This is the latest of a series of regular blogs by our Barrister, Nicholas Dowding KC, where he will be discussing different legal issues in the world of real estate.

By the late 19th century, there had, in the view of Lord Esher MR in Joyner v Weeks [1891] 2 Q.B. 31, for a very long time been a “constant practice” as to the measure of damages in disrepair cases”, which “[amounted] to a rule of law”, namely, that the amount recoverable was the reasonable and proper cost of the repairs, irrespective of whether the works had been or were going to be done.

In that case, the landlord had re let the premises some time prior to lease expiry to a new tenant who intended on taking possession to carry out alterations to amalgamate the premises with adjoining premises. Of the £70 claimed by the landlord for repairs, only £45 was ever incurred. At first instance, Wright J held that the proper measure of damages was the diminution in the value of the landlord’s interest by reason of the disrepair, but not exceeding the cost of doing the repairs. The Court of Appeal reversed him, holding that the landlord was entitled to the full cost of the repair works (£70), irrespective of whether the works had been done. The cost of works rule was, according to Lord Esher, a “highly convenient” one, which “avoids all the subtle refinements with which we have been indulged today, and the extensive and costly inquiries which they would involve”. Fry LJ went even further, saying that the diminution in value measure had “a complexity about it which unfits it for determining affairs as between man and man in a court of law”. No doubt many valuers would find that a rather surprising – and certainly outdated – pronouncement.

The cases which immediately followed Joyner v Weeks all proceeded on the basis that the case had established a rule of general application. It was against this background that Parliament, in 1927, enacted s.18(1) of the Landlord and Tenant Act 1927, which limits damages for disrepair to the amount by which the value of the landlord’s reversion has been diminished owing to the breach. As Lord Greene MR explained in Salisbury v Gilmore [1942] 2 K.B. 38, the legislature regarded the award of the cost of the works, in circumstances where the buildings were going to be pulled down or structurally altered in such a way as to make it useless to perform the covenant, as an unjust enrichment of the landlord, and the purpose of s.18(1) was to remove that injustice.

Thus the matter remained until 1996, when the House of Lords decided (in Ruxley Electronics v Forsyth [1996] A.C. 344) that in the case of a contract to carry out works, the cost of the remedial work is only recoverable where it is reasonable to carry it out, and not where the expenditure would be out of all proportion to the benefit to be obtained. It seems fairly clear that, in the light of this, Joyner v Weeks would not be decided the same way today. Nonetheless, Ruxley was a building contract case, and neither Joyner v Weeks nor s.18(1) of the 1927 Act were referred to by the House.

Following Ruxley, a view arose in some quarters that the rule in Joyner v Weeks is now subject to the Ruxley reasonableness/proportionality test, and from time to time, suggestions to this effect have appeared in some of the cases (see in particular Latimer v Carney [2006] 3 E.G.L.R. 13). It certainly seems anomalous that a different rule should apply in disrepair cases to that which applies in any other breach of contract claim, particularly when one bears in mind that terminal dilapidations claims frequently include non-repair items, such as failure to reinstate, where Ruxley principles apply in the ordinary way.

Nonetheless, the majority of cases have proceeded on the basis that Joyner v Weeks remains good law. Significantly, in Sunlife Europe Properties v Tiger Aspect Holdings [2013] EWCA Civ 1656, Lewison LJ described the common law measure of damages as having been established by … Joyner v Weeks”; accordingly, in assessing the common law measure of damages, the judge below had been “required to find the sum that would have put the premises into the condition in which the tenant ought to have left them”. On this basis, the common law measure of damages for disrepair remains the cost of the works, irrespective of questions of proportionality.

The latest attempt to argue that the rule in Joyner v Weeks is subject to Ruxley principles is Coldunell v Hotel Management International [2022] EWHC 1290 (TCC), which concerned a claim for terminal dilapidations in relation to a hotel. The tenant contended that the cost of the repair works was only recoverable if it was proportionate to undertake the works in accordance with Ruxley principles (it was common ground that Ruxley principles applied to the claim for breach of the covenant to decorate). The judge’s primary finding was that the point did not matter, because she did not consider on the facts that any of the costs claimed were out of all proportion to the benefit to be obtained by doing the repairs. However, she went on to say that, whilst she could see the force of not distinguishing the measure of damages in disrepair cases from that in other breach of contract cases, nonetheless if she had to decide the matter, she would not have accepted the tenant’s argument, given (a) the fact that dilapidations claims have not generally been decided by reference to Ruxley principles to date, (b) the added uncertainty that the application of the principle would bring to dilapidation cases, (c) the operation of the s.18(1) statutory cap, and (d) the judgment of Lewison LJ in Sunlife referred to above.

One may tolerably safely conclude from all this that Joyner v Weeks remains good law, at least up to the level of the Court of Appeal. What the Supreme Court would make of it is, perhaps, anyone’s guess, given in particular the fact that s.18(1) was clearly enacted on the basis that Joyner v Weeks correctly stated the position at common law. It may be that at some future time, a case will arise where the facts are such that the point matters, and it will be worth someone’s while to appeal to the Supreme Court. If so, one more of the possible uncertainties in the law of dilapidations may finally be put to rest.

As always, if you wish to comment or share your experiences, please feel free to contact me at nicholas.dowding@hollisglobal.com