|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ferguson Latimer & Anor v Carney & Ors  EWCA Civ 1417 (27 October 2006)
Cite as:  EWCA Civ 1417
[New search] [Context] [View without highlighting] [Printable RTF version] [Help]
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Salford County Court
HH Judge Gilliland QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE WILSON
| James Ferguson LATIMER & Anr
|- and -
Gary Francis ROBSON
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Matthew Hall (instructed by Brabners Chaffe Street) for the 2nd Respondent
Nigel Bird (instructed by Hills (Bolton) for the 3rd Respondent
Crown Copyright ©
Lady Justice Arden :
"18(1) [The first limb] Damages for a breach of a covenant or agreement to keep or put premises in repair during the currency of a lease, or to leave or put premises in repair at the termination of a lease, whether such covenant or agreement is expressed or implied, and whether general or specific, shall in no case exceed the amount (if any) by which the value of the reversion (whether immediate or not) in the premises is diminished owing to the breach of such covenant or agreement as aforesaid; and [The second limb] in particular no damage shall be recovered for a breach of any such covenant or agreement to leave or put premises in repair at the termination of a lease, if it is shown that the premises, in whatever state of repair they might be, would at or shortly after the termination of the tenancy have been or be pulled down, or such structural alterations made therein as would render valueless the repairs covered by the covenant or agreement."(words in italics added)
"39. The claim to recover the estimated cost of repairs which Mr Hughes made is also bound to fail for similar reasons to the claim for the actual costs of the work. A claim to recover the estimated costs of repair cannot it seems to me be made when a claim for the actual cost of repair has failed and it is unclear what work has actually been carried out. It cannot now be said that it is intended to carry out only the work identified by Mr Hughes and he has accepted that the work carried out included more than he had identified as necessary repairs." (emphasis added)
"37. It was submitted that s.18(1) does not affect the claim for damages for the failure to redecorate the premises at the end of the lease. In my judgment a covenant to decorate premises should be regarded as a repairing covenant for the purposes of s.18(1) of the 1927 Act. It is common to refer to demised premises as being in decorative repair or not as the case may be and a covenant to decorate premises during or at the end of the lease is in substance a species of repairing obligation. S.18(1) of the 1927 Act applies to both general and to specific repairing obligations. A redecorating covenant is in my judgment a specific repairing obligation." (emphasis added)
Summary of conclusions
(1) The cap issue
It was common ground that the landlords had the burden of showing the amount of the damage to the reversion. The judge correctly held that in an appropriate case the court could infer the damage to of the reversion from the evidence as to the estimated cost of the repairs but was in error in holding that there was no sufficient evidence on the facts of this case. Even though he did not have expert evidence, he could draw the inference that the cap was not exceeded from the fact that the landlords had to repair the roof of the premises before they could be relet, and had to execute the other repairs before the new tenant would take his lease. The damage to the reversion should have been inferred from the estimated cost of repairing the roof and in addition from the estimated costs of remedying the other breaches found by the judge, that is the specific estimated costs as defined by me above, subject in the latter case to a discount of 60% to take account of the uncertainty as to the extent that the disrepair affected the value of the reversion.
(2) The amendment issue
The application to amend the notice of appeal should be rejected. It seeks principally to raise the argument that the judge should have inferred damage to the reversion from the period of time taken to relet the property. This ground raises factual issues not raised at trial as do the other grounds sought to be raised by this application.
(3) the decoration issue
The judge found that there was a breach of the covenant to decorate at periodic intervals. Nonetheless, as the decorative state of the premises also constituted a breach of the repairing covenant, section 18(1) applies also to the costs of decoration.
(4) The costs issue
In my judgment, it was plainly wrong for the judge to throw on to the landlords the whole of the burden of the third respondent's costs of bringing the Part 20 claim for an indemnity against the second respondent.
Further background facts and findings of the judge
(4) At all times to put keep and maintain the demised premises and the appurtenances thereof…and the painting and decoration thereof in good and tenantable repair and condition throughout the said term
(5) In the third year of the said term and also in the last year thereof (however determined) to prepare and then to paint in a proper and workmanlike manner all the inside…parts heretofore or usually painted…and also in every third year of the said term and in the last year thereof…to prepare and then to paint in a proper and workmanlike manner all the external parts heretofore or usually painted…"
" 16. The general picture given by the correspondence between Latimer Lee and Mr Weizman solicitors is that it was known from an early stage that Mr Weizman would be likely to be carrying out significant works of his own at the premises and that as well as making good some defects in the premises, the claimants were also taking the opportunity to carry out what were referred to in the letter dated 19 June  as refurbishment works. It is also apparent in my judgment that the claimants were seeking to coordinate what they would doing with Mr Weizman's requirements for his hot food take-away. The rewiring was for example to be done to his requirements."
