Jaura v Ahmed
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Rix,Lord Justice Potter |
| Judgment Date | 21 February 2002 |
| Neutral Citation | [2002] EWCA Civ 210 |
| Docket Number | Case No: A2/2001/1128 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 February 2002 |
[2002] EWCA Civ 210
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MANCHESTER DISTRICT REGISTRY)
DISTRICT JUDGE JONES
Lord Justice Potter
Lord Justice Mummery and
Lord Justice Rix
Case No: A2/2001/1128
Lucy Wilson-Barnes (instructed by Messrs Pannone & Partners) for the Appellant
Daniel I Frieze (instructed by Messrs Berg & Co) for the Respondent
This is an appeal, with the permission of the judge, from an order made by District Judge Jones in the Queen's Bench Division (Manchester District Registry) on 5 March 2001, following a hearing on 10 and 11 July 2000 and the handing down of three written judgments dated 17 August 2000, 18 January 2001 and 5 March 2001. Pursuant to an order made by consent by HHJ Fawcus on 16 November 1999, the District Judge assessed the damages recoverable by Mr Saleem Jaura on a counterclaim by him against Mrs Saeeda Ahmed for wrongful termination of a lease of business premises. There is an appeal by Mr Jaura and a cross appeal by Mrs Ahmed.
Factual Background
On 22 January 1991 Mrs Ahmed and her husband Nazeem (who has since died) granted a lease to Mr Jaura of business premises at 16–18 Sherbourne Street, Manchester for a term of 22 years from 21 January 1991 at an annual rent £15,000, reviewable after 7 years and at subsequent five yearly intervals. At the same time Mr Jaura purchased from them a wholesale stationery business carried on under the name "Inkspots" in close association with a clothing company called Pinwise Limited from the premises in Sherbourne Street. The total price was £76,000, made up as to £42,000 for goodwill, £26,000 for stock and £8,000 for fixtures and fittings. Mr Jaura obtained a loan of £50,000 from Allied Irish Bank to help finance the purchase. This was re-financed by the National Westminster Bank in September 1991.
By 1994 the business was faced with reduced profits. Mr Jaura had difficulty in paying the rent and in servicing the bank loan. He decided to sub-let the premises. In September 1994 he sub-let two floors of the premises to a firm of solicitors, Rafiq & Co, for a term of three years from 1 September 1994 at an annual rent of £15,000. There was increased pressure to derive income from sublettings after a fire at the premises in February 1995. In June 1995 he sublet another part of the premises to Saunders & Co, a firm of solicitors, at a rent of £150 per week (£7,500 per annum). Mr Jaura also had discussions with Mr Rasool, a director of Cotton Works Clothing Limited, for the grant of a sublease of the rest of the premises for a term of three years from September 1995 at an annual rent of £9,600. The judge rejected Mrs Ahmed's contention that the subleases and the proposed sublease were unlawful and held that it was a foreseeable consequence of the wrongful termination of the lease that Mr Jaura would be deprived of the income from sublettings of the premises.
The Inkspots business failed. In August 1995 Mrs Ahmed forfeited the lease for alleged non-payment of rent. The premises were peaceably re-entered while Mr Jaura was away on family affairs in Pakistan. The locks were changed and the premises were re-let. As at August 1995, which the parties agree was the relevant date for the assessment of damages, the lease had an unexpired term of 17 1/2 years. Proceedings were commenced by Mrs Ahmed for arrears of rent. Mr Jaura counterclaimed for damages for wrongful termination of the lease. The claim for rent was dismissed by consent. Damages on the counterclaim were ordered to be assessed. The claims relevant to this appeal fall under four heads: the loss of anticipated profit rental from sublettings; the capital value of the lease; wasted expenditure on fixtures and fittings; and interest incurred by Mr Jaura in respect of the bank loan, which, to the knowledge of Mrs Ahmed, was obtained by Mr Jaura to finance the purchase. It is convenient to deal with each head of damage in turn rather than by reference to whether the grounds are raised in the appeal or in the cross appeal.
A. Anticipated Profit Rents from Premises
The judge awarded a total of £24,700 plus interest to be assessed. This sum was calculated by taking the total of the rents receivable by Mr Jaura under the subtenancy to Rafiq & Co for the balance of two years remaining (£30,000), under the subtenancy to Saunders & Co for the balance remaining from its term of one year (£5,500) and under the proposed subtenancy to Cotton Works Clothing Limited over a period of two (not three) years from August 1995 (£19,200) and deducting from the grand total of £54,700 the rent which he would have had to pay under the lease over the same period (£30,000).
