London Borough of Lambeth v Loveridge

Statutory damages for unlawful eviction under sections 27 and 28 of the Housing Act 1988 are assessed by comparing two open-market valuations of the landlord’s interest immediately before eviction. The first valuation assumes that the occupier retains the same right to occupy at that time. It does not freeze that right against lawful changes inherent in its legal nature. The valuation must therefore reflect a secure tenancy’s vulnerability to conversion into an assured tenancy if the landlord’s interest is sold to a private landlord. If that vulnerability eliminates any difference between the two valuations, statutory damages are nil, leaving any agreed common-law damages unaffected.

A secure tenant of a one-bedroom flat brought proceedings against the local authority landlord after being unlawfully evicted while abroad and the property was prepared for re-letting. The parties agreed common-law damages, but disputed statutory damages under sections 27 and 28 of the Housing Act 1988.

The dispute concerned the valuation assumption in section 28(1)(a). The tenant argued that the hypothetical purchaser had to be treated as taking the property subject to a continuing secure tenancy. The local authority argued that the valuation had to reflect the tenancy’s statutory vulnerability to conversion into an assured tenancy upon a sale of the reversion to a private landlord. The county court awarded £90,500 in statutory damages. The central issue on appeal was the proper construction of section 28.

1. Appeal allowed. Section 28 required two valuations of the landlord’s interest in the building, determined immediately before the eviction, each on the assumption of an open-market sale to a willing purchaser other than the former tenant or the tenant’s family.
2. The valuation under section 28(1)(b) was effectively a vacant-possession valuation. The valuation under section 28(1)(a) assumed that the occupier continued to have the same right immediately before eviction, but did not require that right to be treated as permanently immune from lawful change or operation of law.
3. The hypothetical valuation therefore had to reflect the inherent vulnerability of a local-authority secure tenancy to conversion into an assured tenancy on a sale of the landlord’s interest to a private landlord. The legal and practical constraints affecting the authority’s ability to sell did not alter the statutory open-market assumption.
4. Tagro v Cafane [1991] 1 WLR 378 established that restrictions on the landlord’s ability to sell were irrelevant to the section 28(3) valuation assumption. Melville v Bruton (1996) 29 HLR 319 confirmed that the valuation must reflect the actual realities affecting the premises and that statutory damages could in an appropriate case be nil. Osei-Bonsu v Wandsworth London Borough Council [1999] 1 All ER 265 illustrated that the valuation could take account of the landlord’s ability lawfully to remove an impediment to occupation before sale; its reference to the landlord’s continuing ownership did not require the sale assumption to be ignored.
5. Because the correct valuation produced no difference in value, statutory damages were nil. The agreed common-law damages for unlawful eviction of £7,400 were substituted for the statutory damages awarded below, while the agreed damages for interference with possessions remained undisturbed. The mitigation issue under section 27(7)(a) therefore did not arise.

• Court of Appeal (Civil Division): Appeal from the Lambeth County Court allowed. The county court’s award of £90,500 statutory damages was displaced, statutory damages were held to be nil, and £7,400 in agreed common-law damages was substituted.
• Lambeth County Court: His Honour Judge Blunsdon treated the tenant’s rights as continuing to be those of a secure tenant for the hypothetical valuation and awarded £90,500 statutory damages.