Mira and others v Aylmer Square Investments Ltd and others

Breach of covenant for quiet enjoyment — Damages — Measure of damages — Loss of rent from subtenancies — Whether Hadley v Baxendale rules applicable — Landlord’s appeal dismissedThe appellant landlords are the owners of three blocks of flats; the respondents held long leases of individual flats. In 1985 the appellants commenced building operations to construct penthouses on the roofs of the blocks and by the time of the trial the work was still not complete. Because the tenants experienced dust, dirt, loss of privacy, interference with television reception, deterioration in the condition of the common parts and general inconvenience, they claimed damages from the appellants for breach of the covenants for quiet enjoyment. In the court below, His Honour Judge Newey QC decided (December 1 1988) that in relation to the sample claims of Mr and Mrs Mira and Dr Bush, the former were entitled to loss of rental income from subletting of £210 per week and the latter was entitled to loss of rental income of £250 for six months. The landlords appealed. Held The appeal was dismissed. Although there was no direct contractual relationship between the appellant landlords and the respondents, the contract rule in Hadley v Baxendale (1854) 9 Ex 341 applied to the measure of damages. However, as the appellant landlord was not aware that the respondents intended to sublet, rule 2 in the Hadley case did not apply. The principles for the assessment of damages are set down in Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 WLR 433 and Calabar Properties Ltd v Stitcher [1984] 1 WLR 287. In the circumstances of the long leases of these flats, it was foreseeable that the lessees might wish to sublet. There was nothing in the decision in the Calabar case to preclude damages for loss of rental income from subletting; it was foreseeable and came within rule 1 of the Hadley case. Czarnikow (C) Ltd v Koufos [1969] 1 AC 350 considered. Paul Collins (instructed by Michael Freeman & Co) appeared for the appellants; John McDonnell QC and Keith Hornby (instructed by Bindman & Partners) appeared for the respondents.