Mrs Ahmed appeals against this assessment, contending that the damages for lost profit rent should be reduced to £5,500 by disallowing the claim for £19,200 in respect of the anticipated loss of rental from Cotton Works Clothing Limited for the period September 1995 to September 1997. The judge was criticised for acting on the evidence of Mr Jaura and Mr Rasool, whom he had failed to mention was a friend of Mr Jaura, about the negotiations for a sublease. The judge's assessment of Mr Jaura as a witness was that his evidence was at times exaggerated and at times plainly untrue. Mr Rasool's evidence took the form of a witness statement dated 2 May 2000 and his letter dated 21 March 1997 referring to an agreement to take a lease of part of the premises for an initial period of three years at a rental of £9,600 per annum. The letter, which was not mentioned in the witness statement, was addressed "To Whom It May Concern". Mr Rasool did not attend to give oral evidence at the trial in July 2000. It was submitted that the witness statement was not admissible or, if admissible (as had been conceded below), should have been given little weight.
I would not disturb the findings of the judge on this head of damage. He was entitled to admit Mr Rasool's witness statement under section 2 (4) of the Civil Evidence Act 1995 and CPR Part 32.1 and 32.5, regardless of the absence of a notice. The witness statement was not inconsistent with the contents of the earlier letter and there was other evidence, including oral evidence from Mr Jaura, by which the judge could assess Mr Rasool's evidence. The weight to be attached to the evidence was a matter for the judge and it cannot realistically be contended that there was no evidence to support the judge's findings or that his conclusion was against the weight of the evidence.
B. Capital Value of Lease
The judge awarded the sum of £12,250 plus interest to be assessed. Mrs Ahmed appeals, contending that nothing should be awarded under this head as it duplicates the award for loss of anticipated profit from sublettings and is inconsistent with the judge's conclusion that no damages should be awarded for loss of the opportunity to assign the lease in August 1995. It was argued that the benefit of the subleases was the only value properly attributable to the lease.
I agree that the appeal against the award of £12,250, additional to the damages for the anticipated loss of profit rent, should be allowed. In theory a lease with 17 1/2 years to run could have a capital value in August 1995 in addition to the value of the rents from the short term subleases. The normal measure of damages where the tenant is wrongfully evicted from premises is the value of the unexpired term at the date of wrongful eviction, calculated by reference to the rental value of the premises, less the contractual rent payable under the lease. But the evidence does not support the judge's finding that the lease had a value of £12,250 in August 1995, additional to the rent yielded by the subtenancies over the period of two years from August 1995. Expert evidence was adduced from Mr Ravenhill on behalf of Mr Jaura and from Mr Hawke on behalf of Mrs Ahmed. The judge said that he preferred the approach of Mr Ravenhill to that of Mr Hawke (who placed a nil value on the lease in paragraph 10 of his report in May 2000) and awarded "£12,250 as being the value to the defendant of the loss of being able to assign the lease." It appears, however, from Mr Ravenhill's report of 19 May 2000 and his revised valuation in Appendix 5 to the experts' joint statement of 27 June 2000, that the figure of £12,250 mentioned by him was the result of his calculation of the value as at August 1995 of the profit rent over a period of two years. It was not a valuation of the unexpired term remaining after the expiration of the subtenancies in September 1997. The judge erroneously duplicated damages by awarding both a sum for the loss of profit rent over a period of two years from August 1995 and also a lump sum for the value of the unexpired term as at August 1995 based on an income stream from the premises over a period of the same duration.
C. Expenditure on Fixtures and Fittings.
The judge awarded £9,910 plus interest to be assessed in respect of fixtures and fittings remaining in the premises and lost by Mr Jaura as a result of re-possession of the premises. The calculation of the loss was based on the depreciated figure for fixtures and fittings (£15,394) shown in the accounts of Inkspots for June 1995. Mr Jaura appeals, contending that the judge should have awarded the further sum of £7,285 (£6,200 plus VAT) for expenditure on conversion of the ground floor by ISA Building Contractor, even though this sum does not appear in the business accounts. Mr Jaura's evidence was that the...
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