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A tap was left on in a commercial building. Flooding caused saturated carpets and damage to walls and skirting boards.

The LA is suggesting split the cost 50/50 as the tenant is responsible for the carpet per the lease, ADLS 1993 (2) clause 10.1 (d) Keep all floor coverings clean and replace worn or damaged floor coverings with coverings of similar quality when reasonably required by the landlord.

However, clause 10.1(a) says "keep and maintain the interior of the premises including the landlord's fixtures and fittings in the same clean order, repair and condition as they were in at the commencement of this lease and will at the end yield up the same clean order repair and condition. In each case the tenant shall not be liable for damage by fire...flood...inevitable accident or any risk against which the landlord is insured...."

I would have thought clause 10.1(a) would apply, e.g. the landlord has the building insured for flood/any risk.

There is the question of the carpet ownership, which I think the tenant originally paid for, but now becomes a landlord's fixture.

Reply: Crossley Gates

Property belonging to both the lessor and lessee was damaged, so each can claim under its own policy for that damage. Is the issue trying to decide which property belongs to which party? If they are both insured with the same insurer, this seems academic as long as each party is comfortable with its settlement?

The application of the terms of the lease and the Property Law Act are usually only relevant if one or both insurers subrogate and try to hold the other party liable.

June 2020

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