Landlord and tenant — Mesne profits — Assessment — Property divided into flats — Agreement to let property to company for subletting to individual tenants — Company retaining possession after expiry of tenancy — Keys to two of seven flats subsequently returned to landlord — Landlord claiming mesne profits — Whether payable by reference to entire property or date on which individual flats returned — Correct method of assessment — Whether occupants of flats individually liable in addition to company
The first defendant company traded as an estate agent and property manager. By a letter dated March 2004, the claimant agreed in principle to grant to it a three-year tenancy of a residential property, containing seven flats, at a rent of £95,000 pa. The parties intended that, once the claimant had refurbished the flats, the first defendant would let them individually and manage the building. The claimant handed over five flats in September 2004 and the remaining two in May and September 2005. No formal lease was granted. The second and fourth defendants, who were the directors of the first defendant, each moved into a flat in the property; the second defendant shared his flat with his wife, the third defendant.
Various disputes arose between the parties as to the terms of the agreement and the obligations arising under it. In 2007, the claimant took the view that the term of the agreement had expired. In August 2007, it brought proceedings against the defendants for possession, together with claims for unpaid rent, interest and mesne profits. Certain matters were disposed of at a trial of preliminary issues. A further hearing was then held to determine, inter alia, the liability of the various defendants for mesne profits. Issues were raised as to the correct basis for assessing mesne profits and how far such liability fell on any of the second to fourth defendants as individuals, as opposed to the first defendant company. Meanwhile, in 2009 the first defendant returned the keys to the two flats formerly occupied by the second to fourth defendants, who had by then moved out; none of the other flats had been returned by the date of the hearing.
Held: The claims against the first, second and third defendants were allowed; the claim against the fourth defendant was dismissed. (1) On the evidence, the three-year period of the agreement had commenced in September 2004 on the handover of the first five flats and had expired in September 2007, such that mesne profits were payable from the latter date. Mesne profits were to be assessed by reference to each of the seven individual flats as independently exploitable commercial units that could be returned to the claimant individually, since this was not a case where the retention of part of the property prevented the whole of it from being effectively used. Accordingly, liability for mesne profits in respect of the two flats formerly occupied by the second to fourth defendants ran until May 2009, when the keys had been handed back, while that in respect of the remaining five flats would continue until each was vacated and returned to the claimant. (2) The correct measure of mesne profits is the higher of the true compensatory loss to the landlord and the true value of the benefit gained by the defendant. The starting point in each case is the ordinary letting value of the property of which the owner has been deprived by the trespass, regardless of whether the landlord has shown that it would have relet the property in which the defendant had wrongfully remained. That reflects a restitutionary approach under the principles of unjust enrichment, requiring that the value of the occupation from which the defendant has benefited should be awarded to the landlord rather than being retained by the wrongdoer. In the instant case, a reduction to 95% of the open market letting value should be made. That reflected the fact that the actual loss to the claimant for being unable to let the property and the benefit to the first defendant in having possession of it were each reduced to some degree by certain associated costs; the claimant’s loss was reduced by reason of the costs that it would otherwise have incurred in letting and managing the property, and there was no evidence that the first defendant had benefited by more than that amount. (3) The liabilities of the four defendants were concurrent and separate, based on discrete causes of action. Accordingly, although the claimant was not entitled to recover twice, it was entitled to separate judgments against the second to fourth defendants for separate trespasses, if established. On the evidence, the fourth defendant had vacated the flat during the three-year period of the agreement and, accordingly, was not liable for mesne profits. The second and third defendants were liable in respect of their flat from September 2007 until the dates on which they had personally vacated it, in November and May 2008 respectively, by reason of their physical presence there without lawful right. They were not liable for any subsequent period when the sole impediment to the claimant having the use and possession of the flat was the retention of the key by the first defendant, since that was not an act of the second and third defendants personally.
The following cases are referred to in this report.
Inverugie Investments Ltd v Hackett [1995] 1 WLR 713; [1995] 3 All ER 841; [1996] 1 EGLR 149; [1996] 19 EG 124, PC
Jones v Merton London Borough Council; sub nom Merton London Borough Council v Jones [2008] EWCA Civ 660; [2009] 1 WLR 1269; [2008] 4 All ER 287; [2008] 1 P&CR 3; [2008] 2 EGLR 37; [2008] 33 EG 74
Ministry of Defence v Ashman (1993) 66 P&CR 195; [1993] 2 EGLR 102; [1993] 40 EG 144, CA
Pye (JA) (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419; [2002] 3 WLR 221; [2002] 3 All ER 865; [2003] 1 P&CR 10
Stoke-on-Trent City Council v W&J Wass Ltd (No 1) [1988] 1 WLR 1406; [1988] 3 All ER 394; (1988) 87 LGR 129, CA
Swordheath Properties Ltd v Tabet [1979] 1 WLR 285; [1979] 1 All ER 240; (1978) 37 P&CR 327; [1979] 1 EGLR 58; 249 EG 439, CA
This was the hearing of a claim by the claimant, Compatriot Holdings Ltd, against the defendants, City Partnership Ltd, Ramesh Nadarajah, Nanditha Iriyagolle and Ashish Patel, for mesne profits and other relief in respect of their occupation of residential premises after the end of a tenancy agreement. |page:154|
David Stancliffe, solicitor advocate, of Southcombe & Hayley, appeared for the claimant; Dominic Happé (instructed by Colvin & Partners) represented the defendants.
Giving judgment, HH Judge Hazel Marshall QC said:
Claim
[1] This is a claim by Compatriot Holdings Ltd (CHL), the freehold owner of 27 Cleveland Gardens, London W2, against the defendants, City Property Partnership Ltd (also trading as Cavendish Rowe, as I will refer to it) and three individual defendants. It is made for mesne profits in respect of their occupation of the property subsequent to whenever a three-year lease of the property granted by CHL to Cavendish Rowe is to be taken to have terminated. There is also a counter-claim by Cavendish Rowe against CHL for damages for alleged breach of CHL’s obligations to repair the property during the term and to refurbish the property to a proper standard at the outset.
Background history
[2] The property is a large, old terraced house divided into seven flats on the basement to fifth floors. The second and fourth defendants, Mr Ramesh Nadarajah and Mr Ashish Patel, are the two directors of Cavendish Rowe, which they own in the ratio 70:30 The third defendant is the wife of Mr Nadarajah, and I am told that she is a conveyancing solicitor. The three individual defendants have respectively occupied flat 1 on the ground floor of the premises and flat A in the basement of the premises at times that are in dispute.
[3] CHL owns three hotels and various residential properties, which it lets out as flats and bedsitters, often after converting them. It currently has a portfolio of some 450 residential units, many of which it manages directly and some being managed by resident housekeepers. Cavendish Rowe’s business is that of estate agency and property management.
[4] In 2004, as evidenced in a letter dated 30 March 2004, signed by Mr Jack Singh Gill, of CHL, and Mr Nadarajah, of Cavendish Rowe, CHL agreed in principle that it would grant Cavendish Rowe a tenancy of 27 Cleveland Gardens for three years, at a rent of £95,000 pa. Other terms of this arrangement are in issue, but it is common ground that it was intended that Cavendish Rowe would let out the flats individually and take management responsibility for the building. CHL was thus to be given a guaranteed income and Cavendish Rowe would make its own profit on the intermediate rents.
[5] The flats were being refurbished and were not all handed over to Cavendish Rowe at once. Flats 2 to 7 on the upper floors were handed over in September 2004. Flat 1 was handed over in May 2005 and the basement flat in September 2005. Subsequently, relations between the parties were not entirely smooth and, in August 2007, CHL, believing that the arrangement had run its agreed term, wanted to recover the building.
Proceedings
[6] CHL therefore brought these proceedings, claiming that the tenancy had expired three years after the date of the letter of agreement, namely in March 2007, and that Cavendish Rowe and the defendants were consequently trespassing by remaining in the property.
[7] By its defence, Cavendish Rowe contended that the agreement was “for ten years with a three year initial period” and that in so far as this right to extend the agreement to 10 years was not referred to in the written document, this was a mistake that should be rectified. It also claimed that the commencement date was only when the last flat was handed over and in fact 30 days after that, and thus not until October 2005. In consequence, it claimed that it was not yet obliged to vacate the building on any basis.
[8] Cavendish Rowe also counter-claimed for damages for alleged failure by CHL to carry out its obligations to repair the structure and roof of the property under the agreement, and also in respect of allegedly substandard or incomplete refurbishment of the property in breach of agreement, which was said to have prevented Cavendish Rowe from subletting the flats for their full market value. Other complaints were pleaded, such as that CHL had unlawfully contacted Cavendish Rowe’s subtenants and demanded direct payment of rent from them and that CHL had carried out unlawful works to the property as a listed building. In the end, though, these latter matters have not been pursued.
[9] CHL’s reply and defence to counter-claim denied the claim to a 10-year extension both as a fact and on various legal bases, including, in particular, want of necessary form to effect a disposition of an interest longer than three years.
[10] On a preliminary hearing before HH Judge Wakefield on 12 March 2009, the learned judge decided that Cavendish Rowe’s claim to a 10-year term must fail in law for want of proper form and that, therefore, its three-year term had by then expired, whatever its commencement date. He ordered interim judgment against Cavendish Rowe for £46,802.90 for the period from 15 October 2008 (the latest date on which the term could have expired) until the date of that hearing and further interim payments equivalent to £260.27 per day until possession given or further order, and he made a detailed order as to the costs so far incurred.
[11] He also ordered that the counter-claim be dismissed, but by common consent that order related only to Cavendish Rowe’s counter-claim for rectification of the agreement, no order being intended in respect of the counter-claim for damages. I accordingly directed that HH Judge Wakefield’s order be amended in this respect under CPR 40(12) (the slip rule).
