Grange v Quinn

Where a landlord wrongfully and permanently evicts a tenant shortly after granting a lease and selling the associated business, damages may reflect the premium paid, subject to credit for the benefit the tenant has already received. The court allowed the appeal and awarded the premium less a proportion for six months and ten days’ occupation.

There was no single majority rationale on the general measure of damages. Jackson LJ treated the premium as the agreed price of an asset wrongfully taken back. Gloster J treated it as wasted contractual expenditure and held that the landlords had not proved that it would not have been recouped. Arden LJ dissented, holding that the unchallenged expert evidence showed no recoverable loss.

The claimant paid £9,950 for goodwill and the grant of a six-year lease of sandwich-shop premises. The respondents wrongfully evicted her after about six months. The eviction was found to breach the covenant for quiet enjoyment; the respondents had not served notices under section 146 of the Law of Property Act 1925.

At trial, the Manchester County Court accepted an unchallenged joint accountant’s report that the business had no value at eviction. The Recorder awarded £300 nominal damages for the unlawful eviction. The claimant appealed, seeking repayment of all or most of the premium. The central issue was the proper compensatory measure of damages for the premature and wrongful termination of the lease and business arrangement.

1. Appeal allowed, Arden LJ dissenting. Jackson LJ and Gloster J each concluded that the Recorder’s award of £300 could not stand. They substituted damages of £9,079, being the £9,950 premium less £871 for the benefit of six months and ten days’ occupation and trading.

2. There was no single majority rationale for the general measure of damages. Jackson LJ applied Sampson v Floyd, treating the premium as the agreed price of an asset which the landlords had sold and then wrongfully taken back. In such a case, the normal measure was the purchase price, with credit for the benefit actually received. The profitability of the business did not require a detailed reassessment of whether the claimant had made a bad bargain.

3. Gloster J agreed with Arden LJ that the claim was properly analysed as one for wasted expenditure. Such damages remain compensatory and cannot exceed the position which performance would have produced. However, the contract-breaker bore the burden of proving that the expenditure would not have been recouped. The accountant’s report was not directed to that issue, contained patent errors, and did not establish that the premium would not have been recovered from the business’s gross returns or a permitted sale of the lease and business.

4. Arden LJ would have dismissed the appeal. In her view, the premium was paid for goodwill and entry into the lease, not as apportioned rent. The Recorder was entitled to rely on the unchallenged expert evidence and find that the premium was lost through the unprofitable bargain and trading, rather than through the eviction. Arden LJ would also have refused to permit reliance on a new factual point about errors in the report because it would prejudice the respondents and could not justly be resolved without further evidence.

• Court of Appeal (Civil Division): Appeal allowed by Jackson LJ and Gloster J, with Arden LJ dissenting. Damages were substituted in the sum of £9,079: [2013] EWCA Civ 24.
• Manchester County Court: Mr Recorder MacDonald found that the respondents had wrongfully evicted the claimant but awarded £300 nominal damages.