Earle v Charalambous

Damages for breach of a landlord’s repairing covenant must compensate the tenant for the loss caused by the breach. For an occupying tenant, loss of comfort and convenience and reduction in the property’s value are alternative descriptions of the same loss. A court may assess that loss by a notional reduction in market rent, including for a long lease held as a home. There is no universal tariff derived from awards concerning different properties.

Rental evidence is an aid to valuation, not a separate head of loss. The assessment is ordinarily a matter for the trial judge and does not require expert valuation evidence. Ordinary stress arising from disrepair should be reflected in the overall award, not compensated separately.

The respondent held a 99-year lease of a top-floor flat. The appellant lessor admitted breach of a covenant to repair the roof. Water ingress and damp affected the flat from January 2000. The respondent remained there until a partial ceiling collapse in December 2002, then lived with his parents until roof works were completed in September 2004.

The Central London County Court awarded £20,000 for the period of occupation and £10,000 for the period away from the flat. The lessor appealed, principally challenging the use of rental value to assess general damages and the amount awarded.

1. Appeal allowed in part. Carnwath LJ, with whom Moses LJ and the Chancellor agreed, upheld the judge’s approach in principle but reduced the award for the first period from £20,000 to £13,500. The £10,000 award for the second period stood.

2. The governing question is what sum will place the tenant, so far as money can, in the position he would have occupied had the repairing covenant been performed. For a tenant who remains in occupation, discomfort and inconvenience and diminution in value are not cumulative heads. They describe the same compensable interference with enjoyment. A notional reduction in rent is a legitimate means of assessment under [1998] 3 EGLR 38 and [2004] 1 WLR 1254.

3. The court rejected a universal tariff based on awards in disrepair cases involving humbler or differently held property. A long residential lease is both a home and a valuable asset. Where disrepair substantially deprives the lessee of its enjoyment, a notional reduction in rental value will often be the appropriate starting point. The court disapproved wider observations in Calabar Properties v Stitcher that would exclude rental evidence merely because a long lease is occupied as a home.

4. Expert valuation evidence was not essential. Rental value may be assessed by the court using reliable evidence, including the tenant’s own market research, and judicial assessment. General stress and depression of the ordinary kind arising from disrepair were not a distinct head of loss; they should be reflected in the overall reduction in value.

5. The first-period award lacked adequate reasoning. The judge had rejected the tenant’s percentage-based assessment but reached a higher unexplained global sum. The substituted award of £13,500 reflected 50% of the £1,000 monthly rental value from September 2000 to December 2002. For the second period, living with parents mitigated loss but did not remove the loss of all enjoyment of the flat. The award was a fair global estimate.

6. In the addendum, the court did not decide the general rule concerning notice and time for performance of repairing obligations. It held only that, on the parties’ accepted basis that notice started the relevant period, it was proper to allow a reasonable practical time for remedial action. The appellant was ordered to pay 50% of the respondent’s appeal costs; the costs order below remained undisturbed.

• Court of Appeal (Civil Division): By [2006] EWCA Civ 1090, the court allowed the lessor’s appeal only as to the assessment for the period when the lessee remained in occupation. It substituted £13,500 for the £20,000 award and otherwise dismissed the appeal.
• Central London County Court: Recorder Layton QC found an admitted breach of the lessor’s repairing covenant and awarded £20,000 for the first period of disrepair and £10,000 for the second.