This may be one of the more esoteric points to be heard by the Court of Appeal on terms of a lease, but one of the issues in Newman v Framewood Manor Management Co Ltd [2012] EWCA Civ 159 was whether Mrs Newman was entitled to damages for loss of amenity for not being provided with a contractual jacuzzi but rather a sauna by the Defendant lessor.

While the facts may be of very limited general applicability, there are some general points about loss of amenity claims worth a look. There is also the extraordinary spectacle of an appeal on a claim worth, in the end, about £6,400 in total and where the claimant/appellant is represented by a QC and junior. One can only presume Mrs Newman was a very indignant leaseholder with considerable resources.

Mrs N took the lease of Apartment 18, on the first floor of a newly converted block in 2005. She had a previous lease of the same apartment from 1989. The Management Company was the lessor, and was a company with all the lessees as shareholders.

Apartment 18 was in the same block as the swimming pool, originally accessed via in internal stairwell. This ease of access to the swimming pool was, Mrs N asserted, one of the reasons she had taken that apartment in the first place. However, a design fault meant that there were condensation problems in the stairwell. In 2009 the Management Co. decided to block off the door from the stairwell to the swimming pool. This formed one part of Mrs N’s claim

The lease contained a covenant by the Management Co to keep common recreational facilities in good order and repair, including the swimming pool and a ‘whirlpool’. There had been a jacuzzi, but it was a domestic model and fell out of repair. The management Co. by a majority vote of the tenants, decided to replace it with a sauna, which took place. This was the second part of Mrs N’s claim.

There were further claims for damage done by tree roots to the tarmac of the drive, for failure to repair or replace gym equipment, lack of light to a steam room and damage to a wardrobe.

The company defended, in part on the basis of an exoneration clause in the lease which said:

“the … Company shall not be liable or responsible for any damage suffered by the Lessee or any servant agent or licensee of the Lessee or any member of the Lessee’s family … through any defect in any fixture conduit staircase or thing in or upon [Framewood Manor] or any part thereof … or through the neglect or fault or misconduct of any servant agent contractor or workman whatsoever employed by … the Company in connection with [Framewood Manor] except insofar as any such liability may be covered by insurance effected … by the Company.”

The insurance did not cover any of the matters claimed for by Mrs N.

At first instance, the Judge awarded £250 damages in respect of the steam room light, which had not been repaired for a long period and £1,202.50 in respect of the damage to the wardrobe. These do not form part of the appeal.

The Judge otherwise held that the exoneration clause ruled out liability for defects not covered by insurance.

On the doorway, while the condensation damp was in breach of covenant, there was no evidence of loss through diminuition in value to the apartment. The company had now obtained plans to re-open the doorway and on Mrs N accepting that this would be done within 2 months, no question of an order for specific performance. The exoneration clause ruled out damages for loss of amenity.

On the jacuzzi, while there was a breach, any damages had to take into account that the jacuzzi had been replaced by a sauna, which wholly covered the loss, though it was materially different. There would be no order for specific performance to replace the jacuzzi because the sauna was an adequate replacement and the costs of installing a jacuzzi had to be balanced against the finding of no damages.

The tree roots claim was rejected as there was no evidence that work could be done or what it would cost. It was likely that the tree was subject to a preservation order. This was trifling and not worth an award of damages.

The gym equipment claim was rejected on the basis that the equipment had now been replaced and Mrs N didn’t use the gym. Any loss was trifling.

Mrs N, rather astonishingly, appealed to the Court of Appeal.

Mrs N argued that the exoneration clause did not cover loss of amenity as it was not ‘damage’ within the meaning of the clause. Further, the clause did not cover breach of covenant, which was the cause of action here, being rather aimed at tort, such as under the Occupiers Liability Act 1957. If the Judge’s interpretation of the clause were right, it would make otiose the specific clauses for notice by the company that repairs needed to be done and obliging the company to do repairs within a reasonable time.

The company maintained that the judge was right and the exoneration clause only permitted liability for risks for which the company was insured. The clause was the mirror of the clause containing an obligation to insure.

The Court of Appeal found for Mrs Newman:

The clause has to be interpreted in the light of its factual matrix and this includes the fact that the Company is effectively owned by the lessees of all the apartments at Framewood Manor. The object of the clause is certainly to give them the benefit of any insurance held by the Company. However, the matter does not stop there. Effect has to be given to the clear wording of the exoneration clause. That wording makes it clear that the exoneration clause only applies where the Company is sued on the basis of vicarious liability. If the judge were right, the procedural provisions for giving notices of breach would be, as Toulson LJ pointed out in argument, completely circumvented and rendered otiose. The Company expressly undertook certain repairing covenants. It would be very odd indeed if, under later provisions of the lease, it was exonerated from liability for breaching those covenants unless it had taken out insurance.