[12] The remaining issues between the parties were left to be determined, and that trial came before me. Fortunately, Judge Wakefield had considered the matter on the basis of the documents only, and the potential problem of my having to make findings of fact that might be inconsistent with any that he had made in reaching his earlier decision (in particular, since there was no transcript of any judgment) was thus relatively small.
Issues
[13] The issues agreed to be outstanding are the following:
(1) When the three-year term of the parties’ agreement had commenced, and therefore when it had terminated.
(2) The appropriate measure of mesne profits due to CHL after such termination and, hence, the total sum due for rent, interest and mesne profits.
(3) How far (if at all) in the events that had happened any such liability fell on any of the individual defendants, rather than solely on Cavendish Rowe.
(4) The scope of the parties’ respective obligations to repair and maintain the property under their agreement and whether CHL was in breach of its obligations.
(5) The scope of CHL’s obligations as to the condition of the flats in the building when handed over to Cavendish Rowe, and whether it was in breach of those obligations.
[14] At the commencement of the trial, I stated that, in view of the lack of fully prepared material in the necessary detail to deal with all matters to which the last two issues might give rise, I was not prepared to attempt any determination on quantum. If liability were established in principle, the issue of quantum (including, very probably, issues as to the precise scope of liability) would have to be adjourned to a separate hearing, and very probably an enquiry as to damages before a district judge. The matter proceeded on that basis.
Background and documents
[15] The central document in the case is the letter of 30 March 2004, which I will set out later in full. I deal here with the background to it.
[16] CHL’s associated company, Tigeroak Ltd had had previous dealings with Cavendish Rowe and Mr Nadarajah. Mr Gill had met Mr Nadarajah when he had solicited instructions to find tenants for CHL’s properties.
[17] In November 2000, Cavendish Rowe offered to take over two flats in Colville Terrace, London W11, from Tigeroak, paying a guaranteed monthly rent in respect of each, payable on the 15th of the month by standing order, and to take care of the management and maintenance of the flats. In return, it wanted Tigeroak to decorate and furnish the flats to a good standard, to ensure that the flats and contents were fully insured and to provide certification of the electrical |page:155| apparatus. With modifications, these terms became the terms of a letter agreement for one year between Tigeroak and Cavendish Rowe relating to flat 1, 16 Colville Terrace and flat 2, 22 Colville Terrace, dated 14 August 2000.
[18] Further similar individual agreements followed but, on 1 March 2002 a comprehensive agreement between Tigeroak and Cavendish Rowe, said to be intended to “overhaul” (that is, supersede) any previous agreements, was made in respect of all the flats 1-6 at 16 Colville Terrace and flats 1-5 at 22 Colville Terrace. This was apparently modelled on a previous agreement between a CHL company and the Notting Hill Housing Trust, under which that association had rented entire buildings from it.
[19] That agreement was reasonably detailed. The letting was said to be for a period of three years, subject to a lessee’s right to extend for six months (clause 8) or to terminate on three months’ notice “for any plausible reason” (clause 9)), and at a rent of £11,750 per month, which was to be increased annually in line with the retail prices index: clause 2. It provided for the property to be returned to the lessor with vacant possession at its termination: clause 4.
[20] As to repairs and maintenance, it contained obligations for the lessee to keep the interior of the property in no worse condition than at the date of the lease with “exceptions for deterioration” and that, for the avoidance of doubt, the lessee was “not… responsible for carrying out repairs to the main structure”: clause 5.2. The lessee was to be responsible for “day to day maintenance”, namely to “tend [sic] to any maintenance which can be classed as minor customary or habitual maintenance (subject to Clause 6.3)”, and for cleaning the common parts: clause 5.6.
[21] Clause 6 contained the lessor’s covenants. Clause 6.3, so far as material, reads:
6.3 to put and keep or procure that the property is put and kept in good and decorative repair and condition; —
a) the main structure and exterior of the property
b) [external and internal space and water heating and water gas and electricity supply installations].
[22] Clause 6,4 then provided an interesting reverse variant on the familiar Jervis v Harris clause:
6.4 That notwithstanding the provisions of Clause 6.2 [rent suspension] if any want for repair arises which the Lessor is responsible for putting right and
a) the Lessee has given the Lessor notice in writing of such want and repair and
b) such want is not remedied to the reasonable satisfaction of the lessee within a period of 28 days of service of the said notice [or a shorter but necessary period specified in the notice] then and in any such case… the Lessee shall be entitled to carry out the works required
6.5 that if the Lessee have carried out works required subject to Clause 5.2 the Lessee shall be entitled to recover reasonable costs.
Clause 6.6 also provided for the lessor to replace, during the first year of the term, any white goods item not in proper working order, on written request from the lessee.
[23] This letting document was therefore operative at the time at which the events the subject of the present dispute were taking place, although Cavendish Rowe had by then asked for, and been given, a rent reduction on the flats, first of 5% and then of 15% in 2003, on account of the allegedly poor letting market.
[24] In 2003, however, the question of the subject property, 27 Cleveland Gardens, arose. Mr Nadarajah was aware that Cavendish Rowe had taken over this property and was about to refurbish it, and he wanted to enter into a similar arrangement in respect of it.
[25] On 18 March 2004, he wrote an offer letter on behalf of Cavendish Rowe to Mr Gill, of CHL. It was headed “Guaranteed Rent Scheme” and also “Subject to contract”. It referred to 27 Cleveland Gardens and offered a list of specified monthly rents in respect of each of the seven flats in the building, with a total monthly rent of £7,713 (that is, £92,600 pa) and further offered:
1 to pay the rent in advance on a calendar monthly basis by standing order to the owners bank 15th of each month
2 to take care of the day-to-day management and maintenance of the flats.
It then also proposed that:
The Owner [that is, CHL] agrees with Cavendish Rowe
1. To decorate and furnish the flats to a good standard
2. To ensure that the flats and its contents are adequately insured
3. To check and certify gas and electricity supply by an approved engineer
“The term of this agreement is 3 years beginning 30 days from official handover”
Please let me know whether or not these terms are acceptable to you…
[26] Although there was a space for counter-signature by both parties, this was never completed. There was a meeting between the parties, attended by Mr Gill and Mr Nadarajah, on 25 March 2004, when this deal was further discussed. Mr Nadarajah wrote some individual rents against each flat, in the margin of a copy of the 18 March 2004 letter.
[27] The key letter in this case was subsequently written by him, dated 30 March 2004, as follows:
SUBJECT TO CONTRACT
AGREEMENT IN PRINCIPAL [sic]
RE: 27 Cleveland Gardens London W2 6DE
Dear Jack,
Further to our meeting on 25th March 2004 and subsequent conversations, I am writing to confirm as we agreed that Cavendish Rowe will take over 27 Cleveland Gardens, London W2 6DE on a yearly rent of £95,000 for three years under the terms agreed.
As the building is still not completely ready, we will take over the property, on a flat-by-flat basis until all the flats are completed. A formal contract will be signed at that stage.
Thank you for choosing us. I’m looking forward to our continued successful business relationship to grow from strength to strength.
Signing in agreement… .
The letter is then signed by Mr Nadarajah, on behalf of Cavendish Rowe, and also by Mr Gill, on behalf of CHL.
[28] On its face, this letter thus does not purport to record all the terms agreed between the parties, but recognises that some have been agreed separately. This would naturally seem to be a reference back to the recent meeting between the parties. It also expressly describes itself as an agreement “in principle”, thus indicating an expectation that further aspects of the arrangement might well be fleshed out or varied as to their detail in the future.
[29] As mentioned already, though, Cavendish Rowe did not take over any flats until September 2004, when it took over all five of the upper flats together. CHL expected rents to be paid for these flats on and from 15 September 2004, but this did not happen.
[30] By this time, Mr Gill’s daughter, Ms Jackie Kaur Gill, had begun to take over the management of CHL’s group business, because her father wanted to retire. She pressed Mr Nadarajah for payment. It is plain that they did not get on very well. She did not like the way he kept, as she put it, “hanging around” CHL’s offices. He says that he found her to be hostile and believed that she had taken a personal dislike to him. He thinks that this was because she did not like the rent he had agreed and was paying for the Colville Terrace properties. He wanted to continue dealing with her father, and believed that she was preventing this.
[31] With Ms Gill pressing for rent, Mr Nadarajah wrote to Mr Nadeem Afsar, CHL’s maintenance manager, on 27 January 2005, confirming that:
we have officially acquired the above mentioned flats [sc flats 2-7] from 15th September 2004. The rent for the period of 15/09/04-14/01/05 will be transferred to your account, thereafter we well set up a standing order for all future payments.
He went on to request notice of when the basement and ground-floor flats would be ready and to express concern, and to ask for work to be done regarding the finishing of the communal areas, and the presence of mice in the property, although stressing that these points were “not meant as complaints but rather requests”. |page:156|
[32] The promised rent was not paid, nor was the standing order set up. Only on 4 May 2005, when the ground-floor flat was becoming available and the arrears were around £55,000, was £27,370 paid over. This sixth flat was then made available, and the second and third defendants moved into it, because they found it a convenient central London base.
[33] Thereafter, though, once again no further rent was paid by Cavendish Rowe until the time when the seventh flat in the basement was due to became available in September 2005. At this time, £50,000 was paid over, reducing the then arrears to £2,439.22. As a result, the seventh flat was also handed over and the fourth defendant moved into it. It is now accepted that he moved out during the following year, from which time this flat was presumably let by Cavendish Rowe.
[34] On 30 September 2005, Cavendish Rowe sent an e-mail to Mr Gill, which has been described as the “snagging list”. It begins:
Following an inspection between your manager Nadeem, Ramesh and [the writer]…
It then brings to CHL’s attention a list of claimed deficiencies in the building. These comprised 13 items, the first relating to works required by the council because the building was listed and the remainder (except for a general complaint about malfunctioning TV aerials and concerning the water pressure and temperature in flat 6) relating to works required in order to repair or complete the common parts and the exterior. The letter than stated:
as per our agreement in leasing building we ask that the above be completed within 14 days.
