The immediate question which the Court of Appeal was asked to resolve was whether Mr Moorjani was entitled to damages for his landlord’s breach of its repairing covenant over a period of time when he was not living in his flat for reasons that had nothing to do with the condition of the flat.

That issue was underpinned by a significant question of principle.

Briggs LJ put it thus:

“whether the loss caused by … a breach [of a repairing covenant] (which, being temporary, causes no damage to the capital value of the lessee’s interest) lies in the impairment in the amenity value of the lessee’s proprietary interest in the flat, for which he has paid rent or a premium, or in the experience of discomfort, inconvenience and distress which the lessee actually suffers because of the disrepair”.

Mr Moorjani was the long lessee of a flat in Gloucester Place in Central London. The premium paid, way back when the lease was granted in 1977, was £16,000. A small ground rent was payable, and Mr Moorjani was liable to pay a service charge.

Under the lease, the landlord was obliged to:

• To maintain and repair the common parts;
• To insure the building, noting the interest of the lessee and any mortgagee on it if requested, and
• To use any money received by way of insurance “with all convenient speed” in rebuilding, repairing or otherwise reinstating whatever had been damaged.

“It is well known, and common ground in this case, that [an insuring] covenant of that kind places an implied obligation on the lessor to pursue its rights under such a policy, so as to generate payment by the insurers for whatever works of rebuilding, repair and reinstatement are necessary because of the occurrence of an insured risk: see generally Vural Limited v Security Archives Limited (1989) P&CR 258”, said Briggs LJ.

2005

In 2005, just as refurbishment work to it was completed, Mr Moorjani’s flat suffered a serious leak from the flat above.

The landlord’s managing agent told Mr Moorjani that the managing agency would deal with the repairs. The trial judge considered that in so saying, the agent meant to reassure Mr Moorjani that the managing agent would deal with the insurance claim and the problems that had been caused by the flood and were covered by the insurance.

Repair works were carried out later that year. Mr Moorjani was unhappy with them, but the trial judge held that the problems were mainly decorative, and that the flat was habitable. 

2006

Mr Moorjani’s complaints about the quality of the repair works were interrupted by a further, persistent, but less intrusive leak in 2006.

Drily, Briggs LJ observed that the 2006 leak had the effect of:

“muddying the waters as to the extent to which the disrepair later identified by the parties’ experts had been the result of the 2005 flood, the 2006 leak or a combination of the two”.

In the end, Mr Moorjani engaged his own workmen to finish the redecoration of his flat.

Mr Moorjani happened to be living with his sister when the 2005 flood happened. He returned to his flat in early 2008.

In 2011, he brought a claim against Durban Estates, claiming damages under four headings:

1) Loss of rental income from his flat;

2) Special damages for works not covered under the insurance policy following the 2005 flood, and that he had paid for from his own pocket;

3) General damages for breach of Durban Estates’ obligation to keep the common parts in repair between 2001 and 2011, and

4) General damages for breach of insuring and reinstatement obligations.

Loss of rent

The claim for loss of rent failed at trial. Permission to appeal was refused. That head of loss therefore fell away.

Special damages

The judge considered that Mr Moorjani had not proved his case on the second head of loss. Permission to appeal that issue was however granted.

Disrepair to the common parts

The judge held that:

• There was insufficient evidence of disrepair before 2005. Permission to appeal that period was refused;
• The claim for the period 2005 to 2008 should be dismissed because Mr Moorjani had not been living in the flat at the time. Permission to appeal that element was granted;
• Damages of £1,500 were warranted for the period from January 2008 to March 2011 for the disrepair to the common parts. Permission to appeal that point was granted on the basis that the level of damages may have been too low.

Damages connected with insurance and reinstatement

On this point, the judge held that Mr Moorjani had suffered no loss, because he had not been living in the flat between the time of the flood in 2005 and the completion of the reinstatement work in 2007.

