Jaura v Ahmed

Damages for wrongful eviction may include the value of the unexpired lease, normally calculated by reference to the premises’ rental value less the contractual rent. An award must not duplicate compensation already given for profit rent covering the same period.

In a commercial case, statutory interest should broadly reflect the borrowing cost generally incurred by claimants sharing the successful party’s relevant attributes. The court should disregard unusually favourable or adverse borrowing circumstances personal to that claimant. The appropriate margin above base rate remains a matter of judicial discretion and evidence.

A business tenant counterclaimed for damages after the landlord wrongfully forfeited a lease having 17½ years left to run. A district judge awarded damages for anticipated subletting profits, the capital value of the lease, and fixtures and fittings, together with statutory interest.

The tenant appealed concerning additional expenditure on fixtures and fittings and the rate of statutory interest. The landlord cross-appealed against the awards for anticipated subletting profits and the capital value of the lease. The principal issues were whether the damages duplicated one another, whether the factual awards were supported by the evidence, and what interest rate fairly reflected the tenant’s commercial borrowing costs.

1. Disposition. The tenant’s appeal was allowed on the rate of statutory interest. The landlord’s cross-appeal was allowed as to the separate £12,250 award for the capital value of the lease but failed as to the anticipated subletting profits. The tenant’s challenge concerning further expenditure on fixtures and fittings was rejected. Potter LJ agreed with Mummery LJ and Rix LJ.
2. Lost subletting income. Mummery LJ held that the district judge was entitled to rely on the available written and oral evidence concerning the proposed sublease. The witness statement was admissible under section 2(4) of the Civil Evidence Act 1995 and CPR Part 32.1 and 32.5 despite the absence of a notice. The weight of that evidence was for the trial judge, whose findings were supported by evidence and were not against its weight.
3. Capital value and duplication. A wrongfully evicted tenant may ordinarily recover the value of the unexpired term, assessed by reference to rental value less contractual rent. The expert evidence did not, however, establish a further capital value after the short subtenancies expired. The £12,250 valuation represented the same two-year profit-rent stream already compensated under another head. The additional award therefore duplicated damages and was set aside.
4. Fixtures and fittings. The district judge was entitled to reject the alleged further expenditure of £7,285. The tenant was an unreliable witness and produced no invoice, bank record, cheque stub or accounting entry substantiating the payment. The accepted expenditure of £3,000 was already included in the award.
5. Interest. Rix LJ held that compound interest was unavailable. In a commercial case, simple statutory interest under section 35A of the Supreme Court Act 1981 should reflect the borrowing cost generally faced by claimants with the successful party’s general attributes, while excluding exceptional personal circumstances. Applying Tate & Lyle Food and Distribution Ltd v Greater London Council [1982] 1 WLR 149 and Jackson v Royal Bank of Scotland, the appropriate pre-judgment rate was 3% above the prevailing base rate. The evidence did not justify the tenant’s actual margin of 4.5% above base. Interest was awarded on £34,610 from the wrongful forfeiture in August 1995 until 5 March 2001, with judgment interest thereafter at 8%.

1. Court of Appeal (Civil Division): In Jaura v Ahmed [2002] EWCA Civ 210, the tenant’s appeal was allowed on statutory interest. The landlord’s cross-appeal was allowed only to remove the duplicative £12,250 award.
2. Queen’s Bench Division, Manchester District Registry: District Judge Jones assessed damages on the tenant’s counterclaim following an earlier consent order. He awarded anticipated subletting profits, capital value, and compensation for fixtures and fittings, together with interest to be assessed.