Further, the term ‘damage’ did not extend to loss of amenity, as damage referred to physical damage.

The Court then turned to the appealed heads of claim.

On the doorway claim, Mrs N argued that the Judge should have made a declaration that, but for the belated undertaking to re-instate the door by the company, this was a case in which an order for specific performance would have been made, as this would be reflected in costs. The Court of Appeal declined to do so, on the basis that achieving the undertaking should be arguable in costs.

Mrs N argued that the Judge should not have found that the blockage was temporary, as it had been announced as being a ‘permanent solution’ to the condensation problem. It followed that there should have been an award of damages for loss of amenity during the blocked period as Mr & Mrs N had to walk around 19 metres round the outside of the building to get access, rather than directly via the internal stairwell. Mrs N put this at about £50 per week for the periods they were in occupation.

The Court of Appeal accepted that the blockage was intended to be permanent. The company had not investigated any other solutions to the condensation and did not do so until proceedings had been issued. Damages for loss of amenity followed:

As to damages for loss of amenity, it is not simply a question of compensating Mrs Newman for the short extra distance that the Newmans had to walk to use the pool. The loss of amenity also meant aggravation and inconvenience from having to walk outside rather than using an inside entrance. The Newmans had purchased their apartment specifically in order to have this facility. In those circumstances I would award damages for loss of amenity in the sum of £1,000 for loss of amenity. This represents in round terms the loss of amenity for one year at just under £20 per week.

On the Jacuzzi claim, Mrs N argued that the Judge was wrong not to award damages for loss of amenity, wrong not to make an order for specific performance or wrong not to make an award of damages in lieu of specific performance.

Mrs N submitted that it was not a ground to refuse specific performance that it might be too costly, or that the other shareholders were happy in a case of breach of covenant. The Judge’s finding that the sauna was a sufficient replacement for the jacuzzi was perverse and Mrs N had detailed her use of the jacuzzi in evidence. This was not a reason for refusing specific performance, or for refusing damages in lieu of specific performance. The starting point was the contractual obligation to keep the jacuzzi in good repair.

The Court of Appeal found that the Judge was right not to order specific performance. The costs of installing a new jacuzzi would be disproportionate to the loss of amenity involved and excessive. The situation was similar to the missing 18″ of depth of swimming pool in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344, where an award of damages in lieu was made.

On damages for loss of amenity, the Judge had been wrong not to make an award. IN fact the Judge appeared to have considered the issue in terms of diminuition in value of Mrs N’s lease when discussing the sauna as a sufficient replacement. While the judge was right that there was no evidence of any diminuition in value resulting, he did not then reach a conclusion on loss of amenity.

While Mrs N’s evidence had not expressly stated that she did not regard the sauna as a replacement, a sauna and a jacuzzi are so different that acceptance could not be inferred from silence. A case that she had been adequately compensated by the sauna had not been put to Mrs N

In any event, the question of what her personal preferences were is not conclusive, any more than it was a question whether a majority of leaseholders at Framewood Manor were prepared to approve the change. The question, in my judgment, was also whether a reasonable person with knowledge of the circumstances in which people acquired leasehold interests in this sort of development would say that it was not a substitute for a jacuzzi.

In my judgment, a reasonable person would reach this conclusion. A sauna and a jacuzzi do not serve the same function. A sauna uses steam to induce perspiration in an enclosed space. A jacuzzi, on the other hand, uses warm aerated water and is fitted with a whirlpool, and is usually situated near a swimming pool. A jacuzzi would be much more useful as a facility to enjoy safely with one’s young children or grandchildren than a sauna. Both would require adult supervision but a child would clearly have to be older to use a sauna for any length of time than he or she would have to be to use a jacuzzi. The development at Framewood Manor was after all for private residential use by individuals and families. It was reasonable to expect that a resident might wish to entertain young children.

Damages for loss of amenity followed, assessed at £1000 for the 2.5 years to trial and £2500 for future continued loss of amenity.

On the tree root claim, this had apparently been dealt with by removing the affected tarmac and reducing the tarmaced area. There was no merit to a claim for loss of amenity

On the gym equipment claim, there was evidence that gym equipment had been out repair for a years and that Mr & Mrs N used, or would have used, the facilities. Damages of £500 were appropriate as Mr & Mrs N were not in residence for the full year.

The full damages award, from first instance and appeal was therefore:

And the answer to the question of the difference between a jacuzzi and a sauna? About £325 per annum, pro rata. But only if you really, really want a jacuzzi.

If nothing else, the case serves as a reminder of the difficulty in pursuing and low awards in loss of amenity claims, at least if brought as the sole head of claim.