Briggs LJ dealt with the issues in the following order:

• The cost of works not recovered under the insurance policy;
• Whether £1,500 was too low as an award of damages for shabby common parts between 2008 and 2011 whilst Mr Moorjani was in occupation of the flat;
• The question of principle: whether there was an entitlement to damages for the period when Mr Moorjani was not living at the flat for reasons unconnected with its disrepair.

These expenses related to:

• Warped doors, costing £1,650;
• Repairs to the master bedroom costing £1,800;
• Electrical repairs.

In principle all of these were covered by the insurance policy, and should have been pursued by the managing agent.

The trial judge determined that it was for Mr Moorjani to prove his case. She found that he had not done so.

Briggs LJ disagreed. Mr Moorjani had proved his case for the doors and bedroom repairs. He had shown:

• The damage had been caused by the 2005 flood;
• It fell within the scope of the insurance policy;
• The landlord, through the managing agent, had agreed to pursue a claim for Mr Moorjani for damage caused by the 2005 flood, and
• Mr Moorjani had raised the doors and bedroom damage with the managing agent in sufficient time for a claim to be pursued.

Conversely, the landlord had not produced any evidence to show that it had pursued the claim with the insurers.

“The ball was in the lessor’s court … and it was for Durban Estates to prove, if it could, that the fault lay with the insurers rather than them”, said Briggs LJ. “The evidence … persuades me that these items became in practice irrecoverable once the insurers’ deadline had passed, and the 2006 leak muddied the waters. It was, before that date, the failure of Gross Fine to pursue a claim in relation to those items, for which Durban Estates is liable, that led to Mr Moorjani having to deal with them at his own expense”.

The costs of repairs to the doors and master bedroom were therefore allowed. The electrical work was not allowed, Mr Moorjani not having been able to quantify that loss with evidence.

“How does one put a value on three years of living in an apartment block where the common parts are shabby?” asked the trial judge.

This is how.

Quantifying the loss

Counsel at the trial put three cases before the judge by way of comparable:

• Earle v Charalambous [2007] HLR 8;
• Lewin v Brent London Borough Council (1995) CLY 1574, and
• Sella House Ltd v Mears [1989] EGLR 65.

Two of those cases related to disrepair in the common parts, and carried awards of £450-£513, updated for inflation.

The market rental value of Mr Moorjani’s flat in 2008 was £550 per week.

The trial judge allowed for an increase of 5% per year, and considered that the loss of amenity amounted to 1-2% of that rental value. She awarded Mr Moorjani £1,500, being £500 per year.

Mr Moorjani’s appeal was based on that calculation being plainly too low.

The Court of Appeal’s judgment

Briggs LJ observed that:

“loss of amenity attributable to failure to repair common parts does not lend itself to scientific analysis. It is pre-eminently a matter for an experienced judge (sitting like this Judge) regularly in the local county court for the district which includes the property in question”.

So saying, he followed the lead of Carnwarth LJ in Earle v Charalambous, turned to Wallace v Manchester City Council (1998) 30 HLR 1111, and cited Morritt LJ:

“Thus the question to be answered is what sum is required to compensated the tenant for the distress and inconvenience experienced because of the landlord’s failure to perform his obligation to repair. Such sum may be ascertained in a number of different ways, including but not limited to a notional reduction in the rent. Some judges may prefer to use that method alone (McCoy v Clark), some may prefer a global award for discomfort and inconvenience (Calabar Properties Ltd v Stitcher and Chiodi v De Marney) and others may prefer a mixture of the two…

“But in my judgment, they are not bound to assess damages separately under heads of both diminution in value and discomfort because in cases within the third proposition those heads are alternative ways of expressing the same concept…

“The question is the monetary value of the discomfort and inconvenience suffered by the tenants. That is a matter for the judge. As Kennedy LJ observed in the course of argument there is no market in out-of-repair council houses on which expert evidence could be either admissible or helpful. Secondly, a judge who seeks to assess the monetary compensation to be awarded for discomfort and inconvenience on a global basis would be well-advised to cross check his prospective award by reference to the rent payable for the period equivalent to the duration of the landlord’s breach of covenant. By this means the judge may avoid over- or under-assessments through failure to give proper consideration to the period of the landlord’s breach of obligation or the nature of the property”.

