Lease — Statutory compensation — Loss of chance — Tenant serving notice requesting new tenancy — Landlord’s solicitor negligently serving notice opposing grant — Solicitor contending no loss — Whether landlord losing chance of reducing liability to pay compensation — Claim allowed
The claimant was a property company that had acquired the freehold reversion of commercial premises in July 2001. The premises were let for a 20-year period, expiring in December 2001. The tenant had previously served on its then landlord a notice, under section 26 of the Landlord and Tenant Act 1954, requesting a new tenancy. The then landlord had served a counter-notice stating that it intended to oppose a new tenancy under section 30 (1)(f) of the 1954 Act because it intended to redevelop the premises. The effect of that notice was to give the tenant a vested right to compensation, on quitting, of £179,000.
The claimant had no plans to redevelop and, in September 2001, the claimant instructed the defendant solicitor to serve on the tenant a notice, under section 25 of the 1954 Act, that did not oppose the grant of a new tenancy. Contrary to those express instructions, a notice was served that expressly opposed the grant of a new tenancy on ground (f). The defendant accepted that the service of that notice was negligent.
Despite subsequent negotiations for a new lease, the tenant vacated the premises in 2003. The tenant agreed the level of compensation payable in respect of dilapidations under the lease, against which the £179,000 in respect of the statutory compensation was set off in full.
The claimant brought proceedings against the defendant contending, inter alia, that it had lost its chance of reducing the liability to pay compensation to nil as a result of the defendant’s negligence. It also argued that, if an unopposed notice had been served, the negotiations for a new tenancy would have succeeded.
Held: The claim was allowed.
As a result of service of the wrong notice, the tenant had a vested right to compensation and the claimant had no choice but to allow it to be set off in full. The claimant had lost the opportunity to argue, in the negotiations, that there was no right to compensation, an argument that would have had a reasonable chance of success, even though in the court’s view it was unlikely to have succeeded. The court was required to assess the chance of a lower set-off in respect of compensation and, in all the circumstances, would assess that chance at 30%, entitling the claimant to £53,700: Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602; [1993] EGCS 109 considered.
Damages were only payable if the claimant could establish that it had lost a “chance” by showing, on the balance of probabilities, what its own course of action would have been in a hypothetical situation. Where the value of a “chance” depended upon the actions of third parties in a hypothetical situation, the court might access the same in percentage terms.
It would be unrealistic to ignore what occurred after the opposed notice was served, the fact that the tenant vacated the premises and that compensation was paid. The court would look at the facts known as at the date of the hearing rather than assess the chance of their happening at the date of the breach.
Bernard Livesey QC and Mark Loveday (instructed by Vizards Livesey Cameron Walker) appeared for the claimant; Roger Stewart QC and David Halpern (instructed by Barlow, Lyde & Gilbert) appeared for the defendant.
Eileen O’Grady, barrister
