England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(His Honour Judge Wakefield)

		Royal Courts of Justice Strand London WC2 Monday 19th November, 2001

1. LORD JUSTICE MANCE: This is an application for permission to appeal by the applicant, who is tenant of a flat at 55 Lavington Road, Ealing and has been since 1993. His current landlords are the claimants. The second claimant, however, only acquired the position by transfer at a date considerably subsequent to 1993.
2. The original landlords, that is the first claimant and her co-landlord, in 1995 began proceedings against the applicant for possession and arrears of rent. These claims have been struck out and I am not concerned with them.
3. The applicant's counterclaim was also the subject of an order drawn on 25th August 2000 and amended immaterially on 30th September 2000, that the claimant be debarred from defending that claim in relation to quantum, and at the same time an order that the matter be listed for an assessment of damages and specific performance hearing on 7th November 2000.
4. So the somewhat unusual situation appears to have resulted that the counterclaim or Part 20 claim came on before His Honour Judge Wakefield in November 2000 with the claimants being unable to appear to defend it. Apparently counsel did attend, but could not represent the claimants' interests.
5. I have seen the judge's short judgment given on that occasion and no doubt what I have is likely to be a summary, but it is a perfectly coherent summary, if so. It led to an order, dated 16th November drawn 29th November and subsequently amended in circumstances to which I will come on 31st May 2001. That amendment followed a further hearing before His Honour Judge Wakefield, where some variations of the order were obtained and some were sought unsuccessfully on the applicant's behalf.
6. The upshot of these hearings before His Honour Judge Wakefield is that the judge awarded the applicant on the Part 20 claim as follows. Firstly, in respect of want of repair of the flat he awarded a sum for the whole of the applicant's occupation since 1993. He originally took that as being 360 weeks and he assessed the sum, having read various reports which he listed in his judgment and looked at various photographs (which I have also read and looked at), at £20 a week making, over 360 weeks, £7,200.
7. That sum was amended in May 2001 to take account of a misapprehension, as it appears, or minor arithmetical error, as the judge described it, regarding the period in issue. The sum appears to have been increased from £7,200 to £7,600; that sum being awarded against both claimants.
8. Secondly, in respect of incidents of what may loosely be described as harassment, more technically as breach of the covenant of quiet enjoyment, the judge accepted the allegations in paragraph 13 of the Part 20 counterclaim and assessed the resulting loss or damages at £1,500 in November 2000. That was a counterclaim which could only be made good against the first claimant, since the second claimant was not landlord at the relevant time. In his judgment in May 2001, for reasons which presently do not appear, that sum seems to have been reduced to £1,340.
9. Thirdly, in respect of the poor state of repair current at the date of the assessment, it is first to be noted that the applicant in November 2000 did not then seek specific performance of the landlords' obligations to put the premises in good repair. That was, I understand, because of the landlords' poor past history with compliance with their obligations. The order made was as follows:

"2. That the Defendant may expend reasonable sums in employing a surveyor and workmen to carry out the works listed as outstanding in the schedule to the report of Patrick Reddin dated 14th September 2000 and in the Schedule to the report of Stephen Coultas dated 28th September 2000.

3. That the Defendant's workmen and surveyor may enter the parts of the premises known as 55 Lavington Road, Ealing, adjoining the Defendant's first floor flat, upon reasonable notice, for the purpose of inspection and execution of the said works; and

4. That the sums so expended by the Defendant may (when expended) be further set off against the outstanding rent owing to the Claimants and any future rent owing to the Claimants in respect of the defendant's flat."

10. The reference to further set-off is because there had been a previous paragraph of the order entitling the defendant to set-off his general damages, originally in total £8,700 and then in May increased to £8,940, assessed on his Part 20 claim against the outstanding rent owing to the claimants.
11. When the three paragraphs which I have read relating to the doing of work and the setting off of the cost against rent had been made, the matter came to the attention of the Legal Services Commission which was supporting the applicant, and they wrote on 12th December 2000:

"I confirm the Legal Services Commission's statutory charge arises in this matter.