[35] In the meantime, the agreement in respect of the Colville Terrace flats had expired in April 2005. A mutually acceptable level of future rent could not be agreed and Cavendish Rowe was therefore to hand them back. It appears from correspondence that CHL was then claiming that there were arrears of rent in respect of these properties of some £58,518.20.
[36] Cavendish Rowe had still not been paying further rent on 27 Cleveland Gardens either, and Ms Gill was pressing for this. On 16 December 2005, she e-mailed Mr Patel in Mr Nadarajah’s absence, demanding payment of what were then said to be “almost £50,000 of arrears” (although it seems that this might have been a mistake, judging by both CHL’s account ledger and an earlier demand for only around £21,000 made on 1 December 2009). Mr Patel responded that Mr Nadarajah had told him that he was “waiting on a lease from you”, which provoked an expostulation from Ms Gill that Mr Nadarajah knew perfectly well that there would be no formal detailed lease if payments were not made and that Cavendish Rowe would not have had the building at all without the “preliminary written agreement”.
[37] The arrangements for handing back the flats at Colville Terrace were apparently causing disagreement as well at this time. Mr Patel responded that he was relaying only what he had been told, and suggested a meeting.
[38] Whether or not one took place, matters were not resolved. Cavendish Rowe did not pay rent for 27 Cleveland Gardens and, after further attempts to recover money that I need not set out, CHL issued a winding-up petition against it on 13 June 2007, on the basis of arrears of rent then said to total £145,239.28. Mr Nadarajah responded that this was an abuse of process because there were “complex issues” in the case, which should be negotiated. When CHL persisted, however, Cavendish Rowe paid off the full amount of the rent claimed and the costs of the petition.
[39] CHL’s next step was to commence these proceedings, on 10 August 2007. Subsequently, with no further rent having been paid, a trial in this matter was fixed for 27 October 2008. It was adjourned, but a further interim payment of £128,771.76 was ordered to be paid by consent by an order made on that day. Thereafter, as already mentioned, the preliminary issue of possession was dealt with by HH Judge Wakefield on 12 March 2009.
[40] To complete the history, I should record that although Mr Patel moved out of the basement flat some time in 2006 and the third defendant is said to have moved out of the ground-floor flat in May 2008, there is a dispute as to when Mr Nadarajah actually moved out (he claims it was in July 2008). On any basis, though, the keys of each of these flats were handed over to CHL only in May 2009.
Witnesses
[41] At the trial, I heard evidence from Mr Gill, Mr Afsar and Ms Gill, for CHL, and from Mr Patel and Mr Nadarajah, for Cavendish Rowe, apart from expert evidence referred to later.
[42] Mr Gill is an elderly gentleman, now retired from business. He gave evidence with an obvious anxiety to be careful, but I am satisfied that this arose from his concern at the responsibility to be an accurate witness and not from any attempt to work out what his answers ought to be. He struck me as a basically decent and straightforward man, but not naturally inclined to record things in writing or to write letters, nor naturally very precise about detail or the exact meaning of words. His evidence was not always perfectly clear, although I am satisfied that he was doing his best to tell me what he thought he recollected. Some inconsistencies in his evidence seemed to me to owe more to an eagerness to help, by politely agreeing things, rather than to a real change of position. I find that Mr Gill would have been easy-going and trusting, rather than suspicious and hard-nosed, in his business dealings, although he clearly had a good eye for property opportunities. I accept him as an honest witness, although for the reasons given above, I have examined his account of his recollections with care.
[43] Mr Afsar was plainly a practical man rather than an entrepreneur, and concerned with the maintenance and management side of the business rather than the lettings. He gave evidence quietly and firmly, and impressed me as a reliable witness. He was criticised for having confirmed the truth of his witness statement in oral evidence when, by this time, he knew that a statement made in it, that the individual defendants still resided at the property, was not true. He said that this was a mistake, and I accept this. The point was not central and failure to correct such a point is not such a culpable lapse as to cast any doubt on either his honesty or the reliability of his evidence on issues where he was positively focused. I accept him as a truthful and reliable witness.
[44] Ms Gill is an energetic lady with a strong personality and a down-to-earth manner, more educated than her father (who is clearly very proud of her) and a competent business woman with good commercial sense. She is very articulate, and the combination of this and her great indignation at the way in which the defendants had behaved towards CHL made her give answers at great and forceful length. Her view, in essence, was quite simply that Cavendish Rowe had had the property and should have paid the agreed rent but had never done so, and this was wrong. Ms Gill impressed me as an honest if somewhat uncontrolled witness, whose answers were very genuine. It is fair to say, however, that on the critical issues concerning what had been initially agreed between CHL and Cavendish Rowe, she could state (as she accepted) only what had been reported to her.
[45] Although I formed a favourable view of CHL’s witnesses, I cannot say the same for Cavendish Rowe’s. Mr Patel had given a very assertive witness statement, but curiously similar in expression to Mr Nadarajah’s and, on examination, this was (as he accepted) almost entirely a recounting of what he had been told by Mr Nadarajah. When asked for his own knowledge and recollections, he was either vague or admitted that he simply did not know. This included, for example, whether it had in fact been agreed that Cavendish Rowe would pay its rent by standing order and whether this promise had been kept. It was plain to me that Mr Patel in fact knew very little and that, being very much the junior partner in Cavendish Rowe, he was accustomed to deferring to Mr Nadarajah and accepting his word. Mr Patel displayed no obvious independence of mind, and although I accept that he was not being dishonest, I would hesitate to rely on the accuracy of his evidence in view of his biddable nature.
[46] Mr Nadarajah was an extremely unsatisfactory witness. He was at times self-righteously assured but at other times very evasive. Throughout, however, he found an answer for everything. These answers were, though, I am satisfied, driven more by his instant |page:157| thoughts as to what would best support his case or deflect a difficult point, than by regard for the truth of what he was saying.
[47] An example of an outright untruth (or gross lack of care for accuracy) is a statement in his witness statement that Cavendish Rowe had “paid all the rent as agreed under the transitional phase [sic] to [CHL] (and such rent had been accepted by CHL without comment)”. This was simply never true at any time and is so grossly at odds with the obvious facts that I cannot understand how Mr Nadarajah could ever have subscribed to it.
[48] An example of inconsistency and shifting ground was his ever-changing case to try to justify Cavendish Rowe’s quite appalling rent payment record. Initially as mentioned, the reason was said to be that CHL had not granted a formal lease. However, this position did not arise from a misguided but innocent belief that there was no obligation to pay rent until a formal document was completed, but had been (he said) a negotiating tactic to put pressure on CHL to come to the negotiating table. This may have been over an early suggestion from Ms Gill, to which Mr Nadarajah took exception, (but which I do not think was made in the deliberate knowledge that it was contrary to previous agreement) that the rent under the lease should be paid quarterly in advance. Even if this had been a dispute or misunderstanding, though, Mr Nadarajah apparently saw nothing disreputable in failing to pay for the property at all, even on the basis on which he himself believed he had promised it. Nor did he appear to see anything wrong in dishonouring many individual promises of payment that I am satisfied were made or the promise to set up standing orders. In Cavendish Rowe’s legal case and Mr Nadarajah’s oral evidence, however, the reason for non-payment became, for the first time, the existence of a cross-claim against CHL: first for breach of repairing obligations and then for shortcomings in its obligation to have refurbished the property to a “good standard”.
[49] An example of his readiness to produce a convenient answer and lack of regard for the proper conduct of litigation is that, when cross-examined on the lack of documentary evidence supporting Cavendish Rowe’s claim to have itself spent money on matters now being alleged and claimed to be CHL’s responsibility, he instantly claimed that there were such documents and that they were not in court but could be produced. This was despite there being no reference to these documents in Cavendish Rowe’s disclosure statement. In the end, I do not think that any other pertinent document was actually produced.
[50] Mr Nadarajah appears to me to conduct business on three principles. The first is never to pay any money until it is extracted. The second is that you can buy time and therefore advantage by making promises whether or not you mean to keep them. The third is that if you argue that black is white sufficiently hard and often, there is a sporting chance that the other party will be either bemused or browbeaten into agreeing, at least to some extent. For him, the “truth” is therefore simply what he thinks would be to his best advantage, and I formed the view that he has even become so accustomed to spinning the truth in this way that he can now hardly distinguish between the real truth and whatever opportunistic assertion occurs to him at the time. I do not feel able to rely on Mr Nadarajah’s unsupported evidence in any respect except where it accords with common sense. Where there is a conflict between his evidence and that of CHL’s witnesses, I unhesitatingly prefer the latter.
[51] As to one general point, Mr Nadarajah has several times complained bitterly that this dispute is all somehow Ms Gill’s fault because she bears a quite unreasonable personal animosity towards him because she was unhappy with the level of rent for the Colville Terrace flats. This led her, unreasonably and spitefully, to block him from negotiating with her father. He described this as an “abuse of power”. Although it is quite apparent that Ms Gill dislikes Mr Nadarajah intensely, I reject that accusation as a further example of Mr Nadarajah’s self-oriented view of history. I find the situation to have been that Mr Nadarajah, with his plausibility, was often able to persuade the easy-going Mr Gill to his point of view with consequent advantage, such as the reduction in the rent for the Colville Terrace properties. When Ms Gill took over, Mr Nadarajah found her to be less compliant. This did not suit him and he resented the fact that she would not let him see her father and negotiate his way round him, as she perceived he had done previously. I am perfectly satisfied that what Mr Nadarajah complains of as antagonism is nothing more than a more focused and businesslike approach to CHL’s interests on the part of the new management, and a justifiable reaction to the way in which Cavendish Rowe dealt with its financial obligations.
[52] With this review, I turn to the issues.
Issue 1: What was the commencement of the (agreed) three-year term of Cavendish Rowe’s interest?
