Long lease — Landlord repairing covenants — Measure of damages — Judge assessing damages by reference to rack-rental value — Whether judge taking appropriate approach — Appeal allowed in part
The respondent held a 99-year lease of a one-bedroom flat on the top floor of premises owned by the appellant landlord. The respondent brought a claim against the appellant for damages for breach of the landlord’s repairing covenant, citing that disrepair to the roof had resulted in damp and water leakage into the his flat. The appellant admitted breach of covenant, and the only issue was the correct measure of damages.
The judge considered two separate periods when assessing damages: a 35-month period during which the respondent had continued to occupy the flat and a 21-month period throughout which, following the collapse of the kitchen ceiling, he had lived in his parents’ home. The judge awarded general damages of £20,000 for the first period and £10,000 for the second. In reaching that figure, he took the view that the effects suffered by the respondent were such as to nudge the level of damages towards the top end of the scale. He considered that the correct approach was to determine a global figure to compensate the respondent in respect of each period, and then to cross-check that figure against evidence of the rental value of the flat and the cost of borrowing to pay for it during the relevant period.
On appeal, the appellant contended that the judge’s awards were wholly excessive when compared to the damages awards in other housing disrepair cases, including those involving local authority landlords. He submitted that it was wrong in principle to base the award upon a notional reduction in rack-rental value, as was done in cases involving periodic tenancies, since the flat was the claimant’s home, not an investment, and only a ground rent was in fact payable.
Held: The appeal was allowed in part.
(1) The appellant could not rely upon some general “tariff” applicable in all housing disrepair cases, regardless of the nature and value of the property: Hewitt v Rowlands (1924) All ER 344, Wallace v Manchester City Council [1998] 3 EGLR 38; [1998] 41 EG 223 and Niazi Services Ltd v van der Loo [2004] EWCA Civ 53; [2004] 1 EGLR 62; [2004] 17 EG 130 considered. Many of the cases to which the appellant had referred concerned protected periodic tenancies from a local authority, where the actual rent might be an imperfect guide to the true value of the tenancy to its occupant. There was no analogy with a long lease of a residential property, which was not only a home but also a valuable property asset. Distress and inconvenience were not freestanding heads of claim, but were symptomatic of interference with the lessee’s enjoyment of that asset. If the lessor’s breach of covenant had the effect of depriving the lessee of that enjoyment, wholly or partially, for a significant period, a notional judgment of the resulting reduction in rental value was likely to be the most appropriate starting point for assessment of damages: Calabar Properties Ltd v Stitcher [1983] 2 EGLR 46; (1983) 268 EG 697 distinguished; Electricity Supply Nominees Ltd v National Magazine Co Ltd [1999] 1 EGLR 130 applied. It did not matter that the lessee occupied the property as a home and that it was not an investment, and that only a ground rent was payable. Diminution in market value was a familiar basis for assessing damages for wrongs affecting property, and carried no implication that an actual sale would take place; although the assumed sale was fictional, that element of fiction had never been regarded as an objection. Where the loss of value was temporary, as in the instant case, rental value rather than capital value was the appropriate yardstick: Wildtree Hotels Ltd v Harrow London Borough Council [2000] 2 EGLR 5; [2000] 31 EG 85 applied.
(2) However, the judge’s award of £20,000 for the first period was not supported by adequate reasoning and was excessive when viewed in relation to the respondent’s own claim. It would be reduced to £13,5000 to reflect the fact that things had got worse over time and to make allowance for the time reasonably needed to undertake the repairs.
Paul Letman (instructed by Henry Smith & Co) appeared for the appellant; Damian Falkowski (instructed by Rodgers & Burton) appeared for the respondent.
Sally Dobson, barrister
