Exemplary damages against landlord

Design Progression Ltd v Thurloe Properties Ltd ChD TLR 2 March

The tenant had a 10-year lease of shop premises which were significantly under-rented. Two years before the expiry of the lease the tenant applied to the landlord to assign the residue, which would have resulted in a premium payment to it and the ending of its further obligations under the lease. The landlord, through its agents, pursued a deliberately obstructive policy of not making any decision on whether or not to grant the licence within four months of the application, designed to prevent the assignment going through, in an attempt to recover the premises, with a view to granting a fresh lease for a longer term at full market rental, as opposed to the below market rental under the lease. Although the landlord’s machinations were not successful, that did not mean that it was not appropriate to award exemplary damages to the tenant. An award of exemplary damages is available where there has been unacceptable behaviour by the defendant, and that behaviour displayed features which merited punishment; and where the defendant acted in a way calculated to make a profit for himself which might well exceed the compensation payable to the claimant. The existing basis for an award of exemplary damages, namely to punish a wrongdoer for his conduct, remained the law and there could be circumstances where punishment was appropriate in the civil court. Accordingly, the tenant was awarded an additional sum of £25,000 by way of exemplary damages.