[53] The letter of 30 March 2004 is silent as to this. The earlier letter of 18 March 2004 proposed “30 days from official handover” of (presumably) the property. However, it was marked “subject to contract” and was never itself agreed. The question is therefore what was agreed orally by Mr Nadarajah and Mr Gill?
[54] Mr Nadarajah’s evidence, and the case put by Mr Dominic Happé, was that the term was to start from the handover of the last flat or, rather, from 30 days after this, as stated in the 18 March 2004 letter, in order to give Cavendish Rowe a rent-free period as was “always the custom” in such lettings. Mr Nadarajah said that this was agreed at the 25 March 2004 meeting.
[55] Mr Gill did not express himself very clearly or entirely consistently on this topic. At one point, he appeared to agree that the lease was to run from 30 days after the handover of the last flat, but it then emerged that he was thinking of the Colville Terrace flats, where there had been the previous agreement. At other points in his evidence, he appeared to agree that he would have expected it to run from the signing of the lease, and he also said that that was intended to take place when the last flat was handed over. However, when called on to state in his own words what he understood to have been the case (rather than being asked if he subscribed to something put to him or shown to him), he was actually quite firm and consistent, several times, that his understanding was that the three years were to run from the “official handover” of the flats, and also that this was the handover of the five flats in September 2004 because they were the majority of the flats in the building and the greater part of the rent was therefore to be paid from then.
[56] Mr Happé invited me to accept that the “official handover” could, sensibly, be referring only to the last flat because until then there could be no lease of the whole building. He relied on the occasion when Mr Gill appeared to agree with this and submitted that the evidence showed sufficiently clearly (and, of course, this was what Mr Nadarajah also said) that the term had been agreed to run from 30 days after the handover of the last flat, as proposed in the 18 March 2004 letter, and as had been apparently agreed in respect of the Colville Terrace flats. Both sides agreed that the underlying intention was that the letting of this property should be on substantially the same terms as the Colville Terrace flats. This conclusion was supported by the fact that this was when it was anticipated by both sides that a formal lease of the property would be signed.
[57] The last flat having been handed over on 1 September 2005, this therefore gave a date of 1 October 2005. However, as the evidence also showed that there were “numerous” snagging items still to be dealt with by CHL at the time of the 30 September 2005 letter, which CHL said had been dealt with within 14 days (although the defendants disputed this), the earliest date for the official handover could not (he submitted) be before 30 September 2005 and should be taken to be more likely14 October 2005, when the snagging was meant to be completed.
[58] As against this, Mr David Stancliffe, for CHL, relied on Mr Gill’s ultimate unshakeability that it was the handover of the main body of five flats, and not of the last flat, that triggered the start of the arrangement. As to the “30 days after” point, he argued that this made sense only in a lease for the entire building at one time, since it was, by Mr Nadarajah’s own assertion, supposed to represent a rent-free period for marketing. This had been the case when the Colville Terrace lease was made, but it had fallen out of the agreed terms once it was agreed that this property would be taken over piecemeal. There would |page:158| be sufficient foreknowledge of each flat becoming available, and this point concerning marketing had never appeared subsequently in the contemporaneous correspondence.
[59] Having carefully reviewed the correspondence and the written and oral evidence on this aspect, and having carefully considered Mr Gill’s evidence, with its acknowledged inconsistencies, I find that the starting date of the three-year term was the handover of the first five flats.
[60] I accept Mr Gill’s very firm evidence that this was his understanding, and I observe that, in the context of the timetable of the handover of these flats, namely five in September 2004, one in May 2005 and the last one only in September 2005, his understanding makes good sense. I find that the concept agreed at the meeting of 25 March 2004 certainly was that the term would commence at what was called the “official handover” of the building and that, at the time, the parties did mean the handover of the final flat. However, this was when they both expected all the flats to be handed over within a very short period of each other, that is, a few weeks, such that this would make sense. I find that when it became apparent that five flats were ready but the other two were not, it was agreed between the parties at the time of the handover of the five flats, that this event should be taken to be the “official handover” of the building and would trigger the start of the three-year basic period, even though the rent would obviously be paid pro rata for the flats actually handed over until the others were also handed over.
[61] I find that it is then that Mr Gill obtained his firm “understanding” and that he did so because that is what Mr Nadarajah agreed with him at that time. There are two points that cause me to reach this conclusion, apart from my overall acceptance of Mr Gill’s general evidence. The first is that this understanding could not logically have been gained by Mr Gill at the time of the “Agreement in Principle” in March 2004 because it was not then in contemplation that five flats would be handed over together, with two following later. Second, in the letter of 25 January 2005 that Mr Nadarajah himself wrote to Mr Afsar he stated:
I am writing to confirm that we have officially acquired the above mentioned flats [that is, the five flats] from 15th September 2004…
(Emphasis added.)
[62] I find the use of the word “officially” very significant. It plainly echoes the terminology of “official handover” that Mr Gill naturally used to express his own understanding, and this itself echoes the phrase “official handover” used by Mr Nadarajah in the “subject to contract” letter of 18 March 2004, in respect of the proposed trigger for commencement of the term (albeit then also proposed with an additional 30-day rent-free period, which was not taken further).
[63] In short, I find that Mr Nadarajah and Mr Gill originally agreed that the three years would commence with an event that they regarded as the “official handover”. At the time of the 30 March 2004 letter, this event was anticipated to be the handover of the last flat, but when the timetable for completion of the flats emerged in practice, it was agreed that the handover of the five flats would be regarded as the “official handover” and, therefore, the trigger for commencement of the three-year relationship; the later two flats would be taken in, and rent becoming payable, when they became ready. This variation of the original idea was actually agreed consistently with the recognition, in the 30 March 2004 letter, that it was an “agreement in principle” and, hence, that variations of the detail of the terms then agreed was quite possible and likely.
[64] The result is that I find that Cavendish Rowe’s three-year interest in 27 Cleveland Gardens ran from 15 September 2004 and expired on 15 September 2007. Cavendish Rowe should therefore have given back possession of 27 Cleveland Gardens to CHL on that date.
Issue 2: Quantum of mesne profits, ie damage for trespass/use and occupation
(1) Period
[65] On the basis above, mesne profits (that is, damages for trespass) are recoverable from 15 September 2007 until the property is handed back.
[66] Where the retention of possession of part of a property prevents the entire property unit from being effectively used, it may be the case that the owner is entitled to claim damages in respect of the whole, even though part of the property has been vacated. Here, however, the property is divided into seven independently commercially exploitable units that were handed over individually at the outset, and by the same token, it would, in my judgment, be correct that they could and should be taken back individually in the absence of any evidence that this would not be effective to transfer full and proper commercial control of any unit back to CHL.
[67] This appeared to be the common position at the close of the trial. With commendable pragmatism, neither side sought to raise any argument with regard to where this might leave the issue of the return of the common parts, and I mention that no further. It is common ground that the keys to flat A and flat 1 were handed back to CHL on 29 May 2009 but, as I understand it, none of the other flats had been returned by the date of the trial.
[68] Although Cavendish Rowe appeared to be claiming at the opening of the trial (from Mr Happé’s skeleton argument) that CHL had refused to take back the property flat by flat, his closing submissions not only recorded the agreement of principle above but referred instead to an offer by Cavendish Rowe to return only the entire building with at least some flats still occupied as an offer that had been refused. I will deal with this below in respect of an argument concerning mitigation of loss, but I record that I therefore did not understand it to be alleged that CHL had refused any offer to hand back an individual vacant flat with no conditions attached, and that this possibility was not explored in cross-examination of Ms Gill nor focused on in legal argument. I therefore proceed below on the basis that it is common ground that this was not the case.
[69] In principle, therefore, CHL’s right to recover is in respect of the agreed rate of aggregate rent (£95,000) for the period up to 15 September 2007 and, thereafter, mesne profits in respect of each flat respectively in the sums that I determine below. In respect of flats A and 1, the relevant period is until 29 May 2009. In respect of each other flat, the liability to mesne profits is continuing and will do so until such flat is in fact vacated and returned to CHL
(2) Rate
[70] The assessment of mesne profits starts with the current market rental value of the relevant flats and is therefore a matter of valuation evidence.
[71] By an order of 13 February 2008, District Judge Lightman gave directions for expert evidence to be adducible as to the issues of the appropriate level of mesne profits (if any) and also as to the issue of the true market rents of the flat, the state of repair or maintenance of the flats and the structure of the building, and any effect of this on the values of the flats during the period in question.
[72] The timetable had somewhat slipped. However, CHL had instructed an expert valuer, Mr Bruce R Maunder Taylor FRICS MAE, whose report of 31 October 2008 was in the bundle. Also in the bundle was a letter report obtained on behalf of Cavendish Rowe. This was from a Mr Stephen Porter MRICS, of Porter & Co, dated 9 June 2009. This was thus obtained and introduced only extremely late in the day, although Mr Stancliffe did not raise any major objection to this. It carried a form of statement of truth, but not the full formal declaration laid down by the RICS for surveyors giving expert evidence, nor any statement that Mr Porter had read the requirements of CPR 35. The experts had not met to narrow issues or prepare a joint report, as directed by District Judge Lightman.
[73] With Mr Maunder Taylor attending court on the first day of the trial, I directed that Mr Porter should be asked to attend and that, during |page:159| the afternoon, the experts should meet at the court to try to narrow the issues and to provide an agreed statement where they were able. I also directed that Mr Porter should consider and append a fully appropriate expert’s declaration to his report. The experts duly held such a meeting and provided a supplementary jointly agreed statement in manuscript. However, Mr Porter did not provide the declaration. This may have been an oversight.
