Niazi Services Ltd. v Van Der Loo

Under section 11(1A)(b)(i) of the Landlord and Tenant Act 1985, a sublessor’s repairing covenant covers an installation outside the dwelling only if it forms part of a part of the building in which the sublessor has an estate or interest. An interest in another part of the building, or an interest in the installation short of ownership or control, is insufficient.

Damages for disrepair suffered while the tenant remains in occupation compensate for lost comfort and convenience. The court may assess that loss through a notional reduction in rent, a global award or a combination of methods. The rent and standard of the premises may inform the assessment.

The appellant held a long lease of a top-floor flat and sublet it to the respondent. The respondent counterclaimed for disrepair, including inadequate water pressure caused by altered pipework elsewhere in the building, defective common-part lighting, leaks, a defective shower and failures to paint.

His Honour Judge Ryland awarded £48,000 plus interest, principally by applying a notional 40% reduction to the rent over 33 months. The landlord appealed from that decision of 25 June 2003.

The principal issues were whether the statutory repairing covenant covered installations outside the demised flat in parts of the building in which the sublessor had no estate or interest, and whether damages could properly be assessed by reference to a notional reduction in rent.

1. Appeal allowed in part. The award on the counterclaim was set aside and damages of £9,050 plus interest were substituted.

2. Section 11(1A)(b)(i) of the Landlord and Tenant Act 1985 requires the installation to form part of a part of the building in which the lessor has an estate or interest. It is insufficient that the lessor has an estate or interest elsewhere in the same building. An interest in the installation itself also does not suffice unless the installation is owned or controlled by the lessor within section 11(1A)(b)(ii).

3. The defective water and electricity installations were outside the top-floor flat. The appellant neither owned nor controlled them and had no estate or interest in the parts of the building where the defects were located. The implied covenant therefore did not cover those defects. The resulting mismatch between a sublessor’s rights against a headlessor and a sublessee’s rights against the sublessor was inherent in the statutory scheme.

4. Section 11(3A) did not support a wider construction. It supplies a defence where a lessor falls within the extended covenant but lacks sufficient rights to undertake the necessary work and has used all reasonable endeavours to obtain them. Its existence does not enlarge the installations covered by section 11(1A)(b)(i).

5. O’Connor v Old Etonian Housing Assn. [2002] Ch. 295 was distinguishable. It concerned whether an installation within section 11(1) could function under reasonably anticipated supply conditions. The present case concerned a permanent defect outside the dwelling and the distinct scope of section 11(1A).

6. For periods during which a tenant remains in occupation, damages compensate for the loss of comfort and convenience caused by disrepair. Following Wallace and Manchester City Council [1998] 3 EGLR 38, that loss may be assessed by a notional reduction in rent, a global award or a combination of both. The county court judge had therefore made no error of principle merely by selecting the notional-rent method.

7. After excluding the water and lighting failures, £5,000 was appropriate for the admitted breaches concerning the shower and water leaks. The high rent and intended standard of the flat were relevant to the tenant’s expected comfort and convenience. A further £4,050 was allowed for repainting, excluding 10% for the parapet for which the appellant was not liable.

1. Court of Appeal (Civil Division): By [2004] EWCA Civ 53, allowed the appeal in part, set aside the county court’s damages award and substituted £9,050 plus interest.

2. Central London County Court: His Honour Judge Ryland awarded the respondent £48,000 plus interest on the counterclaim by an order following his decision of 25 June 2003.