CPSEs and Failure to Communicate

Many landlords view Commercial Property Standard Enquiries with a sense of dread. However, they are integral and failure to keep them updated can cause issues.

It can appear unreasonable for the landlord to have to complete lengthy replies to enquiries for a simple lease transaction. Many solicitors, including ourselves, regularly assist landlords with the completion of replies to Commercial Property Standard Enquiries. However, we always reiterate the warning notes and advise clients that the information which they provide in their replies to enquiries can be relied upon by the tenant as part of the contract package; should they become aware of any further information relating to any of the responses given to enquiries prior to the lease being granted, they must keep us informed in order that we can inform the prospective tenants solicitors.

This month an appeal decision is due to be heard following a case which was decided in the High Court last year, First Tower Trustees Ltd and another -v- CDS (Superstores International) Ltd [2017] EWHC B6 (Ch), where the High Court allowed a tenant to withdraw from a lease which they had entered into on the basis that the landlord had received information prior to granting the lease which they had not disclosed to the tenant when they became aware of the issue.

The information disclosed was related to the presence of asbestos in commercial premises which the landlord was not aware of at the time of providing replies to Commercial Property Standard Enquiries. However, 10 days prior to entering into an agreement for the lease, the landlord was made aware of the presence of asbestos in the property by their asbestos specialist. When the tenant took possession of the property under the lease, it began works as required under the terms of their agreement with the landlord and within a matter of days, they discovered asbestos in the property. The tenant terminated the lease in accordance with the termination provisions and sued for damages.

The High Court found in favour of the tenant on the basis that the purported exclusion of liability for misrepresentation in the lease was unreasonable, due to the well-recognised importance of pre-contractual enquiries during the conveyancing process.

The tenant was awarded costs in respect of the works which they had carried out and the cost of obtaining alternative warehouse accommodation.

The landlord has appealed against the decision and an update will follow once that decision has been handed down.

This case is a useful reminder that if a landlord or a seller makes a representation in replies to enquires, and later becomes aware that it is untrue, they should update replies as soon as possible.

MORE INFORMATION 

If you require further legal advice relating to CPSEs, please contact a member of our Commercial Property team for impartial legal advice. Call on 01708 229444 or email us using our contact form.This article was written by Keeley Miller, Senior Associate at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of May 2018.