[74] Mr Maunder Taylor appeared that afternoon and gave evidence, being asked to elaborate on some aspects of his report that were not agreed by Mr Porter. However, Mr Porter was apparently allowed to leave court under the impression that he would not be required to give evidence on oath at all. When he was due to give evidence on the third day of the trial, he was therefore absent and turned out to be unavailable. Consequently, Mr Happé accepted that Mr Porter’s written report could not be adduced in evidence at all (he being neither present to be cross-examined nor having made the relevant declaration) and it was agreed that I could and should proceed on the basis only of Mr Maunder Taylor’s evidence always (of course) as he had modified his opinion as a result of his discussions with Mr Porter.
[75] The experts had agreed the relevant open market monthly rental values of the seven flats in the building if individually let on assured shorthold tenancies (AST) as at six monthly dates from October 2005 until October 2008. Mr Maunder Taylor had originally provided a table of such figures in para 4.2 of his report. Following his discussions with Mr Porter, he had made slight reductions to his figures for the basement flat. I accept all his final figures as the best evidence that I have of the monthly letting values of the individual flats at the stated dates.
[76] These give a letting value as at October 2007, which I find to be close enough to the commencement date of 15 September 2007 to require no adjustment. These values Mr Maunder Taylor found to hold up in general terms for a year, until October 2008, when they were subject to a slight fall.
|
Flat |
A |
1 |
2 |
3 |
4 |
5 |
6
|
|
Oct 2007) Apr 2007) |
3151 |
3207 |
2145 |
2155 |
2155 |
989 |
2364 |
|
Oct 2008 |
3000 |
3095 |
2070 |
2080 |
2080 |
954 |
2281 |
[77] In the calculation of mesne profits, the above rates will therefore be the starting point, the first figure applying from 15 September 2007 until 30 September 2008, and the second figure from 1 October 2008 until the vacation and handover of the relevant flat. I now consider how far, if at all, the calculation of mesne profits on proper legal principle requires these figures to be adjusted.
[78] In the written joint statement, it was said to be agreed that “mesne profits levels are 35% less than AST levels”. This unelaborated statement was made as a result of my request that Mr Maunder Taylor and Mr Porter should discuss and give their opinions as to this aspect of values in the case, as District Judge Lightman had directed.
[79] Mr Stancliffe invited Mr Maunder Taylor to explain, therefore, what this meant, and he explained that the 35% reduction represented deductions from the gross rental values for the following items, at their respective approximate rates:
● letting fees (10% + VAT)
● maintenance (5% +VAT)
● void allowance (5%)
and
● insurance, structural and external repairs and decorations (about 10%).
He explained that these figures were on the basis that the building was a single investment and not part of a portfolio, in which latter case there would be savings. The “void” allowance was small because, in his view, voids could be filled quite quickly. The main risk under “voids” was the non-payment of rent. The only imponderable cost was that of the possibility of some major work being required.
[80] From the above, it is therefore apparent that Mr Maunder Taylor was, in effect, describing his view of the level of actual profit likely to be gained from lettings of the flats after taking appropriate account of expenses. It appeared to me that Mr Maunder Taylor was, in effect, giving the figure that he would advise an owner of the building to use as a working figure for predicting its true return from the investment.
[81] Against this background, Mr Happé submitted that with the experts (more accurately, Mr Maunder Taylor) having arrived at a value for “mesne profits”, I am effectively bound to accept that that figure must be taken to be the appropriate value of the property for this purpose. The correct measure of damage is therefore 65% of each of the above figures.
[82] Mr Stancliffe submitted, relying on Swordheath Properties Ltd v Tabet [1979] 1 WLR 285*, that the correct measure of mesne profits or damages is simply the letting value of the properties in accordance with Mr Maunder Taylor’s AST figures. In Swordheath, it was held to be irrelevant to an assessment of damages for trespass that the landlord had not shown that he would have relet the property in which the defendant had wrongfully remained. Just as no account should be taken of any theoretical voids, therefore, no account should be taken of any other theoretical reductions. The correct measure of damage was simply the ordinary letting value of the property.
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* Editor’s note: Also reported at [1979] 1 EGLR 58; (1978) 249 EG 439
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[83] However, if that were wrong, he submitted that I am not bound by the deductions that Mr Maunder Taylor has applied. His final figure is not necessarily the correct figure for “mesne profits” in law simply because he has so labelled it. I must therefore examine the constituent elements of that figure and consider whether those deductions are in fact justified as deductions that CHL itself would suffer in reality. CHL is not a single building owner and Mr Maunder Taylor agreed that in the case of a building held as part of an investment portfolio there would be savings on his figures. Ms Gill gave evidence that CHL would not incur any greater expenditure on maintenance or insurance merely because it had this additional building in its portfolio; it would not generally suffer voids because it relet its properties quickly and in an organised fashion, and it would not incur letting fees because it was its own letting agent. Mr Stancliffe submitted that her evidence shows that CHL would have suffered only minimal deductions from the gross AST levels, and not the 35% of Mr Maunder Taylor’s hypothetical example.
[84] I prefer Mr Stancliffe’s approach to that of Mr Happé, for the following reasons.
[85] Mesne profits are damages for trespass. These have traditionally been assessed on the basis of the reasonable letting value of the property of which the owner has been deprived by the trespass (see Inverugie Investments Ltd v Hackett [1995] 1 WLR 713†, at p715) even before recent legal interest in whether the appropriate measure of damages is compensatory, that is, simply compensating the claimant for actual loss, or should be restitutionary, that is, depriving the defendant of an unjust enrichment. This latter has also been described as the “user” principle: see Stoke-on-Trent City Council v W&J Wass Ltd (No 1) [1988] 1 WLR 1406, at p1413H. The approach of awarding the actual rental value of the property to the claimant, regardless of whether it would actually have let the property (Swordheath), is a long-established example of this latter approach at work, whether it is described as “user” or “restitutionary”. However, the precise ambit of the approach to mesne profits has apparently not been examined closely in modern times: see Woodfall: Law of Landlord and Tenant, in para 19.013.
—————————————————————————
† Editor’s note: Also reported at [1996] 1 EGLR 149; [1996] 19 EG 124
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[86] Where the value of the property to both claimant and defendant is, in effect, its ordinary letting value, the two approaches, — compensation and restitution — produce the same result. It is only in cases where the value to the defendant wrongdoer greatly exceeds the actual loss to the claimant (for example, the “tipping” cases) that there is an egregious example of the unjust enrichment approach at work. The refusal of the law to look at whether the landlord would in fact have let the property (Swordheath) is a less obvious application of this principle. It is justified because although the landlord would not in fact have lost the sums concerned, the tenant none the less had the benefit of the occupation for which it would have been payable, and the principles of |page:160| unjust enrichment mean that that value must be awarded to the landlord rather than retained by the wrongdoer.
[87] Although there may be cases in which there are special circumstances relating to the nature of the property or the parties that affect the position (see, for example, Ministry of Defence v Ashman (1993) 66 P&CR 195*), in my judgment, the overall principle is that one starts with the ordinary letting value of the property because it represents the starting point both for the measure of loss that the landlord has suffered through being unable to realise that value and the measure of benefit that the tenant has derived from obtaining its use. If there is evidence that the landlord’s loss would not have been the full extent of that letting value because it would have incurred inevitable expenditure that would have reduced its loss, that figure would have to be reduced to represent true compensation. If, however, that exercise reduces the figure below the figure that correctly represents the measure of benefit to the defendant, the landlord will be entitled to the latter rather than the former.
—————————————————————————
* Editor’s note: Also reported at [1990] 2 EGLR 102; [1993] 40 EG 144
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[88] In other words, in my judgment, the correct measure of mesne profits will be the higher of the true compensatory loss to the claimant and the true value of the benefit gained by the defendant. However, the reasonable letting value of the property may in fact be the same as one or the other or (in the simple case) both of these assessments. It is therefore both the starting point and a convenient yardstick in cases where a very refined approach is impossible or unrealistic.
[89] Applying the above approach, I observe that where the tenant or trespasser is occupying property personally, the amount that he would have to pay for that privilege (or for an equivalent property that he would otherwise have had to rent, which is likely to be the same) will provide the relevant and appropriate measure of benefit to the defendant. Where the defendant is not personally occupying the property, but would have let it, that may not be the case.
[90] The AST figures given by Mr Maunder Taylor provide the basic measure of value of both the loss to CHL for not being able to let the property and the value to Cavendish Rowe for having possession of it in order to let it. However, I conclude that both the actual loss to CHL and the actual benefit to Cavendish Rowe would each be reduced to some degree by associated costs, which it is appropriate to take into account.
[91] Accepting Ms Gill’s evidence, as I do, I conclude that the actual loss to CHL for not having the flats returned is properly evaluated at 95% of the AST figures given by Mr Maunder Taylor. This reflects my view of the appropriate discount to allow for costs associated with letting and managing this property that CHL would in fact have incurred in doing so, despite the fact that, for example, it would not have had to incur letting fees, nor to employ any additional maintenance staff, and so forth. This allows for the economies of scale that Mr Maunder Taylor recognised.
[92] I then ask myself whether the benefit to Cavendish Rowe has in fact been greater than this, so that the amount ought to be raised above that figure to prevent unjust enrichment. Although I consider that I should be astute to prevent such unjust enrichment, I cannot see any evidence that suggests to me that Cavendish Rowe has in fact benefited by more than this amount. Being a smaller enterprise than CHL, it is less likely to benefit from economies of scale. I have some evidence of the costs for matters of maintenance and repair that it has actually incurred in the course of letting the properties and also that it has in fact suffered voids during the period. I am satisfied that these would not have been less than 5% of the applicable gross rents.
[93] Assessment of damages on the user or unjust enrichment principle should not extend beyond actual unjust enrichment, since to do so would be to stray into the field of exemplary damages or holding the defendant to account for money that it could have received, as though it were a trustee. That would be wrong in principle. In the end, therefore, I conclude that the measure of benefit to Cavendish Rowe has not exceeded what I find, on the balance of probability, to have been the measure of the true loss to CHL caused by Cavendish Rowe wrongfully remaining in the property, and I will award damages on that basis, that is, at 95% of the applicable AST figures for the appropriate period.