Mr Torrance has recovered £8,700 in general damages by way of set off and will further recover sums from accumulated rent to offset repair costs.

I note your comments in respect of the works required and the disrepair. The charge on the general damages of £8,700 arises immediately and is clear. The charge on any sums expended upon works, by reason of the wording of the order arises immediately that they have been expended, although the actual monies may then be available having been expended, your client then attracts an immediate liability for an equal sum (up to the level of your costs claim less exemptions). There is no power to postpone enforcement of the statutory charge in this matter. The charge arises immediately and whilst I note costs have been awarded and may be enforceable, you would need to seek certificate amendment to pursue enforcement proceedings. The Legal Services Commission does not undertake enforcement in these circumstances.

Whilst I am sure it is inadvertent, the effect of the order seem to attempt to circumvent the fact the Legal Services Commission's statutory charge is a first charge under Section 16(6) of The Legal Aid Act 1988 thereby putting us at risk as to costs recovery, which is not acceptable.

This may not be an issue if your costs will be less than £8,700 (inc disbursements, VAT & counsel)."

12. The answer to the last paragraph is, I understand, almost certainly that the costs were far in excess of £8,700. Indeed Mr Torrance has put them before me at around £50,000, of which some £15,000 were apparently ordered to be paid by the claimants' solicitors personally.
13. The point made by the Legal Services Commission under section 16(6) of the 1988 Act arises because that Act provides for a first charge for the benefit of the Commission on any property which is recoverable preserved for an assisted party in the proceedings, and it is clear that, under the ensuing subsections, property in this context includes any order for damages or costs.
14. The result is, of course, to put Mr Torrance in a very difficult position because, in effect, as soon as he spends money on doing up the flat which ought to be done up by his landlord, he incurs a corresponding liability in the same amount to the Legal Services Commission. It is of little comfort to be told in those circumstances that he may have some right of recovery of those costs against his landlords. Though even that seems questionable since he informs him that they are also legally assisted.
15. To his credit he has prudently put aside the rent which he has been withholding from his landlords, which has reached the substantial total of £25,000. But if he were to expend that on repair he would have no further monies to meet the Legal Services Commission's first charge. He is self-evidently, it seems, not a man of means. Effectively the works which the court contemplated can only be done if he is prepared to expose himself to an equivalent liability to the Legal Services Commission. The matter is perhaps worsened by the fact that even the substantial sum which he has put aside by way of rent, around £25,000, as I have said, may not suffice to cover the whole costs of repair. The order does not seem to cater for the possibility that the applicant may not have sufficient funds to complete the repairs himself, or to say what happens in respect of any incompleted balance of the repairs.
16. It seems, in the light of the wording of the 1988 Act, fairly likely - although of course I can express no concluded view - that an order for specific performance by the landlords, or at least performance of their obligations by the landlords, would not have given rise to such difficulties as the Legal Services Commission outlined in their letter dated 12th December 2000.
17. It is implicit in what I have already said that the judge also gave the applicant costs. But, quite apart from the claimants' ability and willingness to meet any order for costs, there is the problem that they appear to be themselves in receipt of legal aid.
18. However, the applicant tells me that that may have changed, in that the claimants have sold the other half of the house and may now be in receipt of monies. But there has been no freezing order in respect of any of their assets, at least at this point.
19. The applicant now seeks permission to appeal to challenge each of the three aspects of the judgment which I have identified. He prefaced his arguments on the level of damages by the somewhat unpromising submission that more money would give him a better prospect of performing the existing order by doing the works and, at the same time, paying off the Legal Services Commission. It would, obviously, have to be a very large sum indeed to achieve that. The consideration which he has mentioned does not seem to me relevant to the level of damages, quite apart from the fact that the landlords appear unlikely to pay any additional award of damages which may be made.
20. Leaving aside that argument, therefore, the first argument relating to the sum of £20 a week ordered is that a flat sum of that nature is wrong because the rent increased over the period. It did somewhat increase, though it appears not by much, from about £57 a week to £70 a week. It seems to me, on the face of it, that the judge was entitled to take a pragmatic overall view of the prejudice due to the want of repair described in the reports and shown in the photographs and to fix a figure.
