Court allows lease extension damages but dismisses claim for mesne profits as tenant never became trespasser.

[*202] 1983 Nov 23

(ELIADES, D. J. )

IN THE DISTRICT COURT OF FAMAGUSTA SITTING AT LARNACA

Panayiotis Ttofini,

Plaintiff,

v.

PETROLINA LTD.,

Defendants,

(Action No. 100/83).

Contract - Contract of lease of one year’s duration - No need for compliance with section 77 of the Contract Law, Cap. 149- Oral agreement for extension of the contract - Automatically renewed the contract of lease for another year - immaterial that the rent was been paid on a monthly basis.

Damages - Breach of contract - Measure of damages - principles applicable - Section 73 of the Contract Law, Cap. 149 - Breach of contract of lease - Measure of damages must be ascertained with reference to the remaining period of the lease - Failure of plaintiff to mitigate loss - Onus of proof on defendant.

Landlord and tenant - Mesne profits

- Are damages for trespass and can only be claimed from the date when defendant ceased to held the premises. as a tenant and became a trespasser-"Fair wear and tear"- Meaning.

A.Pittadjis, for the Plaintiff.

Y. Panayi, for the Defendant-Company.

JUDGMENT

The following judgment was delivered by:-

ELIADES, D.J.:- On the 6.3.81[*203] the plaintiff agreed in writing to lease to the defendantcompany a fully furnished two-bedroom flat at Ayia Napa, for a period of one year as from the 1. 4.81 until the 31. 3.82. According to the terms of the said contract which has been filed as exhibit 1,

(i) The rent payab:- was agreed at £100 per month,

(ii) The defendant-company undertook to pay the relevant rates for the consumption of water and electricity,

(iii) The defendant-company would deliver vacant possession of the premises at the end of the tenancy in the same condition as when they took possession, fair wear and tear excepted.

It is the allegation of the plaintiff that when the period of the tenancy came to an end, he went to the offices of the defendant-company at Ayia Napa and asked for the key of the flat. There he saw the General Manager of the company,

Mr. Andreas Papadopoulosr who asked for the extension of the tenancy for another year under the same terras. The plaintiff agreed and he was receiving thereafter the monthly rents by cheques issued by the defendant-company, until November 1982,

On the 15. 1.83 a certain Zouvanis Zouvani, the accountant of the defendant-company delivered one key of the flat to the plaintiff and informed him that they were not interested any more in the flat. The plaintiff did not try to secure new tenants. In any way it was winter-time and the chances to find new tenants were minimal. [*204]

When the plaintiff retook possession of the flat he noticed that

1) 6 blankets were missing valued at £18.-

2) 8 sheets were missing valued at £20.-

3) 4 small towels were missing valued at £8.-

4) 4 large towels were missing valued at £12

5) The handle of the shower was broken valued at £10.-

6) A wall mirror was broken valued at £20.

The walls of the flat were also damaged requiring an amount of £100.- for painting. In addition to the above the defendant-company failed to pay the amount of £17.- for the consumption of electricity and £16.- for the consumption of water, which were paid by the plaintiff.

Mr. A. Papadopoulos, the General Manager of the defendant-company and Michalis Tsokkos, one of the directors testified on behalf of the defendants. The defendant-company admitted the existence of the first yearly tenancy, but they strongly denied its renewal for another year. It is their allegation that their General-Manager, Mr. Andreas Papadopoulos, informed orally the plaintiff on the 25.3.82 that they did not want to renew the contract of lease and when requested by the plaintiff to assist him to find a new tenant they introduced to him the Chief-Guide of Fretisresor, It appears that the plaintiff did not reach an agreement with him and Mr. Papadopoulos at the beginning of April 1982 introduced to the plaintiff a certain Yens from the Norwegian company CHAREBORG with whom the plaintiff came to an agreement for the lease of [*207] defendant-company on the 17.1.83. Therefore the defendantcompany is in breach of the renewed yearly tenancy and the plaintiff is entitled to damages.

The question of damages is governed by s.73 of the Contract Law, Cap. 149, which provides as follows:

When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.”

It must be noticed that according to s.2 of Cap. 149 the Contract Law must be interpreted in accordance with the principles of legal interpretation obtaining in England and expressions used in it are presumed to be used with the meaning attaching to them in English law and are construed in accordance therewith.

S.73 of Cap. 149 which is similar to s.73 of the Indian Contract Act, reduces in statutory form the English common law rules governing the measure of damages where a contract has been broken.

The extent to which i plaintiff is

entitled to [*208] demand damages for breach of contract was not fully considered until the decision in Hadley v. Baxendale

in 1854, where Alderson B. in delivering judgment said the following which form the basis upon which the kind and the measure of damages may he ascertained:

"Where two parties have made a contract Which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it".

