Landlords be aware – 10% uplift in damages can apply to breach of repairing covenant

The Court of Appeal has held that the 10% uplift in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 can be applied to damages for breach of a repairing covenant.

In the case of Khan v Mehmood (2022) EWCA Civ 791 the landlord appealed the decision of the trial judge to apply the 10% ‘Simmons v Castle uplift’ when awarding damages.

As background, the primary purpose of the 10% increase in damages in Simmons v Castle is to compensate successful claimants for being now being deprived of the right to recover success fees from defendants, in cases where a claimant was funding the legal costs of pursuing their claim by a CFA.

The underlying claim was one for possession as a result of arears of rent. As is often the case the tenant of the premises submitted a defence and disrepair counterclaim. At first instance the possession claim was dismissed and the judge awarded the tenant damages equating 50% of rent for a period of the tenant’s occupation. The judge also added the Simmons v Castle 10% uplift for the award for damages.

The landlord appealed, which was dismissed and so bought a second appeal in the Court of Appeal.

One of the two issues that the Court of Appeal was asked to consider was whether the uplift should apply to general damages for disrepair.

The landlord sought to argue that the uplift should only apply to the “damages calculated by reference to guideline of tariff and not to damages based on a reduction in rent”.

The tenant argued that:

• The Court in Simmons v Castle saw “no good reason why the 10% increase should be limited so as to exclude any type of claim”;
• The reference to a percentage rent in the award of damages is a broad-brush approach, not a precise calculation;
• In addition to breach of repairing covenant, claims for damages arising out of disrepair may brought by tenants against landlords in nuisance or for personal injury under the Defective Premises Act 1972, both of which would plainly attract the 10% uplift; and
• The uplift should be applied irrespective of how litigation is funded.

The Court of Appeal accepted the tenant’s arguments and dismissed the appeal. Lord Justice Baker finding that claims for general damages for breach of repairing covenants fall squarely within the primary purpose of the uplift in Simmons v Castle.

Landlords now must be aware that a 10% uplift can be applied to the standard diminution in value assessment of the level of damages, and that this can apply irrespective of how a tenant funds a disrepair claim.