Landlord and tenant — Landlords’ claim for possession and arrears of rent — Tenant’s counterclaim for damages for breaches of landlords’ covenants to repair and provide services — Appeal from decision of county court judge, who dismissed possession claim, assessed rent arrears due to landlords at £2,988.77 and awarded tenant £5,895 together with interest of £1,250 on his counterclaim — Landlords’ appeal related only to amount of damages awarded on counterclaim, there being no appeal on liability — The judge had found the tenant’s complaints of breaches of repairing and service obligations substantially justified; they were due mainly to the present landlords’ predecessors in title and most of the repairs had been completed by the date of the hearing — The larger part of the damages awarded by the judge was in respect of inconvenience, discomfort and injury to health — The award was attacked by the landlords on two grounds — First, it was submitted that the fair rent registered in respect of the property by the rent officer took account, under section 70 of the Rent Act 1977, of the state of disrepair due to the landlords’ breaches and that the tenant would be twice compensated if he received damages for breach of the covenant to repair — Second, it was alleged that the tenant (and his wife, of whom he was the statutory successor) had failed to take reasonable steps to mitigate their loss — The Court of Appeal rejected both submissions — As regards the first, the rent officer had taken account of the bad state of repair but he had also to place a value on the landlords’ repairing covenant, as it could not be assumed that the covenant would not be carried out in future — ‘The failure thereafter to carry out that covenant sounds in damages’ — As regards mitigation of loss, in view of all the circumstances, the age of the tenant and the age and state of health of his wife before she died, and their financial straits, the judge was justified in holding that they had done all that they reasonably could — Appeal dismissed
No cases are
referred to in this report.
This was an
appeal from a decision of Judge Vick QC, at Wandsworth County Court. The
appellants, plaintiffs in the county court, were the landlords of a flat at 31
Thurleigh Court, Nightingale Lane, London SW12, and claimed possession and rent
arrears against the defendant tenant, the present respondent, who
counterclaimed for damages for breach of covenants. The judge dismissed the
possession claim but made an award in respect of rent arrears and on the
tenant’s counterclaim. The appeal by the landlords was only in respect of the
latter.
J Ferris
(instructed by Rochman Landau) appeared on behalf of the appellants; John
Hodgson (instructed by Corsellis Church Rackham) represented the respondent.
Giving
judgment, GLIDEWELL LJ said: This is an appeal against an order of His Honour
Judge Vick QC in Wandsworth County Court on June 4 1987 when the learned judge
ordered as follows: he entered judgment for the plaintiffs, Sturolson & Co,
for the sum of £2,988.77 for rent arrears; he dismissed the plaintiffs’ claim
for possession of 31 Thurleigh Court, Nightingale Lane, London SW12; he ordered
that judgment be entered for the defendant on the counterclaim for £5,895
together with £1,250 interest; and he ordered the plaintiffs to pay the
defendant’s costs of the claim and counterclaim.
The plaintiffs
appeal to this court in relation to the amount of damages awarded on the
defendant’s counterclaim. There is no appeal on liability.
The facts as
agreed or as found by the learned judge can be summarised as follows. The late
Mrs Mauroux became tenant of flat 31 Thurleigh Court, Nightingale Lane,
Clapham, in 1963. She and her husband had previously occupied another flat in
another block owned by the same landlords, who were then a company called Keene
Investments Ltd. At that time Mr Mauroux was 52. Now simple mathematics show he
is either 76 or 77.
By 1979, and
for many years before that, Keene Investments Ltd failed to comply, first, with
an express covenant in the tenancy agreement, or a number of express covenants
of which the most important was to supply constant hot water both for heating
and for domestic purposes, and, second, with the covenant implied by section 32
of the Housing Act 1961 that they should repair the structure and the exterior
of the premises. Mr Mauroux, on his wife’s behalf, complained continually about
the landlords’ failure to carry out their covenants and gave written notice
from time to time of the various defects. But the landlords did nothing.
Indeed, their agent told him in effect that they did not intend to do anything
because the land on which the building stood was worth more than the building
itself. So after a time Mrs Mauroux withheld her rent.
In an action
commenced in 1979 Keene Investments Ltd sued Mrs Mauroux for arrears of rent,
then amounting to £742.76 and they claimed forfeiture of the lease and
possession of the premises. By a defence and counterclaim Mrs Mauroux alleged
the breaches of covenant to which I have referred and claimed to set off
damages for those breaches and, indeed, to counterclaim.
I should have
said that, sadly, during the time that she lived at these premises Mrs Mauroux
increasingly lost her sight and in the latter years of her life she was, as I
understand it, totally blind. She died on June 2 1982. Mr Mauroux remained in
possession of the premises as successor to her statutory tenancy under the Rent
Act. The state of disrepair continued. Meanwhile, at a date of which I am not
certain but which must have been before 1983, the present plaintiffs, Sturolson
& Co, bought the block of flats from Keene Investments Ltd, subject, of
course, to their existing state of disrepair and to the landlords’ liability
under the repairing covenants and under the express covenants.
