Council secures major cut in damages payable over unlawful eviction

A local authority has substantially reduced the amount of damages payable as a result of its unlawful eviction of a secure tenant from residential accommodation.

In the Court of Appeal case of London Borough of Lambeth v Loveridge [2013] EWCA Civ 494 Loveridge had been granted a secure tenancy by the council of a one-bedroom flat. The tenancy agreement required him to notify Lambeth of any absence from the property for more than eight weeks.

On 9 July 2009 Loveridge left the property for a lengthy visit to Ghana from which he did not return until 5 December 2009. He continued to pay his rent by standing order but failed to notify the council.

A concern that he might have died in the property led Lambeth to effect forcible entry in September 2009.

The council cleared out Loveridge's possessions, prepared the property for re-letting, and found a replacement occupant prepared to take an introductory tenancy of it on 4 December. This was one day before Loveridge's return. The re-letting was not in fact completed until 7 December.

In the meantime Loveridge had returned and attempted to contact the council on Saturday 5 December. However, his message did not get through in time to those responsible for the grant of the new introductory tenancy. Efforts to reinstate his tenancy of the property came to nothing.

Loveridge therefore brought proceedings against Lambeth for unlawful eviction and for damages for the wrongful disposal of his possessions, in August 2010.

By the time of the trial in June 2012, damages for the loss of his possessions had been agreed at £9,000 and, subject to liability, common law damages for unlawful eviction were agreed in the sum of £16,400 including the £9,000, as the appropriate measure of his actual loss.

It was common ground during the trial that, if liability for statutory damages was established under ss. 27 and 28 of the Housing Act 1988, then the appropriate amount for statutory damages should be either £90,500 (as Loveridge argued) or nil (as the council contended).

Lord Justice Briggs in the Court of Appeal said: “This was because, as the council's valuer asserted and Mr Loveridge's valuer did not dispute, a purchaser of the block on the open market would pay as much for it with the property subject to Mr Loveridge's rights, converted to those of an assured tenant upon sale to a private landlord, as would be paid if the block were offered with vacant possession of the property. In short, there was a buy to let market for the property, not merely an owner occupier market.”

The Court of Appeal overturned the judge at first instance’s award of £90,000 in statutory damages, allowing Lambeth’s appeal on the construction of s. 28 of the 1988 Act.

Lord Justice Briggs said:

1. s.28 clearly required two valuations of the landlord's interest in the building (of which the demised premises formed part) by reference to the date immediately prior to the eviction. Both valuations required it to be assumed that the landlord in default was selling his interest on the open market to a willing buyer (other than the former tenant or his family);
2. For that purpose it was irrelevant that the landlord in default might be prohibited by the terms of his leasehold interest from selling, or (as in the present case) constrained in selling to a private landlord as purchaser: see the Tagro case.
3. The valuation required by s.28(1)(b) (under which the occupier is assumed to have no relevant rights) was tantamount to a vacant possession valuation.

The judge added: “Turning to the valuation required by s.28(1)(a), the assumption that the residential occupier continues to have ‘the same right to occupy the premises as before that time’ by no means requires an assumption that those rights are set in stone thereafter, immune from adverse change, whether by the landlord's lawful action or by operation of law.

“If there is anything which the landlord in default can lawfully do to mitigate the adverse effect of those rights upon an open market purchase that must be taken into account. Thus in the Osei-Bonsu case, the Court of Appeal would have expected the valuation (but for the parties' agreement as to damages) to have taken into account the ability of the landlord in default lawfully to evict the occupier, with his wife's consent, before making its open market sale.”

Lord Justice Briggs added that, by the same token, he considered that the valuer was “equally obliged to take into account the inherent fragility of a secure tenancy to becoming downgraded by operation of law into an assured tenancy, on a sale of a local authority landlord's interest to a private landlord purchaser”.

He said: “In the present case, the vulnerability of Mr Loveridge's secure tenancy to becoming downgraded into an assured tenancy on an open market sale to the highest bidder is inherent in the nature of his rights. This is, in particular, because on an open market sale, the highest bidder is likely to be a private rather than local authority landlord due to the depressing effect upon the value of the block to anyone whose status means that Mr Loveridge would continue to be a secure tenant.

“Finally, it is nothing to the point that, at the moment of valuation, the landlord in default has not yet sold the building, and may have not the remotest intention of doing so. Section 28(3) requires an assumption that the landlord in default's interest is to be valued upon the basis of an open market sale. This means no more than that, whether or not it wishes or intends to sell, the interest is to be valued in that way.”

Lord Justice Briggs said Loveridge's rights of occupation had, from the very grant of his secure tenancy, been vulnerable to be being downgraded upon a sale by his local authority landlord to a private landlord.

He added: "The landlord in default is indeed the owner of the relevant interest to be valued at the date prescribed by s. 28(1). It is nonetheless an interest to be valued by reference to the valuer's assessment of the best price which it could reasonably be expected to obtain in the open market, on the specific assumptions set out in s. 28."

The Court of Appeal judge concluded that the ruling in favour of Lambeth on the construction of s. 28 meant that the second issue of mitigation did not arise since the statutory damages were nil. A further consequence was that there was to be substituted the agreed common law damages for unlawful eviction in the sum of £7,400 for the statutory damages awarded by the judge. The damages for interference with Loveridge’s possessions were undisturbed.