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Lawbite: Does yielding up mean removing asbestos?

  • United Kingdom
  • Litigation and dispute management
  • Real estate
  • Real estate litigation - LawBite

20-10-2020

Pullman Foods Ltd v Welsh Ministers and another [2020] EWHC 2521 (TCC)

The High Court recently found that a tenant had breached its yielding up covenant in a lease by failing to remove asbestos-containing materials when removing buildings on its site.

The lease required the tenant to deliver up the premises at lease expiry “in good and substantial repair and condition to the satisfaction of the lessor”, having first removed buildings or works (if required by the landlord) and making good damage caused by such removal.

The landlord did require the tenant to remove buildings on the site. However, the tenant left building remains on site and these remains contained asbestos-containing material.

After lease expiry, under licences, the tenant (or rather its parent company) removed the building remains but not all of the asbestos-containing materials.  In fact these materials were spread widely across the site necessitating expensive remediation works.

The court found that the tenant had breached its yielding up obligation:

  • by failing to remove the buildings – which extended to removing the asbestos-containing material
  • by failing to leave the site in good and substantial repair and condition.  The word ‘condition’ was found to extend beyond mere repair works.  Presence of the asbestos meant the site was not in a good condition and this was despite the fact that asbestos may have been on site prior to the grant of the lease
  • the court also commented that the obligation to yield up “to the satisfaction of the lessor” didn’t give the landlord a carte blanche in deciding on the appropriate standard of "good condition" or the remediation works. It did, however, entitle the lessor to form its own judgment as to what was required, provided its judgment was within the range of views that could reasonably be held

Key points

  • yielding up covenants may result in wider obligations than initially anticipated, as demonstrated by this case. It is important, therefore, to properly understand at the outset the potential risks in taking on any obligation and to try to renegotiate these where possible
  • the case highlights the importance of proper due diligence on contamination and environmental issues before taking on leasehold obligations