Televantos v McCulloch

Rent Act 1977, Schedule 15, Part I, Case 1 — Rent in arrear — Statutory tenancy — Tenant’s counterclaim for damages for breach of covenant implied by section 11 of Landlord and Tenant Act 1985 to keep the matters mentioned in the section in repair and working order — Judge’s award in respect of counterclaim greater than arrears of rent — Whether order for possession justified — Equitable set-off — Whether tenant came to court with clean hands — Tenant’s appeal allowed The plaintiff in the county court proceedings claimed an order for possession on the ground of arrears of rent payable by the defendant tenant — It was common ground that the defendant had deducted and withheld from her rent payments a total of £2,274 — The defendant counterclaimed for damages for breach of the covenant to repair and keep in working order implied by section 11 of the Landlord and Tenant Act 1985, and the judge awarded the tenant £2,700 in respect of the breach of this covenant — Despite a balance of £426 in favour of the tenant, the judge made an order for possession in the landlord’s favour — The defendant appealed — She submitted that the judge was wrong to make such an order as the fact was that in the result there was no unpaid rent 124 The judge’s reasoning appears to have been that at the time of the issue and commencement of proceedings there were arrears of rent because at that time the quantum of the defendant’s counterclaim had not been ascertained — It was accepted that this reasoning was not as such sustainable — The subject of the defendant’s counterclaim related to a period which, save possibly for a few days, was wholly before the start of proceedings — This meant that, even before the start, the tenant had an equitable set-off to the rent claim, subject, however, to one obstacle raised by the plaintiff The obstacle was the application of the well-recognised equity principle, applicable alike to claims and defences, that ‘he who comes to equity must come with clean hands’ — It was suggested by the plaintiff that the defendant tenant’s hands had not been clean, but the only evidence of that before the judge was that the tenant had not been co-operative with the builder in arranging for the works to be done, causing delay and loss to the plaintiff and, on one occasion, behaving in an ‘unladylike fashion’ when the glass in a door was broken — None of these went anywhere near precluding the tenant from relying on an equitable set-off — In any case the point was not taken in the court below and so was not open in the Court of Appeal The judge had decided that there was rent in arrear, despite his findings on the tenant’s counterclaim — He had therefore, in accordance with section 98(1) of the Rent Act 1977, to decide whether it was reasonable to make a possession order — Here again his conclusions and reasoning met with criticism by the court — He held that it was reasonable to make the order, but, in striking a balance in favour of the landlord, he alluded to personal and family considerations and failed to give weight to the essential points that the tenant’s complaint about the inconvenience she was suffering as a result of the landlord’s breach was well founded and that she was entitled to a sum for damages in excess of the rent withheld The final matter was the plaintiff landlord’s cross-appeal alleging that the award of £2,700 damages was excessive, in particular the £1,000 for general damages — The Court of Appeal rejected this and regarded the award as ‘unimpeachable’ — Appeal allowed and cross-appeal dismissed, with costs The following case is referred to in this report. British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 637; [1979] 3 WLR 451; [1979] 2 All ER 1063; (1978) 39 P&CR 189; [1979] EGD 414; 250 EG 1183, [1979] 1 EGLR 64 This was an appeal by the defendant tenant, Patricia Williams McCulloch, from the decision of Judge Hill-Smith, at Westminster County Court, granting the landlord, Maris Vassos Televantos, possession of the ground-floor flat at 46 Rosebery Road, Muswell Hill, London N10. Philip Engelman (instructed by Whittington Tilling & Knight) appeared on behalf of the appellant; Nicholas Hopkins (instructed by Chalker Smalley) represented the respondent. Giving judgment, NICHOLLS LJ said: This is an appeal by the defendant from an order made by His Honour Judge Hill-Smith, sitting in the Westminster County Court, on April 11 1990. In the proceedings the plaintiff claimed possession from the defendant of a ground-floor flat at 46 Rosebery Road, Muswell Hill, London N10. The tenancy is a statutory tenancy and the basis on which the claim for possession was made was Case 1 of Schedule 15 to the Rent Act 1977. The particular ground relied upon was arrears of rent. At the trial it was common ground that the defendant had deducted and withheld from her rent over a period of months sums totalling £2,274. The defendant counterclaimed for damages for breach of the lessor’s covenant, which, admittedly, was implied in this lease by section 11 of the Landlord and Tenant Act 1985 — that covenant obliging the lessor to keep the matters mentioned in that section in repair and working order. The defendant claimed in the proceedings, although the precise words ‘set off’ did not appear in her defence or counterclaim, to set off those damages against her liability in respect of unpaid rent. The judge awarded the defendant £2,700 in respect of her counterclaim. Nevertheless, although that sum exceeded the agreed amount of unpaid rent, the judge made an order for the defendant to give up possession in five months’ time. He ordered the defendant to pay the plaintiff’s costs on the claim and the plaintiff to pay the defendant’s costs on the counterclaim, those costs orders to be set off against each other. I should further mention, because this was not recorded in the order as drawn up, that the judge also ordered that the defendant was to pay the agreed sum of rent arrears of £2,274. No doubt that sum was to be set against the plaintiff’s liability to pay £2,700 and thereby be wholly extinguished, thus leaving the plaintiff obliged to pay the defendant the balance of £426. The defendant’s appeal is primarily