08/12/2019

“General incompetence” – Unlawful eviction and fitness for habitation

Hussein Ali Hadi Albu-Swalin v (1) Regency (UK) Ltd  (2) Heartland Property Ltd (2019) County Court at Central London.  19 February 2019

We saw the appeal in this case here. I have since received a transcript of the first instance judgment, which is well worth a note of its own. Not only is there the unlawful eviction damages point (and some clarity on why they were made against the party), but also interesting findings on damages for breach of fitness for habitation (not the new s.9A Landlord and Tenant Act 1985, but the old obligation for furnished lettings, but the points still stand). And also, it is a judgment by HHJ Luba QC, so of particular interest to housing lawyers.

Briefly, Regency had converted a house into seven studio rooms. It then entered a tenancy agreement (entitled ‘assured shorthold tenancy agreement’) with Heartland for the whole property for a 12 month term, under which (although not in coherent written form) Heartland were to sub-let the 7 studio flats and then pay over the rent to Regency. There was a provision for one month’s notice, after the first for months.

Heartland claimed to be experienced property professionals. The court expressed some considerable surprise at this.

Heartland then granted a subtenancy of Flat F at the property to Mr Albu-Swalin in late 2015 (after a tenancy application fee of £200, a referencing fee of £75, inventory fee of £125, a deposit of £800 and month rent in advance of £800, in case you were wondering why the Tenant Fees Act was required.) The fixed term was 6 months (with wrong dates in the tenancy agreement).

Soon after the start of the tenancy Mr A-S complained about conditions in the flat, specifically an infestation of bed bugs, and then mould and damp, which damaged Mr A-S possessions and clothing. Nothing was done by Heartland, save replacing a mattress, which is by itself of no use.

By February 2016, it was clear that Regency were fed up with Heartland and would be looking to end the tenancy. Heartland served a ‘termination notice’ on Mr A-S on 2 Feb 2016 giving one months notice.  This was, of course, completely ineffective.

Regency gave notice to Heartland on 12 March 2016, taking effect 11 April 2016. That notice required vacant possession, which Heartland could not give.

On 16 April 2016, Regency changed the locks to Mr A-S flat, excluding him with his possessions still in the property. (Notably, the director of Regency, Mr Kamal Rafique, did not give evidence at the trial. But the evidence of the director of Heartland was that Mr Rafique had told him, after the event, that “he said that he came across similar tenants in his past and he would deal with it.”) Regency then demanded a payment of £600 of Mr A-S in order to retrieve his belongings.

Mr A-S claimed for unlawful eviction on common law grounds against Regency, failure to protect the deposit and unfitness for habitation against Heartland.

On the unlawful eviction claim, Regency had become Mr A-S’s direct landlord on the termination of Heartland’s tenancy. Liability was accepted by Regency in closing submissions at trial, having defended throughout on the basis that no claim could be brought against it.

On the period for which general damages should be awarded and the level of damages, both parties referred:

to Smith v Khan (2018) EWCA Civ 1137 (our note). In that case the Court of Appeal said: “In the case of unlawful eviction, damages for trespass must compensate the tenant not merely for the letting value of the property of which he has been deprived but also for the anxiety, inconvenience and mental stress involved in the loss of what was the tenant’s home.” The Court of Appeal appears to have been referred to a summary or synopsis of recent first instance county court decisions which indicated that the range of awards for general damages in an unlawful eviction case ranged between £100 per night and £300 per night.

Basing himself on that broad spectrum, Mr Hardman (for Mr A-S) submitted that this was a case in which compensation should be awarded on the basis of £200 per night. But for how many nights? Mr Nkafu’s initial position was there should be a relatively limited period of general damages, perhaps a month, since that was the period provided for in the break clause of the agreement. But on reflection Mr Nkafu (for Regency) accepted that this was a tenancy subject to statutory protection that could only be determined by the operation of a properly given notice under section 21 of the Housing Act 1988. That would require at least two months’ notice.