Turning to Mr Moorjani’s case, Briggs LJ noted that the trial judge had cross-checked her award against a notional reduction in rent.

That 1-2% reduction was very low: had Briggs LJ been conducting the trial, he might have reviewed it upwards. However in that time-honoured phrase adopted by many appeal judges, he observed that he had not “had the benefit of having heard the evidence”, nor did he have the trial judge’s “considerable experience in cases of this type in Central London”.

In those circumstances he did not consider that he could interfere with the assessment. That ground of appeal was therefore dismissed.

Is a lessee entitled to damages for loss of amenity in relation to property which s/he does not occupy at the time of the relevant breach of covenant?

Briggs LJ began with a preview of the two alternatives.

Impairment of a property right

If this were the correct approach to assessing damages, it would not matter whether a lessee occupied the property full time, part time, not at all or sublet. Briggs LJ had two observations:

“This reflects a long-standing principle of the law of damages, which is that what the claimant chooses to do with property damaged by the defendant’s breach, otherwise than by way of mitigation, is res inter alios acta [roughly trans.: “is no one’s business but his own”]…;

“Furthermore, it is fully applicable, in the context of leases, to the quantification of damages for a tenant’s breach of repairing obligations, where it is irrelevant to the landlord’s loss that he has, before delivery-up, already re-let the premises at a rent which takes no account of the disrepair: see Joyner v Weeks [1891] 2 QB 31 and Haviland v Long [1952] 2 QB 80.” 

Personal inconvenience, discomfort and distress

The alternative approach was to measure loss on a more personal basis. In that event, it was crucial to be clear about what the lessee had or had not done with his property: if s/he only used it on high days and holidays, the damages would be considerably lower than if the flat was occupied full time by him.

The nature of the lessee would also be key, because Lewis v Daily Telegraph Ltd [1964] AC 234 and Electricity Supply Nominees v National Magazine Co [1999] 1 EGLR 130 were authority for the proposition that a corporate lessee cannot suffer distress or discomfort.

The authorities

Briggs LJ called in quite a cohort of Court of Appeal case law in his resolution of this aspect of the appeal:

• Hewitt v Rowlands (1924) 93 LJKB 1080;
• Calabar Properties v Stitcher [1984] 1 WLR 287;
• Wallace v Manchester City Council (1998) 30 HLR 1111;
• Earle v Charalambous [2007] HLR 8;
• Shine v English Churches Housing Group [2004] HLR 42, and
• McCoy v Clark (1982) 13 HLR 87.

None of the cases expressly plumped for a solution to the particular dilemma before the court. Briggs LJ therefore perambulated their facts and reasoning.

Hewitt v Rowlands

The tenant of a cottage which suffered from terrible damp remained in occupation of it. Bankes LJ made the following statement of principle:

“Prima facie, the measure of damage for breach of obligation to repair is the difference in value to the tenant during that period between the house in the condition in which it now is and the house in the condition in which it would be if the landlord on receipt of the notice had fulfilled his obligation to repair”.

Calabar Properties v Stitcher

Here a top floor flat was damaged as a result of the landlord’s failure to comply with its repairing covenants. The tenant and her husband remained in occupation, suffering discomfort, distress and ill-health until they could bear it no more and left for good.

The tenant succeeded in her claim against the landlord for:

• The cost of repairs and redecoration, and
• A global sum for their discomfort, distress and ill-health.

She failed in her claim for damages for loss of amenity based on the rental value of the flat.

Her claim for the cost of alternative accommodation also failed, but only because it was not pleaded.

In the Court of Appeal, Griffiths LJ held that, as a matter of principle, a claim for the cost of alternative accommodation may be recoverable if property became uninhabitable as a result of a landlord’s breach of a repairing covenant.

