Kalas v Farmer

A tenancy is not surrendered merely because the tenant is absent, has failed to pay rent, or has removed some possessions. Surrender requires a proved act by the tenant amounting to an offer to surrender. A landlord relying on section 27(8) of the Housing Act 1988 must prove both an actual belief that the tenant has ceased to reside and reasonable grounds for that belief. A claim to mitigate unlawful-eviction damages under section 27(7)(a) should be raised and particularised, or at least raised at trial with a fair opportunity to respond. Indemnity costs may be justified where a landlord deliberately chooses an unlawful route to recover possession.

Mr Kalas, an assured tenant, claimed damages under sections 27 and 28 of the Housing Act 1988 after Mr Farmer re-entered and sold the premises while Mr Kalas was imprisoned. Mr Farmer counterclaimed for rent and damage to the property. The Central London County Court found that the tenancy had not been abandoned or surrendered, rejected the statutory defence based on a belief that the tenant had ceased to reside, awarded agreed damages and ordered indemnity costs.

On appeal, Mr Farmer argued that the tenancy had ended by surrender, that section 27(8) applied, that damages should have been mitigated under section 27(7)(a), and that indemnity costs were unjustified.

The appeal was dismissed. Lord Justice Lloyd delivered the leading judgment. Lord Justices Stanley Burnton and Jacob agreed.

1. Surrender. The trial judge was entitled to find that Mr Kalas had not abandoned the premises. The photographs showed possessions remaining there, and the landlord had never asserted below that those items belonged to him. There was no notice, intention, or other proved act by the tenant amounting to an offer to surrender. The landlord’s re-entry therefore did not establish that the tenancy had ended by surrender.
2. Section 27(8). The defence required proof that the landlord both believed that the former tenant had ceased to reside and had reasonable grounds for that belief. The trial judge’s finding was that Mr Farmer did not hold the asserted belief and had taken a calculated risk. The defence consequently failed on the facts.
3. Mitigation. Section 27(7)(a) permits damages to be reduced where the former occupier’s prior conduct makes mitigation reasonable. Regalgrand Ltd v Dickerson & Wade 29 HLR 620 confirmed the importance of pleading and particularising such a claim, while recognising that failure to plead may be overcome if the issue is raised at trial and the claimant has an opportunity to meet it. Here the point was absent from the pleadings, correspondence, skeleton argument and trial. The judge was not required to consider it.
4. Costs. The finding that the landlord deliberately chose an unlawful route instead of seeking possession provided ample justification for indemnity costs.

1. Court of Appeal (Civil Division): On 29 January 2010, dismissed the appeal against the order of Mr Leighton Williams QC.
2. Central London County Court: On 3 March 2009, after trial, entered judgment for the tenant, awarded damages under sections 27 and 28 of the Housing Act 1988, ordered a set-off, and awarded indemnity costs.