same places’. Oddly, it does not appear that at this time the document was sent to either SH or Carmel, nor was any claim made under the guarantees previously provided by Rentokil.

In their reply dated 10^th March 2003, Rentokil Roofing said:

In August 2003 Rentokil Roofing provided a further written recommendation that ‘all or part of the roof be overcladded and override the existing internal eaves’ gutters’. Overcladding all the roof was estimated at £35,800 plus VAT; overcladding a part of the roof only (it is not clear which part) was estimated at £12,300 plus VAT. Again, it does not seem that either of these options was taken any further.

In late 2003 Carmel had engaged two different surveyors in connection with the property: Mr Goldstone of Robinson Lowe Francis, who was going to deal with SH, and in particular negotiate the termination of the lease and the repairs required to remedy the dilapidations, and Mr Watson of Alder King, who was engaged to negotiate a new lease with Metso. Mr Goldstone informed Mr Uzel of Carmel on 1^st December 2003, following his first visit to the property, that it was ‘in a considerably better condition’ than when it was originally let to SH. He said that ‘the majority of items which will require attention relate to the roof’. The letter made clear that Carmel’s starting point was, not unreasonably, to get SH to carry out the repairs required by the lease, which would put that property, they hoped, into a condition in which Metso would then accept, by way of a new lease, a full repairing covenant.

In the run-up to the expiry of the lease and the possible new lease with Metso, the roof was the principal matter addressed in the correspondence between the respective surveyors. For example, on 2^nd March 2004, Mr Henson of Hurst Warne, the surveyors acting for Metso, wrote to Mr Watson to say:

At the same time, in late February 2004, a draft Schedule of Dilapidations was prepared by Mr Goldstone on behalf of Carmel. The production of the draft Schedule followed Mr Goldstone’s detailed inspection of the roof, which was carried out on 5^th February 2004. On that inspection he was attended by the roofing contractors, Options. It was carried out with the aid of a cherry-picker. Mr Goldstone confirmed that it was the only detailed inspection of the roof that he ever undertook. In respect of the repairs to the roof, his Schedule identified Mr Goldstone’s view that the necessary remedial action was to ‘replace the defective roof sheeting, including the provision of new soaker sheets, bargeboards and roof lights’. In his oral evidence, Mr Goldstone confirmed that, whilst this envisaged the replacement of all the roof lights, it recommended the replacement of only a handful of the roof sheets because, by and large, they were in a reasonable condition. He accepted in cross-examination that he was therefore of the view that, at this time, this solution (called in the evidence ‘the patch repairs’) was the appropriate way of putting the roof into proper repair and condition.

It also seemed that Mr Goldstone had considered, and rejected, any sort of overcladding solution. When he sent his draft Schedule to Carmel, his covering letter of 11^th March 2004 said:

Mr Goldstone was cross-examined about that letter. He confirmed that, at that time, he did not consider that the overlaying solution was appropriate or acceptable. In cross-examination, he explained the apparent inconsistency between the patch repairs set out in his draft Schedule, and his letter which talked about renewing the roof in total. He said that, whilst he thought that the patch repairs were the limit of what was required by the terms of SH’s lease, hence its inclusion in his draft Schedule, he also thought that what he called ‘more extensive work’ than was required by the lease would have to be carried out by Carmel at the termination of the lease itself. So although Mr Uzel said in cross-examination that in his letter Mr Goldstone was contradicting himself, I do not believe that that is a fair criticism. Mr Goldstone was in fact identifying two, at least potentially different, things: the work he thought was required by the lease, and the work possibly required for the purposes of Carmel’s long-term investment in the property. He was, at that point, properly keeping the two concepts separate. As we shall see, the principal difficulty in this case arose when, a few months later, he was obliged to blur the edges between them.

