[2015] EWCA Civ 1252; [2016] 1 WLR 2265; [2016] HLR 6; [2016] L&TR 17, 4 December 2015
Damages for breaches of a repairing covenant of a lease are for the impairment of the right to the enjoyment of occupation of a specific property for a specified period arising from the payment of a premium.; discomfort, inconvenience and distress are only symptoms of an interference of that right; 15 per cent notional reduction for deficiencies that were essentially decorative; five per cent notional reduction for common parts that were dilapidated, shabby and dingy; award then halved for period where the lessee was not living in the property
Mr Moorjani purchased the long leasehold of a flat in central London. Durban was the freeholder – and his landlord – of the building in which his flat was located. He decided to refurbish the flat before moving in and during this time lived with his sister. The lease required the lessor to maintain and repair the common parts of the building, to keep the flats insured against loss and damage and to use any money received from any insurers to repair, rebuild and otherwise reinstate the building or flat with all convenient speed. In 2005, before Mr Moorjani had completed refurbishing the flat and while he was living with his sister, there was a leak from the flat above which caused serious damage to his flat. In April 2006, the lessor’s insurers instructed contractors to carry out the works of repair. The works were of poor quality and failed to do all that was required. The deficiencies were, however, essentially decorative and did not cause the flat to become uninhabitable. In February 2007, Mr Moorjani instructed his own contractors to make good the remaining defects in the flat. His lessor agreed to pay for the cost of these works save for repairs to some doors, the master bedroom and electrical repairs. In 2008, Mr Moorjani moved into the flat. Between 2005 and 2011, Durban also failed to maintain and keep in repair the common parts of the building so that they became dilapidated, shabby and dingy.
In 2011, Mr Moorjani issued a claim for damages from Durban. He contended that he was entitled to special damages for the costs of the repairs to the doors, master bedroom and electrics. He also sought general damages arising from the failure to keep the common parts in repair between 2005 and 2011 and the failure to repair the damage to the flat caused by the leak for the period between April 2006 and February 2007 (ie from when the contractors were instructed to when he completed the works of repair to the flat).
HHJ May QC, refused to award damages for the period in which Mr Moorjani did not live in the flat and dismissed his claim for special damages. She did, however, award him damages arising from the poor decorative state of the common parts for the period in which he was living in the flat. The sum equated to one to two per cent notional reduction of the rental value of the flat, ie £1,500 over three years. Mr Moorjani appealed.
The Court of Appeal allowed the appeal in part. The judge had been wrong to dismiss claim for special damages. Mr Moorjani had proved that the doors and master bedroom had been damaged by the leak in 2005. He had also shown that he had drawn these matters to Durban’s insurer’s attention. It was therefore incumbent upon Durban to use the insurance money to carry out those repairs. The judge had, however, been right to refuse the claim in respect of the electrical repairs as the expert evidence did not demonstrate that they had been damaged by the leak in 2005.
It was not appropriate to interfere with the judge’s decision to award a one to two per cent notional reduction of the rental value in respect of the common parts. In awarding damages, she had applied the correct principles and as a county court judge had considerable experience of assessing damages in cases of this type, which the Court of Appeal did not.
The judge had, however, been wrong to refuse to award general damages for the periods in which Mr Moorjani had not been living in the property. Damages for breach of a repairing covenant of a lease are for the impairment to the rights of amenity afforded to the lessee by the lease, ie the right to the enjoyment of occupation of a specific property for a specified period arising from the payment of a premium. The quality of enjoyment is underpinned by the lessor’s promise to perform its repairing obligations under the lease. Discomfort, inconvenience and distress are only symptoms of an interference of that right. It is therefore not a fatal obstacle to a claim for damages arising from that impairment if the lessee has decided not to make use of the property. That does not mean that the use of the property is irrelevant to the quantification of damages. A lessee who decides to live in alternative accommodation, whether in mitigation or not, should not in principle be entitled to 100 per cent notional reduction in the rent. It ought not, however, wholly cancel out the loss occasioned by the impairment of the lessee’s right to enjoy his leasehold interest irrespective of where he lives. If the lessee does decide to live elsewhere he will, subject to an obligation to mitigate, be entitled to the cost of renting alternative premises. In certain cases, a lessee may be entitled to damages in excess of the current rental value, eg where a lessee or a member of the family has suffered from ill health. In other cases, however, the circumstances of the lessee may result in the award of damages being reduced.
It followed that the judge had been wrong to dismiss claims for general damages for the periods in which Mr Moorjani had not lived in the flat. The Court of Appeal decided that had he occupied the flat between 2005 and 2008 it would have awarded a five per cent notional reduction in the rent for the common parts. However, as he had been living elsewhere this was reduced to 2.5 per cent. Likewise, in respect of the flat, the Court of Appeal decided that had he been living in the property between 2006 and 2007 it would have awarded a 15 per cent notional reduction in the rent, but reduced the figure to 7.5 per cent.