Wallace & Ors v Manchester City Council

Damages for breach of a landlord’s repairing obligation must, so far as money can, restore the tenant to the position that proper performance would have produced. Where the tenant remains in occupation, the compensable loss is the discomfort and inconvenience caused by the disrepair. A notional reduction in rent may help quantify that loss, but it is not a separate head requiring an additional award. Where the tenant is entitled to remain but is forced to sell or sublet, diminution in sale price or recoverable rent may instead be appropriate. The two approaches are mutually exclusive for the same period. Expert valuation evidence is generally unhelpful. Housing benefit is irrelevant to compensation for the tenant’s discomfort and inconvenience.

A secure tenant of council housing and her two children claimed damages and specific performance for longstanding disrepair. The claims relied on the landlord’s statutory repairing obligation and duty concerning defects after notice. The county court found breaches, awarded each child £2,000, special damages of £780, and £3,500 for general distress, inconvenience and disruption. Repairs were later completed.

The tenant appealed, contending that the judge should have made a separate award for diminution in the value of the tenancy by reference to rent, that housing benefit did not affect entitlement, and that the general damages were too low. The central questions were whether diminution in value and discomfort were separate heads of loss, how the source of rent affected compensation, and whether the assessment disclosed an error of principle.

1. Appeal dismissed. The tenant was not entitled to separate awards for diminution in value and discomfort or inconvenience where she remained in occupation. The county court judge was entitled to award a global sum for the distress, inconvenience and disruption caused by the disrepair.
2. The governing principle was restitutory. Damages had to place the tenant, so far as money could, in the position she would have occupied if the repairing obligation had been performed. This required comparison between the property as it was during the breach and as it would have been if repaired.
3. For periods during which the tenant remained in occupation, the loss requiring compensation was the loss of comfort and convenience. That loss could be assessed by a notional reduction in rent, a global award, or a mixture. These were alternative methods of expressing the same loss, not cumulative heads. If the tenant was entitled to remain but was forced to sell or sublet, diminution in sale price or recoverable rent could instead be recovered for that different loss. The same period could not also attract compensation for continued occupation.
4. The court gave general guidance that expert valuation evidence was not required for an occupying tenant. The judge should assess the discomfort and inconvenience and might cross-check a global award against the rent, the duration of the breach and the nature of the property.
5. The source of the rent payment, including housing benefit, was irrelevant to the discomfort and inconvenience suffered. The challenge to quantum failed: the properly proved period was approximately October 1994 to July 1997, and the award did not show an error of principle. The appeal was dismissed with costs, subject to legal aid taxation; leave to appeal was refused.

• Court of Appeal (Civil Division): On an appeal from the order of His Honour Judge Hardy, the appeal was dismissed with costs. Leave to appeal was refused. The judgment is reported at [1998] EWCA Civ 1166.
• Manchester County Court: His Honour Judge Hardy found breaches of the repairing obligations and awarded damages to the children, special damages, and general damages to the tenant and children.