Archive for October, 2015

Banksy’s painting is no scrap!

If a tenant gives a covenant to repair and in complying with its covenant removes structural items from the demised premises, who owns the consequential removed items – landlord or tenant?  This was the question asked of the High Court in the somewhat unusual circumstances that arose in The Creative Foundation v Dreamland Leisure Ltd [2015] EWHC 2556 (Ch).

A building in Folkestone was let to Dreamland for a term of 20 years from 24 June 2002 for use as an amusement arcade.  The tenant was to keep the building and all fixtures and additions in good and substantial repair and condition.  Without landlord’s consent, the tenant could not cut maim or injure the walls or timbers or make any alteration in or addition to the premises.  The property was to be yielded up to the landlord at the lease expiry, together with all buildings and erections now or hereafter to be built together with all landlord’s fixtures and improvements, in good and substantial repair and condition.

In September 2014 and without consent of any party, a mural was spray painted on a wall at the building by, it was believed Banksy, the well-known street artist.  The mural was believed to be worth in the region of £300,000 – £470,000.  Claiming it had works of repair to conduct, the tenant had the wall containing the mural removed and attempted to sell it in New York.  The landlord obtained a court order that the mural be stored pending the outcome of its claim it belonged to it, the landlord.

Giving judgement, The Hon Mr Justice Arnold held the default position is that the property belonged to the landlord.  The tenant merely has a tenancy for a period of time and the fact it was discharging an obligation under the lease did not entitle it to claim any chattels removed.  Even if it could be said that items having no more than scrap value belonged to the tenant, that did not entitle the tenant to claim items of substantial value even if the value arose from the spontaneous actions of another party.  He said “It is fair to say that, whatever solution is adopted, one party gets a windfall.  But who has the better right to that windfall?  In my view it is the Lessor.”

The judge emphasized his finding was based on the very particular facts and circumstances of the case, nevertheless there may be some interesting future arguments re disposal of building scrap.