(3) Mitigation
[94] As already mentioned, Mr Happé argued that CHL was guilty of a failure to mitigate its loss, which ought therefore to disentitle it from recovery, at least to some extent. The basis for this is that it is said that, in November 2008, Cavendish Rowe offered to CHL to hand over the entire building with the existing occupying subtenants, but CHL refused to take it back. Cavendish Rowe argues that that was unreasonable, since CHL would itself simply relet the premises, and there is no criticism of the level of rents at which Cavendish Rowe had sublet.
[95] This was put to Ms Gill, who agreed that CHL had refused to take back the building on that basis and was typically emphatic that it was under no obligation to do so. It vetted its own tenants carefully and was not prepared to take over tenants placed in position by Cavendish Rowe. This was not least because she knew that the subtenants were complaining about Cavendish Rowe’s management (or lack of it) and she was not prepared to take over problem tenants. She also felt particularly incensed because at least some of such tenants had been let their flats by Cavendish Rowe, during the pendency of CHL’s application for summary judgment for possession, and before the decision.
[96] I observe parenthetically that Mr Nadarajah agreed that this had happened, but then immediately said that the justification for Cavendish Rowe’s resistance to the summary judgment application and claiming entitlement to a 10-year interest in the property was the need to protect the interests of its occupying subtenants because it was “one of the most reputable firms in London W2”. The irony and illogicality of this completely eluded him.
[97] Mr Stancliffe argued that CHL’s position was perfectly reasonable and that a tenant was not entitled to foist a subtenant on a landlord in the way in which Cavendish Rowe had tried to do. It was a proper business decision to decline to take on the risks and responsibilities that Cavendish Rowe had created for itself, and CHL could not be obliged to accept a deficient performance of Cavendish Rowe’s obligation to return the building vacant, in a respect to which it reasonably objected, in order to assist Cavendish Rowe to minimise its liabilities. In any event, as he pointed out, if the sublettings were beneficial, Cavendish Rowe would obtain that benefit to enable it to pay the required mesne profits, and if they were not, it could not be said that CHL was unreasonable in refusing to take them over.
[98] I accept Mr Stancliffe’s argument. I find that there is no argument based on alleged failure to mitigate loss that should reduce the measure of damage otherwise recoverable by CHL.
Issue 3: What are the respective liabilities of the defendants?
[99] It was originally claimed by CHL that the individual defendants still remained in occupation of flats A and 1 respectively, and were consequently personally liable to CHL as trespassers in respect of those flats. As the evidence emerged, however, it was stated by Mr Patel (and not controverted) that he had left flat A in 2006, during the three-year period. I accept that evidence and find that Mr Patel has no liability.
[100] Mr Nadarajah and his wife, the third defendant, had occupied flat 1 as a convenient central London pied-à-terre. There appears (as is not surprising) to have been no subtenancy agreement, so that they would have been licensees. The evidence of Mr Nadarajah (his wife did not give evidence) was that his wife had moved out of the flat in April or May 2008, and that he had left in July 2008.
[101] There was no evidence controverting his first statement, and I accept it. I find that the third defendant vacated flat 1 on 1 May 2008.
[102] As to his own position, it was put to him, as was Ms Gill’s evidence, that his personal effects were still in the flat at an inspection at the end of October 2008. He agreed that this was the case, but said that these had merely been things that it was not worth moving out. It was also put to him that he had not, I think even by then, amended his address as director of Cavendish Rowe on the records at Companies |page:161| House, as he was legally obliged to do. He claimed that this was an oversight.
[103] I do not accept that Mr Nadarajah vacated flat 1 in July 2008. I accept Ms Gill’s evidence that there were sufficient of his personal effects for it to appear that he remained in occupation in October 2008, and I think that it would have been out of character for him to forgo the convenience of the use of this flat near his work without a compellingly advantageous incentive to do so, although I accept that he probably made less use of it after his wife had ceased to stay there. The question, however, is how long I find this to have continued.
[104] I am not satisfied as a fact that this situation continued right up to the time the keys of the flat were handed back on 29 May 2009; I do not consider that any such finding of fact is sufficiently justified merely on the basis of a presumption of continuation of the situation from October 2008, which is really the only unequivocal evidence that I have. I am satisfied, however, on balance of probability, that Mr Nadarajah’s occupation and use will have continued a little after the inspection in October 2008, and at least until the time of the offer by Cavendish Rowe to return the building to CHL with tenants in occupation in November 2008. Beyond that time, I do not feel able to make any such finding. My finding of fact is, therefore, that Mr Nadarajah remained in personal use and occupation of flat 1 until 15 November 2008.
[105] The final question is, therefore, whether these individual defendants incurred personal liability to CHL for mesne profits on those facts. It was, of course, common ground that such individual liability could be only in respect of the value of flat 1, since neither of them had occupied or used any other part of the property during the relevant period.
[106] Mr Stancliffe submitted that once their occupation during the period after 15 September 2007 had been established, the individual defendants were liable concurrently with Cavendish Rowe for the entire period up to 29 May 2009. Their liability was, he submitted, clear for the period when it was shown that they were physically occupying the premises because liability for mesne profits is liability for trespass, and is simply a matter of physical fact; that is, the use or occupation of another person’s property without lawful right. In so far as any intention was required, it was sufficiently established. Cavendish Rowe intended, during this period, to occupy flat 1 (without any right to do so) and Mr Nadarajah and his wife had the same intention.
[107] Mr Stancliffe submitted, however, that that this liability endured up to the time of the return of the keys because so long as Cavendish Rowe retained the keys, Mr Nadarajah had the right to go to the flat, which therefore rendered him in continued occupation.
[108] Mr Happé submitted that neither individual defendant was liable for mesne profits. He submitted that the occupation of the flats had really been that of Cavendish Rowe, which had had occupying control of the flat in the shape of the keys and had ultimately returned them.
[109] I understood him to refer me to Jones v Merton Borough Council [2008] EWCA Civ 660; [2008] 1 P&CR 3* as authority for this proposition. In that case, the requirements for the giving up of possession by a “tolerated trespasser” were considered. In the context of an argument as to whether formally giving notice of relinquishment of possession was required, it was said that in order to give up possession, one must negative the elements of “possession” of land as discussed in JA Pye (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419. Thus, one must not merely have the intention not to go back to a property but also act in accordance with any such intention by divesting oneself of factual possession, by the removal of one’s property and by relinquishing control. Expressions of intention were insufficient without acts consistent with this. With respect to Mr Happé, I do not read Jones as being of any authority on the position between a landlord and a tenant’s subtenant or licensee, since it was dealing with the situation of a landlord and its immediate former tenant.
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* Editor’s note: Also reported at [2008] 2 EGLR 37; [2008] 33 EG 74
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[110] Mr Happé submitted alternatively that their liability could relate only to the periods during which they were actually in occupation of the flat. On the basis of his submissions as to the duration of Cavendish Rowe’s three-year term, and an acceptance of Mr Nadarajah’s evidence, this would have released them both from liability, but I have rejected the factual propositions on which this was premised.
[111] Lastly, Mr Happé submitted that by obtaining interim judgment against Cavendish Rowe by the order of Judge Wakefield of 12 March 2009, CHL had elected to pursue its remedy against Cavendish Rowe alone and was debarred from now seeking payment from CHL.
[112] In my judgment, this last submission fails on any basis with regard to the period 15 September 2007 to 15 October 2008 because the interim judgment was given by Judge Wakefield only in respect of the period from 15 October 2008 onwards. I did not understand the argument to be made in respect of any earlier payments that Cavendish Rowe was ordered to be made and that were only directions for payment on account, and therefore of a different character in any event.
[113] However, I also reject this argument on legal principle. In my judgment, any liability of the individual defendants and Cavendish Rowe are concurrent and several liabilities, based on discrete causes of action on the part of CHL. Although CHL would not of course be able to recover twice, it is entitled to separate judgments against the defendants for separate trespasses, if established, and the obtaining of any judgment against one defendant in no way extinguishes the right to a judgment against any other.
[114] For the same reason, I also reject Mr Happé’s argument that the individual defendants are not liable for mesne profits because the trespass was that of Cavendish Rowe, and not theirs. In my judgment, Mr Stancliffe was correct that liability for use and occupation is incurred solely by physical presence without lawful right. Even if the individual defendants were present in the flat only on behalf of Cavendish Rowe (which I do not think is the correct analysis of the situation where a company allows its director to occupy residential property over which it has control), that does not, in my judgment, mean that the occupier is divested of personal liability for physically infringing another’s right of property. They might possibly have rights of indemnity against the company, but that is a different matter.
[115] From this, it follows, in my judgment, that the third defendant is liable in respect of flat 1 for mesne profits at the relevant rate from 15 September 2007 until 1 May 2008, and that the second defendant, Mr Nadarajah, is similarly liable from 15 September 2007 until 15 November 2008.
[116] However, I reject Mr Stancliffe’s proposition that their liability endures any longer than above. With regard to the time between their each personally vacating the flat but before the keys were returned, the only impediment to CHL’s having use and possession of its own property was Cavendish Rowe’s retaining the key. I see no evidence that this was the act of the individual defendants personally, in fact, and even despite Mr Nadarajah’s position with Cavendish Rowe, I am not satisfied that there is any legal principle that requires me to impute the retention of the keys to him rather than to Cavendish Rowe. The liability of the second and third defendants for mesne profits is therefore limited, as stated above.
Issues 4 and 5: Cross-liability of CHL for breach of repairing obligation; and cross-liability of CHL for breach of obligation in respect of standard of initial refurbishment
[117] It is convenient to deal with these together, not least because, in Mr Nadarajah’s evidence, they became very much intermingled as a general diatribe of complaints about the state of the building that it was said CHL should have remedied, and that ultimately had allegedly caused Cavendish Rowe loss, either in direct expenditure or because it was only able to let the flats only for around 70-80% of their full market value.