He continued:

“The object of awarding damages against a landlord for breach of his covenant to repair is not to punish the landlord but, so far as money can, to restore the tenant to the position he would have been in had there been no breach. This object will not be achieved by applying one set of rules to all cases regardless of the particular circumstances of the case. The facts of each case must be looked at carefully to see what damage the tenant has suffered, and how he may fairly be compensated by a monetary award”.

Referring to Bankes LJ in Hewitt v Rowlands, Griffiths LJ then observed that each case depended on its individual circumstances, and it was not necessary in every case to obtain valuation evidence:

• A tenant of a Rent Act statutory tenancy could not claim damages equivalent to the market rental value of the flat because he could not stop occupying it and rent it out without losing his tenancy. The tenancy therefore had no market value;
• A tenant who remained in occupation of premises in disrepair was entitled to compensation for the discomfort and inconvenience caused by his landlord’s breach of covenant;
• A tenant who had rented a property in order to let it out may however be entitled to damages equivalent to the market rental value of the flat if the flat could not be let out as a result of the landlord’s breach of covenant;
• A tenant who is driven out and forced to sell a property may be entitled to measure his loss by reference to the difference between the actual sale price and the price s/he would have obtained, had the landlord complied with the repairing covenant.

Wallace v Manchester City Council

The tenant and her two children stayed put in their council property under a secure tenancy, even though the landlord was in breach of its repairing covenant and the property was in an appalling state.

Morritt LJ identified the following propositions:

• The aim of an award of damages for breach of a repairing covenant is, so far as money can, to put the tenant into the position s/he would have been in, had the repairing covenant been complied with;
• It follows that the court will need to compare the property in its actual condition with the condition that it should have been in, had the repairing covenant been complied with;
• If a tenant remains in occupation, the tenant’s loss is the loss of comfort and convenience which results from living in a property which is not in the covenanted state of repair;
• If the tenant does not remain in occupation but is compelled to sell or sublet, his loss is the diminution in price or rent caused by the landlord’s breach. If the property is sold, a tenant cannot claim for discomfort and inconvenience after that sale.

“The question to be answered”, he said, “is what sum is required to compensate the tenant for the distress and inconvenience experienced because of the landlord’s failure to perform his obligation to repair. Such sum may be ascertained in a number of different ways, including but not limited to a notional reduction in rent. Some judges may prefer to use that method alone…, some may prefer a global award for discomfort and inconvenience … and others may prefer a mixture of the two… but in my judgment, they are not bound to assess damages separately under heads of both diminution in value and discomfort because in cases within the third proposition those heads are alternative ways of expressing the same concept”.

Earle v Charalambous

The claimant was the long lessee of a top floor flat that was damaged as a result of a leaking roof, for which the landlord was responsible.

In the end, he moved out of the flat to live with his parents until the roof was repaired, whereupon he resumed occupation.

He was awarded damages in two tranches:

• For the period whilst he was in occupation, and
• For the time he spent living at his parents’.

In the Court of Appeal, Carnwath LJ, with whom Morritt C and Moses LJ agreed, gave the lead judgment. He compared Mr Earle’s position with Wallace, Calabar and Hewitt.

• Wallace was a case of a secure weekly tenancy, where the weekly rent was not the ideal guide to the true value of the tenancy to the tenant;
• Calabar had been criticised by HHJ Hicks QC in Electricity Supply Nominees Ltd v National Magazine [1999] 1 EGLR 130. In Carnwath LJ’s view, it was not authority for departure from Bankes LJ’s statement of principle in Hewitt.

For Briggs LJ there was one standout phrase in the judgment:

“Distress and inconvenience caused by disrepair and not free-standing heads of claim, but are symptomatic of interference with the lessee’s enjoyment of that asset”.

