What happens if a tenant removes part of a wall because it has valuable graffiti on it?
Ordinarily when a tenant leaves a property the landlord would be relatively peeved if the tenant left a wall of graffiti behind and would no doubt serve a schedule of dilapidations without blinking.
Unsurprisingly when the graffiti attracts a hefty price tag, and the hallmarks of a Banksy, the landlord's attitude as to how repairs should have been undertaken, and what happened to the relevant bits of wall, ends up being a little more closely scrutinised.
Removing a Banksy from a wall
In the recent claim of Creative Foundation v Dreamland Leisure (heard by the Chancery Division as a claim for summary judgment) the court found that the process by which the tenant had removed a section of the external wall under the auspices of repair and removed it for "protection" (and auction) was outside what it was entitled to do under the lease. The court ordered that the tenant had to deliver up the Banksy to the landlord.
The tenant had a lease of the building (including external parts) with standard repair and reinstatement obligations. The obligation to redecorate the external demise extended to a four year painting pattern. During the term of the lease the outside wall was regularly defaced with graffiti and on occasion painted over to return the premises to repair. However the property was then adorned with a Banksy graffiti valued at around £0.5m. Departing from its standard practice of painting over graffiti, the tenant originally sought to protect the work with a plastic covering but ultimately removed it and sent it for specialist care. The landlord was aggrieved that it was denied the value of the artwork and took issue with the programme of "repair" undertaken.
The court's decision
The court was unimpressed with the tenant's contention that items of value removed from the premises during a programme of repair belonged to it, the tenant. The court found in favour of the landlord on the following terms:
- The presumption is that the building belongs to the landlord. The tenant will have to show that there is an implied reason why ownership of parts should pass to it;
- Undertaking repairs does not translate into the tenant acquiring the chattels removed – at best they have permission to dispose of the scrap;
- A tenant may be able to imply a term with respect to ownership, but that may not be deemed applicable to items of value; and
- Where the value comes about because of a third party, the landlord has a better call to the value than the tenant.
Where does this leave landlords and tenants going forward?
The overwhelming lesson from this is that a tenant must take care when undertaking repairs, and remember items it removes, if they have a value, belong to the landlord. If there is any question about what ought to happen when something valuable is removed from the premises, the tenant should not be opaque with the landlord, rather it ought to engage in a transparent, sensible dialogue and agree what to do with the removed chattels.
Whether there should be such disparity between removing items of a 'scrap' nature and removing items of value perhaps requires further judicial examination.