Assessing damages where breach of covenant for quiet enjoyment makes it impossible to trade

Where there has been a breach of a covenant for quiet enjoyment which makes it impossible to trade from the demised premises, it is legitimate for the judge to find on the balance of probabilities that the tenant would have traded successfully and then to reach a conclusion as to the profit likely to have been earned. If this approach is taken there is no need to apply a discount to the resulting figure to take account of the possibility of failure.

In Vasiliou v Hajigeorgiou ([2010] EWCA Civ 1475, CA (Eng)) L broke the covenant for quiet enjoyment in a lease of restaurant premises on the ground floor and in the rear yard of his property. He had stored materials in the yard making trade unlawful. Then work done by his contractors resulted in foul water leaking into the restaurant from upstairs flats. T brought separate proceedings in respect of each incident. In the first case, the judge found as a fact that the tenant would have traded successfully from the premises. He then reached a conclusion as to the amount of profit that would have been earned had the landlord not been in breach. The court in the second case replicated this approach. On appeal, the landlord argued that a percentage discount should have been applied to reflect the possibility of failure. The English Court of Appeal rejected this. The judges below were entitled to take the approach they had. Once the judge had found that the tenant would have made a go of the restaurant there was no place for a discount.

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