based on the simple proposition that the judge erred in making an order for possession because, on his own findings, there was no unpaid rent. For the purposes of this appeal the law on this point is clear enough. In his judgment the judge referred to the following summary set out in volume 1 of Woodfall on Landlord and Tenant, para 1/1464: Where the landlord expressly agrees to do repairs, there is no implied condition that if such repairs be not done the tenant may quit or is not liable for rent; but it was held in an old case that the tenant may do the repairs, and deduct the expense from the rent, and such would still seem to be the law. The tenant can always counterclaim for the expense if sued for the rent. He cannot recover more than the reasonable cost of complying with the covenant, and loses that right if he has denied the landlord the opportunity of complying with the covenant himself. A tenant, upon being sued for unpaid rent, may be able to rely upon his own counterclaim against the landlord for breach of a landlord’s repairing covenant as according a defence by way of equitable set off to the claim for rent. Having quoted the substance of that paragraph, the judge said: . . . it is clear, accordingly, that the law is that a tenant in such circumstances is not entitled unilaterally to reduce the rent by a figure that arbitrarily is selected by her or him or the tenant as representing a reasonable reduction for the rent. His or her remedy is to counterclaim in proceedings. In this case I find that there was no agreement in relation to any reduction in rent: and it follows from that that at the time that I have to consider, namely the issue of the proceedings, there were arrears of rent. Thus the heart of the judge’s reasoning seems to be that, because the quantum of the defendant’s counterclaim had not been ascertained when the plaintiff started the proceedings, the rent was then in arrears. For my part, I have some difficulty with that conclusion. It is not a point, however, on which further exposition or consideration is called for in this case because, as I understand the case that has been presented to us on behalf of the landlord, subject to one point which I will mention in a moment it is accepted that that passage in the judge’s reasoning is not supportable. The defendant’s counterclaim relates to damage, by way of inconvenience and otherwise, suffered by her while the flat was in a state of disrepair and while extensive works of repair were being carried out. Those works began in about July 1987 and ended the following May. The plaintiff issued his proceedings early in that month. Thus the subject of the counterclaim relates to a period which, save possibly for a few days, was wholly before the proceedings started. Thus, even when the proceedings were issued, the defendant had available to her a defence of equitable set-off to the rent claim. In due course, when the dispute over the defendant’s claim was determined by the court, what then became revealed was that, indeed, the defendant had a defence to the whole of the claim for unpaid rent. What is said on this point on behalf of the plaintiff is this. The principle set out in Woodfall is culled from the decision in the case of British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 637. There may be a defence by way of equitable set-off in this type of case, but the defence of equitable set-off depends upon an application of principles of equity. As an equitable defence the principle is not applicable in this case because the tenant did not come to the court with clean hands. In support of that submission it is said that the judge preferred the evidence of the landlord to that of the tenant where there was conflict. He found that the tenant was not co-operative with the builder in arranging for the works of repair to be done and this caused delay and damage and loss to the plaintiff, and that on one occasion the tenant behaved in, to quote the judge’s expression, an unladylike125 fashion when the glass in a door was broken. This point was not taken in the court below, and in my view it is not open in this court. This is just the sort of point which, if taken at the trial, can be expected to be the subject of evidence, including cross-examination. In any event, in my view, the point is misconceived. None of the matters relied upon goes anywhere near furnishing grounds for saying that, although the damages payable by the landlord to the tenant exceed the amount of unpaid rent, the tenant should be precluded from relying upon those damages by way of equitable set-off. The judge, having reached the conclusion that there was rent in arrear, despite his findings on the counterclaim, then went on to consider, as he was bound to do, whether it was reasonable that there should be an order for possession. What he said on that was this: I must balance one factor against the other. This property is a rent controlled property. It was purchased by the plaintiff’s father some time ago and had it been of a rateable value highly in excess of this figure, of course the plaintiff would be entitled to possession. His common law right has been whittled down by statute. It is his bricks and mortar. The second aspect is that he has family and at one stage there were earlier proceedings, apparently improperly constituted, to obtain possession so that other members of his family might occupy: and there was again the possibility that the plaintiff himself, Basil’s son, might move to London in pursuit of his work. That is one side. On the other side, the defendant is a single person, that is to say, she is living alone (in fact she is a married person). What has happened to her husband is not at all clear and her partner, Mr Cross, has disappeared from the scene. She is to complete her course of study in three months’ time. It is clear that until or after the period when rent was arbitrarily withheld by her, she complied with her obligation to pay rent. But I am satisfied from the whole evidence given in this case and the way it was given and the demeanour of the parties, that it is a case in which on balance I ought to accede to the landlord’s claim for possession. Had this point