[118] By its counter-claim, Cavendish Rowe claimed damages said then to be £6,000 for alleged breach of CHL’s obligation to carry out “repairs and maintenance to the structure of the building and the common parts”: para 15. No further details were given. It also made a |page:162| general claim that CHL’s refurbishment work had been “substandard and in some instances incomplete” and that, consequently, Cavendish Rowe had sustained a loss of around £70,000 because it was unable to let the flats for their full market value, as could be demonstrated by comparisons with rents of other nearby flats: para 16.
[119] In Mr Nadarajah’s witness statement, the repair claim was said to be for matters that “ought to have been paid for by [CHL] under the terms of the lease”, by reference to a schedule of payments and invoices dating from February 2005 to January 2008. The invoices total £3,740.50, and relate to around 30 relatively small matters. To give the flavour, there is “rodent control” on several occasions throughout the period, repair of “boiler” and of “washing machine”, “replacing mastic round shower”, “replacement of halogen transformers” and repairing of leaks in or from flat 2 and “from flat 4 to flat 1”.
[120] The claim concerning substandard refurbishment was similarly made baldly, with no particular defects identified, coupled with a statement that Cavendish Rowe had “[had] to discount rents… to reflect this situation”. The supporting evidence consisted of a list prepared by Mr Nadarajah of the rents of letting transactions that he said had taken place in the vicinity, and a sheaf of agents’ letting particulars.
[121] In his oral evidence, Mr Nadarajah raised more specific complaints concerning the state of repair of the structure of the building, mentioning alleged damp in the basement flat, ingress of water through the roof of the extension, alleged problems with plumbing, water leaks that had caused a stain on the carpet and a gap discovered between floorboards behind kitchen units in flat 1 through which mice gained access. He also complained about cracks in the structure, which he said CHL should have remedied but did not.
[122] When asked about why he had apparently not complained earlier, he referred to his letter of 27 January 2005 (see [32] above) and referred to the 30 September 2005 snagging list that, he complained, CHL had never remedied — but said that this was in any event not complete because it had been prepared by an employee (one Ms Pearl Bridet) who did not fully understand what to look for. He explained the triviality of the matters on the snagging list on the ground that the flats looked all right when they had been refurbished and he had not therefore realised the extent of the problems, which was also why complaints had not been made earlier.
[123] He complained further that CHL had at first put in a smaller skylight in the rear extension than it had promised. He also said that a boiler had been condemned and that plumbing did not work, and tenants had consequently refused to pay rent and had had to be given rent-free periods — although it appeared to me that he was there referring to recent matters. It was difficult to find any mention of or support for these matters in any of the documents.
[124] Mr Patel said in his evidence that there had been a damp problem in flat A that had produced mildew on his furniture. He claimed that he had so informed Mr Afsar. Both he and Mr Nadarajah maintained that complaints concerning many matters had been made to CHL, and particularly Mr Afsar.
[125] However, Mr Afsar was quite firm that no complaints had been made to him concerning matters of structural repair, such as damp in the structure, water ingress through the extension roof or the main roof or cracks requiring remedy because of structural movement, and he was quite sure that had any such complaints been seriously made, they would have come to his knowledge as head of maintenance. He could not remember the complaint concerning rodent infestation. Both Mr Afsar and Mr Gill gave evidence that the snagging items on the 30 September 2005 list had all been dealt with timeously, and there was no further reference to these in any of the documents.
[126] Much of Mr Happé’s cross-examination of Mr Afsar and Mr Gill appeared to be aimed at obtaining evidence that CHL accepted that it had a responsibility to repair the building and that it had carried out some such works, for example to remedy damp in the basement at Colville Terrace (and including the renovation of the decorative finishes after such work) because it understood that it was obliged to do so by its agreement. This was seemingly in order to found a submission that the same applied to the subject property.
[127] A bemused Mr Afsar agreed that CHL had responsibilities, and agreed that it carried out works to remedy damp in the basement at Colville Terrace (Mr Gill could not remember this), but was clear that no such works had ever arisen in respect of 27 Cleveland Gardens. Mr Gill likewise agreed that CHL was responsible for the structure and exterior of the property, but was equally clear that the interior was Cavendish Rowe’s responsibility because there was no point in the letting arrangement with Cavendish Rowe otherwise. He would not agree that in agreements such as this, of the kind made with a housing association, the landlord would be responsible for all repairs. As he put it, “it depends on the rent”.
[128] I did not derive much assistance from further cross-examination as to whether he agreed that CHL was responsible for “maintenance” or “repair” or whether particular matters came within such a description. First, Mr Gill does not focus on the precise use of words like a lawyer does. Second, this would be a matter of law and the construction of the parties’ agreement, once identified, on any basis, and Mr Gill’s opinion or even apparent admission would be of little weight.
[129] Mr Happé’s closing submissions were that I should find on the evidence that:
(1) CHL was responsible for structural matters, both on the initial renovation and subsequent maintenance and also for “decorative consequences” of the failure to attend to such structural matters;
(2) problems with damp, water ingress and structural movement were made out by the evidence and these fell under CHL’s responsibility;
(3) these defects or wants of repair affected the standard of decoration and the possibility of doing so; and
(4) the consequences of such damp and structural movement amounted to disrepair of the property that, on the expert evidence (to which I refer below), produced some depression in their market value, and also had led to some expenditure on Cavendish Rowe’s part, the exact amount of which would be a matter for an enquiry.
[130] Mr Stancliffe submitted that on proper examination, Cavendish Rowe simply failed to establish its case on either of its claims. As to each, he submitted that Cavendish Rowe had to establish: (a) a duty on CHL; (b) a breach of that duty; and (c) loss resulting, and that there was no credible evidence or legal argument that made out or could make out any of the necessary elements.
[131] He pointed out that the evidence of both parties had been to the effect that the letting of this property had been intended to be on substantially the same terms, or the same main terms, as the written agreement in respect of the Colville Terrace properties that had previously regulated their relations. In so far as matters such as repair were concerned, he accepted that this was the position.
[132] However, with regard to repairs, those terms provided, first, that CHL was responsible only for repairs to the structure and exterior and internal heating and services installations; responsibility for the interior of the premises, and for their decoration and general maintenance rested on “the Lessee” (that is Cavendish Rowe). More importantly, it was provided in clause 6.4 that written notice, if any disrepair claimed to be the landlord’s responsibility, had to be given. He submitted therefore that written notice was a prerequisite of liability, and Cavendish Rowe had simply failed to establish that any such written notice had been given of the matters now being said to be breaches (with the details now being given never even having been foreshadowed).
[133] He submitted that the only written notice was the snagging list of 30 September 2005 and a benevolent interpretation of the matters raised in the letter of 27 January 2005. He invited me to find on the evidence that Mr Afsar and Mr Gill were right that these had all been dealt with (as there had been no further complaint until Mr Nadarajah’s allegation in cross-examination) and that the latter were not even wants of repair. That, he submitted was enough to dispose of the allegations concerning breach of CHL’s repairing obligations.
[134] He submitted further though that, even taken at face value, the allegations that there were wants of repair of a structural nature were entirely unsupported by any credible evidence. The allegations of structural wants of repair based on the evidence of cracks was mere assertion, there being no evidence that these were cracks requiring |page:163| repair as opposed to perfectly ordinary signs of the age of the building — indeed, Mr Maunder Taylor’s evidence was to this effect. The allegations concerning water ingress and/or alleged defects in respect of plumbing were, once again, solely the word of Mr Nadarajah, incapable of being tested because of their late introduction and uncorroborated by any expert evidence, such that even if it were accepted that there was some problem, it was impossible to be satisfied of its nature, and still less that it was within the potential area of landlord’s responsibility.
[135] He went on to submit that there was also, in any event, no sufficient evidence of loss. The only pleaded losses had been the elements of the claim that had reduced from a generalised £6,000 to a more particular £3,700-odd, but that, on examination, comprised elements that were actually matters of maintenance and management of the building. They was no evidence of wants of repair to the structure or exterior or even in respect of the service installations that might be CHL’s responsibility. Some items were perfectly clearly everyday maintenance expenditure and there was no sufficient detail of, for example, “leaks” to show that these were from matters within CHL’s area of responsibility, rather than other causes. It was no good Cavendish Rowe simply producing invoices of alleged expenditure on the building without making any attempt to relate these to complaints that it was entitled to make.
[136] As to the claim based on breach of the obligation to refurbish “to a good standard”, Mr Stancliffe’s first submission was that this simply failed at the outset for (in effect) uncertainty because it was really impossible to identify the scope or standard of the alleged duty. No definition of the required “standard” was either pleaded or contained in any evidence.
[137] However, beyond that, it was noteworthy that there had been no complaint concerning the standard of work prior to Cavendish Rowe’s having to defend these proceedings for possession and payment — apart from the snagging list. This was the only “official” document in this regard, it was also the defendants’ own document, and it implied that the standard was acceptable to Cavendish Rowe at the time apart from the minor matters there mentioned. There was not a hint of any further complaint in this regard for almost four years.
[138] Quite apart from the inability to define what the “good standard” was, there was also no evidence of the standard that had been attained. Mr Maunder Taylor had been asked to comment and, although he had pointed out that he had not inspected at that time, his comments cast no aspersions on the likely standard of finish, in its context, and, indeed, expressly rejected any suggestion that there had been structural movement or wants of structural repair.
[139] Last, he submitted that the evidence of alleged “loss” caused by the supposed substandard finish was wholly unsubstantial and unworthy of credit. It consisted of mere assertion by Mr Nadarajah, based on his own collection and interpretation of alleged “comparables” and misguided reliance on the (unsurprising) statements from the expert that if the flats were now redecorated he would expect an improvement in rental figures of 5-10%, and that a better standard of finish would be likely to increase rents, but he could not quantify any amount.
