Remedies

Damages can be defined as the sum of money that would put the landlord in the position it would have been in if the tenant had complied with the covenants completely. This is the case both at the end of the lease and during the term.

The measure of damages should reflect the landlord’s loss. That loss may be assessed as the actual cost of repairs or by the amount by which the landlord’s reversionary interest has diminished in value as a result of the breaches of covenant. This assessment is a fundamental part of a damages claim for dilapidations at the end of the term of the tenancy; there are a considerable number of issues to be taken into account and a number of approaches available. These are reviewed in Section 18 and diminution. There may be other, additional elements of loss, such as lost rent.

Damages claims can be, and often are, combined with any of the other interim remedies.

Particular factors to be considered when trying to assess the damages suffered by a landlord for a breach by the tenant during the term include:

• Unless the landlord owns other property nearby that is being devalued or endangered by the tenant’s breaches, where the tenancy has a very long time to run, the damage to the reversion is likely to be minimal, particularly as any hypothetical purchaser would be able to enforce the terms of the tenancy.
• Is the landlord liable to third parties? If so, there may be substantial diminution to the reversion.
• Does the tenant have security of tenure under, for example, Part II of the Landlord and Tenant Act 1954 (which gives protection to business tenants)? If so, and as the new business tenancy can be expected to contain similar obligations concerning the condition of the building as those in the existing lease, there may be limited damage to the reversion.
• Is the landlord going to, or can it, carry out the work? If not, then that might suppress its claim.
• Is the landlord itself a tenant? If so, that may have an impact on the claim.

The date at which the claim is valued depends on the circumstances. Generally, damages are assessed as at the date of the breach; however, in dilapidations cases, the damages are more likely to be assessed at the date of the hearing or at the expiry of the tenancy if the term of the tenancy expires before the hearing.

An obvious disadvantage of a damages claim during the term is that it will not necessarily result in the works being carried out, and the need to comply with the Leasehold Property (Repairs) Act 1938 may complicate matters. As a result, stand-alone claims for damages during the term are uncommon. It is more likely that a claim for damages will be added to a claim for forfeiture or for specific performance.

The Leasehold Property (Repairs) Act 1938 will apply to a landlord's claim for damages during the term of the tenancy where the tenancy was granted for a term of 7 years or more and there are more than 3 years remaining.

Whether the 1938 Act applies or not, the approach to the quantification of damages that a landlord might claim of a tenant who has broken the terms of a tenancy concerning the condition of the building will be the same.