The two months would have to expire on whatever was the date the payment of rent was to be made under the tenancy. So that in the event that Mr Nkafu was content to accept that a period of between two and three months might represent the proper spectrum of an award of compensation for general damages for loss of the tenancy. For his part, Mr Hardman limited his claim to 60 days of loss, broadly equivalent to two months. He drew attention, very fairly, to the fact the original term of the tenancy was due to end in May and that there was broadly a period of two months involved. In the event both counsel took a sensible mid-range position in identifying 60 days as the period for which I should award general damages in the circumstances I have described.

On the daily rate:

I remind myself that this is a claim made by a single man. No particular hardship or distress is urged beyond the simple loss of a home and the inability, within a short while, to find anywhere else to rent. As I say, Mr Hardman says the 60 days should be compensated at the mid-range of £200 per day. In my judgment, having regard to all the circumstances of the case and the previous indicative authorities, I consider that sum to be too high.

It seems to me that 60 days at £150 per day represents the proper measure of award for general damages in this case. 60 days at £150 is, I think, £9000. To that must be added the 10 per cent uplift provided from the Simmons v Castle formula which is another £900. So I will award general damages against the first defendant for the unlawful eviction at £9900.

Special damages – the court was not convinced that all the items claimed for were lost or damaged to the extent of the schedule claimed. £5000 was awarded.

Exemplary damages:

This was a disgraceful case. It appears that a criminal offence was committed in breaking and entering into a tenanted flat. It appears, further, that this was done in circumstances where the defendant – first defendant company – knew perfectly well that there was a lawful way of obtaining possession. It knew perfectly well that the flat in question was occupied.

In those circumstances there can only have been one explanation for the action taken by the first defendant and that was to achieve a better profit from its property than it was doing up to that time. That is precisely the profit that has motivated so many landlords to behave badly. Unless the court meets such misbehaviour by the imposition of exemplary damages, this sort of disgraceful behaviour will continue. I consider that in this particular case, having looked at other guideline cases and examples of awards of exemplary damages, exemplary damages should be fixed at £4000.

Aggravated damages:

this is not a case at the worst end of the spectrum. No violence was involved. No breaking-in, in the presence of the tenant. No, as it were, terror induced at the particular time. But this was nevertheless a sudden eviction with no warning, no opportunity to remove the goods. Moreover, it was accompanied by, in effect, blackmail – by the first defendant’s builder requiring a lump sum of money before the tenant could get access to his goods. This, too, was disgraceful. But, as I say not at the worst end. It is an unlawful eviction with serious aggravating features which I have identified. I will award £1000 damages by way of aggravated damages.

And, before turning to the claim against Heartland, the court pauses to note:

I cannot leave this judgment, however – in the light of my previous remarks in relation to both the defendants – without observing that if there was ever a classic case demonstrating the need for tight regulation of both private rented landlords sector and the private letting agents, this is a paradigm.

On the claims against Heartland, namely the deposit claim, the fitness claim and the harassment claim:

Heartland claimed it had taken two months rent, not one in advance and a deposit, But even that explanation said that one month was being held in case Mr A-S didn’t cover the rent, so was a deposit.

On the level of penalty:

Here we are dealing with a property management agency holding itself out, according to Mr Talim’s witness statement, as having some expertise. As I have demonstrated, this is not an expert agency at all. It is a shambles. It ought to know, and had known, about the provisions for the protection of tenancy deposits. It ought to have known, having been in business for some considerable time, that if it did not protect tenants’ deposits, there would be certain consequences.

Three times deposit penalty imposed, plus the deposit. Making £3200.

On the fitness claim, in regard to the bedbugs, mould and dampness, this was a breach of the covenant implied into furnished lettings that it will be fit for human habitation when it came to be occupied.

Bedbugs:

In respect of this particular complaint, it is to the credit of the second defendant that a replacement mattress was arranged. But unsurprisingly, replacing a mattress infested with bedbugs will do no use at all unless bedbugs are first cleared from the bed itself and the immediate surroundings.