That phrase was not, in Briggs LJ’s view, confined to long leases. It was equally applicable to periodic, secure and even statutory tenancies because:

“In each case, the lessee or tenant enjoys a recognisable species of property right, in return for payment, either in the form of a premium, a rack rent or a fair rent. If in any of those cases the amenity or value of that bundle of rights to the lessee or tenant is impaired by the lessor’s or landlord’s breach of covenant, then that is a loss of which discomfort, inconvenience or distress (or the breakdown in health of a loved one) are all symptoms”.

he tenant in this case refused to leave his flat despite the landlord’s offers to accommodate him elsewhere whilst it carried out repairs. That refusal amounted to an unreasonable refusal to mitigate his losses.

The trial judge awarded damages in excess of the rent payable by the lessee, and the Court of Appeal reduced the award on the basis that it could not be justified.

For Briggs LJ, the key phrase to emerge from the judgment was that, in a contractual claim such as an action for breach of the terms of a lease:

“the award of damages for stress and inconvenience should be related to the fact that the tenant is not getting proper value for the rent”.

hine was however a case where the tenant was not the tenant under a long lease for which a premium had been paid.

Briggs LJ noted that where the lease in question was a long lease, two different considerations applied, although he did not explore them in detail, and emphasised that they did not detract from the overarching principle that breach of covenant caused impairment in a lessee’s property rights.

First, an award of damages was intended to compensate the lessee for the loss of value of the premium paid for the lease, as opposed to the weekly rent.

Second, whilst the obligation lay on the landlord to carry out repairs and maintenance, the money to pay for repairs and maintenance came from the lessees through the service charge. It was a matter of speculation as to whether, by failing to demand the money at the time when the repairs were needed, the landlord had ameliorated or, when the service charge was finally demanded, aggravated the lessees’ financial positions.

McCoy v Clark (1982) 13 HLR 87

The tenant here effectively used his flat as a dormitory – he neither decorated, furnished nor tidied it. The trial judge therefore awarded a very low amount by way of damages. The tenant appealed.

Sir David Cairns, who allowed the appeal but did not refer to any authority or principle, said:

“On that basis, was the compensation that was awarded to the defendant for it adequate? In my view, it was not. It is all very well to say that the defendant was not spending a great deal of the day in the flat and that he was using it mainly as a sleeping place. If he had the flat as a sleeping place and was willing to pay £9 per week for the flat for that purpose, then he is entitled to a flat which is comfortable for that purpose, and if it is substantially reduced in the degree of comfort, than I think that what he ought to recover is something proportional to that reduction”.

That lengthy perambulation around the authorities allowed Briggs LJ to reach a number of “tentative” conclusions.

The root of the loss

Both Calabar and Wallace refer to discomfort, inconvenience and distress as if they were themselves the losses suffered. Briggs LJ however opined that:

“the better view is that the loss consists in the impairment to the rights of amenity afforded to the lessee by the lease of which discomfort, inconvenience and distress (even the deterioration of the health of a loved one) are only symptoms”.

That was so if liability for the performance of the repairs and reinstatement lay on the landlord, irrespective of whether the lessee was liable to pay for those repairs and reinstatement by way of service charge. In Briggs LJ’s words:

“The quality of [a lessee’s] enjoyment is underpinned by the lessor’s promise to carry out [its] obligations diligently and in due time, rather than to neglect or delay in their performance”.

Use and non-use

If Briggs LJ’s first tentative conclusion was correct, the use that would have been made of the property, had it not been in disrepair, was not relevant to the assessment of damages.

Mitigation

In what I am tempted to interpret as a rather uncomfortable reconciliation of Earle with his conclusions, Briggs LJ rowed back from entirely disregarding the lessee’s use – or non-use – of his/her property rights during the period of disrepair.

In Earle, the tenant had suffered a 100% loss of amenity, because he had been unable to live in his flat at all. The Court of Appeal limited his damages to 50% of the market value of the flat however because he mitigated his loss by living with his parents.

