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Damages and s18 cap

This page includes information on the following topics:
  • Costs estimates.
  • Application of s18 in various contexts.
  • Costs estimates - different work carried out.
  • Covenants to paint.
  • Covenants to re-instate.
  • Old and obsolete buildings.
  • Property ripe for redevelopment.
  • Sub-tenants remaining in occupation.
  • Old premises and lengthy expired lease - supercession.
  • Costs consequences of exaggerated claims by landlords.

Introduction

The general rule at common law is that the measure of damages is the cost of putting the premises into the state of repair required by the covenant. However, this is subject to the cap imposed by s18(1) of the Landlord and Tenant Act 1927 that limits the amount of damages to the diminution in the value of the reversion at the end of the term by reason of the breaches. In a well prepared case there will usually be evidence of the cost of repairs that were carried out (if that is the case) and expert evidence (either joint or from each party) as to the diminution in the value of the reversion. In some cases there will be no such expert evidence and the court will often use the cost of repairs to help it assess the diminution in value (Jones v Herxheimer [1950] 2QB 106).


Estimated costs

Different work carried out - covenant to decorate

Latimer v Carney
[2006] EWCA Civ 1417

Introduction

In this case the CA has held that an estimated cost of repairs in a schedule of dilapidations could be used to establish diminution in value, even though different work was carried out.

It also held that a covenant to decorate is a covenant to repair and so subject to the s18 cap.

The facts

In this case there was no expert evidence at trial of the diminution in value of the reversion. The landlord had obtained a schedule of dilapidations from a surveyor, which set out an estimate of what it would cost to put the premises in repair by reason of the defects. However, the landlord did not actually carry out the works specified in the report. Rather, the landlord refurbished the property to meet the needs of an incoming tenant. There were therefore ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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