On 22^nd April 2004 Mr Watson wrote to Mr Henson saying:

In his negotiations with Metso, Mr Watson persisted in the opposite view, writing again on 9^th June 2004 to say that ‘the roof covering will be repaired as required but it is not our client’s intention to replace this in its entirety’. Although his next letter to Mr Uzel of 22^nd June indicated that Mr Henson, Metso’s surveyor, had agreed to this, Mr Henson’s own letter of 30^th June made Metso’s position crystal clear. He said:

Mr Watson said in evidence that he was more of a valuation specialist and that it was Mr Goldstone who was dealing with the details of what works were required to comply with SH’s repairing covenant. However, on 1^st July 2004 Mr Watson offered a view to Mr Uzel that was at least consistent with what was in Mr Goldstone’s draft Schedule. He said:

On 5^th July 2004 Mr Uzel sent Mr Goldstone the correspondence that had passed between Mr Watson and Mr Henson about the roof. Mr Goldstone’s reply was curious because it suggested that his Schedule included for roof renewal, when, as he accepted in cross-examination, it patently did not. He said that he could not explain why there was this discrepancy. It does not seem to me that anything turns upon it.

Just at this critical moment, there was then an outbreak of further leaks at the property. It seems that Metso dug their heels in as to their proposal for a new roof. Mr Uzel was finally obliged to agree to it. On 21^st July he wrote to Mr Goldstone to tell him that he had agreed with Metso ‘that we will be putting on a new roof and charging this back to SH’. He also said Metso were going to let him have a letter which said, in terms, that they would not take the building unless a new roof was put on. It was not suggested that this decision was based on any advice whatsoever from either Mr Watson or Mr Goldstone.

The promised letter from Mr Rickards of Metso was also dated 21^st July 2004. That said that ‘in addition to the existing leaks, substantial new areas of leaking have developed’. He identified the extensive damage caused by these leaks and concluded by saying that ‘unless we can be convinced of moves to provide a permanent solution to the leaking roof, we cannot consider signing the proposed new building lease’. Mr Ryan of SH said in evidence that he had no idea of these events; he was surprised that, if Mr Rickards had a real difficulty with the state of the roof, he had not contacted SH at all during this period.

Mr Uzel forwarded this letter to Mr Goldstone on 26^th July and asked him to instruct Options ‘to give us a price for a new roof as per your design. This could potentially be, I suppose, an overcladding or a complete recladding’ (Footnote: ²)^{Note 2}. Whilst this letter made plain that Carmel had decided on either overcladding or recladding, Mr Goldstone remained of the view that the patch repairs solution was the appropriate measure of work for the purposes of the Schedule of Dilapidations against SH. We know this because, on 30^th July, he produced another version of that Schedule, with the patch repairs referred to again, although this time it identified all 56 roof lights to be replaced. The revised Schedule identified just 20 asbestos roof sheets that, in Mr Goldstone’s view, would need to be replaced. The revised Schedule was sent to Mr Hewitt, the surveyor acting for SH, on 9^th August 2004.

Mr Hewitt responded on 2^nd September 2004. He said:

However, the dispute between the parties was actually just about to grow much larger, because on 16^th September, in what was a purported response to this letter, Mr Goldstone said:

Mr Goldstone’s next letter on this point was dated 19^th October 2004. This letter set out a more detailed explanation of why he considered that the existing roof was not in a condition which would justify patch repairs only. The letter included this paragraph:

CONDITION OF THE ROOF AND SUBSEQUENT WORKS

The parties’ experts are agreed that, as at 24^th December 2004, when SH’s lease expired, the roof was in a state of disrepair. They are agreed that the following defects were apparent:

Subsequently, the overcladding to the roof was carried out at Carmel’s expense. SH accept that this overcladding work was a repair option open to Carmel but they do not say (unlike the tenants in one or two of the reported cases referred to above) that the work went beyond repair and constituted enhancement or betterment. However, they say that the patch repairs, which first featured in Mr Goldstone’s original Schedule, were a cheaper repair option which was reasonably and sensibly possible and ought therefore, in accordance with the principles noted in paragraph 9 above, to form the basis of the calculation of damages. In response, Carmel says that the patch repairs were not an appropriate method of repair in all the circumstances and/or were impracticable. I address that key issue in section F below.

PATCH REPAIRS OR OVERCLADDING?

Mr Goldstone made a detailed inspection of the roof on 5^th February; Mr Hewitt made his detailed inspection of the roof shortly thereafter. Following these inspections, as set out in paragraphs 24 to 33 above, Mr Goldstone was of the view that, in order to put the roof in to proper repair and condition, all roof lights had to be replaced and other work was necessary to the valley gutters. Mr Hewitt subsequently agreed with that. In addition, both men were of the view that only a handful of the roof sheets themselves required to be replaced. Although, as I have pointed out, this solution was called ‘the patch repairs’ in the evidence, it obviously involved rather more than that. On the facts, therefore, I find that up to 9^th August 2004, both Mr Goldstone and Mr Hewitt were generally agreed that the patch repairs, as opposed to a more radical solution, were sufficient to meet SH’s liability under the covenants in the lease.

