Moorjani v Durban Estates Ltd (2015)

Claiming for loss despite vacancy of property

The background

Appellant Moorjani owned a long lease of a residential flat situated within a block where common parts were in a state of disrepair and described as ‘dilapidated, shabby and dingy’.

Following a water leak in the flat above, the appellant’s flat suffered damage as did others in the building. The appellant brought a claim against the landlord for breach of covenant to insure and repair common parts. At the time of the leak, the appellant was not living in the flat, returning only after repair works had been completed.

When the case was heard at first instance, the claim was unsuccessful on the grounds that the appellant had not been living in the flat at the time of the leak; damages were awarded only in respect of the common parts and for those years when the appellant was residing in the property. Moorjani appealed.

The law

The key points of argument in this case were:

• whether Moorjani could claim damages for the period of time when he was not residing at the flat;
• if so, how such damages could be calculated; and
• whether any loss suffered by Moorjani should be based on impairment of the amenity value in Moorjani’s leasehold interest or discomfort, inconvenience and distress actually suffered as a result of the landlord’s breach of covenant.

The case reached the Court of Appeal, which referenced a number of cases, in particular Earle v Charalambous [2006], in its decision. Charalambous guided the court on the most suitable starting point when assessing and quantifying damages, stating that where a landlord’s breach of its repair covenant adversely affects the tenant’s enjoyment of the property, the court should firstly consider any reduction in rental value.

The decision

The court concluded that Moorjani’s loss stemmed from the effect on his rights of amenity granted by the lease, rather than the resulting discomfort, inconvenience and distress he may have suffered. As a result, the claim was still valid despite the fact that he was not living in the premises at the time the damage was caused and did not return until it was made good. The landlord’s breach was sufficient to cause the tenant some loss of amenity under the lease.

Because he was living elsewhere, however, Moorjani’s loss could be mitigated. Even though Moorjani had not intended to mitigate by living elsewhere, the fact that he was not in residence at the time of the leak is nevertheless an adequate form of mitigation.

Each case should turn on its facts; courts may award damages according to the circumstances of the parties. Where a tenant needs to vacate a property as a result of damage caused by a landlord’s breach, the rent they pay for alternative premises will be a suitable guide to the court as to any award it makes. If a tenant chooses to vacate a property or lets it out to another, it will not have suffered a personal loss but it will have suffered an interference in its enjoyment of the property granted by the lease, a factor which can be taken into consideration in assessing quantum.

The Court of Appeal in Moorjani held that, whilst damages assessed according to the rental value of the premises during the period the premises were affected could be awarded to the appellant in consideration of the impact on his rights of amenity, these should be reduced because of his living arrangements at the time, the fact that damage was purely cosmetic and the lack of severity of the landlord’s breach. In cases where common parts are in a greater state of disrepair, or where ground rents are much higher, awards for damages could be significantly increased.

JB Leitch’s Phil Parkinson comments on the decision:

“Moorjani really highlights the importance for landlords to ensure that repair obligations are complied with. A failure to deal with disrepair, even of common parts and where works required are generally cosmetic in nature, may well lead to damages claims not limited as to whether or not a tenant was residing in the premises. We recommend that landlords review their leases and satisfy themselves that repairing covenants are satisfied.”