Tenant wins Supreme Court fight with council over damages for unlawful eviction

A secure tenant who was unlawfully evicted from his accommodation has won his Supreme Court battle with a London council over the level of damages payable.

In Loveridge v Mayor and Burgesses of the London Borough of Lambeth [2014] UKSC 65 the Supreme Court restored a county court ruling that Lambeth should pay £90,500 under s. 28 of the Housing Act 1988 and £9,000 for trespass to goods.

It overturned the decision of the Court of Appeal, which had adopted the council’s approach to the s. 28 valuation exercise and substituted agreed common law damages of £16,400.

The background to the case was that Loveridge had been a secure tenant of a one-bedroom flat owned by Lambeth.

On 9 July 2009 he left the property for a lengthy visit to Ghana. He continued to pay his rent by standing order, but a concern that he might have died in the property led the council to effect forcible entry in September 2009.

Lambeth cleared out Loveridge’s possessions, and found a replacement occupant. When he returned his efforts to reinstate his tenancy of the property were unsuccessful.

Loveridge brought proceedings against the council for unlawful eviction.

As part of the litigation, the claimant and Lambeth each instructed a surveyor to value the council’s interest in the property (19 Moresby Walk) for the purposes of subsections 28(1)(a) and (b) of the 1988 Act.

Loveridge’s surveyor calculated valuation (a) on the basis that 19 Moresby Walk was sold with both the upstairs and downstairs flats subject to secure tenancies. He calculated valuation (b) on the basis that 19 Moresby Walk was sold with vacant possession of the downstairs flat but with the upstairs flat subject to a secure tenancy. This difference in value was £90,500.

The council’s approach was to rely on subsection 28(3)(a), which requires both valuations (a) and (b) to be calculated on the assumption that the property is sold on the open market to a willing buyer.

If 19 Moresby Walk had in fact been sold on the open market, say to a private landlord, the secure tenancies (which do not apply to private landlords) would have been converted into assured tenancies, thus allowing the new landlord to bring the rents up to market level.

The council’s surveyor therefore conducted valuation (a) on the basis that both flats were subject to assured tenancies. He concluded that valuation (b) produced the same figure as valuation (a) because the downstairs flat with vacant possession would be worth the same as if it were subject to an assured tenancy.

The Supreme Court unanimously allowed Loveridge’s appeal over the correct approach.

The judgment was given by Lord Wilson, with whom Lord Neuberger, Lord Sumption, Lord Carnwath and Lord Toulson agreed.

Lord Wilson said the words of section 27 of the 1988 Act were wide enough to cover an unlawful eviction on the part of a local authority landlord, not just a private sector landlord. This was the case even if local authority landlords rarely perpetrated unlawful evictions of their tenants.

“When they do so, it is usually, as here, as a result of honest misjudgment and scarcely ever….as a result of any deliberate intention to act unlawfully,” the judge said.

Lord Wilson noted that section 28(1) required the court to make two valuations, namely (a) and (b), of the landlord’s interest as at the time immediately prior to the unlawful eviction.

“Valuation (a) is based on the assumption that the tenant continues to have the same ‘right to occupy’ the premises as he had prior to the eviction,” he said. “Indeed, in the light of the definition in section 27(9)(b) of the Act, the assumption that he continues to have the same right to occupy includes an assumption that he continues to enjoy the benefit of the same restrictions on the landlord’s right to recover possession as he enjoyed prior to the eviction.”

Valuation (b) by contrast was based on the assumption that the tenant ceased to have that right to occupy, including that he ceased to enjoy that benefit.

Lord Wilson said the issue in the case was whether the valuation of both the upstairs and downstairs flats at 19 Moresby Walk (for valuation (a)) and of the upstairs flat (for valuation (b)) should be conducted on the assumption that they were subject to secure tenancies or to assured tenancies.

The judge said the exercise mandated by section 28 of the 1988 Act was more complicated than an identification of market value.

“The assumption of a sale on the open market [subsection 28(3)(a)] is ‘for the purposes of’ the valuations referred to in subsection 28(1), in which other assumptions are mandated, namely (a) that the tenant ‘continues to have the same right to occupy the premises’ as he had immediately prior to the eviction and, alternatively, (b) that he ‘has ceased to have that right’.”

The judge said the right which Loveridge had to occupy the downstairs flat immediately prior to the eviction was the right of a secure tenant.

Lambeth, he suggested, correctly argued that the consequence of a notional sale to a private landlord would be to convert the status of Loveridge’s tenancy (and indeed that of the tenancy upstairs) from secured to assured.

However, the judge said in his view the notional exercise mandated by subsection 3(a) of section 28 did not extend to making the consequential adjustments to the nature of Mr Loveridge’s right (or indeed that of the tenant upstairs) consequent upon sale.

“For that is barred by the words of subsection 1(a),” Lord Wilson said. “Within this highly artificial exercise, regard to the effect of one assumption is halted by the terms of another.”

The judge concluded that the likely effect upon a secure tenancy of a sale to a private landlord should not therefore be taken into account.

Lord Wilson said Parliament might wish to revisit the application of section 27, and therefore of section 28, of the 1988 Act to unlawful evictions on the part of local authorities.

“No doubt all reasonable means of dissuading them from making unlawful evictions, whether by misjudgement or otherwise, should be in place,” he said. “But the facts are that Lambeth did not realise a capital gain, and never aspired to realise a capital gain, as a result of its eviction of Mr Loveridge; and that its intention was always to re-let the flat and that, once it did so, even its notional gain was eliminated.

“In such circumstances it seems wrong that, by reference to a calculation of its notional gain, the law should require payment to Mr Loveridge out of public funds in an amount which is 12 times greater than that of his loss.”

Michael Paget of Cornerstone Barristers, who acted for Harry Loveridge alongside Jan Luba QC of Garden Court Chambers, said: “The Supreme Court has made it clear that the Housing Act 1988 applies to all landlords equally, with a potential heavy penalty when a tenant with significant security of tenure is unlawfully evicted. Trying to regain possession without using the courts may not be worth it.”

Paget added: “This statutory damages dog has an awful bite but there is absolutely no reason at all to get bitten. Where the evicted tenant had significant security then full statutory damages will be significant, but no landlord should end up being subject to a full award. Where a mistake is made by the landlord it should be corrected as quickly as possible. Lawfully enforcing a possession order through the courts is by far the safest way to guarantee vacant possession.”

Section 28, Housing Act 1988

Section 28 sets out the method by which damages for unlawful eviction are calculated, being the difference in value between two alternative calculations of the landlord’s interest in the building at the time immediately prior to the unlawful eviction:

"(1) The basis for the assessment of damages [for unlawful eviction] is the difference in valued, determined as at the time immediately before the residential occupier ceased to occupy the premises in question as his residence, between –

(a) the value of the interest of the landlord in default determined on the assumption that the residential occupier continues to have the same right to occupy the premises as before that time; and

(b) the value of that interest determined on the assumption that the residential occupier has ceased to have that right.

(2) In relation to any premises, any reference in this section to the interest of the landlord in default is a reference to his interest in the building in which the premises in question are comprised (whether or not that building contains any other premises) together with its curtilage.

(3) For the purposes of the valuations referred to in subsection (1) above, it shall be assumed –

(a) that the landlord in default is selling his interest on the open market to a willing buyer…."