In 2018, the London Borough of Tower Hamlets was advised that two tower blocks, Brewster House and Malting House needed £8,066,944.38 in remedial works. This was, in part, because the buildings have been constructed using a design methodology now known to be defective (the Large Panel System) and in part because earlier remedial works – carried in in the 1960s and 1990s – had also failed to remedy the problem.

Tower Hamlets claimed this vast sum – equivalent to around £70,000 per flat – from the leaseholders. However, the Upper Tribunal has now confirmed that it was wrong to do so – leaving Tower Hamlets to meet the cost itself.

We consider in the below insight if – and how – the decision in The London Borough of Tower Hamlets v Lessees of Brewster House and Malting House [2024] UKUT 193 (LC) might be applied elsewhere.

The decision

In accordance with each of the leases, Tower Hamlets agreed to (and was entitled to charge for):

"maintain and keep in good and substantial repair and condition… the main structure of the Building including the principal internal timbers and the exterior walls and the foundations and the roof thereof with its main water tanks main drains gutters and rain water pipes (other than those included in this demise or in the demise of any other flat in the Building)"

The Tribunal was not satisfied that the word “maintain” covered works necessary to address a long-standing structural defect. Nor could they rely on a sweeper clause, which allowed the landlord to charge for “all such works installations acts matters and things as in the absolute discretion of the Lessors may be considered necessary or advisable” where the works proposed were of a kind different to the itemised provisions (including the one quote above.

Capsticks’ view

At first glance, it might reasonably be asked if Tower Hamlets was punished for doing the right thing. After all, the Tribunal’s finding that Tower Hamlets could not include the works as part of the service charge involved a finding that Tower Hamlets was not actually required to do them at all. Were it not for those tenants who were assured tenants of Tower Hamlets, Tower Hamlets could simply have left it to collapse.

The answer to this point is in a careful characterisation of what was wrong with the Barleymow Estate. The problem was that the concrete slabs – making up the structure – were insufficient, even under normal loads. This had been the case from the very beginning. They were not, in any material sense, the result of physical damage caused to the buildings since their construction (requiring repair), nor were they the result of age or wear and tear (requiring maintenance). Instead, the works will leave the two buildings in a better state than they had ever been before.

In other circumstances, Tower Hamlets might instead have left the residents to pursue a claim against the original developer. In this case it was, however, unlikely to do so: the blocks were built under the direction of the London County Council, and Tower Hamlets took over responsibility for them in 1984. The buck, after all, must stop somewhere.

Conclusion

Latent defects – like the structural problems identified at Barleymow - continue to be treated differently by the Courts from almost everything else. Works identified as necessary to address them should likewise be treated differently, as should the drafting that deals with them – as many modern leases do.

How Capsticks can help

We are construction and building safety experts. We have extensive construction expertise and provide support to our clients from the development of their business case through to completion of the project. We work with our clients to support the development of their construction strategy and to appoint their professional team and build contractor. 

For more information on how Capsticks can assist, please contact Abi Condry and James Burt.