There is no suggestion that anything of that nature was done. On the face of it, therefore, furnished premises provided with an infested bed and a mattress would appear to be a breach of the covenant for fitness.

Damp and mould:

Heartlands own evidence was that “numerous other tenants had complained about the same problems in relation to their flats in this particular property. They had attributed the problems to poor design and construction when the house was converted into rooms and flats.”

Mr A-S had complained from an early stage about the damp and mould.

There was also a s.11 Landlord and Tenant Act 1985 claim on electric sockets, on an electric cooker which failed, as did its replacement, and an electric fire which failed, as did its replacement.

General damages for these issues were assessed at 50% of rent:

Mr Hardman submits that this is a case in which I should take, as a guide, the passing rent, that is to say £800 a month. He contends that I should set a figure which represents something in the order of 50 per cent diminishment in value. I consider that that is a fair starting point and a good, rough guide. Fifty per cent of £800p.m. would produce a figure of £400p.m. I look at the period covered, November to mid-April. That is not a full period of six months. I have to eliminate part of November because it would take some time for the problems to arise and the second half of April after which there had been exclusion from the property.

It seems to me that the proper approach to take, in round terms, is to award half the passing rent for each of full five months. I will therefore award five times £400, that is £2000

Finally, on the harassment claim

It is said, for example, that there was an unreasonable request for immediate access for a surveyor, and an unreasonable request for an urgent meeting, not once but twice. A further unreasonably short request for access for a surveyor. A request to get in contact and so on and so forth.

This seems to me to be but an indication of brusqueness and incompetence on the part of the second defendant. What I have to ask myself is, objectively, does this give rise to the breach of the covenant of quiet enjoyment by representing an interference, essentially, with the tenants’ enjoyment of the property. I have looked at each of the aspects of the allegations made by the claimant. To my mind, whether taken separately or as a whole, they are de minimis. In my judgment, they do not sound in damages at all.

Comment

On our post on the appeal, I questioned the basis for arriving at two months as the the appropriate period for unlawful eviction general damages. From the first instance judgment, it appears that this was something effectively agreed by the parties, so the finding is not a surprise when these were the submissions.

I have to say I am unconvinced that this is right. The Court of Appeal in Smith v Khan (2018) EWCA Civ 1137 (in a decision that I had considerable doubts about at the time) did hold that damages should run until the earliest point in time at which the landlord could have lawfully terminated the right of occupation – in that case on the basis the tenant not pursuing the right of re-entry. But I am unconvinced that for an assured shorthold tenancy, the section 21 notice two month notice period can amount to the point of ‘lawful termination’ of the right of occupation. While clearly this has to be based on a generality (eg not the average time to warrant of the local county court) it surely has to take into account continued right of occupation after service of a s.21 notice.

On the other hand it does not appear that there was an application for re-entry here, which might confuse matters. Nor is there any information about when Mr A-S managed to secure equivalent tenure somewhere else, if he did.

I do feel that the Court of Appeal rather needs to revisit unlawful eviction damages, on a fully argued case…

The ‘conditions’ damages, as a mixture of fitness and s.11 disrepair are worth noting. Proportion of rent was accepted (on the claimant’s submissions) as the appropriate measure of damages. There may be further arguments to have on this.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

5 Comments

  1. John-Paul

    “The two months would have to expire on whatever was the date the payment of rent was to be made under the tenancy.” Nice to see that even senior judges get this wrong.

    Reply
    • Giles Peaker

      Hah – yes, post 1 Oct 2015 tenancy, and initial fixed term.

    • Michael Barnes

      But is it not a period of the tenancy, which may not align with rent-payment date?

  2. John-Paul

    Notice no longer needs to expire at the end of a rental period and, as noted, the rent payment date is not connected to the rental period, although they often coincide.

    Reply
  3. Giles Peaker

    Michael – no, not for post 1 Oct 2015 tenancies, or any indeed AST unless it was a contractual periodic. The two months can expire at any point.

    Reply

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