Khan v Mehmood (2022) EWCA Civ 791 (Housing Law Practitioners Association intervening)

This was, it has to be said, in part a rather odd appeal to the Court of Appeal. The background was a rent arrears possession claim by Ms Khan and a defence and disrepair counterclaim by the tenant, Mr Mehmood. At trial, Ms Khan did not appear and was not represented. The possession claim was dismissed and a judgment on the counterclaim made for damages equating 50% of rent for the period 2007 to 2014 (date of trial) (plus return of deposit and penalty for failure to protect). The District Judge added the Simmons v Castle 10% uplift to the disrepair general damages.

Ms Khan appealed (which for some reason nothing happened on for four years), and the appeal was dismissed by the Circuit Judge. Ms Khan brought a second appeal to the Court of Appeal.

At the Court of Appeal there were two issues.

i) damages should not have been awarded for 2007-2011 when, on the tenant’s own evidence (though not their particulars) they had not been the tenant, but a lodger of the main tenant.

ii) The Simmons v Castle uplift should not/did not apply to disrepair general damages.

Issue i) need not detain us, as it was a factual issue and a question of what was before the District Judge on the pleadings. The Court of Appeal found that the initial particulars of claim had been superseded by a reply to defence to counterclaim and a witness statement in which the tenant had said the tenancy began in 2011, and the District Judge had not addressed this.

Both the pleaded case and the evidence before the court clearly indicated that the defendant only became the tenant of the property in March 2011. It was only at that point that he became entitled to the benefit of the term implied into the tenancy agreement by s.11 of the 1985 Act. He was therefore only entitled to damages for breach of the implied term from that date. The damages to which he is therefore entitled are equal to 50% of the rent paid under the tenancy from 23 March 2011. The award of damages calculated by reference to a reduction in rent dating back to 2007 was therefore excessive.

Issue ii) was obviously the one with broader significance, and the reason for HLPA’s intervention (for transparency, I’m a HLPA member and former chair).

Ms Khan had started by arguing that Simmons v Castle II (Our note here) should only apply to to “damages calculated by reference to a guideline or tariff and not to damages based on a reduction in rent”.

However, by the time of the hearing, this broadened into a full on attack on Simmons v Castle II.

(1) Was the declaration in Simmons v Castle correct in the sense that it justly and properly implemented the recommendations of Sir Rupert Jackson’s “Final Report on Civil Litigation Costs” (December 2009)?

The claimant asserts that the declaration was neither in accordance with the recommendations in Sir Rupert’s report nor just.

(2) Can and should this Court depart from that declaration?

The claimant submits that this Court can and should depart from the declaration because (a) in the exceptional circumstances where the Court in Simmons v Castle was translating a recommendation from Sir Rupert’s report into a declaration, the normal rule of precedent does not apply; (b) in any event, this Court has a positive power and a duty to ensure that damages awards accord with justice and should now depart from the earlier decision.

The tenant (by Toby Van Hagen) and HLPA (by Liz Davies QC) argued as follows:

The HLPA’s arguments, supported by Ms Solomon’s statement, were in summary as follows:

(1) The Court in Simmons v Castle saw “no good reason why the 10% increase should be limited so as to exclude any type of claim” and so declared that it should apply to all civil claims. By definition, that extends to damages for breach of a repairing covenant. As illustrated by Ms Solomon’s statement, that has been followed by practitioners subsequently when litigating and negotiating such cases. There is no good reason to depart from this established practice.

(2) The fact that the assessment of damages for loss of amenity starts with a calculation based on rent does not put these cases into the type of case where the cause of action or nature of the damages is such that it is outside the Court of Appeal’s reasoning. The reference to a percentage of rent in the award of damages is a broad-brush approach, not a precise calculation.

(3) The fact that the level of rent is usually taken as the starting point does not necessarily mean that the effect of inflation is already taken into account.

(4) As the Court in Simmons v Castle noted (at paragraph 46) when giving its reasons for extending the uplift to all civil claims, “there is much overlap between tort and contract cases”. In addition to breach of repairing covenant, claims for damages arising out of disrepair may brought by tenants against landlords in nuisance or for personal injury under the Defective Premises Act 1972, both of which would plainly attract the 10% uplift.

(5) Many claimants, however funded, receive modest awards of damages and withholding the 10% uplift would have a significant effect on the level of compensation.

(6) A significant number of claimants or counter-claimants fund these cases by way of CFAs and so fall within the primary purpose of Simmons v Castle, to compensate for the percentage reduction of damages as a result of the non-recoverability of the success fee following the LASPO reforms.

(7) Another consequence of LASPO was to reduce the scope of legal aid for housing disrepair cases. The number of legal aid practitioners specialising in this area is falling. Representation by CFA is therefore increasingly common and necessary for potential claimants. The success fee is a vital part of the sustainability of representation for tenants, particularly for those in social housing or at the lower end of the private housing market who are unable to afford legal fees out of their own resources. Removing the Simmons v Castle uplift, and thereby reducing the level of general damages, would have an adverse impact on success fees and the availability of legal representation for such claimants.