[140] I accept the overall thrust of Mr Stancliffe’s submissions and reject Mr Happé’s. I am wholly unpersuaded by Cavendish Rowe that it has any claim whatsoever against CHL either for breach of the repairing obligations that were (I accept) assumed by CHL or for breach of its accepted obligation to decorate the flats (I accept Mr Gill’s firm evidence that it did not assume any obligation to furnish them) “to a good standard”, still less any breach that could possibly have the utterly exaggerated result contended for by Mr Nadarajah that Cavendish Rowe had “had to” give discounts on rents of 20-30%.
[141] I find that that the agreement between the parties was based on the Colville Terrace written agreement. This is very badly drafted in terms of use of the English language, even though it seems to be accepted that it was “lifted” from a form of agreement used by the Notting Hill Housing Trust. If the third defendant was responsible for it, as I think was said, it does her no credit. However, I find its meaning to be tolerably clear.
[142] CHL was to be responsible for the repair of the structure and exterior of the building and the internal services and conducting media. Cavendish Rowe was responsible for the interior of the premises and for their day-to-day management and maintenance. This would include the customary little household jobs of repair and, of course, matters occasioned by accidents and use by tenants.
[143] I also find it to have been understood, as part of this division of responsibility between CHL and Cavendish Rowe, that responsibility for maintaining internal decorative finishes or standards during the tenancy would fall on Cavendish Rowe as part of its responsibility for the “interior”. It is perfectly apparent that in the context of this kind of letting operation, appearances are very important, and it was Cavendish Rowe that was standing to make profits from maintaining these. I find that Mr Nadarajah knew such profits to be potentially considerable, but Mr Gill was less perceptive. Mr Gill, however, saw the benefit of the “guaranteed rent” arrangement as being precisely that that kind of work would be Cavendish Rowe’s responsibility, since otherwise CHL might as well have managed and let the property itself.
[144] I also find that it was understood and agreed that CHL would be obliged to carry out repairs only on written notice from Cavendish Rowe. I find that this was intended to apply to all CHL’s repairing (etc) obligation in respect of this property because the parties understood this to be a principle of general application, even though a close reading of para 6.4 of the Colville Terrace agreement suggests that it could be argued that this was provided for only in the context of the provision entitling Cavendish Rowe to carry out work in default of CHL’s compliance and to charge CHL for such work. It might therefore be said that the requirement for written notice was not provided generally in respect of the initial obligation to repair, but a requirement of notice in some form would in any event apply by the presumption of the common law, since a landlord’s repairing obligation is construed as one to repair on notice, for obvious reasons. It is not occupying the property.
[145] I accept the evidence of Mr Gill, of Mr Afsar, and of the documents, that no written complaints were made beyond those already mentioned above, and I accept (and find) that all the matters there mentioned, in so far as they constituted notice of wants of repair (and I do not consider that dealing with rodent infestation, for example, falls within “repair”, as contrasted with day-to-day management and maintenance on any basis) were dealt with promptly by CHL.
[146] I prefer the evidence of CHL’s witnesses, rather than that of Mr Nadarajah and Mr Patel as to any other complaints. I am satisfied that there were no other oral communications giving notice of wants of repair for which CHL was responsible, at least to the extent of anything sufficiently significant for anyone to remember. On balance, I do accept that Mr Patel drew attention to damp on furniture in his basement flat, since I accept that he genuinely believed this. I think that Mr Afsar accepted that it had or might have been mentioned, although he did not recall it ever becoming an issue. This is, however, no evidence of any want of repair within CHL’s obligation in the absence of any expert evidence as to the cause of such damp. For example, damp can easily occur because of condensation and lack of ventilation, particularly in basement premises. Apart from that, I find no evidence that satisfies me that any other sort of complaint within this class was ever made to CHL. Consequently, I reject the claim that CHL has been in any breach of its repairing obligations.
[147] The same applies to the claim with regard to alleged substandard refurbishment work. The documents disclose no evidence of any positive obligation or undertaking by CHL as to the standard of its refurbishment works, apart from that proposed with regard to decoration in the letter of 18 March 2004, namely “good”. There is, of course, at common law, no general warranty of fitness or standard of works to a property being let (and statutory requirements are not here relevant). The transferee must make its own inspection and form its own judgment.
[148] However, assuming that such responsibility was accepted by CHL as applying to underlying fit-out works as well as to decoration (and I suppose that this might be an attenuated interpretation of the |page:164| word “furnish” in the 18 March 2004 letter), I can see no evidence that this obligation was not complied with.
[149] Although I accept Mr Stancliffe’s criticism that it is not possible to identify the applicable standard from the parties’ agreement, and that, arguably, it would be void for uncertainty, it seems to me that the parties none the less knew, from their experience and previous dealings, what was acceptable and what would not be, and Cavendish Rowe was content that CHL would, in principle, deliver acceptable work. The actual history satisfies me that the standard that CHL did achieve was well known and obvious to Mr Nadarajah when the “official handover” took place, and was perfectly satisfactory to him at the time and thereafter when the other flats were accepted, except in the respects that were noted (and dealt with) in the later snagging list. Satisfactory, for Mr Nadarajah, would have meant that the standard was of an appearance that would satisfy potential tenants.
[150] In fact, I consider it wholly implausible that had there been any lack of appropriate standard, there would not have been some record of Mr Nadarajah complaining about this before he was put in the position of having to defend these proceedings. I entirely reject his opportunistic assertion in oral evidence that it was the state of the premises that was the justification for his withholding rent earlier. I also reject his claim that the “problems” were not obvious initially because the premises “looked all right” because I find that there is in fact no evidence of any problems even subsequently.
[151] Mr Maunder Taylor’s report is, I find, very persuasive on this point, having the ring of common sense. He says that, in 2008, the state of the premises was consistent with having been decorated some four-and-a-half years previously and no attention having been paid to decorative and other finishes since (which I have no doubt was the case in fact). He also says that landlords of this type of property will expect to redecorate every five years. By implication, he finds no reason to criticise the original work, although, equally, his perfectly sensible comment that if finishes are “better” they will produce higher rent suggests that the quality of the finishes may well not have been of the highest grade. This chimes with Mr Afsar’s acceptance that 27 Cleveland Gardens was “20% worse” than another of the claimant’s developments at 29 Cleveland Gardens. However, it does not mean that the standard at 27 Cleveland Gardens was not “good” within the meaning and intent of the parties’ agreement regarding 27 Cleveland Gardens at the time.
[152] Mr Maunder Taylor also states that he found no evidence of structural distress or failure (albeit not having carried out a full condition survey) and expressed the opinion that the degree of apparent cracking was of a perfectly normal extent for the inevitable degree of movement in a building of this age and the time since last decoration. It did not impair enjoyment of the property and would not cause any diminution of rental value as compared with a building with no such evidence, even though the situation ought to be monitored.
[153] Last, he expressed the view in respect of the issue of “disrepair” that he saw nothing out of the norm in respect of the standard of repair (and hence, by implication, no criticism) and that although the structural cracking that had broken through the decorations did not itself affect rental value as a structural fault, if the premises were now redecorated he would expect an increase in rental values of 5-10%.
[154] This evidence satisfies me that there is really nothing in Cavendish Rowe’s claim that CHL was in breach of any obligation that it undertook with regard to the standard of refurbishment works at the subject property. Mr Nadarajah’s complaints are entirely, I find, contrived with hindsight. He has looked for complaints to raise, lighted on any point that might be used to resist CHL’s claim and then rewritten it back into history.
[155] For completeness, I should add that I find that the supposed “evidence” of loss in this regard is also entirely without foundation. First, there is absolutely no evidence to support the assertion that Cavendish Rowe “had to” give discounts on the rents of the flats as a result of any substandard finishes or work by CHL. No evidence of any such actual process has been given. The evidence of comparative values is no more than Mr Nadarajah’s own interpretation of uncorroborated figures for transactions that he has uncovered, some of which indeed appear only to be asking prices, and comparison of these figures with the rents of the subject flats. From this, he invites inferences to be drawn as to the reasons why the figures in the transactions that he reports were higher than those for transactions in this building that he had achieved.
[156] Mr Maunder Taylor expressed the firm view, in his report, that care must be taken in comparing the subject flat values with those in other buildings because of variations in the quality and provision of services and the consequent difficulty of ensuring a fair “like for like” comparison. This is a warning that I wholeheartedly accept. Even apart from any question of whether Mr Nadarajah’s evidence is reliable evidence of the facts, that evidence itself is far too lacking in detail to justify the conclusions that he seeks to extract from it. This is quite apart from any further question of the reliability of his interpretation of that evidence or his own assertions of opinion on what would normally be a matter for independent expert evidence.
[157] Cavendish Rowe therefore fails to establish that it has any cross-claim against CHL for breach of any obligation.
Conclusion
[158] The final outcome of this matter is therefore as follows:
(1) I will give judgment for CHL against Cavendish Rowe, for the following sums in so far as they have not been paid for:
(i) rent of £95,000 pa for the period from 15 September 2004 until 15 September 2007, and thereafter;
(ii) mesne profits, calculated for each flat at 95% of the figures (given above) derived from Mr Maunder Taylor’s final evidence for the period from 15 September 2007 until:
(a) 29 May 2009 in the case of flats 1 and A; and
(b) possession given, in the case of each of the other flats.
(2) I will give judgment in favour of CHL against the second and third defendants concurrently in respect of the mesne profits relating to flat 1 against:
(i) the second defendant for the period from 15 September 2007 until 15 November 2008; and
(ii) the third defendant for the period from 15 September 2007 until 30 April 2008.
(3) The claim against the fourth defendant is dismissed.
(4) The counter-claim of the first defendant is dismissed.
(5) I will hear counsel on the question of the correct calculation of the judgment sums and any claim for interest, and any other consequential matters.
Claims against the first, second and third defendants allowed; claim against the fourth defendant dismissed.