become material, I must say, with all respect to the judge, that I am wholly unable to accept that he reached a correct decision on the question of reasonableness. The factor, above all others, on the judge’s findings which needed to be taken into account was that the sums withheld from the payments of rent were withheld because of a claim by the tenant that she was entitled to damages for the inconvenience that she was suffering as a result of the landlord’s breach of covenant. In the event, the judge found that her complaint was well founded and that she was entitled indeed to a sum in excess of the amount which she had withheld. In my view, when one takes that into account, I have the greatest difficulty in seeing how it could be regarded as reasonable in the circumstances of this case to say that an order for possession should be made. On that the judge was plainly wrong. The third issue which has been put before us concerns a cross-appeal by the plaintiff against the judge’s award of damages in the sum of £2,700. The background facts can be stated shortly. In May 1987 the London Borough of Haringey served a notice under section 9(1)(a) of the Housing Act 1957, requiring extensive works to be carried out within 120 days to bring the house up to a reasonable standard. That followed a complaint to the environmental health officer by the tenants of the upstairs flat. The judge found that the complaint was made with, as he put it, the support, active or inactive, of the defendant. The judge was satisfied that defects existed, that considerable works of repair were necessary and that those works involved disturbance to the defendant. The works took a substantial period. The initial estimate of the small builder who was engaged was 10 weeks, but in the event the works took 10 months. The judge said the builder had limited experience and was clearly without any real equipment or expertise. The defendant was irritated by the slowness and irregularity of the works, but she herself was not co-operative. There were difficulties in arranging dates for some of the work and responsibility for that fell equally on both sides. The judge said: It is clear that she suffered a degree of inconvenience, spasmodically, greater and sometimes less, during the period when the quite extensive repairs involving structural alterations and the repositioning of water tanks and the likes of that were taking place. It is clear on that basis that arrangements ought to have been made by the landlords either to let her use the flat above or otherwise to mitigate the inconvenience. I am satisfied that there was inconvenience, and on that basis a breach of the section 11 implied covenant. The judge awarded the defendant the sum of £1,700 by way of general damages for breach of that covenant. There was also a claim for special damages for items such as loss of the contents of a freezer when the electricity was disconnected and the cleaning of carpets and curtains etc. Under that head the defendant claimed £1,753 and he awarded her £1,000, which, he said, amounted to generous compensation. On the cross-appeal the plaintiff contends that the award of £1,700 was excessive. It was submitted, in short, that a sum of the order of £1,000 pa, depending on the circumstances, is the typical figure to be awarded for distress, inconvenience and hardship. It is submitted that the period of inconvenience in the present case should not be equivalent to more than one year for the purpose of damages when one takes into account, first, the inevitable disruption which will follow from a landlord’s complying with his repairing obligations and carrying out works; second, the obstruction of the defendant in this case; third, the fact that the defendant had and occupied alternative accommodation in Paris, at least intermittently, during the time when the main works were done; and, fourth, that there had been no increase in the rent since the lease was granted in 1985. It is submitted that a time equivalent of five or six months’ inconvenience is in point in the present case and that the sum awarded for that period should be of the order of £500 to cover inconvenience while the works were being carried out. The principal inconvenience arose when the works were being carried out, and, in respect of the earlier period, the damages should not exceed a sum of the order of, say, £150. It is submitted that the difference between these figures and the amount awarded by the judge is so large as to demonstrate that the judge must have fallen into error when making his award. I am unable to accept these submissions. Each case must depend on its own facts. Here the damages awarded were in respect of the whole period of the tenancy from April 1985 onwards. No doubt the principal problems were in the 10 months while the work was being carried out, but the interference with the tenant’s enjoyment was not confined to that time. In my view, the sum awarded cannot be regarded as plainly excessive. The judge saw the witnesses and was able to form an opinion on the state of the premises, on the degree of inconvenience suffered from time to time by the defendant and on the plaintiff’s culpability. The judge had in mind, because he mentioned these matters in his judgment, that the tenant was not co-operative and that it was only during the time the works were being carried out that the principal problems existed. I can see no reason for thinking that the judge failed to take into account and give due weight to the matters which were material and I can see no basis for saying that his award was plainly wrong. In my view, the award is unimpeachable. For these reasons, it must follow that, in my view, this appeal should be allowed and the cross-appeal dismissed. Agreeing, MANN LJ said: There is one question upon which I would wish to reserve my position. It is this. Can it be said that, as at the commencement of proceedings in circumstances such as here obtained and were found to have obtained, that any rent lawfully due from the tenant had not been paid?  The answer to that question is devoid of consequence in these appeals. It does not affect the result. The appeal was allowed and cross-appeal dismissed with costs.