Introduction

The valuation of general damages in housing disrepair claims remains a complex and unsettled issue within English law. This article explores the methodological approaches that have been taken by the Courts, the inconsistencies in judicial approaches, and the implications of the absence of a settled legal framework.

Examination of Case Law

The assessment of damages in housing disrepair claims was considered in the case of Hewitt v Rowlands [1924] 93 KB 1080. The Court held that the core principle for assessing such damages is to award the difference in value to the tenant between the property's actual condition and the condition it would have been in, had the landlord fulfilled their repair obligations. This approach aimed to restore the tenant to the position that they would have been in had the property been properly maintained, to ensure adequate compensation for the tenant's loss of value caused by the landlord's breach of duty.

Subsequently, in Calabar Properties Ltd v Stitcher [1984] 1 WLR 287 (“Calabar”), Griffiths LJ (at page 297) clarified that:

“The object of awarding damages against a landlord for breach of his covenant to repair is not to punish the landlord but, so far as money can, to restore the tenant to the position he would have been in had there been no breach. This object will not be achieved by applying one set of rules to all cases regardless of the particular circumstances of the case.”

[Emphasis added]

In Calabar, the tenant was a long leaseholder, and the Court of Appeal determined (at page 298) that she should – in principle - be awarded:

“the cost to which she was put in taking alternative accommodation, the cost of redecorating, and some award for all the unpleasantness of living in the flat as it deteriorated until it became uninhabitable.”

[Emphasis added]

The last component of the award for general damagesthus recognises the tenant’s distress and inconvenience caused by the landlord's failure to repair. However, the Court did not prescribe a specific methodology for determining the amount, leaving it to be assessed based on the particular circumstances of each case.

Wallace v Manchester City Council [1998] 30 HLR 1111 involved a claim where a social tenant brought proceedings against the Defendant social landlord for alleged disrepair within her property. At [6] of the judgment, Morritt LJ noted that damages for distress and inconvenience experienced because of a landlord’s failure to perform their obligation to repair could be ascertained via one of the following approaches:

At [25], Morritt LJ stated that:

“25. The question is the monetary value of the discomfort and inconvenience suffered by the tenant. That is a matter for the judge. As Kennedy LJ observed in the course of argument there is no market in out of repair council houses on which expert evidence could be either admissible or helpful. Second, a judge who seeks to assess the monetary compensation to be awarded for discomfort and inconvenience on a global basis would be well advised to cross-check his prospective award by reference to the rent payable for the period equivalent to the duration of the landlord’s breach of covenant.”

[Emphasis added]

Wallace provides insight into assessing general damages for distress and inconvenience, outlining three potential methods. While this flexibility allows for a tailored assessment reflecting the specific impact of the disrepair on the tenant’s quality of life, it also introduces variability in outcomes, as different Judges may prefer different methods or combinations thereof, leaving tenants in uncertainty as to the redress they may expect to receive. This open-ended approach also leaves landlords in a state of limbo and at the behest of the (almost) sole discretion of the trial Judge.

Notably, Morritt LJ’s suggestion to cross-check prospective awards against the rent payable during the period of disrepair seeks to prevent over- or under-compensation, and it can be forcefully argued therefore that this approach serves as a form of practical guidance to ensure that awards are reasonable and proportionate.

However, this approach also introduces another layer of (potentially inescapable) complexity and subjectivity, as Judges must balance the abstract valuation of discomfort experienced by a tenant against tangible financial metrics. Thus, it may well be the case that a social housing tenant who pays a reduced rent, compared to a private tenant who does not, will receive a (potentially) far lesser award despite experiencing the same (or similar) levels of discomfort and inconvenience within a similar type of property that would have otherwise fetched a similar level of rent if let on the open market. This may well be construed by some as an unfair penalty on certain tenants, merely by virtue of their status as social housing tenants.

The absence of a prescribed methodology or clear and comprehensive guidelines established by the Senior Courts for calculating general damages in housing disrepair claims means that there is no uniform standard guiding the process of assessment. Consequently, both tenants and landlords face considerable uncertainty regarding potential compensation for similar disrepair issues.

In the case of English Churches Housing Group v Shine [2004] EWCA Civ 434 (“English Churches”) the calculation of damages by way of reference to a proportion of the rent payable was preferred, in spite of the principles set out in Wallace (and arguably, in reaction to Wallace). At [104] to [105] Wall LJ stated:

“104. Whilst we accept that the guidelines helpfully set out by Morritt LJ in Wallace v Manchester City Council are not to be applied in a mechanistic or dogmatic way, and whilst we equally accept that there will be cases in which the level of distress or inconvenience experienced by a tenant may require an award in excess of the level of rental payable, we take the view that the plain inference of Morritt LJ's judgment, and the figures identified in the case itself, demonstrate that if an award of damages for stress and inconvenience arising from a landlord's breach of the implied covenant to repair is to exceed the level of the rental payable, clear reasons need to be given by the court for taking that course, and the facts of the case - notably the conduct of the landlord - must warrant such an award.