(See Hadley v. Baxendale 1854 9 Exch. at p.354).

The same principles were later followed and adopted in The Heron II (1967) 3 All E.R* 686, and Koufos v. C. Czarnikow Ltd. (1967) 3 W.L.R. 1491 where Lord Reid said the following:

"The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of [*209] contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation,

(See also Soleada S.A. V Hamoor Tanker Corporation,

(1981) 1 All E.R. 856.)

It follows from the above that damages are recoverable for breach of contract, if

(a) they flow naturally from the breach, or

(b) they are of a type that they could reasonably be within the contemplation of the parties at the time the contract was concluded.

In ascertaining the amount of damages one must bear in mind the speech of Lord Blackburn in Livingstone v. Rawyards Coal Co.( (1880)5 App. Cas. 25) where he defined the measure of damages as that sum of money which will put the party 1 who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.

This statement which forms the basis for the principle of restitution in integrum was later followed and adopted in Victoria Laundry Ltd. v. Newman Industries Ltd, (1949) 1 All E.R. 997, where Lord Reid said:

It is well settled that the governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do so, as if his rights had been [210] observed."

The plaintiff claims the amount of £400.- by way of damages for rents due and/or for mesne profits.

A landlord may recover in an action for mesne profits the damages which he has suffered through being out of possession of the land. Since mesne profits are damages for trespass (see Glykys v. Ioannides, 24 C.L.R. p. 220) they can only be claimed from the date when the defendant ceased to hold the premises as a tenant and became a trespasser. The action for mesne profits does not lie unless either the landlord has recovered possession or the tenant’s interest in the land has ceased. (Elliot v. Boynton,(1924)11Ch. 236.

Considering that the plaintiff was not deprived of possession of his premises by the defendant-company remaining illegally in possession, the plaintiff’s claim must be limited to damages.

The measure of damages must be ascertained with reference to the rent payable in connection to the remaining period of the lease. As no rent was paid from the 1.12.82 the amount of damages to which the plaintiff is entitled must be equal to the rents payable from the

1.12.82 up and including the 31. 3.83.

(C) DUTY TO MITIGATE LOSS:

It is well established that the plaintiff is under a duty to take all reasonable steps to mitigate the loss arising[*213]

"that the premises do not suffer more than the operation of time and nature would effect; he is bound by seasonable applications of labour to keep the house as nearly as possible in the same condition as when it was demised."

(Gutteridge v. Munyand (1834)7 Cand p. 129).

In Haskell v. Marlow, (1928) 2 K.B. 45, a testator had devised a dwelling-house to his wife for her life, provided that she would keep it in good repair and condition (reasonable wear and tear excepted). After his death, the widow remained in possession of the house for 42 years, when it was found to be in a "very shocking state of disrepair". Nothing had been done to damage the house, but the widow omitted almost entirely to repair it, and had done very little to prevent decay. In an action brought by the trustees of the will against the executors of the widow for compensation it was held that to bring dilapidations within an exception of reasonable wear and tear, two things must be shown:

First, that the dilapidations for which exemption is claimed were caused by normal human use or by the normal action of the elements, and

Secondly, that they are reasonable in amount, having regard to the terms of the contract to repair and the other circumstances of the case.

Talbot J. in agreeing that reasonable wear and tear means "the ordinary operation of natural forces" proceeded to say that:[*214]

"The exception of want of repair due to wear and tear must be construed as limited to what is directly due to wear and tear... it does not mean that if there is a defect originally proceeding from reasonable wear and tear (the covenantor) is released from his obligations to keep in good rapair and condition as to everything which it may be possible to trace ultimately to that defect. He is bound to do such repairs as may be required to prevent the consequences flowing originally from wear and tear from producing others which wear and tear would not directly produce."

The second branch of the above principle was not later followed by the Court of Appeal in a case where an under-lessor had covenanted to repair the outside walls and roofs, fair wear and tear excepted, and a slate, cracked by age and wear and tear, was neglected, so that in time more and more water penetrated and ultimately a large part of the house fell into a serious state of disrepairs. The total state of disrepair was due to the elements, complete with the absence of any steps by anybody to prevent further deterioration. It was held that the covenantor was under no obligation to stop the wear and tear due to natural causes. (Taylor v. Webb. (1937) 1 All E.R. 540).

The decision in Taylor v. Webb created some confusion as to the state of the law which however was settled by the House of Lords in Regis Property Co. v. Dudley (1953) 3 All E.R. 491, where it was held that the exception of fair wear [*217] the total amount of £536 with coats to be assessed by the Registrar on the scale £500. -- £1,000.-.

Judgment for plaintiff for £536 with costs.