Wrongful eviction: the £100,000 mistake

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Loveridge v the Mayor and Burgess of Lambeth Borough Council [2014] UKSC 65

Mr Loveridgbge was the secure tenant of a flat under a tenancy granted by Lambeth Borough Council. In breach of his lease, Mr Loveridge left for Ghana for 5 months leaving the property standing empty and without informing his landlord. The Council became concerned that Mr Loveridge might have come to some harm in the property and forced entry. Finding it apparently unoccupied, they emptied the flat of Mr Loveridge’s possessions and re-let it. By doing so the Council committed the statutory tort of unlawfully depriving a residential occupier of his occupation of the premises.

Under section 28 of the Housing Act 1988 damages for such a tort are not calculated by reference to the tenant’s actual loss, but to the profit the landlord obtains as a consequence of the eviction, calculated by reference to a statutory test.

That is, the difference between the value of the landlord’s interest with the occupier enjoying a right to occupy and the value of the landlord’s interest without the occupier having a right to occupy.

Despite the parties agreeing that Mr Loveridge’s possessions were worth £9,000 and that common law damages for unlawful eviction were just £7,400, the trial judge awarded Mr Loveridge £90,500 in statutory damages on the basis that the value of the landlord’s reversion was reduced by this sum as a consequence of the flat being let to a secure tenant. Hypothetically, by selling the reversionary interest free of Mr Loveridge’s tenancy, the Council stood to make £90,500 more than if he were still in occupation as a secure tenant. The judge also awarded Mr Loveridge the agreed sum of £9,000 in relation to his possessions.

The Court of Appeal overturned this decision finding that the valuation process should have proceeded on the basis that (as a matter of law) a sale of the landlord’s interest would result in Mr Loveridge ceasing to be a secure tenant and becoming an assured tenant instead, (since this is what occurs when a local authority sells a reversion to a private landlord). Accordingly, the Court found that Mr Loveridge’s occupation as an assured tenant would have no impact on the price a hypothetical private purchaser would pay for the reversion.

However, on 3 December 2014 the Supreme Court reversed the Court of Appeal’s decision and reinstated the trial judge’s original order. The Court considered that the issue in question was whether the valuation of Mr Loveridge’s flat should be conducted on the assumption that it was subject to an assured tenancy or a secure tenancy (the latter being much harder for a landlord to end). The Court found that, as Mr Loveridge had enjoyed the right to occupy as a secure tenant, the valuations should be conducted on this basis, since section 28(1)(a) of the 1988 Act stipulates that the valuations should be carried out on the basis that the “same right” continues.

Whilst the damages payable for unlawful eviction in this case were undoubtedly magnified as a consequence of the identity of the landlord (a local authority) and the legal effect of the local authority selling a property subject to a secure tenancy to a private purchaser, the outcome does serve as a warning to landlords that unlawful eviction of a residential occupier could give rise to a liability to pay damages far greater than they might envisage, even where it appears the tenant has abandoned the property.