Property Law Act 2007 - the effect of Sections 268-272 on landlord-tenant recovery

When the Property Law Act 2007 (PLA) came into effect it seemed to be one of those rare pieces of legislation that made life simpler – landlords could no longer recover from tenants for destruction or damage to 'leased premises, or the whole or any part of the land on which the leased premises are situated'. Of course there were exceptions to the general exclusion of recovery, such as when the destruction or damage was done intentionally by the tenant (see section 269(3) PLA). It appeared that an area of recovery/liability conflict was gone. Of course, nothing is as simple as it first seems.

One uncertainty was whether the protection afforded tenants was for them alone, or whether it extended to protect employees of the tenant. The recent case of Sheehan v Watson1 has clarified that issue – tenant's employees are as protected as the tenant itself. Other questions remain, however.

WHAT PROPERTY IS COVERED BY THE PLA REGIME?

The first hurdle for any person considering the application of the PLA regime is deciding exactly what destroyed or damaged property falls under its provisions. The ambit of the PLA regime will, perhaps, not become clear until more cases are taken to court for judicial consideration. The issue lies in the phrase below which comes from the opening words of section 268:

Sections 269 and 270 apply if, on or after 1 January 2008, leased premises, or the whole or any part of the land on which the leased premises are situated, are destroyed or damaged by one or more of the following events...[emphasis added]

The phrase, to which we have added emphasis, is not defined in the PLA nor is it a phrase that has been judicially considered.

Despite the uncertainty surrounding what the phrase intends to cover, a general observation can be drawn.

The property covered by the PLA extends beyond the footprint of the leased premises - the PLA covers destruction and damage to the land on which the leased premises are situated. This seems to suggest that the PLA regime intends to prevent recovery for destruction or damage that is caused to surrounding land when the source of the damage is from the leased premises

For example, envisage the scenario of a multi-storey building with multiple tenancies. Obviously the 'leased premises' for tenant A will not include what is leased by tenant B, yet the land on which both leased premises are situated is the same. Due to the PLA regime, the costs of remedying the destruction or damage to tenant B's...