On July 1 1983
Sturolson & Co started a second action against Mr Mauroux, again claiming
forfeiture and possession for non-payment of rent, which by now amounted to
£1,020. However, they also alleged, by amendment, a further breach of covenant
by him in that he had for many years acted, I think in a relatively modest way,
as agent for wine shippers and this they alleged constituted a breach of
covenant not to use the premises for the purposes of a business. Mr Mauroux, as
his wife had done previously, pleaded the landlords’ breaches of covenant as a
defence and set off and counterclaimed damages for those breaches.
In all the
circumstances, the learned judge refused to order possession, as I have already
said.
The period for
which Mr Mauroux, both in his own capacity and representing his wife’s estate
for the years in which she had been tenant, could claim damages for breach of
covenant was limited by the Limitation Act, that is to say to the period
starting some six years before the first action.
It is fair to
say that, unlike their predecessors, the plaintiff company were conscious of
their obligation to carry out their covenants, and by the time of the hearing
they had completed most if not all of the required repairs. Indeed, they had
done the major part of the work in the summer of 1983.
Now as I said,
there is no appeal by the plaintiffs with regard to liability. So far as
damages are concerned, the judge assessed damages under two broad heads. First,
he awarded damages for the diminution in the value to the Maurouxes of their
tenancy, including in this both damages for the state of disrepair of the
premises and for the failure to supply services, including the hot water.
Second, he awarded damages for discomfort, inconvenience and injury to health.
Mr Mauroux’
complaints as to disrepair and breach of covenant were set out in his
counterclaim in the second action in the following terms (para 11):
Particulars
(a) The Lessors have failed to keep the structure
and exterior of the premises in repair so that damp has penetrated the external
walls of the said flat to the extent that fungus grows on the inside of the
walls;
(b) The Lessors have failed to provide hot water
to the premises throughout the day or a sufficient supply of hot water to heat
the central heating radiators in the flat;
(c) The Lessors have failed to provide lighting
to the corridors of the building during the daytime so that the said corridors
are in darkness in the daytime and have failed to keep in repair the external
lighting of the building;
(d) The Lessors have failed to keep the
electrical wiring within the said flat in repair so that the same has been
unusable for long periods;
(e) The Lessors have failed to prevent water
penetrating into the said flat from a defective bath in the flat above;
(f) The Lessors have failed to keep in repair the
window frames of the said flat so that water penetrates into the flat through
the said frames and have left broken windows unrepaired for years;
(g) The Lessors have permitted cockroaches and
other insects to infest the boiler room below the said flat from whence they
have repeatedly penetrated into the said flat and caused a nuisance to the
Defendant;
(h) The Lessors failed to repair a defective bath
water closet and bathroom hand basin in the said flat for three years;
(i) The Lessors have failed to keep the external
drain outside the flat clear so that the said drain repeatedly became blocked
so as to be a nuisance to the Defendant.
The judge
specifically found for the plaintiffs — he found that he was not satisfied that
the defendant’s complaints were made out — on two of those items, namely the
penetration of water from the bath above and the infestation by cockroaches and
other insects. But that apart, he found for Mr Mauroux. He said (p 13):
The weight of
evidence adduced before me has satisfied me that Keene Investments were in
deliberate and continuing breach of their statutory obligations to repair from
at least 1965 onwards until they were replaced as landlords by Sturolson &
Co in late 1982, and there is every indication from all the documents and other
evidence that by the 1970s at the latest the state of disrepair had become
appalling and had nearly reached its peak, although it continued until repaired
by Sturolson & Co in late 1982 and 1983.
Having seen
and heard Mr Mauroux give his evidence and studied the documents carefully I am
satisfied that the defects complained of by him existed, that he complained
regularly about them, and that nothing was done about his complaints by Keene
Investments save to a minimal extent.
The judge
assessed the damages, not merely under the two heads to which I have referred
but separately in relation to each of four periods; the first is the period leading
up to the first action, that is to say to October 9 1978; the second is a
period from then until June 2 1982, the date of Mrs Mauroux’ death; the third
is a period from that date until the summer of 1983 when the present plaintiffs
had completed the major works of repair; and the fourth is the period to the
date of the hearing from the summer of 1983 onwards.
The judge
assessed the damages under head 1 for diminution in value for each of those
periods as a percentage of the total rent for that period. He did not always
choose the same percentage. Mr Ferris, for the plaintiffs, had not objected to
the judge adopting that as a method of assessment. The total awarded under this
head, to cover both the breach of the covenant to keep in repair and the breach
of the covenant to provide services, comes to £1,345. The judge did not specify
how much of that was for breach of the covenant to repair and how much was for
the breach to provide services.
