UKSC 65
On appeal from:  EWCA Civ 494
Loveridge (Appellant) v Mayor and Burgesses of the London Borough of Lambeth (Respondent)
Lord Neuberger, President
JUDGMENT GIVEN ON
Heard on 21 October 2014
Jan Luba QC
(Instructed by Hopkin Murray Beskine)
Andrew Arden QC
(Instructed by Lambeth Legal Services)
LORD WILSON: (with whom Lord Neuberger, Lord Sumption, Lord Carnwath and Lord Toulson agree)
"3.17 It is important that existing tenants whose Rent Act rights will be preserved should be protected against the minority of landlords who may be prepared to harass them in order to obtain vacant possession and to relet at higher rents. The Government therefore proposes to increase the existing statutory protection by creating a new offence where the landlord harasses the tenant …. The Government also proposes to strengthen the civil law to enable tenants who have been evicted illegally or forced out by harassment to claim greater compensation. This would be an important additional deterrent to harassment."
"This section applies if, at any time after 9th June 1988, a landlord (in this section referred to as 'the landlord in default') … unlawfully deprives the residential occupier of any premises of his occupation of the whole or part of the premises."
"(3) Subject to the following provisions of this section, where this section applies, the landlord in default shall, by virtue of this section, be liable to pay to the former residential occupier, in respect of his loss of the right to occupy the premises in question as his residence, damages assessed on the basis set out in section 28 below.
(4) Any liability arising by virtue of subsection (3) above -
(a) shall be in the nature of a liability in tort; and
(b) subject to subsection (5) below, shall be in addition to any liability arising apart from this section (whether in tort, contract or otherwise).
(5) Nothing in this section affects the right of a residential occupier to enforce any liability which arises apart from this section in respect of his loss of the right to occupy premises as his residence; but damages shall not be awarded both in respect of such a liability and in respect of a liability arising by virtue of this section on account of the same loss."
(a) The first, at (a), is the definition of "residential occupier", which is to have the meaning set out in section 1 of the Protection from Eviction Act 1977, namely a person occupying premises as a residence, whether (as in the case of Mr Loveridge) under a contract or by virtue of any enactment or rule of law giving him the right to remain there.
(b) The second, at (b), is the definition of a residential occupier's "right to occupy", which is to include "any restriction on the right of another person to recover possession of the premises in question".
"(1) The basis for the assessment of damages referred to in section 27(3) above is the difference in value, 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;
Although section 27(3) describes the damages payable to the tenant under section 28 as being in respect of his loss of the right to occupy, it is clear that they are designed to yield to him not the amount of his loss but, exceptionally, the amount of the gain which the landlord would otherwise have achieved by reason of the eviction.
"… the whole concept of the landlord … selling his interest on the open market to a willing buyer assumes that he can sell it on the open market to a willing buyer …"
(a) In respect of valuation (a), his instructions, once refined, were to value the building as at 22 September 2009 on the assumption that both flats were subject to secure tenancies. By reference to a capitalisation of the rents payable under the tenancies, Mr Jenner's valuation (a) was in the sum of £123,000.
(b) In respect of valuation (b), his instructions were to value the building as at 22 September 2009 on the assumption that the owner had vacant possession of the downstairs flat but that the upstairs flat was subject to a secure tenancy. By reference to the market value of properties comparable to the downstairs flat and to a capitalisation of the rent payable for the upstairs flat, Mr Jenner's valuation (b) was in the sum of £213,500.
(c) So the difference between Mr Jenner's valuations (a) and (b) was £90,500, being the sum which the trial judge awarded to Mr Loveridge by way of damages under section 28.
(a) In respect of valuation (a), his instructions were therefore to value the building as at 22 September 2009 on the assumption that both flats had then become subject to assured tenancies. By reference to market comparables, Mr Robson's valuation (a) was in the sum of £304,000.
(b) In respect of valuation (b), his instructions were to value the building as at 22 September 2009 on the assumption that the owner had vacant possession of the downstairs flat but that the upstairs flat had then become subject to an assured tenancy. By reference to market comparables, Mr Robson's valuation (b) was again in the sum of £304,000. For his opinion, not challenged by Mr Jenner, was that in 2009 there was no difference between the value of 19 Moresby Walk if bought with vacant possession and if bought subject to an assured tenancy.
(c) So the difference between Mr Robson's valuations (a) and (b) was nil, being the sum which the Court of Appeal considered to be Mr Loveridge's entitlement under section 28.
"The clear answer to this argument, I am satisfied, lies in [Wandsworth's] submission that what is being valued is the interest of the landlord … not the abstract interest of a notional willing buyer. Although the concept of a willing buyer helps to fix the respective valuations, one postulates the landlord's continuing ownership in fact."
Although it may take time to understand his last sentence, Simon Brown LJ there expressed the view, with which I respectfully agree, that the likely effect of a sale upon the subsistence or otherwise of the secure tenancy should not be brought into the valuation exercise mandated by section 28.
"Mr Loveridge's rights of occupation had, from the very grant of his secure tenancy, been vulnerable to being downgraded on a sale by his local authority landlord to a private landlord. It was a vulnerability inherent in the nature of his rights."
The Lord Justice rightly put aside the extreme unreality of any such proposed sale. But he endorsed a valuation under section 28(1)(a) which was based upon a notional downgrading of the right which Mr Loveridge had prior to the eviction, namely the right of a secure tenant, so as to become the right only of an assured tenant. In my view his endorsement was wrong: for, as His Honour Judge Blunsdon had concluded in a judgment of enviable clarity, section 28(1)(a) requires the basis of the valuation to be that Mr Loveridge "continues" following the eviction to have "the same right" to occupy as he had prior to the eviction. I therefore propose that the appeal should be allowed and the judge's order restored.