Peter Jolly examines how much a landlord can recover if a tenant fails to repair his property, and what evidence the court requires


The general rule is that the measure of damages is the cost of putting the property back into its proper state of repair. But the measure of loss is governed by section 18 of the Landlord and Tenant Act 1927. Sub-section 1 of that legislation reads: 'Damages for breach of a covenant or agreement to keep or put premises in repair during the currency of a lease or put premises in repair at the termination of a lease... shall in no case exceed the amount by which the value of the reversion... in the premises is diminished owing to the breach.'



It matters not if there is no express covenant. In all cases, section 18 sets a cap on the amount the former landlord can recover from the tenant by limiting the damages to the reduction in the value of the reversion.



In Latimer v Carney [2006] EWCA Civ 1417, [2006] All ER (D) 347 (Oct), the landlord granted a six-year lease of a carpet shop with upstairs living accommodation in Manchester. After assignment and renewal, the final annual rent was £9,500.



Just prior to the expiry of the lease, the landlord obtained a surveyor's report on the state of disrepair and the cost of rectification. After the tenant had vacated, the surveyor updated his findings. Consequent thereon, the landlord spent an initial £3,813 on roof repairs, a little more than estimated.



The landlord tried to relet. The market was not buoyant. The shop was not in a prime retail zone. Eventually, he found W, who wanted to use the premises as a fast-food outlet. Planning consent and changes to the building were required. The landlord was forced to refurbish the property to meet W's needs. This went far beyond the original repairs needed.



In all, £23,823.39 was spent and nearly a year lost, to secure a new lease at only £10,500 annual rental.



The landlord sued, claiming £12,840 of the remedial costs shown in the schedule of dilapidations, or the £23,823.39, plus lost rent for a year, and council tax incurred while the repairs were carried out. Understandably, the respondents, the original and ultimate tenants, were not overjoyed. Defences and part 20 proceedings followed.



The landlord lost at trial. They had proved neither the actual cost of repair nor the damage to the reversion. The landlord had failed to separate repair from improvement costs.



The judge found that the tenant's breach in not redecorating at the end of the term was a breach of a repairing covenant, but loss could not be proved and it was caught by section 18(1). The issues pursued on the landlord's appeal were directed to the extent of recovery of the scheduled estimated costs of repair, and the basis for any such liability.



What was the Court of Appeal's view? The measure of damages is the reasonable cost of executing the repairs required to fulfil the covenant. That is statutorily capped by section 18(1). It is also subject to general principles of damages (see Ruxley v Forsyth [1966] AC 344, where damages for a swimming pool constructed to slightly less than contracted dimensions were not on a total rebuild basis, which would be disproportionate, but based on a modest diminution in value).



The court needs to know the difference between the value of the property unrepaired and repaired, or at least that that difference exceeds the sum claimed from the tenant. Ideally, a single joint expert will provide this assistance.



Is this compulsory? The court can presume in obvious cases that disrepair must have caused some damage to the reversion, and repair bills are reliable guides to that figure. Delivering the only reasoned judgment in Latimer, Lady Justice Arden shrank from giving a definitive list of matters which, absent valuation evidence, might assist the trial judge in assessing diminution in value, but pointed out that inferences could be drawn from circumstantial evidence. Although the material date is that of the lease end, subsequent events can inform the process, such as the granting of a rent-free period to the new tenant.



The court was helped by the decision in Crewe Services v Silk (1998) 35 EG 81, as to the application of section 18 where evidence is sparse. An agricultural tenant failed to keep his farm in good order. He was still in occupation. The tenant might do the repairs himself; the landlord might not do the works at all. Despite the lease still running, section 18(1) applied, and a 75% discount was applied to the estimated cost of repairs.



In Latimer, some of the work carried out by the landlord for Mr W rendered remedial work futile. For example, if an outgoing tenant has to repair a broken sash window, and the landlord's new lessee demands double glazing, where is the justice in the outgoing tenant having to cough up?



The appeal court took a broad view. Assume diminution from the estimated repair bill, providing the landlord could show he had actually done these works. In Latimer, that included the roof repairs. In the case of other repairs, apply a discount. How much? The judge must do the best he can on the material in front of him. The estimated repair costs were discounted by 60% for uncertainty.



Common sense? Yes, but it renders precise anticipation of the end result difficult and, in the absence of more targeted evidence, causes problems in advising on settlement proposals.



Should the judge have inferred damage to the reversion by the delay in reletting? The appellants sought to raise this late in the day, but the appellate court had insufficient factual information to resolve that - it remains a moot point.



Latimer shows that, while expert evidence is not mandatory, it is preferable to come to court with valuations addressing the section 18 cap. The surveyor should address the individual breaches, the cost of remedial action, and the impact on reversionary values. If repairs are necessary, that points to some damage to the reversion. Tenants should be alert to the actions of the landlord after termination of the lease.



District Judge Peter Jolly sits at Portsmouth Combined Court Centre