Cases - Secretary of State for the Environment v Possfund (North West) Ltd
Record details
- Name
- Secretary of State for the Environment v Possfund (North West) Ltd
- Date
- [1997]
- Citation
- 2 EGLR 56, ChD
- Legislation
- Keywords
- Commercial property - landlord and tenant – depreciation allowance – tenant to pay depreciation allowance for fixtures and fittings – whether the landlord was obliged to spend the depreciation allowance in the term of the tenancy
- Summary
-
The tenant was obliged to pay a depreciation allowance in respect of the cost of maintaining and replacing, amongst other things, fixtures and fittings, and in particular the air conditioning. Under the leases the landlord covenanted to maintain the air conditioning. The sums paid over the term of the lease in respect of the depreciation allowance had not been expended by the landlord on replacing the air conditioning by the date when the tenant's lease had expired. The tenant claimed repayment of the fund.
However, it was held that it was irrelevant that the landlord did not spend the fund on replacing the air conditioning during the period of the tenancy. Once the payments were made they became the landlord's absolute property. The commercial reality was that the life of the air conditioning might not have had a life coterminous with the leases. The cost to the landlord of running the air conditioning included its depreciation, which the tenant had agreed to indemnify. One factor against the tenant's contention was the absence of any machinery in the leases for the repayment of the fund.