(8) The uplift should be applied irrespective of how the litigation is funded. In De Souza v Vinci Construction (UK) Ltd, supra, this Court held that a successful claimant recovering damages for disability discrimination in the employment tribunal was entitled to the 10% uplift even though the proceedings took place in a no costs jurisdiction. In Summers v Bundy (2016) EWCA Civ 126, this Court held that a successful claimant in clinical negligence proceedings who had been legally-aided throughout the proceedings was entitled to the uplift. Whilst the issue of compensating for the loss of the success fee will not arise for legally-aided claimants, any distinction when it came to the assessment of damages would lead to complexity and perceptions of unfairness, rather than the simplicity and clarity recommended by the Court of Appeal in Simmons v Castle.

On behalf of the defendant, Mr Vanhegan adopted those submissions and added the following arguments.

(1) The decision in Simmons v Castle to extend the 10% uplift to all civil claims, including in contract, was made after extensive argument and analysis and there is no justification for this Court now revising that decision.

(2) Since the decision in Simmons v Castle, the courts have taken a permissive rather than a restrictive approach to the application of the uplift – see for example Cruddas v Calvert (2015) EWCA Civ 171 (defamation), De Souza v Vinci Construction (2017) EWCA Civ 879 (claim in the employment tribunal for disability discrimination) and Mohammed v Home Office (2017) EWHC 2809 (QB) (false imprisonment).

(3) In any event, there is no merit in the argument that the 10% uplift should be confined to cases where damages are assessed by reference to a “tariff”. There is nothing in the approach to general damages for breach of a repairing covenant as propounded in the case law (see in particular Wallace v Manchester City Council (1998) 30 HLR 1111 and the line of subsequent authorities) to support excluding such damages from the scope of the uplift.

(4) Contrary to the claimant’s assertion, the uplift supports the compensatory principle. Without it, the successful claimant would have to pay the success fee to his lawyer out of his general damages.

The Court of Appeal rejected Ms Khan’s arguments.

general damages for breach of a repairing covenant are conventionally calculated by reference to a notional reduction in rent as opposed to a tariff or set of guidelines, the 10% uplift should not be applied. In some types of claim, the level of damages is assessed by reference to a tariff to “ensure consistency in awards and promote settlement of disputes” (McGregor on Damages, 21st edition, para 52.008). But there is nothing in the judgment in Simmons v Castle to suggest that the declaration should be confined to cases where damages are assessed by reference to a tariff. The Court could have confined it to such cases but conspicuously did not do so.

The calculation of general damages for loss of amenity, of which discomfort, inconvenience and distress are the symptoms, is a matter for the judge, without expert valuation evidence. As Griffiths LJ observed in Calabar Properties v Stitcher, “the facts of each case must be looked at carefully to see what damage the tenant has suffered and how he may be fairly compensated by a monetary award.” Furthermore, as Morritt LJ observed in Wallace v Manchester City Council, damages are not invariably calculated by reference to a notional reduction in rent but may alternatively be expressed as a global award or a combination of the two. Even where the rental value is used as the basis for calculation, the particular circumstances of the tenant may lead to either an increase or a reduction in the quantification. For that reason, the fact that taking a notional reduction in rent as the starting point may sometimes (though not invariably) incorporate an adjustment for inflation is no justification for excluding such damages from the scope of the uplift.

This was not a fortuitous outcome for disrepair claims, they fell squarely within the primary purpose of Simmons v Castle.

“… the primary purpose of the 10% increase in damages would be to compensate successful claimants, as a class, for being deprived of the right which they had enjoyed since 2000 to recover success fees from defendants, in cases where a claimant was funding the legal costs of pursuing his or her claim by a CFA.”

A claimant for damages for breach of a repairing covenant manifestly falls within that class. As demonstrated by the statement and submissions on behalf of the HLPA, CFAs play an important role in assisting tenants to bring claims for breach of repairing covenants. Such claims are therefore manifestly within the category of cases for which the 10% uplift was specifically intended, by way of compensation for the success fee which the claimant tenant’s lawyer is entitled to be paid by his client but which, following LASPO, cannot be recovered from the defendant landlord. The need to secure funding for claims in the post-LASPO environment was integral to the recommendations in Jackson Report and the declaration made by this Court in Simmons v Castle. The arguments put before this Court on behalf of the HLPA demonstrate that it remains a very important consideration in this category of litigation.

Appeal allowed on the first ground but dismissed on the second.

Comment

HPA and representatives, and the tenant’s representatives, did an excellent job in setting out both the legal and factual basis for the 10% uplift applying for disrepair/housing conditions claims. This was an odd, and perhaps doomed challenge to Simmons v Castle by Ms Khan, but the Court of Appeal’s judgment also has wider relevance in view of the looming imposition of wholly unrealistic fixed recoverable costs on housing cases.