PGF II SA & Anor v Royal & Sun Alliance Insurance Plc & Anor [2010] EWHC 1459 (TCC) (13 July 2010)

PGF II SA & Anor v Royal & Sun Alliance Insurance Plc & Anor [2010] EWHC 1459 (TCC) (13 July 2010)

Damages for breach of repairing covenants are limited to the diminution in value of the reversion as at the date of lease termination, taking into account the landlord's intention and the doctrine of supercession. Where refurbishment or redevelopment is not decided at the termination date, damages may include the value of repairs that would survive refurbishment. The statutory cap under Section 18(1) applies, and the standard of repair is that required for a 1973 prestige City building, not modern standards.

Citation
[2010] EWHC 1459 (TCC)
Parties
Claimant: PGF II S. A; Claimant: PGF II(LIME) S. A; 1st Defendant: Royal & Sun Alliance Insurance PLC; 2nd Defendant: London & Edinburgh Insurance Company Limited
Jurisdiction
England and Wales
Judgment Date
13 July 2010
Procedural Posture
Commercial Lease Dispute / Final Judgment
Outcome
Damages awarded to Claimants, subject to statutory cap and deduction for superceded works.
Legal Topics
Dilapidations, Damages, Leasehold Covenants, Section 18 Landlord and Tenant Act 1927, Supercession, Assessment of Damages
Property Law Landlord and Tenant Contract Law Dilapidations Damages Leasehold Covenants Section 18 Landlord and Tenant Act 1927 Supercession +1 more

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Parties

PGF II S. A

Claimant

PGF II(LIME) S. A

Claimant

Royal & Sun Alliance Insurance PLC

1st Defendant

London & Edinburgh Insurance Company Limited

2nd Defendant

Procedural Posture

Commercial Lease Dispute / Final Judgment

Legal Issues

  1. 1 Measure of damages for breach of repairing covenants
  2. 2 Application of Section 18(1) Landlord and Tenant Act 1927
  3. 3 Effect of landlord's intention to refurbish or redevelop

Ratio Decidendi

Damages for breach of repairing covenants are limited to the diminution in value of the reversion as at the date of lease termination, taking into account the landlord's intention and the doctrine of supercession. Where refurbishment or redevelopment is not decided at the termination date, damages may include the value of repairs that would survive refurbishment. The statutory cap under Section 18(1) applies, and the standard of repair is that required for a 1973 prestige City building, not modern standards.

Court Disposition

Damages awarded to Claimants, subject to statutory cap and deduction for superceded works.

Orders

  • Defendants to pay damages for breach of repairing covenants, limited to diminution in value of the reversion as determined by the court.
  • Damages to be calculated based on works surviving refurbishment, with deduction for superceded items.