The balance of
the award of damages under the counterclaim is under the second head,
inconvenience, discomfort and injury to health. Mr Ferris, who has argued the
plaintiffs’ case in detail and with skill, has put forward two quite separate
grounds of attack against the judgment.
First, he says
— and it is the case — that since June 1973 these premises have been let at a
rent which is a registered fair rent. That rent has been revised from time to
time; indeed, there have been five separate assessments. On June 5 1973 the
rent was assessed at £414.72 and, without going through the matter in detail,
it was reassessed at February 1977, November 1981 and April 1984, and on August
22 1986 it was fixed at £1,776.
By the Rent
Act 1977, section 70, the rent officer (whose task it is to determine a fair
rent) is given instructions as to matters which he is to take into account.
Section 70(1) provides:
In
determining, for the purposes of this Part of this Act, what rent is or would
be a fair rent under a regulated tenancy of a dwelling-house, regard shall be
had to all the circumstances (other than personal circumstances) and in
particular to —
(a) the age, character, locality and state of
repair of the dwelling-house,
(b) does not matter and subsection (2) does not
matter.
Subsection
(3):
There shall be
disregarded —
(a) any disrepair or other defects attributable
to a failure by the tenant under the regulated tenancy or any predecessor in
title of his to comply with any terms thereof.
So Mr Ferris
argues that the rent officer is obliged to take into account, and it must be
assumed did take into account, the state of disrepair to which the landlords’
failure to carry out their repairing obligation had led. He must, therefore,
have fixed the rent at a figure lower than it would have been if the tenancy
had not been in that state of disrepair. Thus, Mr Ferris argues, the rent
officer has, in effect, already compensated the defendant for the state of
disrepair of the premises. He accepts that he has not compensated the tenant
for the failure to provide services because, in respect of that, the rent
officer is not concerned with the question whether the services are actually
provided, he is concerned only with the contractual position; that is to say,
he treats the matter as if the landlord was carrying out his obligation under
the contract to provide the services.
So Mr Ferris
argues that so far as disrepair is concerned, if the tenant is awarded damages
for the breach of the covenant to repair, he is in effect being awarded damages
for that for which he has already been compensated in the fixing of a lower
rent. Therefore, the award of damages of £1,345 must be excessive.
In his
judgment the learned judge dealt with this matter, shortly, in the following
terms (on p 20):
Of course I
have to have regard to the fair rent assessed and the dates of the assessments
and the intervals of time between assessments, and to the considerations to
which the rent officer and rent assessment committee are required to direct
their attention in arriving at their assessments. These include the nature of both
the landlords’ and tenants’ respective contractual and statutory obligations
and the condition of the dwelling-house when they inspect it, bearing in mind
that those inspections normally only take place at biannual intervals if not
longer. In my view that does not preclude me from determining on an objective
basis whether the landlords have been proved to have failed to perform their
statutory or contractual obligations to a measurable degree over and above that
reflected in the fair rent assessment.
So the judge
specifically had it in mind that section 70 of the 1977 Rent Act did require
the rent officer to take the state of disrepair into account but concluded in
that last phrase that there might well be something which might be the subject
of compensation for disrepair over and above that which the rent officer had
taken into account.
Mr Hodgson,
for Mr Mauroux, argues that this is indeed so. He submits that the rent officer
was obliged to value having regard both to the condition of the premises and
also taking account of the terms of the contract which included the landlord’s
implied obligation to repair. Obviously, he submits, that obligation was of
value to the tenant. The rent officer was not entitled to assume it would not
be carried out, even though in the end it was not. Obviously the rent of a
property in disrepair is less than that of a property in repair, even with a
repairing covenant in the lease. But the rent for a property in disrepair but
with a landlord’s repairing covenant will be greater than such a property where
there is no repairing covenant. Therefore, he says, the rent officer has not
wholly taken disrepair into account because he must have valued the value of
the repairing covenant and the failure thereafter to carry out that covenant
sounds in damages.
With that
argument I agree, and I would therefore reject the appellants’ argument under
this head.
The second
argument for the plaintiffs is that the Maurouxes, on ordinary principles, were
only entitled to claim damages under any head if they had taken reasonable
steps to mitigate their loss. They could, it is argued, have done this by
carrying out at least some of the repairs themselves, of Mr Mauroux carrying
them out, and then by withholding the cost of doing that from their rent — to
which it is suggested there would have been no answer. By not carrying out any
repairs — even the most modest or those requiring the least skill — themselves
they have failed to make out a case. Thus to an extent the award of damages
under both heads should be reduced.
