Today the Supreme Court ruled, in Loveridge (AP) v Mayor and Burgesses of the London Borough of Lambeth, (click here to see the judgment) that statutory damages for unlawful eviction are calculated in the same way regardless of whether the landlord is a public sector or private sector landlord. In calculating statutory damages the effect on the value of the landlord's building of the tenant's security of tenure before eviction is crucial. The judgment means that, in certain cases, substantial damages will be awarded against local authorities.
Michael Paget who acted for Harry Loveridge, comments: 'This judgment makes it clear that there is a potential heavy penalty when a tenant with significant security of tenure is unlawfully evicted. Regaining possession without using the courts may not be worth it.'
Statutory damages are calculated by considering the value of the building with the tenant benefiting from security of tenure and without such security of tenure. It is a purely hypothetical process and does not require an actual sale to a willing buyer.
The Supreme Court decided that the Court of Appeal was wrong to consider what would actually happen after a sale to a willing buyer. The fact that a secure tenancy would be downgraded to an assured tenancy after sale to a private sector buyer was irrelevant.
In practice the circumstances where full statutory damages are awarded should be very rare. First, no statutory damages are awarded if the landlord believed and had reasonable cause to believe that the tenant had stopped living in the property when the eviction took place. Secondly, the extent of the damages can be reduced where the court considers it reasonable to take account of the tenant's behaviour prior to the eviction or if he or she has refused an offer of reinstatement. And thirdly, no statutory damages apply where the tenant is reinstated. As Michael says 'Really no Council should ever need to pay full statutory damages. If a mistake is made it needs to be corrected quickly.'
Mr Loveridge was unlawfully evicted by Lambeth Council. Mr Loveridge was abroad but was still paying his rent and had all his personal possessions in the property. Full statutory damages were awarded by the trial judge and reinstated by the Supreme Court because, after entering the property, it was not reasonable for the Council to believe Mr Loveridge was not living there; there was nothing in Mr Loveridge's conduct which would warrant a reduction in damages and the Council did not offer to reinstate Mr Loveridge in the property.
Michael concludes 'This statutory damages dog has a horrible bite but there is really no reason at all to get bitten'