Liverpool City Council v Irwin [1977] AC 239 (HL)

Facts

• Liverpool City Council, as landlord, owned a high-rise building where Mr. and Mrs. Irwin were tenants.
• The tenancy agreement did not expressly state any obligation for the Council to maintain common areas such as staircases, lifts, and refuse chutes.
• The communal areas of the building had fallen into disrepair, with issues like non-functional lifts, absent stairwell lighting, blocked refuse chutes, and overflowing cisterns.
• The tenants withheld rent in protest over these maintenance issues.
• The Council sued for possession of the property, and the Irwins counterclaimed, asserting the court should imply a term requiring the Council to maintain the common areas.
• The core dispute concerned whether an obligation to maintain communal areas could be implied into the tenancy agreement, given its silence on the point.

Issues

1. Whether a term could be implied into the tenancy agreement obliging the landlord to maintain the common parts of the building.
2. Whether such an implied term should be based on the reasonableness of the obligation or its necessity for the contract to function.
3. Whether Liverpool City Council had breached any implied obligation to maintain the common areas.

Decision

• The House of Lords held that terms implied by law arise only out of necessity, not mere reasonableness.
• It was determined that a tenancy of a multi-story building necessarily implied an obligation on the landlord to take reasonable care of common areas essential for tenant access.
• The Court explicitly rejected an absolute obligation of perfect repair, instead implying a term requiring reasonable care.
• Applying the implied term, the Court found the Council had not breached its duty, as it had taken reasonable steps to maintain the common areas.
• The problems in the communal areas were attributed to repeated acts of vandalism, rather than any negligence by the Council.

Legal Principles

• Terms implied by law in contracts are based on necessity, not reasonableness or mere desirability.
• The necessity test for implied terms aims at what is required for the contract to be workable, particularly in long-term relationships like tenancies.
• An implied duty to maintain does not require the landlord to guarantee perfect condition of common areas but to take reasonable care, especially where external factors such as vandalism intervene.
• The decision distinguishes between terms implied by fact (dependent on parties' intentions) and by law (arising from the legal nature of the contract).

Conclusion

Liverpool City Council v Irwin established that terms can only be implied by law into contracts when necessary for their proper operation, not merely because they seem reasonable. The landlord’s duty is one of reasonable care regarding common areas, not absolute maintenance, and on the facts, the Council was not in breach of this obligation.