EWCA Civ 210.
A businessman was awarded damages for unlawful eviction based upon loss of profit from sublettings but was refused a sum in respect of the capital value of the lease, as this would have amounted to double recovery. He was also awarded interest at a rate that reflected the cost to him, as a small businessman of being kept out of his money, rather than the lower conventional sums awarded in commercial cases. He received 3% over base prevailing from time to time.
Wasted expenditure - premium
 EWCA Civ 24
The Court of Appeal awarded the tenant damages for unlawful eviction by the landlord, the damages being equal to the premium paid by the tenant on the granting of the lease, but strongly criticized the “massive legal fees and expert costs” incurred by the parties.
In July 2008 T (as tenant) took a six-year lease of a sandwich shop from L (the landlord). Although the lease did not refer to a premium, T paid L £9,950 described in contemporaneous correspondence as being for L’s interest in the business, or what the particulars of sale called "business/lease/fixtures and fittings…plus stock at value". The finding of fact in the lower court was that this sum was paid "for the goodwill of the business as it existed in July 2008". Six months into the term, T was evicted by L for, amongst other breaches of covenant, failure to keep the windows clean. T maintained that L had unlawfully evicted her and sought to recover the premium she had paid on taking the lease by way of damages for wrongful eviction.
The main issue related to the correct basis on which damages should be awarded. As unlawful eviction was a breach of contract for which damages could be awarded the court considered whether these should be assessed by reference to the premium paid by the tenant, or by reference to the profitability of the tenant’s business.
The trial judge held that the breaches of covenant complained of, such as failure to keep the windows clean, were not serious enough to constitute a breach of covenant. Further, no notice under s146 notice of the Law of Property Act 1925 had been served; and also L had, in any event, waived the breach by accepting rent. However, the court held that T had suffered no significant loss and awarded her only nominal damages.
Decision on appeal
By a 2:1 majority, the Court of Appeal allowed T’s appeal. The Court held that it should approach the claim as one for wasted expenditure incurred in reliance on the contract. Damages may be awarded on that basis rather on the basis of loss of bargain. Jackson LJ quoted Lord Blackburn in Livingstone v Rawyards Coal Company (1880) 5 App Cas 25:
- “where any injury is to be compensated by damages, [it] should as nearly as possible [be] that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.”
He went on to say that:
- “The starting point for assessing damages is the purchase price which the claimant paid, namely £9,950. It would be manifestly unjust if [L] could evict [T] after only six months and still keep the purchase price.”
The court held that T needed to deduct a small amount from the original premium paid to represent the benefit received by her because of her occupation of the premises and running the business before the unlawful eviction. He ruled that T’s appeal should be allowed and awarded damages of £9,079 as meeting the justice of this case.