That, so it seems to me, is an extremely important starting point for any investigation into the dispute as to the appropriate remedial work under the lease. Mr Goldstone had said publicly that the patch repairs were appropriate. From 5^th February 2004, when he made his inspection, through the production of his original Schedule on 27^th February, his exchanges with Mr Uzel between March and July 2004, through his production of his revised Schedule on 30^th July, right up to when he sent it off to Mr Hewitt on 9^th August, Mr Goldstone was of the opinion that the patch repairs identified in the draft Schedule were what was required to put the building into proper repair and condition (in accordance with the relevant covenants), and nothing else. He had also said expressly that he was not in favour of overroofing.

By 16^th September 2004 Mr Goldstone had changed his position. There is, of course, nothing wrong with that; indeed, experts, if they are doing their job properly, should always be willing to review the information available to them and, if appropriate, to change their position in the light of that information. But, given the circumstances of this case, it is necessary for the court to examine in a little more detail why Mr Goldstone wrote to Mr Hewitt on 16^th September, just five weeks after he had reiterated his patch repair recommendation, and without having undertaken any further inspection of the roof, to say that only replacement was justified in order to put the roof in to appropriate repair and condition in accordance with the terms of the lease.

The evidence, both written and oral, makes it clear that the most significant event in the summer months of 2004 was Mr Uzel’s decision in July to provide Metso with a new roof (paragraph 31 above). Mr Uzel told me that that was his decision based on his conversations with Metso. It was not a decision that he had discussed with Mr Goldstone or Mr Watson beforehand, and it was not a decision which was based on any pre-existing advice from either Mr Goldstone or Mr Watson; indeed, it could be said to be contrary to Mr Watson’s express advice, as well as being clearly contrary to Mr Goldstone’s draft Schedule of Dilapidations.

The decision to replace the roof was, of course, entirely sensible from a commercial perspective, given Metso’s continuing complaints about it and Carmel’s desire to enter into a new lease with them. It was also consistent with Mr Goldstone’s letter of 11^th March (paragraphs 25 and 26 above) to the effect that, regardless of the position under the lease, a replacement roof was a sensible step. It was also consistent with Mr Watson’s evidence that an incoming tenant such as Metso might well insist, with a property of this age, on a new roof before they agreed to a full repairing covenant. But it is clear that it was a decision taken with the position of Metso firmly in mind, and with no consideration of the potentially different position under the terms of SH’s lease. When Mr Uzel made his decision, he hoped that he could get the cost of the work back from SH, but nobody (certainly not Mr Goldstone) had given him any advice to that effect.

For these reasons, it is impossible not to conclude on the facts that what happened was this: Mr Goldstone advised both Mr Uzel and SH that, under the terms of SH’s lease, the patch repairs were appropriate; Mr Uzel, for understandable commercial reasons, provided Metso with a new roof.; Mr Goldstone then had no real option but to alter his position and argue that a new roof, or certainly overroofing, was justified under the lease after all. Indeed, he explained in cross-examination his changed position by reference to his letter of 16^th September 2004 and he appeared to admit that he had altered his view because of what he called ‘the subtenant’s demands’.

Mr Goldstone also suggested that he had changed his mind because of advice he had received from Options (the roofing contractors) about the practical difficulties of carrying out the patch repairs. His evidence as to the detail of that advice, and how and when it was given, was very vague. For the reasons set out above, it would have had to have been provided between 9^th August 2004, when the second version of the patch repairs Schedule was sent out by Mr Goldstone to Mr Hewitt, and 16^th September, when the letter referred to at paragraph 35 was sent to Mr Hewitt by Mr Goldstone. But there is no written record or note of any advice about the roof being given by Options to Mr Goldstone during that period; neither was Mr Goldstone able to say that any such advice was given orally within that period of about five weeks.