Now by an
unfortunate error (which the county court has explained) the passage in the
judgment which was intended to deal with this matter was omitted from the draft
of the judgment that was originally circulated. I should have said that the
learned judge dictated his judgment, a draft of it was circulated to the
parties by post, and thereafter the parties’ representatives attended at court
on June 4 1982, when the judgment was formally given although I imagine was not
actually read out. However, the omission having been pointed out to the judge,
he added a passage which was what was originally intended to be inserted, which
reads as follows:
Mr Ferris has
urged strongly the alleged failure to mitigate by the tenants. The principles
to apply are expressed clearly in Chitty on Contracts (25th ed) at paras
1714 and 1715 thus: ‘The Plaintiff cannot recover for loss consequent upon the
Defendant’s breach of contract where the Plaintiff could have avoided the loss
by taking reasonable steps’ and ‘the onus of proof is on the Defendant who must
show that the Plaintiff ought as a reasonable man to have taken certain steps
to mitigate his loss’. The test is that of reasonableness and on the evidence
adduced before me I have formed the clear judgment that there was nothing which
Mr and Mrs Mauroux have done or failed to do as reasonable ordinary statutory
tenants to mitigate their damage or loss beyond what they did having regard to
the clear and deliberate policy of Keene Investments to let the block fall into
disrepair. Faced with this landlord they did all that they could reasonably be
expected to do, in my view, to make their flat habitable.
Mr Ferris
argues that, on the evidence, the Maurouxes did almost nothing. They could at
least, he says, have cleaned out the drains, or replaced the lights in the
corridors, or replaced window panes from time to time. And, as I have said,
they could if necessary, if that involved them in some cost, have withheld the
rent. Their failure to do so was so unreasonable that no judge could properly
find that they behaved reasonably.
With this also
I disagree. The parts of the works of repair which it is alleged the Maurouxes
could have done were, of course, all relatively minor and it may be that they
could have done them. It may be that some other persons differently situated,
without a wife who had gone blind and the worry that that entailed, and without
the financial stringency that the judge found the Maurouxes were under
certainly for most of the relevant period, would have carried out such works.
There were many parts of the disrepair which, of course, they could not
reasonably have been expected to do — curing the damp coming through the walls
where the fungus was growing through is an obvious example.
My view does
not depend upon a finding of any fact by this court; I regard it as being a
matter singularly within the province of the learned judge. He heard the
evidence. He was able to decide, in a way we cannot, what his view was of the
relative conduct of the parties, and his view of the conduct of Keene
Investments shines through from the passage I have already read and, indeed,
one or two other passages in the judgment. They behaved quite disgracefully.
The conclusion that he reached that it was not reasonable to expect Mr and Mrs
Mauroux to have done anything more than they did is one with which, in my view,
we cannot and should not interfere.
For these
reasons, I would dismiss this appeal.
Agreeing,
TAYLOR LJ said: The appellants’ main argument is based upon section 70 of the
Rent Act 1977. That requires that in fixing a fair rent for a regulated tenancy
regard shall be had ‘to all the circumstances (other than personal
circumstances) and in particular to — (a) the age, character, locality
and state of repair of the dwelling-house’. Thus, any disrepair is to be taken
into account in reduction of the rent. Mr Ferris argues that if the tenant
thereafter seeks damages for breach of the landlord’s covenants, such damages
cannot include any sum for disrepair; otherwise, he says, the landlord would
suffer a double penalty for the same default.
I cannot
agree. The rent officer has to have regard to all the circumstances of the
case. Those, in my judgment, include the existence of the landlord’s repairing
covenant. Mr Hodgson puts it another way: the fair rent must charge the tenant,
inter alia, for the value of the landlord’s obligation to repair. It is
true that the rent officer must take account of any disrepair at the time of
his assessment, but he is not to assume that any present disrepair will
continue indefinitely because of the failure of the landlord to discharge his
obligation.
Take two cases
for comparison. First, a landlord whose rent is fixed on the basis of present
disrepair thereafter rectifies the defects. The tenant continues to pay only
the fixed fair rent. Second, another landlord, such as the plaintiffs here,
does no repairs at all and indeed the disrepair may gradually progress. The
tenant still has to pay the same fixed rent. In those circumstances, I see no
reason why a judge faced with a claim for damages for breach of covenant should
not award a sum to the tenant in respect of the failure of the landlord to
carry out his obligations. He has, of course, to have regard to the fact that
the rent is fixed on the basis of existing disrepair, but that fact does not,
in my view, exclude the award of an appropriate amount to take account of the
continuation or deterioration of that disrepair and of the landlord’s failure
to discharge that repairing obligation for which the rent includes a charge.
I consider the
approach of the learned judge in this case was wholly justified and I agree
with Glidewell LJ that that argument addressed by Mr Ferris must fail. I do not
wish to add anything to what Glidewell LJ has said in respect of the argument
as to mitigation of loss. Accordingly, I agree that this appeal must be
dismissed.
The appeal
was dismissed with costs: legal aid taxation of defendant’s costs until January
7 1988 ordered.