There are reasons for this, mostly the lack of cases taken to trial, and with it lack of detailed ‘authorised by the higher courts’ means of assessment. It is also because the heads of damages aren’t as clear, being allegedly contractual but with a vague importation of tort.
This is my attempt to summarise the current situation, with a suggestion of where matters might move and why they are unlikely to.
From 1998, the main case has been Wallace v Manchester 30 HLR 1111 (also as [1998] EWCA Civ 1166). Wallace said firmly that the base of quantum is contractual, not tort, the principle being the restitution of the difference in value between the property with disrepair and the property if the landlord had fulfilled the repairing obligation. Discomfort and inconvenience for the tenant are a part of this head, not a separate, tortious, head of damages.
But how to assess this? Wallace was wonderfully vague. Either a Global Award – an assessment of damages as a whole – or a Nominal Reduction approach – an award for reduction in rental value – or both as one. But Wallace did suggest that a global approach should be cross checked against a nominal approach.
However, Wallace did unofficially set up a tariff of an award of between £1,000 and £2,750 per year as a scale for disrepair. Updated for inflation, that is now £1264 to £3477 per year of disrepair, depending on the seriousness of disrepair.
Oddly, this tariff has become the norm. Most settlements work on some form of the Wallace scale. I say oddly because the Nominal Reduction approach, based on rent payable, could, even at the time of Wallace, produce higher awards.
More recently, Niazi Services Ltd v Van der Loo [2004] EWCA Civ 53, and English Churches v Shine [2004] EWCA Civ 434 have gone some way to affirming a Nominal Reduction approach, based on a proportion of rent. While this means that the maximum award is limited by the rent ( and that higher rental property will attract a much higher award for relatively small disrepair), given that even a low average social tenancy rent is worth £4000 per year, an assessment of damages is likely to be higher than the Wallace tariff (even adjusted for inflation. The Wallace tariff in that case amounted to a scale of something like 50% to 100% of rent, as far as I recall).
By the way, Earle v Charalambous [2006] EWCA Civ 1090 confirms the use of the nominal approach, but also gives leaseholders the route of a proportion of an assessed open market rental value as the base for the rent value. The argument rejected was that a nominal rent approach was not open to leaseholders claiming for disrepair.
Why haven’t calculation and negotiation of damages moved to a nominal rent model? This would be likely to raise damages on the whole, even if not by a very large amount in many cases.
The answer is not straightforward. But the main reason is risk and the Civil Procedure Rules (CPR).
Hardly any disrepair cases get to trial, as most get no further than a negotiation over settlement. But trial is the only place where the valuation approach will be tested and confirmed, also giving a useable precedent.
Why do the cases usually settle? For the non or student lawyer readership, the answer is risk resulting from the effects of Part 36 of the CPR. For instance, if a few weeks before a trial date (or indeed at any point before that), the landlord makes an offer of settlement that is reasonable but at the lowish end of the scale from your estimation of the claim, the calculation goes like this:
If the matter proceeds to trial, the extra legal costs from the point of the offer are likely to be c. £5000 (at an absolute minimum for both sides’ costs). If the claimant does not get a damages award at trial that is better than the offer, they will be liable for the legal costs of both sides from the closing date of the offer. So, if the offer is in the range that a court may award, there is a genuine risk that the claimant will end up liable for the £5000(+) costs. This will wipe out or severely dent any damages award actually made, because the costs will come out of the damages.
The same calculation pretty much applies for legally aided, private and ‘no win no fee’ (CFA) clients. So, the discrepancy between the offer and what the claimant’s solicitor (and barrister) think is the likely range of damages at trial has to be very large to go ahead. This takes a strong claimant’s case and a rather bad defendant – which rarely happens. Alternatively, it takes a private client who is happy to bear the risk and go on even after advice, which rarely happens. Neither legal aid funding nor a CFA will usually support the burden of risk.
The Part 36 offer rule was intended to make cases settle, and it works. But in disrepair, I’d suggest it is keeping disrepair damages artificially and unfairly low.
I would be delighted to hear any accounts of disrepair damages awards at trial from readers. I do have a couple of recent examples, but the circumstances are both utterly distinct and relevant to the award, so anonymity, alas, forbids. Suffice it to say that in both cases, the Court inclined to a nominal percentage of rent approach, rather than the Wallace ‘tariff’.
What counts as serious or less serious disrepair is a matter of fact, evidence and some common sense. But is also a topic for another post.