Indeed, on all the evidence, I consider that it was most unlikely that Options gave the advice suggested during this period. In particular:

Perhaps most tellingly of all on this question, Mr Goldstone did not at any time seek to justify the overcladding solution to Mr Hewitt on the grounds of practicality, and he made no reference at all to any such advice having been given to him by Options, or by any other roofing contractors. Instead, as he accepted in cross-examination, his letter of 16^th September sought to justify replacement because ‘the subtenant will not be prepared to sign a lease with a full repairing covenant’. He made the same point in his letter of 19^th October. As I have already noted, he agreed that he was seeking to justify overcladding by reference not to the covenant but to Metso’s demands. Not only was that the application of the wrong criterion, it was also the best evidence that Options had not in fact given the advice he later suggested they had during this period. If they had given that advice, I consider that he would inevitably have referred to it in his correspondence. It would have been the best possible reason to justify his change of position.

For all those reasons, therefore, I do not accept the suggestion that Mr Goldstone’s change of mind between 9^th August and 16^th September was caused by advice from Options or other roofing contractors. The only relevant event during this period, as I have indicated, was Mr Uzel’s decision to provide Metso with a new roof, and I am in no doubt that that was the cause of Mr Goldstone’s change of position.

In summary, and for the reasons I have given, I find that:

In my judgment, there is a strong case for concluding that the patch repairs were the most appropriate scheme under the terms of the covenants. That is because, for the reasons that I have already set out, it was the patch repairs which had been agreed as such by Mr Goldstone and Mr Hewitt. Both men confirmed that they had been involved in other jobs where similar sorts of patch repairs to roofs of this type and age had been successfully carried out; indeed, Mr Hewitt told me of a project in Milton Keynes that he had just completed where precisely this type of work had been completed. In addition, it must not be forgotten that Mr Watson was also of the view that the overroofing was not necessary and that patch repairs were appropriate (see paragraphs 27, 28 and 29 above). There was, therefore, unanimity, at least up to 9^th August 2004, between Mr Goldstone and Mr Watson, the surveyors engaged by Carmel, and between them and Mr Hewitt, SH’s surveyor.

Furthermore, it should also be noted that the sort of patch repairs proposed were, as Mr Hewitt confirmed in cross-examination, very common in the industry. As he explained, the Green Book of the Advisory Council for Roofing contains details as to how such work should be properly carried out. In addition, the Health & Safety Executive produce their own specific methodology for replacing isolated roof sheets and roof lights. What, therefore, made this work, which is relatively common, unacceptable or inappropriate in this particular case?

Two rather different attacks on the patch repairs solution were made by Carmel. The first was the suggestion that such works were futile because of the history of the roof leaks and the condition of the roof, and that, as a consequence, the patch repairs, as Mr Kynoch put it, represented ‘flogging a tired old horse’. The second was the suggestion that such works were impracticable. I deal with each of those criticisms below.

I reject the suggestion that the patch repairs originally advocated by Mr Goldstone and maintained by Mr Hewitt were in some way futile because of the history and/or the condition of the roof. After all, Mr Goldstone had inspected the roof and concluded that, far from being futile, the patch repairs where what was necessary to put the roof into appropriate repair and condition. He did not suggest that at any time he received advice from Options, or indeed anyone else, that made him alter that view or persuaded him that the repairs were in some way futile; nor, it seems to me, could he have possibly done so, given that such matters were entirely for him, as Carmel’s surveyor, to assess and decide. He therefore plainly concluded that the patch repairs were appropriate and not futile.

Furthermore, if that were not enough, I should also note that this was not a case (unlike those cited in paragraph 10 above) where SH were arguing for a futile repair scheme to an element of the property that really needed to be replaced. On the contrary, the one element of the original roof that everybody was agreed had reached the end of its natural life was the roof lights. SH were not suggesting that the roof lights be the subject of futile repair; on their case, they would be replaced in their entirety. On the evidence, it seems to me that the roof lights were the principal source of the leaks in the past. Therefore, their proposed replacement was the opposite of futile; it was a critical step to prevent further leaks into the property. For all those reasons, therefore, I reject the futility argument; I simply do not accept that it is applicable on the facts.

The second attack was the suggestion that the patch repairs were impracticable. I deal with each of the relevant criticisms below.

Asbestos Roof Sheets

Both schemes involved risks to the occupants below which would have had to have been addressed by careful project management, as Mr Hewitt explained. Both schemes required proper safety measures, whether by way of netting or harnesses and inertia reels. Neither scheme allowed access from below because of the suspended ceilings installed by Metso. There was nothing to say that one scheme was any more dangerous or any more difficult from a Health & Safety perspective than the other.