…

It is, accordingly in our judgment logical that the calculation of the award of damages for stress and inconvenience should be related to the fact that the tenant is not getting proper value for the rent, which is being paid for defective premises.”

[Emphasis added]

Wall LJ’s judgment indicates a preference for using a proportion of the rent as a benchmark for assessing damages, except in cases where “clear reasons” and “the facts of the case” justify a higher award. This method provides a slightly more tangible metric for Judges to consider, potentially enhancing consistency and predictability in awards.

The varying approaches in Wallace, Calabar, and English Churches highlight the uncertainty inherent in the current legal framework for assessing general damages in housing disrepair claims. In Wallace, Morritt LJ suggested a mix of methods, including a notional reduction in rent and a global award for discomfort and inconvenience or both, leaving significant discretion to Judges. In Calabar, Griffiths LJ emphasised the need to restore the tenant to the position they would have been in but for the breach, without providing a specific formula for calculating damages.

By contrast, English Churches seems to suggest a more structured approach, generally relating damages to a proportion of the rent payable. While this may offer some guidance and potentially reduce variability, it still runs the risk of not adequately addressing the subjective experiences of tenants affected by disrepair (as well as potentially under-compensating tenants by virtue of the fact that they pay a reduced rent).

The case of Earle v Charalambous [2007] HLR 8 was a disrepair case involving a long leaseholder. Carnwath LJ at [32] stated that:

“A long-lease of a residential property is not only a home, but is also a valuable property asset. Distress and inconvenience caused by disrepair are not free-standing heads of claim, but are symptomatic of interference with the lessee's enjoyment of that asset. If the lessor's breach of covenant has the effect of depriving the lessee of that enjoyment, wholly or partially, for a significant period, a notional judgment of the resulting reduction in rental value is likely to be the most appropriate starting point for assessment of damages.”

[Emphasis added]

Thus, the Court established a distinction between the assessment of damages for secure or assured tenancies and long leaseholds. For secure or assured tenancies, damages could be calculated based on a notional percentage rebate of the rent actually paid during the relevant period.

In contrast, for long leaseholders, damages were to be assessed by calculating the difference between the market rent that could have been obtained had the freeholder fulfilled their repairing obligations and the rent that could be achieved for the premises in its unrepaired state. Therefore, the case of Earle suggests that long leaseholders in practice could receive far greater damages than their counterparts with secure or assured tenancies.  

Finally, the case of Moorjani v Durban Estates Limited [2015] EWCA Civ 1252 involved a leaseholder of a flat who brought a claim against the freeholder landlord for alleged disrepair. Briggs LJ stated at paragraphs [35] to [37]:

“35. First, although the language of the Calabar and Wallace cases speak of discomfort, inconvenience and distress as if they were the very losses caused to the lessee by the lessor's breach, the better view is that the loss consists in the impairment to the rights of amenity afforded to the lessee by the lease of which discomfort, inconvenience and distress (and even the deterioration of the health of a loved one) are only symptoms.

…

…

[Emphasis added]

Moorjani offers some further clarification on the nature of general damages in housing disrepair claims. Briggs LJ determined that the true loss suffered by the tenant consists of the impairment of their rights to amenity provided by the lease. Discomfort, inconvenience, and distress are, thus, manifestations of this impairment, rather than standalone losses. This is said at [31] to be applicable to periodic, secure and statutory tenancies as opposed to being restricted only to long leases.

This judgment also broadens the scope of potential claims by allowing tenants to seek damages even if they do not fully use the impaired amenities during the period of disrepair. Indeed, while the tenant’s use or non-use of the property can be considered in mitigating loss, it does not – in itself - preclude the award of damages, according to Moorjani.

Conclusion

The assessment of general damages in housing disrepair claims remains largely unsettled, with varying approaches and significant Judicial discretion. The cases referred to in this article illustrate the varied methodologies employed by the Courts. These cases reveal the tension between flexibility and consistency in determining damages. While some favour rent-based benchmarks/rebates, others refer to global assessments or market rent differentials, leading to uncertainty for both tenants and landlords.

In light of the above, there is a clear and pressing need for further Judicial guidance or legislative intervention to establish a more consistent framework for assessing general damages in housing disrepair claims, ensuring adequate compensation for tenants and clarity for landlords.

Author: Abdul Qadim