21. Then it is said, at length, in the applicant's witness statement that I should look at the profits which the landlords have made, and at the considerable increase demonstrated by certain documents (emanating, I think, from the Land Registry) in property values between 1993 and to date. The maxim is invoked that no one should profit from their own wrong. But I do not think that the increase in property values is an instance of profiting from the landlords' own wrong. It is profit which they made because they were landlords and because they owned a property, not because they breached their obligations to the applicant.
22. Mr Torrance also mentions the premium they would have obtained if they had achieved vacant possession. But they have not achieved this and so there is no question of profiting in that respect.
23. On the face of it it is difficult, it seems to me, to say that there is anything wrong with the £20 a week. Having read the reports and seen the photographs, the judge did not think this was the worst case of its kind. That seems to be a comment that is made good on the face of the reports and photographs. However, I leave this head aside for the moment.
24. I turn to the harassment claim, as I can call it for short. That, as I have said, appears to have led to damages of £1,500, reduced thereafter to £1,430. Having read the allegations in the applicant's pleading, I must say that I think there may be something to be said for the view that this was too low a sum for continual misconduct over a long period. The applicant asked me to take into account that it was conduct undertaken to get him out of the premises. But whether that is so or not, it seems to me that the applicant does have a ground for obtaining permission to appeal.
25. Then thirdly, and probably most importantly, there is the matter of the Legal Services Commission's first charge, which I have dealt with already at some little length. The applicant invokes the maxim that justice should be effective and cites in this context the Human Rights Act. I agree that justice should be effective. On the other hand, it is generally true that orders should not normally be structured in order to effect a particular result as to costs, and in particular not so as deliberately to affect the interests of a body like the Legal Services Commission. Here, however, it does seem to me that the basic relief required was in the nature of specific performance. It was for the landlords to perform there obligations. On that footing the Legal Services Commission would not, if those obligations had been performed, have obtained any first charge over anything as against the applicant.
26. The only reason for not granting specific performance has nothing to do with the Legal Services Commission and was the landlords' unreliability. The Legal Services Commission would, if specific performance had been granted, have been exposed to the risk of not being able to recover any costs recoverable from the landlords. The alternative course which the court devised to help the applicant, admittedly in November at the applicant's counsel's requests, proves not to be a feasible course at all. Counsel in May sought unsuccessfully to persuade the judge to reconsider his decision because of the attitude of the Legal Services Commission, but the judge refused to do that. He stood by his previous exercise of his discretion. He said that it was not proper for him to revise this part of his decision, and he said that the Legal Services Commission was not his concern and its attitude and first charge were no reason to award specific performance instead of damages. Knowledge of the first charge would not have affected his decision at trial.
27. It seems to me that on this ground the applicant does again have a reason to seek permission to appeal from this court, which I propose to grant. It may be that the court cannot do anything, any more than His Honour Judge Wakefield felt he could in May. On the other hand it is possible that some different form of order, perhaps specific performance with a consequential or an ancillary order authorising a third party, or even the applicant, to undertake the works on behalf of the claimants, might be admissible. It may be that in those circumstances the practical difficulty posed by the first charge would not arise. I cannot, as I say, decide that. All that I decide at the moment is the matter should go to appeal.
28. I revert to the very first of the three points. By itself I would not be minded to grant permission to appeal on it, but since the matter is coming before the court and it may be better not to prejudge one particular aspect of the matter, what I propose to do is stand over the application in respect of that aspect, i.e. stand over the application to appeal against the order for damages of £7,600 to the full court to come on at the same time and, if permission is granted then, to be heard at the same time as the other points.
29. Finally, I should say that the applicant relied on delay and alleged an infringement of his human rights by delay in the determination of the application for an injunction for harassment. I cannot see any fault of the court on the material before him and I see nothing wrong with the judge's exercise of his discretion in respect of the claim for an injunction for which he gave a good reason. I do not give permission on that ground.
ORDER: Application for permission to appeal granted on the grounds indicated in the judgment; applicant to be provided with a copy of this judgment at public expense. (Order not part of approved judgment) ____________________