Perry v Scherchen & Ors

An appellate court should interfere with an award of general damages only where it falls plainly outside the proper discretionary range. In business-loss cases, damages may be assessed by reference to interruption and reasonable re-establishment, or by valuing the business as destroyed. A destruction valuation sets a ceiling, even where the business could be recreated after interruption. It ordinarily capitalises the income stream, allowing for the undertaking’s benefits and uncertainties and giving credit for compensation and assets retained. Fresh evidence and remittal should be refused where, applying that ceiling, no higher award could result and the overriding objective requires proportionate use of court resources.

Mr Marco Perry operated a recording studio as a sub-tenant. The defendants unlawfully evicted him and damaged the premises and equipment. Mr Justice Alliott found liability and awarded £55,000 in damages, comprising general damages and special damages for equipment restoration, relocation, re-establishment and lost income.

Mr Perry appealed on quantum. He challenged the admission and weight of late evidence about the availability of alternative premises and sought to adduce further evidence and have the assessment remitted. The central issue was whether the judge’s approach or award justified appellate intervention.

Lord Justice Chadwick gave the leading judgment. Rougier J and Lord Justice Kennedy agreed. The appeal was dismissed.

1. General damages. The relevant question was not whether the Court of Appeal might have awarded more, but whether the award was so plainly low that it fell outside the range properly available to the judge exercising his discretion. The £5,000 award, including aggravated and exemplary damages, was within that range.
2. Business-loss valuation. Damages could be assessed on an interruption-of-business basis or a destruction-of-business basis. The destruction valuation could not produce a lower recovery than the interruption measure and therefore set a ceiling on the award, even where the business could be re-established.
3. Destruction basis. The appropriate approach, applying Owners of the Dredger Liesbosch v Owners of the Steamship Edison [1933] AC 449 at pp 463–464, was to capitalise the income stream which the business or profit-producing asset would have generated. The valuation concerned what a willing purchaser would pay for the undertaking and its assets, allowing for the benefits and uncertainties of the particular enterprise. A multiplier or discount factor could be used.
4. Credits and fresh evidence. Any destruction valuation would credit compensation received under Part II of the Landlord and Tenant Act 1954 and the value of the retained audio equipment in a properly repaired state. On the available figures, the destruction valuation would not exceed the £50,000 special-damages award unless a multiplier above 6.5 were adopted. Consequently, fresh evidence about relocation time could not produce a higher award. The Court therefore refused to admit it or remit the factual assessment. The overriding objective under the Civil Procedure Rules supported that proportionate course.
5. Order. The appeal was dismissed with costs subject to detailed assessment. Permission to appeal was refused.

1. Court of Appeal (Civil Division). On 27 June 2001, dismissed Mr Perry’s appeal against the quantum of damages, ordered costs subject to detailed assessment and refused permission to appeal.
2. High Court, Mr Justice Alliott. By order dated 26 May 2000, found the defendants liable for unlawful eviction and awarded £55,000 in damages.