In the light of that limitation, Briggs LJ’s view was that use/non-use of the property in disrepair was potentially relevant to the question of mitigation, adding however that where property was not useable, the cost of renting alternative accommodation may be the better measure of a lessee’s loss.

A form of mitigation?

In a rather curious continuation of his mitigation theme, Briggs LJ then observed that “it would be strange if mitigation were the only principle by reference to which the limited use or non-use of leasehold premises during the period of disrepair was relevant”.

The trial judge had held that Mr Moorjani’s absence from his flat was unconnected with the flood and his landlord’s subsequent breaches of covenant.

If however Mr Moorjani had left his flat as a result of the breaches, Briggs LJ considered that it would have been wrong to award him 100% of the rental value of his flat.

That was because Mr Earle had only recovered 50% of the rental value when he left his flat in order to mitigate his loss, even though he suffered an equivalent impairment of his rights.

In order to reconcile the two positions, Briggs LJ was obliged to adopt a rather unattractive conclusion, that being that:

“It may be that non-use for reasons unconnected with the disrepair should be regarded as a form of mitigation of loss, even if there is no intention to mitigate, but it will not wholly cancel out the loss constituted by the impairment of the amenity, for which the tenant has paid rent, and the lessee a premium, even if he lives elsewhere rent-free”.

Effectively therefore, and despite Briggs LJ’s opening observation in this section, it would appear that mitigation is the only context in which use of the property falls to be considered.

Adequacy

Finally, Briggs LJ considered the situation where the rental value may be insufficient to adequately compensate a lessee’s loss.

“The court is entitled, and, I would say, obliged to temper the rigour of those rules which seek to implement the compensatory principle which lies at the heart of the law of damages, where particular circumstances make it just to do so, see generally County Personnel (Employment Agency) Ltd v Alan Pulver & Co [1987] 1 WLR 916.”

The point had already been adverted to by the Court of Appeal in Shine – damages may exceed the market rental value in given situations where there are aggravating factors, just as they may be reduced in others, and not only where the relevant conduct is effectively by way of mitigation.

It will be no surprise to learn that Briggs LJ determined that Mr Moorjani was entitled to damages for disrepair to the common parts for the period during which he was out of occupation for reasons unconnected to the disrepair.

This is how he approached the assessment of Mr Moorjani’s damages:

• The market rental value of the flat was the starting point for assessing the damages to which he was entitled;
• That value should be significantly reduced because neither the flat nor the common parts was in more than cosmetic disrepair;
• It should be further reduced to take account of the fact that Mr Moorjani was not in occupation of the flat at the relevant time, and therefore sustained a lesser loss than a lessee in occupation.

So as to save the parties having to return to the county court for the exact sum to be determined, Briggs LJ carried out the assessment himself, applying, entirely without irony bearing in mind the complaint that the disrepair was decorative, a “broad brush” approach.

The assessment

The notional weekly rental value of the flat in 2008 was £550.00.

Between 2005 and 2006, Mr Moorjani complained only of disrepair to the common parts.

• Briggs LJ reduced the rental value by 5% a year in order to calculate the rental value for 2005 and 2006;
• Had Mr Moorjani been in occupation of the flat, he would have awarded 5% of that rental value;
• As Mr Moorjani had not been in occupation, Briggs LJ reduced that 5% to 2.5%.

From 2006 until the first quarter of 2007, both the flat and the common parts were in a state of disrepair.

• Briggs LJ again applied a 5% reduction per year from the 2008 figure;
• Had Mr Moorjani been in occupation, Briggs LJ would have awarded him 20% of the rental value;
• Again however, as he had not been in occupation, that 20% was reduced to 10%.

From the second quarter of 2007 until early 2008 when Mr Moorjani returned to the flat, only the common parts were in disrepair. Briggs LJ applied the same methodology as for the 2005-6 period.

Both King and Longmore LJJ agreed with Briggs LJ.

My observations will follow in a separate post. This one is quite long enough, and there is plenty to say about Briggs LJ’s conclusions.

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