For all these reasons, I consider that neither the ‘futility’ nor the ‘impracticability’ arguments advanced by Carmel are sustainable. They do not render the patch repair scheme, which Mr Goldstone originally advocated, impracticable or unjustified. On the contrary, the patch repairs, including the replacement of all the roof lights and the work to the gutters, were the appropriate repair works, given the particular disrepair to this roof and the terms of the covenants. The overcladding of the roof was the result of a decision taken by Carmel without any advice to the effect that the cost of such work was recoverable from SH. For all the reasons given, I conclude that it was not.

I should also say by way of summary that this conclusion was the same as that reached by Mr Hewitt, Mr Watson and Mr Goldstone, at least up to 9^th August 2004. It was therefore supported by the vast majority of the oral expert evidence that I heard during the trial. Although Mr Kynoch properly pointed out that others, including the various roofing contractors, Rentokil, Options and Icon (the contractors to whom Mr Hewitt referred), and Mr Greenyer, the surveyor acting for Metso, all advocated re-roofing of some sort, that was a view which in each case:

For the avoidance of doubt and by reference to the principles outlined in section C above, I conclude that:

QUANTUM

The parties are agreed that the figure for the patch repairs is £24,462.44. This includes the claims for fees and so on, and also allows for a deduction in accordance with the first limb of Section 18 of the Landlord and Tenant Act 1927. Prima facie, Carmel’s claim is in this sum. For this reason, Mr Kynoch’s criticisms of Mr Hewitt’s calculations are now nothing to the point (because the appropriate figure has been agreed). Furthermore, as I observed during argument, Carmel did not offer an alternative figure for the patch repairs in any event.

However, SH have a further argument which they say reduces the correct figure to £18,278.44 by stripping out the work involved in the replacement of the roof lights. This argument relies on the second limb of Section 18 of the 1927 Act, which provides that:

The second limb of Section 18 has been explained on the basis that:

The authorities suggest that the term ‘structural alterations’ is to be given a wide interpretation (see Firle Investments Limited v Datapoint Internal Limited [2000] EWHC 105 TCC and Pickering v Phillimore [unreported] 10^th May 1976). However, these and other authorities all proceed on the (not unreasonable) assumption that the structural alterations are entirely different from the repairs covered by the covenants and that they are not (as would be the case if Mr Healey was right in his submissions in this case), one and the same.

In my judgment, this is the principal reason why the situation here is a long way from the sort of position with which the second limb of Section 18 was designed to deal. Here, there was a straight fight between two different remedial schemes, both of which were described by the experts as repairs. I have decided that the lesser scheme was appropriate because it was reasonably and sensibly possible. But the mere fact that Carmel undertook a more extensive and expensive repair scheme does not, in my view, trigger the second limb of Section 18. I derive support, for what I hope is a common sense analysis, from various observations of Arden LJ in Latimer and Another v Carney & Ors [2006] EWCA Civ 1417, and in particular paragraph 51 where she said:

Accordingly, I conclude that there should be no deduction by way of the second limb of Section 18. I do not consider that this is a Section 18 case. There is no injustice to SH in my conclusion that they were liable for the lesser, rather than for the more extensive repair scheme, without further deduction. The work done by Carmel was work of repair and, as Mr Healey fairly accepted, it did not go beyond that. It seems to me that this, therefore, takes it outside the meaning and intent of Section 18. Thus, the work actually carried out does not supercede the patch repair scheme.

In addition, to the extent that it is relevant, I am doubtful whether the overcladding could be described as a structural alteration. As I have already noted, the experts referred to it as a repair. Moreover, it was suggested that it might be a structural alteration because it imposed a greater loading on the steel frame. However, most repair work involves an increase, to a greater or a lesser extent, to the loading imposed on the frame of a building. If that was the only test for a structural alteration, then it might be very difficult to identify any work of repair that was not also a structural alteration. Again, that is plainly not what the second limb of Section 18 was designed to address. On that ground as well, I consider that the Section 18 arguments fail.

For these reasons, I reject SH’s submission that the second limb of Section 18 is relevant. I conclude that the patch repairs were the appropriate repair scheme, without deduction, in the sum £24,462.44. That will be the amount of Carmel’s damages. I will deal separately, but not this afternoon, with all remaining questions of interest and costs.