"The costs of remedial works as shown in the schedule of dilapidations……………………………………………£12,840Alternatively, the costs of remedial works as carried out and shown in annexure D…………£23,823.39
Lost rent at £10,500 per annum for 386 days………..£11,104.11
Council tax incurred whilst the remedial works carried out £1,508.23"
(1) The cap issue
"… if there is evidence that the repairs done, being repairs within the covenant, were no more than reasonably necessary to make the rooms fit for occupation or reletting for residential purposes, we fail to see why the proper cost of those repairs should not be regarded prima facie as representing a diminution in the value of the reversion due to the tenant's breach of covenant, being money which the landlord, acting as an ordinary prudent owner, had to spend on the property owing to the breach and would not had to spend but for the breach…
The evidence of the tenant's surveyor as to the capital values of the whole house and of the part let to the defendant seems to us to be beside the point… we do not for a moment intend to cast doubt on its validity as a measure of the damages recoverable under section 18(1) in cases to which it is appropriate. But we certainly deprecate its introduction as a sine qua non into all cases, including a small and simple case like the present concerned with a letting of some of the rooms in a house, where it becomes a purely hypothetical calculation wholly removed from the practical realities of the matter." (page 118)
"depending on the facts, the diminution in value of the reversion might well be limited to the cost of those repair works which would survive the refurbishment." (para. 29-41)
" 78. … Expressing the essence of the general principle in my own words, I would put it this way: If none of the repairs could realistically be expected to survive the refurbishment or if only such an insignificant proportion could be expected to survive as to fall within the "de minimis" concept, it is difficult to see how the value of the landlord's interest at the term date would have been in any way diminished by reason of the disrepair. Equally, whenever some not insignificant part or parts of the repairs could realistically be expected to survive the refurbishment, it seems fairly obvious (a) that the value of the landlord's interest at the term date is likely to be to some extent diminished by reason of the disrepair and (b) that the extent of the diminution is likely to be related to the value of the repairs that could realistically be expected to survive ("the survival items") and whatever (if any) reduction in the time required for refurbishment was to be expected if those repairs had been carried out by the tenant before the term date."
"That is plainly right as a matter of principle. The problem is relating it to the practicalities of the disposal of business in the county court. County court judges constantly have to deal with cases that are inadequately prepared and presented, either as to the facts or as to the law (or both), and they must not be discouraged from doing their best to reach a fair result on inadequate movements. Moreover, there is a strong public interest in encouraging litigants not to incur the expense of a proliferation of expert witnesses (in this case, actuaries and valuers have been mentioned), unless the additional expense of time and money can be justified.
I am sure that the judge was wrong to treat undiscounted costs of repair as a safe guide in this case, especially as he did not find that the landlord was going to undertake any repairs itself. I am sure that the judge would have been assisted by evidence of the effect of disrepair (caused by a tenant's breaches of covenant) on the value of the freehold interest in the farm if it been put on the market, subject to and with the benefit of the tenancy, at the date of the hearing. Evidence on those points could have been obtained from the two agents who were called as witnesses, one on each side, without the need for new experts…
I am, however, by no means sure that the judge needed evidence, beyond what was before him, for the simple proposition that a tenanted farm in a seriously bad state -- and it must be remembered that the judge rejected Mr Silk's case that the breaches were non-existent or trivial -- is worth less than a tenanted farm where the tenant has complied with all his obligations. The judge said at the end of his second judgment that on the termination of the tenancy with the breaches remaining unremedied, "an intending purchaser would insist that due allowance from the purchase price be made for putting all these matters right". By parity of reasoning, a purchaser would expect some allowance if he was buying the freehold subject to a tenancy, where there were continuing breaches. He would not be satisfied with the bland assurance that it will be put right before the end of the tenancy.
The true position is (as Millett L. J. observed in the course of argument) that general damages are at large, and the judge must do the best he can, just as the jury would have had to do when civil actions were heard by juries. I have already referred to the old case of Worcester School Trustees, tried by Coleridge J with a jury. Just the same approach can be seen in Portman v Latter (1942) WN 97, in which Croom-Johnson J. was unimpressed by all the expert witnesses, but he proposed "to deal with the case as he thought a jury would" and assessed damages, in the particular circumstances of that case as they appeared in evidence, at about three-fifths of the cost of the repairs. There the lease had come to an end, but the premises could not be relet as a dwelling-house.
Where a landlord claims damages for breach of a repairing covenant near the beginning or in the middle of the term of a long lease (and on the assumption that he gets leave under the Leasehold Property (Repairs) Act 1938 as amended), he will, if he fails to lead evidence of diminution in the value of the reversion, run a serious risk of the court concluding that there has been no significant diminution. Where a tenant is defending such a claim towards the end of the term of the lease he will, if he fails to lead evidence that the diminution is much less than the cost of the repairs, run a serious risk of the court accepting cost (or that cost only slightly discounted) as the best evidence of the diminution. In most cases that the evidence before the court (even if imperfect and incomplete) will be more important than issues as to the burden of proof." (pages 4 to 5)
"A claim to recover the estimated costs of repair cannot it seems to me be made when a claim for the actual cost of repair has failed and it is unclear what work has actually been carried out."
"[W]hilst a failure to adduce valuation evidence as to the occurrence or non-occurrence of diminution in value of the reversion will not necessarily be fatal, a well-advised party will usually ensure that such evidence is before the court."
(2) the amendment issue
(3) the decoration issue
"a covenant to decorate premises during or at the end of the lease is in substance a species of repairing obligation."
(4) the costs issue
Lord Justice Wilson: