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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Vukelic v Hammersmith and Fulham [2003] EWHC 188 (TCC) (06 March 2003) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2003/188.html Cite as: [2003] EWHC 188 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St. Dunstan's House, 133-137, Fetter Lane, London, EC4A 1HD
		6 March 2003

HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)


 
H.H. Judge Richard Seymour Q. C. :

Introduction

1. The local authority for the district of the London Borough of Hammersmith and Fulham, to which I shall refer in this judgment as "the Council", is formally known by the title the Mayor and Burgesses of the London Borough of Hammersmith and Fulham. The Council is the freehold owner of the property known as and situate at Shops Numbers 1 and 2 Bush Green House, 5 Uxbridge Road, Shepherd's Bush, London W12 ("the Property").
2. The Property forms part of a building ("the Building") constructed, according to the proud legend upon its front elevation, by London County Council in 1900. As originally constructed, so it seems, the Building comprised a fire station and some shop units at ground floor level, and a number of residential flats on the upper floors. The fire station appears to have comprised, at least in part, an open yard ("the Yard"). At some point, possibly during the 1920s, the Yard was roofed over, partly with glazing. The Property comprises what it seems were originally two of the ground floor shop units in the Building. Over the front part of the Property, the elevation facing Uxbridge Road, there are a number of floors of flats. However, at the rear the Property has a flat roof in part. This flat roof is paved and seems to be used as a patio area by occupiers of the flats. In this judgment I shall call that area "the Patio". The remainder of the rear of the Property is also roofed, but at a lower level than the Patio. The roof of the lower level, to which I shall refer in this judgment as "the Other Roof", is essentially flat, but has inserted into it a raised skylight which covers a lavatory and the boiler room in the Property. The Other Roof abuts the roof over the Yard and seems at one stage itself to have been open. At all events, down what is now an internal wall is a cast iron drain or vent pipe of the type more usually seen on the exterior of a building.
3. On the front of the Property is what looks like the remains of what were originally two shop fronts. Behind the shop fronts is a large area laid out as a restaurant with tables and chairs and, at the rear, a service bar. To the left of the service bar in the rear wall of the restaurant area is a door which leads into a store room. From that store room a door on the right leads into what is now a corridor, but of which the greater part, at least, was once open to the elements. Immediately on the left as one enters the corridor is a lavatory, which I understand has been used as a Gentlemen's lavatory. The rear part of the restaurant area, the store room and the Gentlemen's lavatory are all under the Patio. As one continues down the corridor past the Gentlemen's lavatory one comes to the other lavatory, that under the Other Roof, which was used as a Ladies' lavatory, and the boiler room. A door from the boiler room in the right hand wall as one comes down the corridor into the boiler room leads into the kitchen at the Property. The kitchen is under the Patio. Doors lead from the kitchen into the bar area of the restaurant and directly into the restaurant itself.
4. By a lease ("the Lease") dated 29 October 1986 and made between the Council and Mrs. Vesna Vukelic, the Claimant in this action, the Council demised the Property to Mrs. Vukelic for a term commencing on 25 December 1981 and expiring on 26 December 2001. The rent originally reserved under the Lease was a sum of £7,500 per annum. The Lease contained provision for review of the rent. As from no later than 25 December 1995 the rent payable under the Lease was the sum of £13,000 per annum. By clause 1 of the Lease it was made plain that the extent of the demise included:-

"i) The internal plastered coverings and plasterwork tiles and other materials on the walls bounding the demised premises and the doors and door frames window frames and furnishings and the glass fitted in such doors and windows in any wall or partition

ii) The walls and partitions lying within the demised premises (but excluding any load bearing columns or walls) and the plastered coverings plasterwork tiles and all other materials on all walls (including the load bearing columns and walls but subject to the provisions contained in sub clause (i) of this Schedule) and the partitions and the doors door frames fitted in such walls and partitions

iii) The plastered coverings and plasterwork tiles and all other materials on the surfaces of the ceiling and of the floors of the demised premises including the screedings and the floor and floor slab thereof but excluding any floor slab separating the demised premises from other premises

iv) All the sewers drains channels watercourses gas and water pipes radiators valves taps electric cables and wires and supply lines in under upon or installed in or affixed or connected to and exclusively serving the demised premises

v) The shop front including the window frames and casements glass and all panels infilling stallrisers locks latches fasteners fixtures and fittings appertaining thereto

vi) The landlord's fixtures and fittings sanitary water and other apparatus and appurtenances installed in or affixed to the demised premises."

5. Clause 3 of the Lease contained the following covenants on the part of Mrs. Vulkelic which are presently material:-

"(3) At all times to pay a fair and due proportion to be determined by the Landlord which determination shall be binding upon the Tenant of the costs charges and expenses payable in respect of constructing repairing rebuilding and cleansing all party walls fences structures sewers drains pipes watercourses roads pavements and other things the use of which is common to the demised premises and other premises such payment to be paid by the Tenant on demand and to keep the Landlord indemnified against such proportion of such costs charges and expenses as aforesaid

(4) To comply at the Tenant's own expense with all obligations imposed by any Public or Private Act or Acts of Parliament for the time being in force and do and execute or cause to be done or executed all such works acts deeds matters and things as under or by virtue of any such Act or Acts are or shall be required directed or necessary to be done or executed upon or in respect of the demised premises or any part thereof whether by the Landlord Tenant or occupier and in particular but without prejudice to the generality of this sub clause in all respects insofar as they affect the demised premises to comply with the provisions of the Shops Act 1950 the Factories Act 1961 the Offices Shops and Railway Premises Act 1963 and the Health and Safety at Work Act 1974 and any statutory modification or re-enactment thereof for the time being in force and any Regulation or Order made or having effect thereunder and also to observe the regulations of any Municipal Local or other authority so far as applicable to the demised premises

(5) Throughout the said term to put and keep the demised premises including the shop front and every part thereof and all additions thereto in good and substantial repair order and condition and maintained cleansed and amended in every respect (damage by fire and such other risks against which the Landlord shall have insured save where the insurance monies shall be irrecoverable in consequence of any act or default of the Tenant excepted) using suitable materials of good quality AND ALSO when and so often as it shall be necessary to renew any fixture upon and belonging to the demised premises to substitute another fixture of a similar quality value and description to the satisfaction of the Landlord

(6) Without prejudice to the generality of sub clause (5) of this Clause to prepare and paint with two coats of good quality paint in tints and colours to be approved by the Landlord in a workmanlike manner all such parts of the demised premises which previously or ought to be so painted as to the exterior and the shop front in every fourth year of the said term and as to the internal work in every fifth year of the said term the time in each case to be computed from the date of the commencement of the said term and in each case the painting to be done in the last year of the said term (howsoever the same may be determined) and after each internal painting to clean burnish polish paint paper grain varnish oil distemper whitewash stop whiten french or wax polish and colour and otherwise decorate or treat in a suitable manner for their maintenance all such parts as have previously been so dealt with (including the lettering on the fascia of the demised premises)…

(11)(i) Not to carry on or permit or suffer to be carried on in or upon the demised premises or any part thereof any trade or business other than that of a licensed restaurant…"

6. By clause 5(10) of the Lease it was provided that:-

"Without prejudice to any other right remedy or power available to the Landlord if any rent shall not be paid within 14 days after the same shall have become due (whether or not any formal demand shall have been made therefor) or if any other sum of money payable by the Tenant to the Landlord shall not be paid within 14 days after the same shall be [sic] been demanded to pay interest thereon (as well after as before any judgment) at the rate of 5 per centum per annum above base or similar lending rate of the bankers for the time being of the Landlord from time to time in force calculated on a day to day basis from the date of the same being due and demanded (as the case may be) to the date of payment (both dates inclusive) and the aggregate amount for the time being so payable but unpaid shall at the option of the Landlord be recoverable by action or as rent in arrear."

Whilst not at all well drafted, omitting as it does any specific reference to the party by whom interest is to be payable, it is tolerably clear that the effect of this provision is that it is the Tenant, Mrs. Vukelic, who is to pay interest on sums due to the Landlord, the Council, but unpaid.

7. The Lease did not contain any provision by which the Council was expressly obliged to undertake any repairs to the exterior of the Property or to anything else. However, if it did undertake any repairs to the exterior, the effect of the covenant in clause 3(3) of the Lease was that Mrs. Vukelic was bound to contribute to the cost of such works.
8. From about 1 August 1980, it seems, Mrs. Vukelic carried on business in the Property trading under the style, "Europa Restaurant". The date 1 August 1980 is one suggested by the fact that, according to the enclosures to a letter dated 11 September 1996 written by Mr. Tim O'Connell of Messrs. Grant Thornton, who were her accountants, to Mrs. Vukelic which were put in evidence, Mrs. Vukelic had accounts prepared for the year ended 31 July 1981. Mrs. Vukelic told me, and I accept, that initially she operated her restaurant in partnership with her friend Mrs. Milka Yovichic. After a couple of years Mrs. Vukelic bought out Mrs. Yovichic and thereafter ran the restaurant together with her husband until his death in 1990. The restaurant specialised in Continental cuisine. It is not far from the BBC Television Centre and Mrs. Vukelic told me at paragraph 2 of a witness statement dated 14 May 2001, in evidence which I accept, that her customers came from the BBC, banks and local businesses, as well as passing trade.
9. It seems that some time around about 1983, although Mrs. Vukelic was somewhat indefinite in her evidence about the exact date, water started to leak into the Ladies' lavatory and the rear store room at the Property. Mrs. Vukelic told me in evidence, and I accept, that the Council was notified concerning the leaks, but did nothing. She and her husband therefore caused temporary repairs to be undertaken. The account given by Mrs. Vukelic was confirmed by the terms of an internal memorandum of the Council dated 28 July 1995 written by Miss Susan Eziefula to Lucy Calico which was put in evidence, and in which it was recorded, amongst other things that:-

"Since 1983, the tenants have complained about the general state of the building, especially water damage from adjoining residential premises via the rear door and roof."

10. Included in the documents disclosed on behalf of the Council in this action was a chronology concerning the Property, which seems to have been prepared by Miss Eziefula and attached to an internal Council memorandum which she wrote dated 22 June 1995 to Mr. John Cornish, who was at the time the Council's Head of Property Services. The body of the chronology included the following entries:-

"1984 – Memo to Architect regarding leaking pipe, expenditure code given.

1985 – Damp at flank – Architects to remedy.

1985 – Continued instructions from Valuers to Architects regarding damp penetration.

1986 – Tenants asked for compensation as a result of damage to property (caused by surrounding Council flats and rain).

1986 – Damage to internal works by water penetration dealt with by way of an insurance claim.

1986 – Architects report of works required

renew existing flat roof

clean lantern lights….

1988 – Tenants complaint of leaks from flat roof from time to time. "

11. At paragraph 6 of an affidavit which she swore on 30 January 2003, in a passage which I accept in substance, although from the chronology to which I have referred the event in question may have taken place earlier than she now recalls, Mrs. Vukelic said:-

"Then sometime in 1989/90 the roof of my restaurant was flooded because of the defective roof [this is a reference to the roof over the rear of the restaurant under the Patio] and the interior decorations damaged. We immediately notified the landlord by telephone and letter, LBHF, to whom we pay rent, of the problem and asked them to put it right."

12. The contemporary awareness on the part of the Council of the existence of water penetration through the Patio, and in other areas, causing damage to the Property appears from the references in internal Council documentation to which I have already referred.
13. An internal Council memorandum dated 1 July 1994 was written by Mr. Bob Watkins, a building surveyor, to Mr. Matthew Conliffe. That memorandum contained a report on the condition of the Property at that time. The material part of the report was in these terms:-

"The walls are of plastered brick construction, the floors are of plastered filler joist concrete construction to the front section of the unit with residential flats over. The rear section has a plastered concrete filler joist flat roof over. The ancillary areas have a timber lantern light and flat roof over.

The areas of concern are the rear section of the restaurant and ancillary section and can be detailed as follow:-

1 Concrete to the underside of the flat roof to rear section of the restaurant has spalled (broken off) on the lines of the steel filler joists, caused by the rusting of the steels probably due to previous water penetration – the roof has been recovered in the last 5-6 years and does not appear to be leaking at present). Repairs will necessitate removing of defective concrete, cleaning of steelwork, possible strengthening of steel flanges by means of welding on of additional steel plates, concrete repairs and redecorations.

2 The flat roof and lantern light over the ancillary area have been leaking for several years and has caused extensive damage to the internal plaster and finishings. In order to carry out a successful repair the lantern light, flat roof covering, flashings and upstands will need to be renewed. However, the roof incorporates another rooflight over the warehouse unit in Pennard Road, which will also require renewing. Remedial works to the internal finishings and redecorations.

In order to carry out the necessary works the unit will need to be vacated as it would be impossible to carry out these type of repairs with the lessee in occupation."

14. In a memorandum dated 27 February 1995 to Eartha Challoner Miss Eziefula seemed to be contemplating that the Council might actually be about to arrange to undertake works to remedy the problems of water penetration into the Property. Miss Eziefula wrote in the memorandum:-

"The shop at the above premises is in a very poor state of repair and has been the subject of dispute for several years.

Under the terms of the lease, the Council is responsible for external repairs (including the roof).

The tenant is soley [sic] responsible for internal repairs but is covenanted to pay a fair and due proportion towards external repairs.

Attached is a copy of BTS' report and a breakdown of the likely costs which amount to £30-£35k.

I have also made a list of the tenant's direct costs and will advise her of the expenditure involved.

Please advise me as to whether Housing could provide funds for such works."

15. Miss Eziefula did write to Mrs. Vukelic and notify her of the anticipated costs in a letter dated 12 May 1995. Mrs. Vukelic replied in a letter dated 22 May 1995 so far as is presently material as follows:-

"First of all we like to inform You [sic] that since 1982 we have been trying to explain to you that all our problems with the premises started in 1982 when flat roof above our restaurant started to leak. Many a times my husband who was alive than [sic] went to see you but for no avail it always ended up with more questions and more forms.

To this day we don't know the name of the Insurance company that surely must have been responsible to pay for the damage caused by leaking roof in the first place. How can you possibly ask us to pay anything towards the cost which you and Insurers ignored for so long. Couple of times the plaster fell of [sic] the ceiling missing myself by inches that would have killed me. Your own health inspector almost closed the premises few times I wished he did, than,[sic] We could have gone to the courts and let them decide whose responsibility it was to repair the roof. It was no use for me to decorate the premises inside until the roof and some leaking pipes not belonging to me were repaired first. For more than eight years we suffered almost total loss of business because of the danger from falling ceiling and water dripping down the kitchen and restaurant walls through no fault of our own least you could finally do is rectify your negligense [sic] and help me keep away some nosy local newspaper people that want to know how it is that we are allowed to keep this place public. I have no other way to leave [sic] and work so I have no alternative but to hope that one day somebody will help me to turn this place into decent restaurant. I will be very happy to resolve this problem with you amicably but please, I cannot possibly be responsible for this enormos [sic] cost."

16. In the memorandum dated 22 June 1995 written by Miss Eziefula to Mr. Cornish, to which I have already referred Miss Eziefula attributed the water ingress into the Property to

"a combination of inadequate maintenance of the premises (especially the roof) and defects emanating from adjoining Council premises."

17. There was then further correspondence between the Council, in the person of Miss Eziefula, and Mrs. Vukelic. The relevant correspondence was marked "without prejudice", but copies have been put before me without objection from either party. However, to some extent the copies put before me have been edited. A letter dated 6 July 1995 from Miss Eziefula to Mrs. Vukelic included this:-

"I can confirm from my records that the flat roof was defective. Over the years, our Architects carried out a series of remedial repairs (including the roof) on the premises as a whole. At that time, you were concerned that even though repairs had been carried out the roof was still leaking. I have now obtained quotes for the building works including the replacement of the existing roof, plus other items.

As already mentioned, I am in the process of identifying funds to effect these repairs."

18. After Miss Eziefula's letter dated 6 July 1995 matters did not proceed swiftly. In a letter to Mrs. Vukelic dated 21 July 1995 Miss Eziefula confirmed that she would make an inspection of the Property on 24 July 1995 and said that she would be in a position "to advise you of the final outcome of this case by 21 August." Alas it was not to be. So far as the documents put before me go the next communication to Mrs. Vukelic from the Council was a letter from Miss Eziefula dated 27 February 1996. In that letter Miss Eziefula confirmed that a recommendation had been made to the Housing Department "to carry out the repair works this financial year (April 1996)." That recommendation evidently did not commend itself to whomever was charged with making a decision about it, because nothing happened before the end of the 1995 – 1996 financial year.
19. In July 1996 a brief for proposed remedial works at the Property was prepared within the Council and sent to Miss Eziefula under cover of a facsimile transmission dated 17 July 1996. The cover sheet of the transmission contained a note that "restaurant will have to close during internal works."
20. Miss Eziefula wrote a letter dated 24 July 1996 to Mrs. Vukelic which included the following:-

"ROOF REPAIRS

As discussed, it is the Council's intention to bring the structure of the roof into good repair. A detailed site inspection of the above premises was carried out by our Structural Engineer on the 16^th July and a thorough investigation of the areas prone to water penetration will be undertaken prior to the tendering process.

INTERNAL REPAIRS

The Council intends to carry out some internal decoration to the affected areas and we are currently obtaining quotes for these.

COMPENSATION

As a result of the nature of the works proposed, it will be necessary for you to vacate the premises. As discussed, this would inevitably lead to loss of earnings and it was suggested that you would have to provide the Council with written evidence of estimated loss during closure. In addition to this your representative discussed the possibility of a further compensation claim for the inconvenience suffered as a result of disrepair to the structure of the building over the duration of the lease. During the meeting you were advised to send your written proposals to the Chief Valuer, which would then be passed to the Head of Property Services and Director of Finance for consideration."

21. Mrs. Yovichic replied to the letter dated 24 July 1996 on behalf of Mrs. Vukelic. She sought clarification of exactly what internal decoration the Council was proposing to carry out. She also indicated that Messrs. Grant Thornton were in the process of working out figures for compensation and that those figures would be supplied when they were to hand. In addition Mrs. Yovichic requested information as to when the execution of repairs would commence and how long they would take. Miss Eziefula in her turn replied to Mrs. Yovichic in a letter dated 6 August 1996. The substance of that letter was:-

"With regards to the internal repairs, I apologise if the wording was misleading. I can confirm that the Council will carry out the necessary replastering and decorating to the interior of the building (walls and ceiling) damaged by the water penetration.

I am advised by the Structural Engineer that the start date will be January 1997 which allows for the completed tender process. The work is expected to take between 6-8 weeks if there are no building delays."

22. Mrs. Yovichic wrote again to Miss Eziefula in a letter dated 19 September 1996. The material part of that letter was in these terms:-

"Further to your letter dated 12^th inst. [not put in evidence] and our subsequent telecon, I am pleased to say that I have at long last heard from Messrs. Grant Thornton – Mrs. Vukelic's Accountant – with their calculations.

For your information, please find enclosed a copy of Grant Thornt's [sic] calculations. As Mrs. Vukelic has not been in a financial situatuion [sic] to pay Grant Thornton's fees for the past four years they have not finalised her Accounts since 31^st July 1992 but I understand from them that from first inspection of the figures they have the last four years have been even worse than the previous four – the actual turnover for last year for example only being £34,000.00 approx.

For the time being, perhaps the last four years figures should be treated the same as from 1989 to 1992. Do you agree?

Messrs. Grant Thornton's figures relate to loss of profit only. As far as the actual rent is concerned, as I explained to you during our telecon, I have spoken to Messrs. Woolfe & Co., Chartered Surveyors, of Brent Street, London, and here again due to lack of funds, I have not obtained a written statement from them but they tell me that, as a general rule, the rent reduction would be calculated on the basis of taking the total amount required to repair the premises to proper standars [sic] and dividing this by the number of years since the dilapitations [sic] starter [sic] – for example if the total amount of repairs is say £50,000.00 and this has occurred over a 10 year period then that would give us an annual rent reduction of £5,000.00. Please let me know what the final figures for repairs will be so that we can carry out the necessary calculations.

In view of the above figures, I feel that Mrs. Vulkelic should be exempt from any future rents until such time as the premises have been fully repaired.

Once all exact figures are know [sic] we will then proceed to calculate Mrs. Vukelic's total losses. "

23. What was enclosed with Mrs. Yovichic's letter dated 19 September 1996 seems to have been one of the two schedules of calculations which were put in evidence before me and which were sent to Mrs. Vukelic by Mr. O'Connell of Messrs. Grant Thornton under cover of his letter dated 11 September 1996 to which I have already referred. The first schedule set out a calculation of supposed loss of gross profit from the restaurant business at the Property over the period between the year ending 31 July 1984 and that ending 31 July 1992 on the assumption that the average gross profit in the three years ending, respectively, on 31 July 1981, 31 July 1982 and 31 July 1983, would, but for the water penetration at the Property, have increased in line with the increases in the Retail Price Index. The second schedule used the same basic methodology, but calculated supposed losses on the assumption that turnover would have increased not only in line with the increases in the Retail Price Index but also at a rate of 10% per annum on top of that. There was an exciting difference in the outcome depending upon which basis was used. The Retail Price Index based calculation produced a total loss of gross profit over the years up to that ending on 31 July 1992 of £13,140, whilst the other schedule produced a total supposed loss of £167,257. It seems to have been the second of these schedules which was sent to the Council by Mrs. Yovichic. The schedules did record what the actual turnover of the business had been in each year between that ending 31 July 1981 and that ending 31 July 1992. The covering letter indicated that Messrs. Grant Thornton had prepared accounts for each of those years. The actual turnover figures recorded were as follows:-

Year ending 31 July £

1981 34,978

1982 38,777

1983 41,368

1984 38,043

1985 34,079

1986 37,842

1987 47,541

1988 47,543

1989 51,806

1990 58,395

1991 55,835

1992 59,381

A note to one of the schedules recorded that on average gross profit in the years from 1983 to 1992 inclusive represented 60% of turnover.

24. The documents put before me did not include any response from the Council to Mrs. Yovichic's letter dated 19 September 1996.
25. An internal Council memorandum dated 18 December 1996 written by E. Blavo to Miss Eziefula recorded that tenders for the anticipated works to the Property were scheduled to be returned on 24 December 1996 and that the proposed start date for works was 3 February 1997, with a contract period of 14 weeks. In a letter dated 7 January 1997 to Mrs. Vukelic Miss Eziefula indicated that the period during which works would be undertaken to the Property was from 3 February 1997 to 14 March 1997. The letter included:-

"As previously discussed it will be necessary for the tenants to vacate the premises including goods, furniture, and loose items during the period. Any items of plant or furniture left at the premises during the works is at the risk of the tenants and I will now require the following information by the 22^nd January for my consideration.

1. Loss of earnings as a result of closure supported by trading accounts.

2. Cost of storage.

3. Loss of trade as a result of damages caused by the defective roof, and supporting trading accounts.

4. Profit and Loss accounts plus balance sheets dating back to December 1993. These will enable the Council to assess the rent reduction."

26. Mrs. Vukelic did obtain a quotation for the cost of storage of equipment from the Property from a company called Mastercross Ltd. The quotation was set out in a letter dated 20 January 1997, of which a copy was put in evidence. The quotation included an inventory of kitchen equipment as follows:-

"Restaurant

CHEST FREEZER

FRIDGE/FREEZER + ONE OTHER

2ft sq TABLE AND STOOL

DUSTBINS

CHINA, GLASSWARE & CUTLERY(INDIVIDUALLY PACKED)

STEEL FOOD WARMER

CUPBOARD

TABLE AND OTHER NEXT TO HOT PLATE

LARGE GAS COOKER & REAR PANEL

HOT PLATE ON BASE

SMALL SINK UNIT

PREPARATION UNIT

LARGE ASCO COOLER (TO BE ARRANGED)

LARGE EXTRACTOR HOOD

KITCHEN CHAIR AND WASTE BIN

CHIP FRYER."

27. An internal Council memorandum dated 30 January 1997 written by Miss Eziefula to Mr. Paul Bennett, of which a copy was put in evidence, indicated that it appeared as a result of the tenders received in relation to the works intended to be undertaken to the Property that insufficient funding had been allowed by the Council to cover the tendered cost. In the event the works did not take place at the time indicated, and it appears likely that the reason for this was the fact that insufficient funds were thought to be available.
28. Under cover of a letter dated 5 February 1997, but which contained a post script dated 10 February 1997, Mrs. Yovichic on behalf of Mrs. Vukelic sent to Miss Eziefula a copy of the quotation of Mastercross Ltd. for storage and also further figures from Messrs. Grant Thornton. Those figures were set out in one of two schedules prepared on the same bases as the previous two schedules, but with figures carried on from the year ending 31 July 1992 to the year ending 31 July 1996. The schedule sent was that prepared on the assumption of an increase in turnover in line with increases in the Retail Price Index plus 10% per annum. From the fact that it was only that schedule which was sent on this occasion I conclude that what was provided previously had been prepared on the same basis. No copy of the actual enclosure to the letter dated 19 September 1996 was put in evidence. The actual turnover figures included in the schedules for the additional years were £50,988 for the year ending 31 July 1993, £38,133 for the year ending 31 July 1994, £38,796 for the year ending 31 July 1995 and £34,509 for the year ending 31 July 1996. The new schedules were sent to Mrs. Yovichic by Mr. O'Connell of Messrs. Grant Thornton under cover of a letter dated 6 February 1997 in which he made clear that:-

"I would stress again that the figures for actual turnover as per the schedules are based on a preliminary review of the records of Mrs. Vukelic as accounts have not been prepared for the years as yet."

29. In a letter dated 13 February 1997 to Mrs. Vukelic Miss Eziefula wrote:-

"I am writing to inform you that the contract has been delayed and will not proceed on the above date [17 February 1997].

I expect to receive confirmation of the new date by Monday, 17^th, and will advise you accordingly.

I am in receipt of your financial records and quotations and will process these as promised."

30. Mrs. Yovichic wrote again to Miss Eziefula on 27 February 1997. In her letter Mrs. Yovichic referred to a discussion about the possibility of works at the Property commencing in the second week of March, and recorded that Miss Eziefula had been unable to confirm that the works would definitely commence then. Mrs. Yovichic went on:-

"In view of the fact that the above repairs originated way back in 1983 and have obviously deteriorated over the years the state of the building is now in extremely poor condition and in our view not fit for the purposes for what it is being used, namely Restaurant. Mrs. Vukelic has been given two commencement dates in the past and these have not been kept. She in turn notified her regular customers that she would be closed by now and her business is suffering due to non-commencement of repairs as originally promised. I am personally of the opinion that if a Health Inspector were to visit the premises that he would close them down immediately due to lack of repairs.

Mrs. Vukelic has asked me to write to you to give yourselves seven days notice from today's date to reply to me with a commencement date not later than 2^nd week of March, i.e. by 10^th March latest. If you are unable to confirm this commencement date then Mrs. Vukelic will be instructing her Solicitors on the matter.

If your client is unable to commence repairs by 10^th March, I would suggest that they close Mrs. Vukelic's business by then and re-imburse her on a weekly basis her outgoings as set out in my letter to you of 11^th inst. In addition to the outgoings set out in my letter of 11^th inst. rent also be waived in full until such time as all the repairs are complete."

31. In an internal Council memorandum dated 14 March 1997 to Mr. Paul Bennett Miss Eziefula expressed concern that if the Council proceeded with the works intended at the Property and at the adjoining property "it would have spent the whole repair budget allowance for 97/98."
32. A response to Mrs. Vukelic's claim for compensation was made in a letter dated 2 April 1997 written by Miss Eziefula. That letter also indicated that the Council had decided not to proceed with any work to the Property at that time. The material passages in the letter were these:-

"Firstly, in relation to the recent delay in proceeding with the repairs there have been a number of aspects which have had to be clarified. The current price following our tendering of the works contract to deal with your roof and your neighbours is held until 22^nd April. The overall cost of the work, and work to your neighbour's roof would be cheaper if undertaken at the same time. I should therefore like if possible to proceed with the works by then….

You have had figures presented to me by your financial advisers suggesting loss of profits due to downturn in trade allegedly because of disrepair of the building. I do not concur however with your advisers in this. The trading period reflects the longest and probably deepest business recession in recent memory and the downturn in trade no doubt predominantly reflects this."

33. Contrary to what seems to have been anticipated in Miss Eziefula's letter dated 2 April 1997, work to the Property did not proceed on 22 April 1997 or at all in 1997. It was suggested by Mr. John Rylance, who appeared at the trial before me on behalf of the Council, that the reason was an inability to gain access to the neighbouring premises which also required repairs. There was no real evidence about it, but what Mr. Rylance suggested may be so. However, I have a lingering suspicion that, given the anticipated effect on the repairs budget mentioned in Miss Eziefula's memorandum dated 14 March 1997, it was at very least convenient to the Council to have some excuse to do nothing to carry out any works to the Property in 1997.
34. According to the evidence of Mrs. Vukelic, at some point at about the end of February 1998 Mr. Warren Back, a Principal Valuer in the Valuation and Property Services Division of the Council, turned up without prior notification at the Property during normal opening hours with workmen and apparently intended that any loose concrete in the ceiling of the restaurant should be removed by the workmen. Mr. Back also gave evidence before me and denied that he had attended at the Property in February 1998. He said that his first involvement with the Property was in November 1999 when he wrote a letter dated 17 November 1999 to Mrs. Vukelic, and subsequently visited her at the Property. I did not find Mr. Back to be a satisfactory witness. His demeanour over this particular issue struck me as especially shifty. From the point of view of Mrs. Vukelic, the attitude on the part of the Council and its officers which she wished to demonstrate by reference to the incident in February 1998 was just as well demonstrated whichever officer of the Council was involved in it. There was no reason for her to identify the person involved as Mr. Back rather than some other officer, unless it was Mr. Back who was involved. Subsequently Mrs. Vukelic had a number of dealings with Mr. Back, so she knows him perfectly well. Again, Mrs. Vukelic, as the correspondence to which I have so far referred demonstrates, had a strong sense of grievance in relation to the conduct of the Council concerning water penetration into the Property and might be expected to have a good recollection of all incidents which she considered of importance. I unhesitatingly accept her evidence that it was indeed Mr. Back who came, with others, to the Property without an appointment in February 1998. Mrs. Vukelic told me in evidence, and I accept, that she showed Mr. Back a piece of concrete which had fallen from the ceiling, narrowly missing her. His comment was to the effect that she should keep the lump of concrete because it might have some value in the future. Mrs. Vukelic did not permit the workmen on that occasion to do any of the apparently intended work, but told them to make an appointment to come back at a convenient time. They never made an appointment and they never came back. Mrs. Vukelic also told me, and again I accept, that she had in fact herself caused a piece of wood to be fixed to the lattice wood framing at that time attached to the ceiling of the restaurant area to protect customers from the risk of falling concrete from the ceiling.
35. The incident described in the preceding paragraph prompted Mrs. Yovichic to write to the Council a letter dated 3 March 1998 which included:-

"In view of the fact that you and your colleagues turned-up at the premises to inspect initially without prior warning and then turned up again without an appointment or prior warning Mrs. Vukelic was totally surprised by your visit and subsequent request. In future please ensure that proper procedure is followed and that mutually convenient appointments are made.

After carefully considering the matter and bearing in mind numerous promises made in the past to carry out works on these premises Mrs. Vukelic is not prepared to allow any works to be carried out without prior written confirmation of the following:-

1. A complete list of all works to be carried out in the restaurant; including full specifications.

2. Length of time envisaged to carry out the works – it was previously envisaged by the Council that the restaurant would have to be cleared out and things put into store prior to commencement of works.

3. Length of time needed for the works to be fully completed – originally envisaged between 6 – 8 weeks, at approximately £49,000.00.

4. Details of full compensation to be paid to Mrs. Vukelic during remedial works – including all wages, insurances, loss of profits and interuption [sic] of business.

5. Details of who is dealing with Mrs. vukelic's [sic] compensation claim – details of which are with the Council and have been for months.

6. In view of the fact that water has been leaking into the restaurant since 1982 from the council's premises above the restaurant I feel that Mrs. Vukelic has been more that [sic] patient, to say the least, and is entitled to have the repairs carried out fully to the restaurant and not by a means of a "temporary" nature."

36. The documents put in evidence before me did not include any immediate response to the letter dated 3 March 1998 written by Mrs. Yovichic to the Council. For reasons which were not explained a reply was delayed until 9 June 1998. The reply was written by Mr. Chris Grace, a Technical Manager employed by the Council. Enclosed with the letter was a full specification of the works intended to be carried out. The letter indicated that it was envisaged that the execution of the works would take 8 to 10 weeks. Mr. Grace restated that the position of the Council in relation to compensation was as set out in the letter dated 2 April 1997. The letter concluded:-

"All repairs to the restaurant will be of a permanent nature. In the meantime there are some areas of "live" concrete in the dinning [sic] area which need to be removed and it was this area of work that we intended to carry out when we called, albeit without proper notice, in February of this year. It is essential that these areas of concrete are subject to a temporary repair for reasons of safety, as these areas of concrete have the potential to fall into the dinning [sic] area."

37. The specification a copy of which was enclosed with the letter dated 9 June 1998 included:-

"Work within restaurant area

60 Protect all retained fittings, furniture, floor coverings, wall decorations and the like for the duration of the works.

61 Carefully disconnect and take down lights as necessary, and refix and reconnect on completion.

62 Carefully take down areas of timber open lattice ceiling as necessary for access to carry out repairs to the concrete soffit above. Reinstate on completion. Allow for any necessary temporary support….

66 Clean down and decorate timber open lattice ceiling complete

Work within kitchen area

67 Protect all retained fittings, appliances. Furniture, floor coverings, and the like for the duration of the works…

72 Degrease, clean down and decorate walls and ceiling with one undercoat and one topcoat of gloss oil paint.

73 Degrease, clean down and decorate woodwork with with [sic] one undercoat and one topcoat of gloss oil paint.

74 Degrease, clean down and decorate pipework with with [sic] one undercoat and one topcoat of gloss oil paint.

Work within lobby/store

75 Protect all retained fittings, appliances, furniture, floor coverings, and the like for the duration of the works…

77 Degrease, clean down and decorate walls and ceiling with one undercoat and one topcoat of gloss oil paint.

78 Degrease, clean down and decorate woodwork with with [sic] one undercoat and one topcoat of gloss oil paint.

79 Degrease, clean down and decorate pipework with with [sic] one undercoat and one topcoat of gloss oil paint.

Work within toilets, corridor and kitchen lobby area

80 Protect all retained fittings, appliances, furniture, floor coverings, and the like for the duration of the works…

86 Degrease, clean down and decorate walls and ceiling with one undercoat and one topcoat of gloss oil paint.

87 Degrease, clean down and decorate woodwork with with [sic] one undercoat and one topcoat of gloss oil paint.

88 Degrease, clean down and decorate pipework with with [sic] one undercoat and one topcoat of gloss oil paint."

38. The documents copies of which were put in evidence before me included a report dated 19 March 1998 of an inspection for the purposes of Food Safety Act 1990 made by Mr. Desmond Black, an Environmental Protection Officer employed by the Council. That report recorded that on the occasion of the inspection the Property was found to be unsatisfactory so far as food hygiene was concerned because of the need to:-

"(1) Repair damaged/defective paint work in kitchen area

(2) Repaint/resurface defective areas

(3) Ceiling plaster defective – remove and renew defective areas

(4) Repair defective ceiling in dining area."

The report contained no indication that the equipment in the kitchen itself was in any way inadequate or suspect.

39. Mr. Uzo Nwanze, Head of Valuation & Property Services of the Council, made an undated report concerning the case of Mrs. Vukelic to Councillor Loman. A copy of the report was put in evidence. From the internal evidence of its contents the report seems to have been made at about the end of 1998. The report included:-

"Following several meetings and correspondence with Mrs. Vukelic, the Council went out to tender for the works in 1997, the works would have commenced if not for the fact that a similar dispute arose regarding No 5A Uxbridge Road. In view of its proximity it was considered financially prudent to undertake the necessary repairs in conjunction with the required repairs to the roof of No 5A which was also in a poor state.

Subsequently in September 1998, the tender for undertaking repairs to the roofs of 5 and 5a Uxbridge Road were returned. Prior to the return of the tenders an opportunity to dispose the shops in the parade arose. The proposed repairs were therefore suspended pending negotiations for the disposal of the shops.

These negotiations have not been successful and as such I have decided to proceed with the repairs to the roof as previously envisaged. Unfortunately, I now understand that the previous tenders have lapsed and as such a need to re-tender.

Generally, the tender period will be 5 weeks and the contract period is anticipated to be 10 weeks. The works will necessitate the closure of the restaurant for a substantial part of the contract period. I propose informing Mrs. Vukelic of a start date following the completion of the tender process."

40. For reasons which were not explained, the Council did not seek tenders until the latter part of 1999. One of the tenderers was a company called Contrad Construction Ltd. ("Contrad"). In a letter dated 16 November 1999 to Contrad Mr. Martin Seignot, a Technical Officer employed by the Council, informed the company that its tender had been successful.
41. In his letter dated 17 November 1999 to Mrs. Vukelic which I have already mentioned Mr. Back informed her that the Council was then in a position to commence repair works to the Property. He said that works were due to begin on 30 November 1999 and were expected to last for 12 weeks. He said that he had been advised that it would be necessary for the restaurant to close for the duration of the works. It seems that the restaurant was at that time still, at any rate notionally, open for business, as Mr. Black made a further inspection visit on 20 October 1999, which he is unlikely to have done if the restaurant had by that date closed completely.
42. The progress of the works within the Property was not smooth. The works necessary proved to be more extensive than originally contemplated. In particular, it turned out to be necessary to take down the whole of the ceiling in the main part of the restaurant area. The question then arose of with what to replace the previous wooden lattice ceiling. The Council decided to replace it with a suspended ceiling. The instruction to Contrad to do that was dated 11 February 2000. A further instruction to take down and remove from site the existing lattice ceiling was dated 2 March 2000. Mrs. Vukelic was not consulted before the decision to fix a suspended ceiling was made. Once she became aware of the decision she made known her objection to Mr. Seignot. He reported that objection to Mr. Back in an e-mail dated 22 February 2000. A copy of the e-mail was put in evidence. That copy was endorsed in the hand of Mr. Back, "Advised Martin Seignot that he should disregard Mrs. Vukelic and fit suspended ceiling". In his cross-examination before me Mr. Back indicated, and I accept at least this part of his evidence, that it was cheaper to fit a suspended ceiling than it would have been to have replaced the wooden lattice ceiling. He asserted, but Mrs. Vukelic disputed, that Mrs. Vukelic had herself previously wanted the lattice ceiling replaced. I prefer the evidence of Mrs. Vukelic on this point. Mrs. Vukelic was at this time being assisted in her dealings with the Council by an architect friend, Mrs. Maya Vuksa. Mrs. Vuksa wrote a letter dated 17 March 2000 to Mr. Back which included:-

"Mr. Seignot has informed me that an "Armstrong" suspended ceiling is proposed to conceal the unsightly remedial works and electrical wiring. Mrs. Vukelic is strongly opposed to the installation of this type of ceiling system, as it is quite inappropriate in this restaurant, for both practical and aesthetic reasons. In a restaurant, this type of ceiling will quickly become discoloured by nicotine and will require a high level of maintenance….

I understand that Mrs. Vukelic was informed prior to the commencement of the works that the original timber open lattice ceiling grid would be retained or replaced to match. As this is no longer the case, it would seem appropriate that Mrs. Vukelic is allowed to request a reasonable alternative. Mrs. Vukelic would prefer that the ceiling be fully plastered, with boxing around the steel beams to allow for services. This would be the best and most long lasting solution. Mr. Seignot informed us that this is not an option due to financial constraints."

Mr. Back's reply was dismissive. In a letter dated 23 March 2000 to Mrs. Vuksa he wrote, so far as is presently material:-

"The reason why the Council intends to fit an "Armstrong" suspended ceiling is not only cost based. Of equal importance is the ease of accessibility to services and in particular the necessity to have quick access to remedy any possible leaks from the central heating piping. The Council has looked at trying to re-route the piping but this has not proved possible.

Having discussed your alternative proposals with Martin Seignot, they do not provide easy access and therefore the Council will be proceeding with the Armstrong ceiling."

Mrs. Vukelic herself returned to the fray in a letter to Mr. Back dated 10 April 2000. She wrote, amongst other things:-

"I must confirm that had I known that you were proposing to install this type of ceiling and not replaster the main ceiling I would not have agreed to the removal of the original open lattice grid. Had you retained this lattice, the ceiling above would have required replastering, as the unsightly remedial works would have been visible through the grid. As you appear not to have set aside this original grid for re-use it is only fair that you should at least replaster or dry line the main ceiling to a finished standard."

Mrs. Vukelic also instructed solicitors, Messrs. Trott and Gentry, to write on her behalf in relation to the ceiling in the restaurant area, and other matters. About the ceiling they wrote, "All our Client asks is that some form of latticing be reinstalled". The Council remained unmoved. Mr. Back made a file note dated 11 May 2000 which was put in evidence and which concerned a conversation with Mrs. Vukelic's solicitor. The material part of the note was, "advised him that the ceiling was suitable for restaurant use and we will not be removing it."

At some point in the exchanges about the ceiling, so Mrs. Vukelic told me, and I accept, Mr. Back indicated to her that she could "take it or leave it".

43. During the course of the works at the Property the Council decided that it should renew the electrical system in the Property and also provide a fire alarm system. One would have thought that in principle the undertaking of such works would have been to the advantage of Mrs. Vukelic. However, the work was undertaken without consultation with her over such matters as the desired locations of power points or the runs of electrical conduit, much of which in the kitchen was surface-mounted. Fire alarm cabling was also run in conduit which was largely surface-mounted and the runs of which were not discussed with her. I had the benefit of a view of the Property on Tuesday, 4 February 2003. On that occasion, in the presence of Mr. Rylance and his instructing solicitor, Miss Suzanne Bond, Mrs. Vukelic drew to my attention the runs of electrical conduit and the siting of power points. These were matters about which she obviously felt a considerable sense of grievance because she had not been consulted. I asked Mr. Back when he came to give evidence whether there was any reason why she had not been consulted about the locations of power points and of runs of electrical conduit. He rather suggested that these sorts of detail were not for him to deal with. I had the impression that at the time renewal of the electrical system was being considered, along with provision of a fire alarm system, it did not occur to him to consult Mrs. Vukelic and that even now he cannot really understand why it might have been courteous to have done so. For reasons which were never explained, the recessed lighting in the suspended ceiling which was in fact fitted does not extend all the way to the rear left hand corner of the restaurant area.
44. Considerable play was made during the hearing before me of the dilapidated condition of the shop front of the Property. It was suggested that it was unattractive and something of a deterrent to passing trade. By the end of 1999 or the beginning of 2000 Mrs. Vukelic in fact obtained the agreement of a body called White City Partnership to make a grant to her for the installation of a new shop front. The opportunity to receive that grant was lost as a result of the time taken by the Council to complete the works to be undertaken in the Property. In a letter to Mr. Seignot written by Mr. Tom Buxton, Development Officer of Groundwork West London, dated 28 February 2000 Mr. Buxton explained that:-

"Due to the serious delays in the project as a result of the internal improvements being implemented by the council and the inaction of BG Trade, the contractors responsible for building and installing the shop front, the White City Partnership grant towards the new shopfront has been withdrawn. I have had to do this as the project had to be complete and the money spent by the 10^th of March, and despite my best efforts, I have no confidence that this would have happened. As I am in the position of being able to reallocate this money to a project that could be completed by the 10^th March, I have had no choice but to withdraw the grant offer.

I am very disappointed that this has had to be done, as the project is one that fulfils the Frontage Improvement Scheme criteria very well. The project would have resulted in a vastly improved frontage that would have brought benefits to the surrounding area as well as the business itself. I am also sad that the project shall now probably not go ahead without grant support.

With regard to this, I have requested that the White City Partnership consider awarding the grant again in the next financial year, but I am not confident of this being approved as the project has already spanned two financial years without result. I shall keep you informed of any developments."

45. The supposed completion of the works commenced at the Property in about December 1999 was very long delayed. In his first witness statement in this action Mr. Seignot set out a catalogue of reasons for the delays, to some of which I have referred. Other factors seem to have been delays on the part of Contrad, disputes with Contrad as to exactly what it was that company was supposed to do, and defects in the work which it had done. A certificate of non-completion was issued on 15 August 2000. In the event Mr. Back wrote a letter dated 25 January 2001 to Mrs. Vukelic in which he said:-

"I write to advise that the works to your premises are now complete thus enabling you to recommence trading.

I apologise for the length of time taken to undertake the works but please contact me in order to arrange for a handover of the keys."

That was it. There was no explanation for the delays or suggestion that Mrs. Vukelic was to be compensated for the time she had been kept out of the Property.

This action

46. In fact by a claim form issued in the Chancery Division on 16 August 2000 Mrs. Vukelic, acting in person, had commenced the present action. The brief details which she gave on the claim form of her claim were these:-

"The Claimant is the leaseholder of the premises known as 5 Uxbridge Rd, Shepherds Bush, London W12 and in the circumstances particularised in the Points of Claim (To Follow) submits that the cumulative failure or negligence, breaches of agreement by the Defendant over many years to make good the serious damage done to my restaurant premises by the Defendant's contractors/employees/tenants water penetration defective roof leaking ceiling and the toilets damp walls have significantly disrupted the Claimant's restaurant business as to adversely affect sales income profits, customer traffic and business growth. Damage to my business reputation caused excessive worry and stress to my late husband and lead [sic] to his death by a heart attack. The Claimant is also suffering from excessive stress and worry because of the condition of the poor premises caused by the Defendant. The Defendants have admitted responsibility and after more than 10 years agreed in December 1999 to carry out repairs within 8 to 12 weeks but the repairs have not been completed as of this date. In essence the Claimant claims as follows:

1. The Defendants have acted in breach of the agreement to finish the repairs within the agreed period and the Claimant is seeking damages plus interest. The Claimant is seeking compensation for loss of sales income and profits from December 1999 onwards.

2. The Claimant is seeking damages for disruption of business, loss of customers due to the bad state of the premises.

3. The Claimant is seeking reimbursement of the rent and rates paid over the years.

4. The Claimant is seeking exemplary damages.

5. The Claimant is seeking interest on damages/compensation.

6. The Claimant has suffered damage to health due to excessive stress and worry which has led to a stroke and is seeking damages.

7. The Claimant is seeking damages for loss of access to Government Business Grants.

8. The Claimant is asking for costs of this action plus interest.

9. The Claimant is seeking all further and other relief as the Honourable Court may think fair and just.

10. Damages for the destruction of tiles and damage to kitchen equipment."

47. Mrs. Vukelic told me in her evidence that she was born on 25 May 1938 in Montenegro in the former Yugoslavia and came to this country in 1962. Despite being resident in this country for many years it has to be said that her spoken English is not good. She has been assisted throughout this action by the advice of Dr. Martin Kazuka in relation to the presentation of her case, and by her friend Mrs. Milka Yovichic in expressing herself in the English language. It is obvious to me that most, if not all, of the documents which Mrs. Vukelic has apparently produced in the English language to which I have already referred, and all of the documents which she apparently produced for the purposes of this action were the product of very considerable assistance from others. It is, it seems to me, necessary to have this in mind when considering the validity or otherwise of some criticisms made by Mr. Rylance during the course of the hearing before me of the terms of some of the documents.
48. Particulars of Claim were produced in this action which were dated 12 October 2000 and were signed by Mrs. Vukelic. The Particulars of Claim were rather discursive and alleged, or hinted at, a number of causes of action. All focused essentially on the question of the water penetration into the Property from adjoining premises within the control of the Council. There were claims for damages in respect of the death of Mr. Vukelic, in respect of alleged damage to the health of Mrs. Vukelic herself, and in respect of the alleged damage to the restaurant business carried on in the Property. Some rather extravagant values were attributed to each of these elements of claim. I need not, however, concern myself with those values, because subsequently Mrs. Vukelic's claims were revised.
49. A Defence was served on behalf of the Council. The Defence contained some rather limited admissions of water penetration but no admission of any legal liability on the part of the Council to Mrs. Vukelic. At paragraph 37 of the Defence she was put to strict proof of any loss of profit and the cause thereof. At paragraph 50 of the Defence it was denied that the Council was liable in damages to Mrs. Vukelic at all, but it was contended that if it was, it was entitled to set-off against any such liability its counterclaims. At paragraphs 51 and 52 of the Defence it was pleaded that the Council was entitled to rely on the provisions of Limitation Act 1980 as excluding any liability in respect of any alleged breach of the Lease which occurred earlier than 17 August 1988 and any liability in respect of any breach of a common law duty which accrued earlier than 17 August 1994. By subsequent amendment a new paragraph 52A of the Defence was added by which the Council contended that the effect of Limitation Act 1980 s.11 was that, since the claims of Mrs. Vukelic in the action included claims in respect of personal injuries to herself and another, it was under no liability to her in respect of any cause of action accruing before 17 August 1997. The counterclaims of the Council were for arrears of rent due under the Lease and for a contribution under clause 3(3) of the Lease to the costs of the works undertaken in the Property between December 1999 and January 2001.
50. This action came on for trial before me, sitting as a Judge of the Chancery Division, on 8 July 2002. On that occasion Mr. Rylance, on behalf of the Council, admitted liability to Mrs. Vukelic in respect of nuisance caused at the Property since 18 August 1997. He drew to my attention the provisions of Limitation Act 1980 s.11 and submitted that in the circumstances Mrs. Vukelic was not entitled to damages from any earlier date or in respect of any cause of action other than that which he admitted. It seemed to me then, and it seems to me now, that as a matter of law that submission is well-founded. I therefore directed that judgment be entered for Mrs. Vukelic for damages to be assessed in respect of the nuisance caused to her by the Council from 18 August 1997. I also directed that the action be transferred to this Court for the assessment of damages. It is with that assessment that this judgment is concerned. Mr. Rylance made clear on 8 July 2002 that the Council might not seek to pursue its counterclaim in relation to a contribution to the costs of the works undertaken at the Property between December 1999 and January 2001. That element of counterclaim was formally abandoned on 29 November 2002. However, the counterclaim in respect of arrears of rent, and in respect of interest due thereon under the terms of clause 5(10) of the Lease, was pursued. By the date of commencement of the trial before me, 3 February 2003, the total amount of the arrears and interest was £126,264.20. The amount was not disputed by Mrs. Vukelic, but she contended that it was unfair in the circumstances that she should have to pay it. The arrears represented rent falling due on and from 25 December 1995.

Events subsequent to the commencement of this action

51. Mrs. Vukelic has not sought to recommence her restaurant business in the Property. Her response to Mr. Back's letter dated 25 January 2001 was a letter dated 21 February 2001 which she told me was drafted with the assistance of an architect friend, I imagine Mrs. Vuksa. The letter was in these terms:-

"Further to your request that we meet in order for you to return the keys: this suggests that you feel your work is now finished.

I write to confirm that the remedial works carried out on behalf of the local authority are far from complete. We have an agreement that the restaurant will be returned in working order so that it may re-open for business immediately.

At this stage, re-opening the restaurant is impossible. The following items require further work or resolution before the restaurant is ready to open to the public:

Rear WC, Store & Boiler Area

1.0 The new paintwork to the entire area is blistering due to the damp walls. The contractors have recently removed new paintwork to the rear wall where this problem was particularly bad but have not completed the work. The unpainted plaster to the rear wall has not dried out or is suffering from damp penetration. The damp problem in this entire area has obviously not been resolved and the work carried out is superficial.

One of the main reasons for the closure of the restaurant was to carry out remedial works to this rear area. If this is not dealt with properly the damp problem will continue and the decorations will quickly deteriorate to their earlier state.

This is a major problem and I do not understand why it could not be resolved to a satisfactory standard over the time that the contractors have had possession of the site.

2.0 New skirtings have been fitted within the toilet cubicles. There are considerable gaps between the skirtings and the floor tiles that will collect dust and will be very difficult to clean. The original skirtings did not have these gaps. If you were unable to scribe the skirting to the floor, a suitable coving tile should have been used or the floor tiles replaced.

3.0 The floor tiles throughout this area are covered with dried cement and plaster from the building works. I will not be able to remove this without hiring specialist cleaners or equipment.

4.0 The new glazing over the toilet cubicles has been roughly painted to obscure the view into the toilets from the flats above. This is completely unsatisfactory. The glass installed here should be opal or sufficiently textured to obscure the view in.

5.0 The drain cover is broken and covered with cement/plaster.

6.0 The original fitted shelves below the high-level air bricks in the rear storage area have not been replaced.

7.0 There are holes and gaps around all the pipes cut through the walls.

8.0 The bricks below the skylight in the boiler room have been left exposed.

9.0 There are gaps around the framing of the new skylights.

Kitchen

10.0 The floor below the new linoleum is uneven and hazardous; it should have been levelled before the new linoleum was fitted. The wall and floor behind the large refrigerator and Bain-Marie have not been cleaned, treated for damp or decorated. These appliances should have been moved to ensure that the walls are free of damp.

11.0 All the kitchen appliances and fittings were uncovered and left unprotected during the works. They are now covered with rust, plaster splashes and building dust. These items were in good working order and condition; they are now completely defunct.

12.0 The metal nosing strip to the step from the bar into the kitchen has been damaged and is now loose and hazardous.

13.0 Some wall tiles have been replaced and some have not. There are gaps between the new and the old tiles that will be difficult to clean and therefore unhygienic.

Bar Area

14.0 The black laminate bar top has been scratched and the edge strips broken.

15.0 Drilling to accommodate cabling to the new double socket- (which is not needed) has damaged the rear timber laminate worktop.

16.0 The coffee machine is damaged.

Front Restaurant Area

17.0 The chairs are covered with dirt and dust.

18.0 Several tables have been damaged.

19.0 There now appear to be fewer ceiling light fittings than originally at the rear of the restaurant.

20.0 Wallpaper has been replaced in patches where the original paper was damaged by damp or during the building works. This paper does not match the original and looks untidy and unfinished. Other areas of wallpaper have not been replaced but simply painted over; this has caused blistering and stretching either from the application of new paint or from original damp that has not been remedied.

21.0 The new ceiling does not match the original. Several of the new ceiling panels are damaged. The type of ceiling installed will quickly discolour and will incur much greater costs to maintain than the original open lattice ceiling.

General

22.0 All the boxes containing items belonging to the restaurant have been opened and distributed around the site. I cannot understand why the contractors' operatives should open these boxes. This has caused many of the items including pictures and their frames to be damaged.

23.0 There appear to be no light switches apart from the switches on the fuseboard. I cannot check the electrics generally, as there appears to be no supply. I am unaware whether the electricity bills for the time that the restaurant has been in the contractors' possession have been paid and what arrangements will be implemented by the local authority to reconnect the electricity on completion of the works, so that the restaurant may function.

24.0 Redundant gas pipes have not been removed and have been left unfixed and hazardous.

I have instructed a Building Surveyor to inspect the works and am awaiting his report.

The restaurant cannot be re-opened until these problems are resolved. You have not fulfilled your side of the agreement."

52. Mrs. Vukelic's evidence concerning the building surveyor whom it was anticipated in February 2001 would inspect the Property was somewhat indefinite. Previously Mrs. Vukelic had engaged the services of Mr. Robert Powell, who had prepared a report on the Property dated 11 March 1997 which was put in evidence. Mr. Powell also prepared reports in 2002 which were put in evidence. He gave oral evidence at the trial. However, he seems not to have been the person Mrs. Vukelic had in mind in February 2001 as the building surveyor to have a look at the Property. Mr. Powell is not in fact a building surveyor, but a civil and structural engineer, a point as to which some play was made at the trial in relation to such differences as there were between his evidence and that of Mr. Michael Cornet, a building surveyor called to give evidence on behalf of the Council. In the event there was no evidence from anyone with professional qualifications as to the condition of the Property following the completion of the works undertaken on behalf of the Council between December 1999 and January 2001, save insofar as Mrs. Vukelic's letter dated 21 February 2001 was prepared with professional assistance. However, there were put in evidence photographs taken in May 2001 which showed the condition of the Property at that time. Broadly those photographs confirmed the condition of the Property as described in the letter dated 21 February 2001. Some of the photographs also showed fungi growing in the boiler room to the rear of the kitchen. One photograph showed a snail climbing a wall.
53. Mr. Cornet was first instructed on behalf of the Council in relation to this action at the beginning of 2002. He prepared a report dated 13 February 2002 which was put in evidence. It is not necessary for the purposes of this judgment to quote extensively from that report. Suffice to say that at that time the view which Mr. Cornet took was that, apart from some low level damp readings in some areas which he seemed to think required no action, and the effects of a backing up of drains caused, he understood, as a result of a historic build up of fat in the drains, the only indications of continuing dampness were in an area to the left of the kitchen vent and in an area around the south window in the Ladies lavatory. The report was not, as such, a commentary on Mrs. Vukelic's letter dated 21 February 2001 or on Mr. Powell's report dated 11 March 1997.
54. On 27 June 2002 Mr. Powell undertook a survey of the Property using a damp meter. He prepared a report dated 1 July 2002 in which he recorded the readings which he had made. The material part of the "Conclusions" section of that report was in these terms:-

"Most of the walls to the rooms to the rear of the restaurant are suffering from significant levels of damp. It is known that the damp problems and water penetration has occurred in the units behind the rear wall and the roof drainage has been altered during refurbishment.

The levels of moisture recorded are greater than would be obtainable from internal condensation.

It is thought possible that moisture is passing through the brickwork from the unit behind.

Other areas of moisture ingress may be leaking roof-lights, inadequate d.p.c. and d.p.m."

55. As a result of an order made by me on 8 July 2002 Mr. Powell and Mr. Cornet undertook a joint inspection of the Property on 17 July 2002. I directed that:-

"The surveyors shall prepare a joint schedule of the condition of the premises and shall seek to agree the existence and cause of any want of repair observed and any necessary remedial action. In so far as they are unable to agree, the surveyors shall prepare a joint statement showing those issues on which they disagree and the positions respectively adopted on such issues. The joint schedule and joint statement shall be supplied to the parties and to the Court by 4 pm on Monday the 5^th August 2002."

56. Following the joint inspection Mr. Cornet undertook the drafting of a joint report. As a result of some misunderstanding the report was not signed by each of Mr. Powell and Mr. Cornet as a joint report following discussion of Mr. Cornet's draft between them. Rather Mr. Powell produced a separate commentary on Mr. Cornet's draft. The draft indicated that the matters considered at the joint inspection were, first, a list of matters of concern identified to Mr. Powell by Mrs. Vukelic, and, second, the readings set out in Mr. Powell's report dated 1 July 2002. In relation to the matters raised by Mrs. Vukelic, it was recorded in Mr. Cornet's draft report that he and Mr. Powell had agreed that a light which had previously existed in the lobby area at the front of the restaurant dining space had not been replaced. It was also agreed that the ceiling paintwork in the restaurant area was not of a uniform colour, and that the columns in the lobby area of the restaurant dining space had been covered with hardboard which had suffered some edge lifting and caused splitting through the decorative paper applied over the hardboard. Both of these matters were indicated as having nothing to do with the works which the Council had caused to be carried out in the Property. The draft report noted that there were two drops of mismatched wallpaper in the restaurant area. It also noted that there had been surface damage to the bar counter, downstands and shelves, some of which, at least, appeared to be from ordinary wear and tear. About other of the matters raised by Mrs. Vukelic the draft report contained these comments:-

"2.12 Gent's WC window unopenable. Agreed there has been a new fixed timber frame with Georgian wire glass and an electrical extract fan as part of the repairs carried out by the Landlord. It was further agreed that the works are better designed to stop any risk of water penetration and the extract fan is an appropriate form of ventilation extract.

2.13 Cooker extract not capable of being cleaned as windows fixed shut. Agreed that the main extract has removable filter access internally and because of the risk of blow back of fumes it is not appropriate to have openable windows.

2.14 Ladies toilet, lack of privacy. The experts agreed that the roof light has been replaced as part of the Landlord's repairs and the underside has been simply painted. It was agreed that approximately 1m² of painting would benefit from an additional coat of paint.

2.15 Kitchen floor uneven. Agreed that the original floor substrate remains and that it is generally even but it is understood that the Landlord has re-covered the floor in an Altro anti-slip type sheet vinyl floor. A 600mm length of flooring has lifted beneath the dish wash basin as it has not been heat-sealed and the experts agree that this should be heat-sealed.

2.16 Redundant pipe in kitchen. Agreed there was an older gas pipe now redundant but the surveyors were unable to date the alteration but it is consistent with the replacement noted in paragraph 2.04 above. There is a further two metre length of old water pipe in the bar/internal corridor corner and this is loose. The older tiling behind is incomplete indicating this is historic and the Tenant's responsibility."

57. The draft joint report prepared by Mr. Cornet included these comments concerning the damp readings obtained by Mr. Powell on his inspection on 27 June 2002:-

"3.03 P.01. Restaurant. Readings of 15% in an area approximately 3m² with no lifting of the decorations. It is understood that this dampness originated from a leak from above and outside the demise not being within the Landlord's control and not being part of the Landlord's works. There appears to be some blown plaster behind the painted decorative paper. At ground level beneath there is further lifted plaster but this area is dry.

3.04 P.2.01. Kitchen. Agreed that the substrate plaster behind new and existing tiles had lifted away between the old scratch coat and plaster setting. Some 18 No. new wall tiles had lifted away to a height of approximately 1.6 metres. Meter readings vary but generally indicate saturation to a height of 2 metres and continue on a reduced scale to two-thirds the height of the room in this position. Agreed that this wall may be suffering from three sources of dampness. Bridging off the floor, drain blockage or basin leaks (now repaired), and water penetration from the original rear addition roof (now replaced). It was further agreed that the areas appear to be drying out but it would be recommended that approximately 12 m² of rendering to both sides of this wall would be appropriate and replacement of approximately 5 m² of wall tiles. The dampness does not appear to directly relate to the Landlord's works.

3.05 P.2.02 Kitchen window arch. Agreed that there is no structural damage to the arch. There is localised dampness in the purpends of the bricks to the arch at 23% and this may have occurred from dampness prior to the window replacement. Agreed that approximately 2 m² of external pointing to the arch that should be re-pointed by the Landlord…

3.08 P.3.01. North store. The north wall had a small area of dampness approximately 3 metres above floor level in a band approximately 600 mm wide giving a 50-60% reading. There was no obvious cause for this as the north wall was enclosed by the development on that side of the building. Agreed that the dampness should continue to be allowed to dry out naturally or alternatively hack off 3 m² of render and re-render…

3.14 P.7.01. Rear passageway. There were 100% readings around the floor of the wash hand basin outlet gully. Agreed that the wall adjacent would benefit from re-rendering in conjunction with numbered paragraph 3.04 above with similar responsibility for repair."

58. The final section of the draft joint report was concerned with decoration. It was in these terms:-

"There are various areas of lifting and exfoliated paint both on new and old plaster within the various areas mentioned in the paragraphs above and this has probably been carried out by the Landlord although a Tenant's repairing obligation. The paint system appears to be a vinyl based emulsion and the surveyors consider that some of the visual loss of finish is as a result of natural moisture evaporation from the rendered substrate not being able to penetrate the paint system and therefore lifting off. The experts agreed that the surfaces and efflorescence should be rubbed back, prepared and re-decorated in ordinary emulsion paint with a micro porous composition so as to allow the natural evaporation to continue."

59. A point made by Mr. Powell in his report dated 29 October 2002 in which he commented upon the draft joint report prepared by Mr. Cornet was that he and Mr. Cornet differed as to whether the Council was obliged so far as Mrs. Vukelic was concerned to carry out the works the subject of the specification for the works to the Property which Contrad had agreed to undertake for the Council. Mr. Powell's view was that the Council did owe Mrs. Vukelic such an obligation. Moreover, he and Mr. Cornet seemed to differ as to the correct interpretation of some parts of that specification. These differences were elaborated in Mr. Powell's comments on those parts of the draft joint report which concerned the matters raised by Mrs. Vukelic which had been discussed on the occasion of the joint inspection. About damp in the kitchen Mr. Powell commented in his report dated 29 October 2002:-

"The damp damage was severe and extended to window level, although somewhat reducing in height. Drying out appears to be nominal and the levels of damp prior to contract works was not recorded."

60. Mr. Cornet in his turn commented upon Mr. Powell's report dated 29 October 2002 in a report dated 22 December 2002. The latter report contained some rather tetchy observations from Mr. Cornet as to his communications with Mr. Powell, or the lack of them, and in relation to matters covered by his draft joint report largely repeated what he had there written. However, he did say in respect of damp penetration into the kitchen at the Property:-

"I consider that the problems are continuing and further remedial works are required. These are:-

3.13.1 Elimination of the extensive condensation by adequate heating and ventilation.

3.13.2 Improvement of rainwater disposal from the main roof on to the boiler room roof.

3.13.3 Hacking off and re-rendering of approximately 24 m² of plaster, together with a new chemical damp proof course if required.

3.13.4 There is a new active leak coming through the head of the window to the rear of the kitchen. This is running off the parapet above and is caused from defective rainwater disposal at second storey level to the external balcony. This rainwater system needs to be repaired, the window/brickwork sealant joint repaired and adjacent 2 m² of external pointing replaced."

Mr. Cornet also commented that the Council should undertake any external repair necessary to remedy the small area of damp ingress into the store room at the rear of the Property. He agreed that further repairs were necessary to the rendering in the rear corridor at the Property. At the end of his report dated 22 December 2002 Mr. Cornet wrote:-

"7.15 The original repair works carried out by the Defendant were completed in January 2001 and it would be unreasonable for the Claimant to have recommenced trading from that date."

In a yet further report dated 18 January 2003 Mr. Cornet explained that what he had meant to say in paragraph 7.15 of his report dated 22 December 2002 was that in his view it would have been "reasonable" for Mrs. Vukelic to have recommenced running her restaurant as from the date of completion of the original works in January 2001. That expression of view was challenged in cross-examination. I have to say that I did not find Mr. Cornet's evidence on this point particularly satisfactory. Although he sought to insist that it would have been reasonable for Mrs. Vukelic to have recommenced running her restaurant business as from January 2001, he was driven to accept, as it seemed to me, that in fact he could not really say, because he had little or no idea of the hygiene requirements to be satisfied before premises could be used for cooking food for service to the public. He was, however, very dismissive of the presence of fungi, which he asserted could and should simply have been brushed off, and unimpressed by the practical difficulties of trying to operate a kitchen in which, as he accepted, repair works needed to be done, not only to deal with damp penetration through one wall, but also to repair plaster and tiles becoming detached from the underlying structure on another.

61. It was ultimately common ground between Mr. Powell and Mr. Cornet that there were further works which needed to be undertaken at the Property in order to deal with ingress of water from areas for which the Council was responsible and to deal with the consequences of such ingress. I did not have the impression that there was much, if any, difference in the end between them as to what needed to be done, other, perhaps than in relation to decorations. Shortly before the commencement of the trial before me, and, so Mr. Back told me, as a result of the discussions between Mr. Powell and Mr. Cornet, further works at the Property had been commenced on behalf of the Council. Those works were not complete by the end of the trial. They are being undertaken, as I understand it, in conjunction with works to adjacent premises from which it is believed that the greater part, at least, of the continuing water penetration into the Property is occurring. The works as a whole are not expected to be completed until August of this year. Mr. Rylance told me that the Council would wish me to take into account in assessing damages in this case the works currently in progress, and would be prepared to give an undertaking in terms which I considered appropriate to complete the works which I thought necessary to a standard which I felt was requisite and over a reasonable time scale. Mrs. Vukelic also indicated that she would like the Council to give an undertaking in appropriate terms. While it is a little unusual, I see no reason in principle why the Court should not assist the parties, if that is what they wish, to resolve at least a part of the disputes between them. This judgment is prepared in the first instance as a draft. As matters were left at the conclusion of the hearing before me, Mr. Powell and Mr. Cornet were going to lend their assistance to the parties in the formulation of an appropriate undertaking. Apart from making later in this judgment a few comments which I hope will be of help to the parties in the agreement of an undertaking between them, I propose to see what the parties can achieve between themselves before making any further comments concerning an undertaking. However, if, contrary to my present feeling, no satisfactory undertaking can be agreed, that will be taken into account in the final version of this judgment.

Damages for nuisance – general principles

62. In his written skeleton argument produced at the beginning of the trial Mr. Rylance made the following submission as to the principles applicable to the assessment of damages for nuisance:-

"20. The measure of damages for nuisance is the same as for other torts, namely:-

(1) "That sum of money which will put the party 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" per Lord Blackburn in Livingstone v. Rawyards Coal Co (1880) 5 App Cas 25 at 39.

(2) "The damages are whatever loss results to the injured party as a natural consequence of the wrongful act of he defendant" per Lindley LJ in Grosvenor Hotel Co. v. Hamilton (1894) 2 QB 836 at 840; Clerk & Lindsell on Torts 18^th Edition, para. 19-26.

21 However, nuisance is essentially a tort against the claimant's interest in property and the enjoyment of that property. The primary measure of damages is thus the loss of value of that property, together with such consequential losses which are "a natural consequence of the wrongful act". Damages for personal injury are not recoverable (see further below on this). See generally Clerk & Lindsell paras. 19-26 and 19-27."

63. In the context of his submission that damages in respect of personal injury are not recoverable as a matter of law in a case of nuisance Mr. Rylance reminded me of the decision of the House of Lords in Hunter v. Canary Wharf Ltd. [1997] AC 655. He drew to my attention a number of passages in the speeches of the members of the House in which comments were made as to the nature of the damages which could be recovered.
64. Lord Goff of Chieveley at page 692C-E said:-

"It follows that, on the authorities as they stand, an action in private nuisance will only lie at the suit of a person who has a right to the land affected. Ordinarily, such a person can only sue if he has the right to exclusive possession of the land, such as a freeholder or tenant in possession, or even a licensee with exclusive possession. Exceptionally however, as Foster v. Warblington Urban District Council shows, this category may include a person in actual possession who has no right to be there, and in any event a reversioner can sue in so far his reversionary interest is affected. But a mere licensee on the land has no right to sue.

The question therefore arises whether your Lordships should be persuaded to depart from established principle, and recognise such a right in others who are no more than mere licensees on the land. At the heart of this question lies a more fundamental question, which relates to the scope of the law of private nuisance. Here I wish to draw attention to the fact that although, in the past, damages for personal injury have been recovered at least in actions of public nuisance, there is now developing a school of thought that the appropriate remedy for such claims as these should lie in our now fully developed law of negligence, and that personal injury claims should be altogether excluded from the domain of nuisance."

65. At page 695B in his speech Lord Lloyd of Berwick identified three kinds of nuisance, namely, "(1) nuisance by encroachment on a neighbour's land; (2) nuisance by direct physical injury to a neighbour's land; and (3) nuisance by interference with a neighbour's quiet enjoyment of his land." At page 696A-D Lord Lloyd commented:-

"Like, I imagine, all your Lordships, I would be in favour of modernising the law wherever this can be done. But it is one thing to modernise the law by ridding it of unnecessary technicalities; it is another thing to bring about a fundamental change in the nature and scope of a cause of action. It has been said that an actionable nuisance is incapable of exact definition. But the essence of private nuisance is easy enough to identify, and it is the same in all three classes of private nuisance, namely, interference with land or the enjoyment of land. In the case of nuisances within class (1) or (2) the measure of damages is, as I have said, the diminution in the value of the land. Exactly the same should be true of nuisances within class (3). There is no difference of principle. The effect of smoke from a neighbouring factory is to reduce the value of the land. There may be no diminution in the market value. But there will certainly be loss of amenity value so long as the nuisance lasts. If that be the right approach, then the reduction in amenity value is the same whether the land is occupied by the family man or the bachelor.

If the occupier of land suffers personal injury as a result of inhaling the smoke, he may have a cause of action in negligence. But he does not have a cause of action in nuisance for his personal injury, nor for interference with his personal enjoyment. It follows that the quantum of damages in private nuisance does not depend on the number of those enjoying the land in question. It also follows that the only persons entitled to sue for loss in amenity value of the land are the owner or the occupier with the right of exclusive possession."

66. Lord Hoffman at page 706B-H took very much the same view as Lord Lloyd. He said:-

"If this were the case, the need for the plaintiff to have an interest in land would indeed be hard to justify. The passage I have quoted from Dillon LJ ...Khorasandjian v. Bush [1993] QB 727,734) is an eloquent statement of the reasons. But the premise is quite mistaken. In the case of nuisances "productive of sensible personal discomfort," the action is not for causing discomfort to the person but, as in the case of the first category, for causing injury to the land. True it is that the land has not suffered "sensible" injury, but its utility has been diminished by the existence of the nuisance. It is for an unlawful threat to the utility of his land that the possessor or occupier is entitled to an injunction and it is for the diminution in such utility that he is entitled to compensation.

I cannot therefore agree with Stephenson LJ in Bone v. Seale [1975] 1 W.L.R. 797, 803-804 when he said that damages in an action for nuisance caused by smells from a pig farm should be fixed by analogy with damages for loss of amenity in an action for personal injury. In that case it was said that "efforts to prove diminution in the value of the property as a result of this persistent smell over the years failed". I take this to mean that it had not been shown that the property would sell for less. But diminution in capital value is not the only measure of loss. It seems to me that the value of the right to occupy a house which smells of pigs must be less than the value of the occupation of an equivalent house which does not. In the case of a transitory nuisance, the capital value of the property will seldom be reduced. But the owner or occupier is entitled to compensation for the diminution in the amenity value of the property during the period for which the nuisance persisted. To some extent this involves placing a value upon intangibles. But estate agents do this all the time. The law of damages is sufficiently flexible to be able to do justice in such a case: compare Ruxley Electronics and Construction Ltd. v. Forsyth [1996] AC 344.

There may of course be cases in which, in addition to damages for injury to his land, the owner or occupier is able to recover damages for consequential loss. He will, for example, be entitled to loss of profits which are the result of inability to use the land for the purposes of his business. Or if the land is flooded, he may also be able to recover damages for chattels or livestock lost as a result. But inconvenience, annoyance or even illness suffered by persons on land as a result of smells or dust are not damage consequential upon the injury to the land. It is rather the other way about: the injury to the amenity of the land consists in the fact that the persons upon it are liable to suffer inconvenience, annoyance or illness."

67. Lord Cooke of Thorndon, at pages 718E-719C, took a different view from the other members of the House. However, Lord Hope, at pages 724F-725A, indicated his agreement with the majority. He said:-

"The effect on that interest in land will also provide the measure of his damages, if reimbursement for the effects of the nuisance is what is being claimed, irrespective of whether the nuisance was by encroachment, direct physical injury or interference with the quiet enjoyment of the land. The cost of repairs or other remedial works is of course recoverable, if the plaintiff has required to incur that expenditure. Diminution in the value of the plaintiffs' interest, whether as owner or occupier, because the capital or letting value of the land has been affected is another relevant head of damages. When the nuisance has resulted only in loss of amenity, the measure of damages must in principle be the same. I do not see how an assessment of the damages appropriate for claims for personal injury at the instance of all those who happened to be on the land can be the right measure. If this were so, the amount recoverable would depend on the number of those affected, not the effect on the amenity of the land. At best it is no more than a guide to the true measure of liability, which is the extent to which the nuisance has impeded the comfortable enjoyment of the plaintiff's property."

68. Mrs. Vukelic was not in a position to give me much assistance as to the principles to be applied in assessing damages for nuisance. She knew what she considered her losses to be, and to the detail of those losses I shall turn a little later. However, for the present, in my judgment, although it may be possible to regard the statements of principle set out in the passages from the speeches in Hunter v. Canary Wharf Ltd. which I have quoted as to a degree obiter, they are nonetheless sound indications of the principles to be applied and I should follow them. What I derive from the relevant passages which is relevant to the assessment of damages in the present case is that, first, the underlying principle is that what the owner or occupier of land which has suffered from what in law amounts to a nuisance is entitled to by way of reparation is compensation for the injury done to the value of his or her interest in the land in question. The precise evaluation of that compensation will depend upon both the nature of the interest in the relevant land of the claimant and the nature of the nuisance. Thus if physical damage is done to land, the cost of repairing the damage is likely to provide evidence of at least the primary measure of the loss. However, if the land in question is used for business purposes and the nuisance renders the land less useful for those purposes, compensation in respect of any damage sustained by the business in the form of loss of profits, or the like, can be recovered as consequential damage. Again, if as a result of a nuisance, physical damage is caused to chattels for the time being on the land affected, the cost of repairing the chattels, or, if necessary, replacing them, can be recovered as consequential damages. However, I accept the submission of Mr. Rylance that damages in respect of personal injuries cannot be recovered as damages for nuisance.

The damages claimed in the present action

69. It is, perhaps, important to remind oneself that in the present case what is principally complained of is physical damage to the Property as a result of water penetration from adjacent areas of the Building for which the Council is responsible. The primary type of loss which one would expect an occupier of the Property to have suffered as a result of the nuisance is thus the cost of repairing the Property to eliminate the consequences of the water penetration. In fact, conceptually in performance of her duty to mitigate her loss, Mrs. Vukelic has permitted the Council at its own expense to undertake works which now, at least, are intended to remedy both the sources of water penetration and the consequences within the Property. If, in the course of taking reasonable steps to mitigate her loss – in this case by allowing the Council to undertake works to remedy the nuisance – Mrs. Vukelic sustained additional losses, then it would seem that such losses are recoverable. In The World Beauty [1970] P 144 at page 156 Winn LJ said that:-

"… it is implicit in the principle, that if mitigating steps are reasonably taken and additional loss or damage results notwithstanding the reasonable decision to take those steps, then that will be in addition to the recoverable damage and not a set-off against the amount of it."

70. After judgment was entered in this action for damages to be assessed Mrs. Vukelic was asked to give further information under CPR Part 18 in relation to the damages claims which she was pursuing. The information which she gave indicated that she was seeking compensation for the impact of the state of the Property on her ability to continue her restaurant business in it. She divided her claim into a number of elements, including loss of salary, loss of profit, loss of goodwill and loss of future business opportunity. Some criticism was made by Mr. Rylance in his closing submissions of how the claim had been broken down. He drew attention to apparent duplication of some elements and to the lack of evidence, in his submission, to support the figures claimed. For the purposes of this judgment I think that it is enough at this stage, before coming to consider the evidence relied upon by Mrs. Vukelic in detail, to say that it was plain from looking in the round at how she put her claim that she was contending that from at least the date as from which damages fell to be assessed in the light of my order of 8 July 2002 she had not been able to carry on her restaurant business and she wanted to be compensated in respect of that.
71. Associated with the main claim in respect of the impact upon the restaurant business were claims which conceptually were really claims in respect of additional losses which Mrs. Vukelic contended she had suffered as a result of seeking to mitigate her loss by permitting the Council to undertake works in the Property. These were claims for compensation for damage done to kitchen equipment which it was said had not been properly protected during the carrying out of the works and for compensation for damage to restaurant accessories which had been carelessly treated during the execution of the works.
72. Mrs. Vukelic also claimed damages, as she put it in the further information which she provided:-

"in respect of non-pecuniary damage suffered as a result of excessive mental stress, distress, anxiety, hurt and loss of reputation."

73. The final element in Mrs. Vukelic's claim for damages was for exemplary damages.
74. I shall consider each of the elements in Mrs. Vukelic's claims in turn.

Compensation in respect of impact upon the restaurant business

75. Mrs. Vukelic relied in support of this element in her claims upon the material supplied by Messrs. Grant Thornton under cover of Mr. O'Connell's letters dated, respectively, 11 September 1996 and 6 February 1997, to which I have already referred. In her affidavit sworn on 30 January 2003, at paragraph 5, she said:-

"I took £15,000 net a year prior to 1992. My lifestyle was comfortable, good clothes; I went to the hairdressers twice a week – on Mondays and Fridays. I went to a beautician once a week. My husband and I went to a concert once a week and went to see a ballet once a month. We took two three weeks holidays abroad and a short break of seven days. I went to Yugoslavia every year to visit my mother who was very proud of me and of what I had achieved. I was very happy. I had many friends and I was respected in the community. My reputation was very good. I gave to charities particularly those dealing with children and the homeless. Every three years we bought new cars and life was beautiful. My decision to flee from Communism in 1962 was a good one. I have achieved independence through hard work and savings. I did not think anything could go wrong, the business was thriving, customers were people with money who were good spenders. My restaurant was used by BBC TV to shoot television plays and an episode of a serial was made there. In 1997, the BBC was going to use my restaurant again for a television programme. These brought customers as far afield as Hampstead, BBC Bush House W.C.1 and Highgate. In short business was very good. I had good Accountants to look after the tax, PAYE – Grant Thornton. My husband and I were a success story in business in the West of London W12 and what a beautiful life and feeling it was! I was an achiever and my mental outlook was success-orientated underpinned by hard work providing quality food for my customers."

76. At paragraph 11 of her affidavit sworn on 30 January 2003 Mrs. Vukelic deposed that:-

"In 1995 and 1996 I was just holding on to the premises and doing very little trade because customers stayed away because of the damp and decrepit condition of the premises. Many of them said so quite openly. In the autumn of 1996, the Council advised me that they were going to carry out repair works to my premises and asked me to close the restaurant. The repairs were to commence in February 1997. … I put a notice on the door that I had closed, for renovations and refurbishment, for three months. I was pleased that at last the damage to my restaurant was going to be made good. It gave me hope."

I accept that evidence, and the evidence which Mrs. Vukelic gave in paragraph 5 of her affidavit sworn on 30 January 2003.

77. In paragraph 13 of her affidavit sworn on 30 January 2003 Mrs. Vukelic spoke of having to sell her jewellery and other possessions, and to borrow money, to keep going. In the context in which that paragraph is to be found in the affidavit it seems to describe events in 1997. That would be consistent with Mrs. Vukelic putting up a notice in February 1997 that she was going to be closed for three months for renovations and refurbishment. I accept the evidence in paragraph 13 of the affidavit also.
78. It was the duty of Mr. Rylance, on behalf of the Council, to seek to challenge the accuracy of Mrs. Vukelic's account of how successful her business had been before the problems with water penetration had caused her to cease the business. I should make entirely clear that throughout his dealings with Mrs. Vukelic and those assisting her Mr. Rylance showed her great courtesy and consideration, so far as his instructions from the Council permitted, as, indeed, did Miss Bond. However, Mr. Rylance's instructions from his client compelled him, entirely properly from his professional point of view, to pursue a number of matters which were, as it seemed to me, unnecessarily hurtful and distressing to Mrs. Vukelic. In particular, Mr. Rylance suggested that the quality of the restaurant was never high, that Mrs. Vukelic's standards of hygiene were low, that the restaurant area was dirty, as could be seen from a particular photograph, in his submission, and the kitchen equipment was antiquated and for that reason unsuitable. I am entirely satisfied on the evidence that none of these criticisms was justified. As I have already said, Mrs. Vukelic specialised in offering Continental cuisine in her restaurant, that no doubt reflecting her own origins. The Property is close to the BBC Television Centre, and her evidence, which I accept, is that her patrons included many people from the BBC, some of them nationally known journalists and presenters. It is undoubtedly the case that the frontage of the restaurant, at least after it lost a fascia indicating the name and nature of the business, would not have encouraged passing trade, but Mrs. Vukelic, I find, enjoyed a good reputation which was largely passed on by recommendation. I am satisfied that Mrs. Vukelic offered good quality fare at reasonable prices to a discerning clientele. The Grant Thornton figures as to the turnover of the business up to the year ending 31 July 1992 indicate a rising trend throughout the 1980s and into the 1990s, with a blip in the year Mrs. Vukelic's husband died. Although, on instructions, Mr. Rylance sought to cast doubt on the accuracy of the figures as to turnover, it seems to me that there is no reason to lack confidence in the correctness of those figures. Mr. O'Connell in his letter dated 11 September 1996 indicated that those figures had been extracted from accounts which had been prepared by Messrs. Grant Thornton. I cannot see any justification for doubting the statement as to the source of the figures for turnover or for supposing that the exercise of abstraction of the figures would not have been carried out competently. On those figures, and accepting also as accurate, as I do, the indication from Messrs. Grant Thornton that on average gross profit amounted to 60% of turnover in the period 1983 to 1992, the income from the restaurant was ample to provide Mrs. Vukelic with drawings of £15,000, and I accept her evidence that it did. Not only does the steadily rising turnover from 1984 to 1992 indicate a successful business, but throughout this period the restaurant would have been the subject of periodic inspection by the Council's own Environmental Protection Officer. I have referred to two reports from such an officer in 1998 and 1999. No copies of any other reports were put before me and there was in fact no evidence that on any occasion any Environmental Protection Officer found any cause for concern either as to the standards of hygiene in the restaurant or the kitchen at the Property, or as to the appropriateness or quality of maintenance of any of the equipment used. I accept the evidence of Mrs. Vukelic that the equipment in her restaurant was, immediately prior to the commencement of the works of Contrad in December 1999, in good working order and condition.
79. In the light of the evidence to which I have so far referred on which Mrs. Vukelic relied in support of her claim for damages in respect of the impact upon her business of the nuisance for which the Council was responsible, I find that, up to the year ending 31 July 1992, the restaurant was sufficiently successful for her to be able to generate enough income to pay her rent to the Council of £13,000 per annum and to permit her to draw as profits at least £15,000 per annum. In other words, the value to Mrs. Vukelic at that time of being able to use the Property for the purposes of her restaurant business was not less than £28,000 per annum.
80. In his closing submissions Mr. Rylance suggested that it was double counting to treat the value to Mrs. Vukelic of the ability to carry on the restaurant business as including not merely a figure for net profit, but also the amount of the rent. In my judgment whether Mr. Rylance is correct in his suggestion or not depends upon why one wishes to know what was the value to Mrs. Vukelic of the opportunity to carry on her business. If she had been put out of the Property and had no continuing obligations in respect of it, no doubt the loss which she had suffered in consequence would just be the net value to her of the business of which she had been deprived. However, in the present case Mrs. Vukelic continues as a tenant of the Property and there is a counterclaim against her for the amounts which have fallen due as rent since 25 December 1995, together with interest thereon. If and insofar as, but for the effect upon her business of the nuisance for which the Council at length accepted responsibility on 8 July 2002, she would have generated income out of which she could have paid rent, and in the event did not generate that income, so that she has incurred increased liabilities, it does seem to me that the amount of the liabilities which she has incurred which she would otherwise have been able to discharge represents an addition to her loss of net profit. It would, of course, be otherwise if her liability to pay rent had come to an end at the same time as her ability to carry on her business.
81. A recurring theme, on instructions, in the submissions of Mr. Rylance, which in this respect echoed the oral evidence of Mr. Back, was that the Council had always been anxious to compensate Mrs. Vukelic in respect of her losses, but had been frustrated in its good intentions by the failure of Mrs. Vukelic to help herself by providing reliable financial information, such as audited accounts, on the basis of which an assessment of her losses could be made. That suggestion is a travesty of the true position. Until shortly before it submitted to judgment on 8 July 2002, in fact until it offered to submit to judgment on 15 May 2002, the Council had always maintained in this action that it was not liable to Mrs. Vukelic. Not only that, but it had put forward intimidating counterclaims not only in respect of rent, but also, incredibly, for a contribution to its costs of seeking to remedy the very nuisance which is the foundation of Mrs. Vukelic's claims in this action. Before the action was commenced the most that the Council had done was to indicate that it was prepared to consider claims for compensation. Such consideration as was given resulted in a rather contemptuous rejection of the claim on grounds that causation of loss had not been demonstrated. That position was first communicated to Mrs. Vukelic in Miss Eziefula's letter dated 2 April 1997. It did not alter thereafter. Mr. Rylance, for the purposes of this action, sought production from Mrs. Vukelic of accounts relating to her business, and pressed her for those documents. From his professional point of view, and given that he must have had instructions to do that, no criticism can properly be made of the course he took. However, his client knew perfectly well, or would have if someone had read the file, and in particular the letter dated 19 September 1996 written by Mrs. Yovichic on behalf of Mrs. Vukelic, that no accounts had been finalised since those for the year ending 31 July 1992 because Mrs. Vukelic could not afford to have that work done. In the circumstances, continuing to seek production of accounts which the Council ought to have known did not exist, and criticising Mrs. Vukelic for not producing that which did not exist, really amounted to harassing her needlessly.
82. For present purposes it seems to me that the turnover figures produced by Messrs. Grant Thornton on a preliminary review of the material which Mrs. Vukelic had given them in relation to the years ending on 31 July 1993, 1994, 1995 and 1996 are sufficiently accurate to enable a realistic impression to be gained of how the restaurant business fared in the years which they concern. There was a significant fall in turnover as between the year ending 31 July 1992 and that ending 31 July 1993, then a steady turnover for a couple of years, followed by a further fall of the order of 11%. In my judgment one can also derive from the fact that, in contrast to the position in earlier years, Messrs. Grant Thornton did not finalise accounts for years after that ending 31 July 1992 even where they did preliminary work, that the turnover of the business was not thought likely to sustain the relevant expense. A further indicator of decline in the business is the non-payment of rent after that falling due on 29 September 1995. It is correct that Mrs. Vukelic on the evidence had been accustomed from time to time prior to 25 December 1995 to withhold rent as a protest against the failure of the Council to tackle the problem of water ingress into the Property. However, up to that time she had always paid eventually.
83. Mrs. Vukelic told me that after the year ending 31 July 1996 she remained theoretically open for business but in fact did little, if any, trade. It was not suggested to her that she had a thriving business in the years ending 31 July 1997, 31 July 1998 and 31 July 1999. As I have indicated, the whole thrust of her cross-examination was directed to how poorly her business performed. It was accepted on behalf of the Council that Mrs. Vukelic had no business at all after she closed in response to Mr. Back's letter dated 17 November 1999, to which I have already referred. I am satisfied, having regard in particular to the reports of Mr. Black, the Environmental Protection Officer, dated 19 March 1998 and 20 October 1999, that Mrs. Vukelic did not actually close down the restaurant until she received Mr. Back's letter dated 17 November 1999, but that in the period after the year ending 31 July 1996 the volume of business transacted in the restaurant was small and diminished over the period up to 17 November 1999. In the light of the evidence, which I accept, that Mrs. Vukelic had to sell possessions and to borrow to keep going in and after 1997, I find that the restaurant business did not generate sufficient turnover to produce a gross profit after the year ending 31 July 1996.
84. On instructions Mr. Rylance concentrated a lot of attention upon the issue whether, acting reasonably in performance of her duty to mitigate her loss, Mrs. Vukelic ought to have tried to reopen her restaurant after she was told by Mr. Back in his letter dated 25 January 2001 that works were complete and she could recommence trading. Mr. Rylance accepted, as it seems to me rightly, that the obligation of Mrs. Vukelic in relation to mitigation was only to act reasonably. I think that he also accepted, but if not I hold, that the burden of showing that Mrs. Vukelic did not act reasonably to mitigate her loss was on the Council. Mr. Rylance submitted that the reason, or at least the principal reason, why Mrs. Vukelic did not seek to reopen the restaurant immediately after 25 January 2001, was because of her misguided belief, evidenced by her letter dated 21 February 2001, that the Council was legally bound to her to carry out the works set out in the specification which formed part of the contract between the Council and Contrad. He also submitted that the question whether Mrs. Vukelic acted reasonably fell to be answered by reference to how matters seemed in January 2001, not by reference to how they are now known to have been.
85. In my judgment, in considering the question of what Mrs. Vukelic, acting reasonably, could be expected to have done in January 2001 and thereafter it is necessary to have regard to the history of the dealings between Mrs. Vukelic and the Council in relation to the issue of water penetration into the Property over the entire span of the disputes about it. The conduct of the Council over the period from 1984, but in particular from about July 1994, demonstrated institutionalised lethargy and a degree of insensitivity to the plight of Mrs. Vukelic which was tantamount to callous indifference. Although the need for works to be carried out to tackle the problems of water penetration was well-known to the Council by July 1994, and had been for years, nothing at all was done even to appear to address the matter until about May 1995. Nothing effective happened in 1995, but Mrs. Vukelic was then given an indication that works would be carried out by April 1996. That date passed with no explanation as to why nothing had happened. In the summer of 1996 there was discussion of work being done starting in January 1997. Nothing happened in January 1997, apparently, although Mrs. Vukelic did not know it at the time, because there was insufficient allowance in the Council's budget. In April 1997 Mrs. Vukelic's claim for compensation was rejected. 1997 drifted into 1998, and then in about September 1998, although again Mrs. Vukelic did not know it at the time, the Council decided to delay executing the necessary repairs because it was hoping the sell the Property and the problem. There were then the further delays until the work actually started in about December 1999. Against this long history of delay, one might suppose that once work actually began some effort would be made to have it completed as quickly as possible and to a good standard. Presumably to reassure her as to what was intended Mrs. Vukelic had been provided with a copy of the specification of the works which Contrad was supposed to carry out. Instead of the twelve weeks which Mr. Back indicated in his letter dated 17 November 1999 the works were expected to take, they apparently took nearly fifteen months. The reasons the work took so long were dealt with in the evidence of Mr. Seignot. I found him to be another unimpressive witness. He seemed to have no interest in making any real effort to have the works completed as soon as possible, notwithstanding that he knew that until they had been completed Mrs. Vukelic could not resume occupation of the Property. He took little interest in keeping her informed of progress or in consulting her about aspects of the work, such as the positioning of electric power points when the Property was rewired, in which, had he thought about it, he would have realised that she had an interest. Mrs. Vukelic did of course know in January 2001 that her wishes in respect of the type of ceiling to replace the existing wooden lattice had been completely disregarded. She could see when she went to the Property that its condition was substantially as set out in her letter dated 21 February 2001, which, insofar as it describes the state of the Property in February 2001, I am satisfied is for all material purposes accurate. Indeed a number of the matters identified in that letter, such as the damage to the bar counter in the restaurant, the patching of wallpaper in the restaurant area, and the non-removal of redundant pipework were evident upon the occasion of my view. It would have been clear to her, as I find was the case, that no meaningful efforts had been made to protect the existing equipment in the Property. All of this would have conveyed to any reasonable person, in my judgment, that such work as had been done had been done to the lowest possible standard which could arguably be said to be adequate. That, coupled with the fact that there was, as I find, and as recorded in the letter dated 21 February 2001, still substantial dampness in the rear of the Property, means, it seems to me, that there was every reason for any reasonable person to suppose that the work had not been done properly and the underlying problems had not been remedied. That has, of course, proved to be the case. In the result, therefore, I reject the suggestion that Mrs. Vukelic ought reasonably to have attempted to restart her restaurant business in January 2001, working round, as necessary, as Mr. Cornet suggested, any problems and utilising self-help. On the contrary, in my judgment it was entirely reasonable of Mrs. Vukelic to decide that she would not continue to seek to battle against the odds as she had before the works began, but wait until the works which needed to be undertaken to remedy the problems of water penetration and the consequences thereof had been undertaken properly. On the evidence given before me that state of affairs is unlikely to be achieved until about August 2003.
86. In the light of the foregoing findings I hold that from 17 November 1999 until, say, 17 August 2003, Mrs. Vukelic has been, and will be, totally unable to seek to operate her restaurant business in the Property as a result of the nuisances for which the Council belatedly accepted responsibility. Doing the best I can, I find that it will be six months after she is able to recommence her business before it will be re-established at the sort of level of turnover which it would have had but for the nuisances. That may well be an underestimate, but there was no real evidence before me about how long it would take to re-establish the business. Mr. Rylance accepted that it would take some time. He suggested three months. It is really because I am satisfied that that would be too short a time, as much as for any other reason, that I take a period of six months. I am satisfied that a period of that length is, if anything, generous to the Council. For the reasons set out earlier in this judgment, I am satisfied that the restaurant did not generate any gross profit after 18 August 1997, the date from which damages fall to be assessed in the light of the judgment entered on 8 July 2002. Doing the best I can, I find that the loss of contribution from the business to Mrs. Vukelic's ability to pay her rent for the Property and the loss of net profit which she would have earned but for the nuisance for which the Council has accepted liability from 18 August 1997 together run at a rate of at least £28,000 per annum until 17 August 2003, a total of six years. Thereafter over a period of six months I find that the turnover of the restaurant will progress from nil, at the time it reopens, to the level at which it can enable Mrs. Vukelic both to pay her rent and draw an income of £15,000 per annum as net profit, after a period of six months. It seems appropriate to take the loss for this period of six months as a figure of £7,000, that being half of the rate of the previous annual loss for half of a year, to reflect the progression from nil turnover to nil loss. I therefore assess damages in respect of this element of claim at £175,000, being six years at £28,000 per annum, £168,000, plus £7,000.
87. By the date upon which this judgment is handed down five and a half years of the loss of income in respect of which the damages calculated as set out in the preceding paragraph are awarded will have elapsed. Mr. Rylance in his closing submissions very properly accepted that Mrs. Vukelic is entitled to interest on any damages awarded for past loss. He made no submissions as to the rate at which it might be appropriate to award interest. Although I only have power to award simple, not compound, interest, it seems to me that it is appropriate to take as the rate a rate based upon that which is payable by Mrs. Vukelic under the Lease by virtue of clause 5(10), that is to say 5% over the base rate for the time being of the Council's bankers. If that is a fair rate for Mrs. Vukelic to pay to the Council on money she owes it, I do not see how the Council can complain if that is the rate at which it has to pay interest to her on money which it owes. On the figures put before me as to the calculation of the sum claimed by way of interest by the Council on arrears of rent, the rate taken from August 1997 until 29 September 1997 was 11.75%, thereafter it was 12.25% for about six months, 12.5% for the next six months or so, before falling back progressively to 11% by January 1999. For most of 1999 the rate fluctuated between 10.5% and 10%. For virtually the whole of 2000 the rate taken was 11%. In 2001 the rate fell progressively from 10.75% to 9%, at which it has continued until almost the date upon which this judgment will be handed down. I propose to take what seems to be a broad weighted average of these rates, 10.75%, and to apply it to half of the loss over the period 18 August 1997 to 18 February 2003, to reflect the fact that the loss occurred progressively over the period. The result is a figure of £8,277.50 by way of interest.

Compensation in respect of damage to restaurant equipment and accessories

88. There was a degree of confusion in relation to the claim made by Mrs. Vukelic in relation to damage sustained by equipment in the restaurant which was left unprotected during the execution of the works between December 1999 and January 2001. I accept her evidence that the equipment was in fact left unprotected. The contrary was not suggested. I accept that the unprotected equipment suffered damage, principally from rusting, and that it all needs to be replaced, apart from sinks, which I am satisfied can be cleaned and brought back into use. There was no real dispute that the other equipment needed to be replaced. The confusion arose because Mrs. Vukelic relied as evidence of the cost of replacement upon a quotation which she had obtained from a company called Hansens Kitchen Equipment Ltd. dated 30 August 2002 ("the Hansens Quotation"). The Hansens Quotation was not, it seems, obtained specifically for the purposes of the litigation and it included quotations for items which had not previously been in the Property. Initially there was a certain lack of clarity as to which items in the Hansens Quotation Mrs. Vukelic was seeking to make a claim for because she did not specifically exclude any of the items listed in it. However, it was clear from the view which I attended what equipment Mrs. Vukelic had had in the restaurant which had been damaged and she was entirely straightforward about it in her cross-examination. Moreover, there was clear evidence as to what equipment had been in the restaurant in January 1997 in the form of the inventory set out in the removal quotation dated 20 January 1997 from Mastercross Ltd., the material part of which I have set out earlier in this judgment. Mr. Rylance, on instructions, sought to suggest that Mrs. Vukelic had set out deliberately to exaggerate this element of her claim. I am entirely satisfied that there is no substance in that suggestion.
89. Mrs. Shanthikumari Uthayakumar, who seems generally to be known as Mrs. Shanti Kumar, was called as an expert witness in relation to kitchen equipment on behalf of the Council. Mrs. Kumar carries on business through a company called Hygiene & Safety Management Systems Ltd., and it seemed to me from her evidence that the name of her company gives a more reliable indication of her true expertise than to describe her as an expert in kitchen equipment. In her report dated 21 January 2003 prepared for the purposes of this action she set out her academic and professional qualifications as a Bachelor of Science degree in bio-analytical science, a Master of Science degree in environmental health, a post-graduate diploma in analytical chemistry, membership of the Chartered Institute of Environmental Health, membership of the Royal Institute of Public Health and membership of the Institute of Occupational Safety and Health. Mrs. Kumar agreed that the following items of equipment were in the restaurant and needed to be replaced:-

i) Asco two door refrigerator with a compressor

ii) Chest freezer with stainless steel hinged lid and white exterior

iii) Heavy duty 6 burner oven

iv) Cast iron griddle

v) Oliver Tons single basket fryer

vi) Automatic espresso machine

vii) Crypto Peerless potato chipper

viii) Waste disposal unit

Mrs. Kumar in her report did not initially accept that the espresso machine needed to be replaced, but she did accept that in her oral evidence. She gave prices in her report for replacement of those items which she accepted needed to be replaced, and indicated that she had obtained those prices from a company called Court Catering Equipment Ltd. She did not suggest that any of the equipment which needed to be replaced could be replaced with second-hand, rather than new, equipment. The main thrust of Mrs. Kumar's oral evidence was that Mrs. Vukelic's restaurant equipment needed to be replaced not because of damage sustained through want of protection during the execution of building works, but because it was old. She made the frankly laughable suggestion that the rust plainly visible for all to see on the restaurant equipment had nothing to do with it having been left unprotected in damp conditions, but was entirely referable to it being old. She also contended that no damage would have been sustained from rust if only the equipment had been washed with detergent before the works began. I have no hesitation in rejecting the evidence of Mrs. Kumar as to the causes of the damage to the restaurant equipment which she accepted needed to be replaced or as to how such damage might have been prevented. She was unable to explain how, if the equipment had been as bad as she imagined before the works even began, this had not been remarked by an Environmental Protection Officer on one of the periodic visits made by such officers of the Council.

90. As I have said, I accept the evidence of Mrs. Vukelic that all relevant items of equipment were in good working order before the commencement of the works in December 1999 and that their present condition is entirely the result of them not having been protected during the execution of the works. I consider that the Hansens Quotation, being a quotation given apparently for a genuine commercial purpose, that is to say in the real expectation of business resulting, is more accurate an indication of the cost of replacing the various items than the rather round figures derived by enquiry by Mrs. Kumar. Except with regard to the sinks, in respect of which I accept the evidence of Mrs. Kumar, I accept the evidence of Mrs. Vukelic as to the items which need to be replaced, which are rather more extensive than those which Mrs. Kumar accepted, and therefore I allow at the full price quoted in the Hansens Quotation the items numbered in that quotation as 1, 2, 3, 4, 6, 7, 11, 12, 13, 14, 15, 17, 18 and 19. Mrs. Vukelic's evidence in relation to item 13, which as quoted was a mobile hot cupboard, was that her previous cupboard was fixed, but there was no evidence of any difference in price by reason of mobility. Item 14 was an undercounter wine cooler, and Mrs. Vukelic's evidence was that previously she had had a refrigerator. What, if any, the difference between a wine cooler and a refrigerator may be was not explored. They seem to me to be essentially the same. Mrs. Vukelic's evidence in relation to item 1, which was a large refrigerator to replace a built-in refrigerator which I saw, was that she was confident that as that refrigerator, which is too heavy to be conveniently moved, was against the wall of the kitchen through which damp has continued to penetrate notwithstanding the execution of the works by Contrad, it had been affected by rust to the rear. That strikes me as just plain common sense. In the result in respect of the items of restaurant equipment to which I have referred I assess the damages payable by the Council to Mrs. Vukelic at £23,438.82 for equipment, to which a proportion of the quoted installation charge needs to be added. The quoted installation charge was £3,601. On the assumption that the installation charge was proportional to the value of the equipment, which is unlikely to be correct, but which is probably a favourable assumption from the point of view of the Council, the appropriate proportion of the quoted installation charge to add is 63%, which amounts to £2,268.63. The total award in respect of damage to restaurant equipment is therefore £25,707.45. As no part of that sum has yet been expended there is no question of awarding interest on that figure.
91. Mrs. Vukelic also made a claim in respect of what she called restaurant accessories, by which she meant china, cutlery, glasses, frying pans and the like. The total sum claimed was £6,232. The individual items included in the calculation were put at very modest prices and there was no suggestion that the claim as a claim was in any way overpriced. What Mr. Rylance did contend, on instructions, was that the claim had not been proved. He pointed to the fact that, as I saw on the view, there were cardboard boxes in the Property which contained at least some part of the previous stocks of china, cutlery, glasses and so forth, of the restaurant, and it was incumbent upon Mrs. Vukelic, in order to prove this element of claim, to go through the boxes and find out what was there, as she could only properly claim for what had been lost or damaged. Mrs. Vukelic's response was that in order to operate the restaurant properly one needed to have matching items of china, cutlery, glass and so forth, so if any significant part of the previous stocks had been lost or damaged, the whole would have to be replaced. I accept that answer to the point. It was obvious from the condition of the boxes which I saw, even without looking inside them, that significant losses and damage were likely to have occurred. Some boxes were open and appeared to be empty of contents. Other boxes appeared to have been crushed. None was in an orderly stack or collected together in such a way as to suggest that care had been taken in moving them. They all looked as if they had just been thrown around to suit the convenience of workmen. In the result I find this item of claim proved in the sum claimed, £6,232. Again, however, as no expense in relation to this item of claim has yet been incurred, there is no question of awarding interest.

The personal injury claim

92. I have already indicated that I accept the submission of Mr. Rylance that in assessing damages for nuisance no sum can be recovered in respect of personal injury. While I accept that submission, the fact that it was made, on instructions, is bound to cause anyone with knowledge of the circumstances of this action considerable unease. On 8 July 2002, as I have recorded, I was persuaded that the effect of Limitation Act 1980 s.11 was that because there was a claim for damages for personal injury the limitation period applicable to all of Mrs. Vukelic's claims was three years, rather than the six years which would otherwise have applied. The taking of the point that damages are not recoverable in nuisance in respect of personal injury anyway thus might lead the cynical to suppose that the Council adopted a Machivellian plan to seek to reduce the damages payable to Mrs. Vukelic along these lines: because you are claiming damages for personal injury you are only able to claim any damages in respect of the three years before the issue of the claim form instead of in respect of six, so we submit to judgment for damages to be assessed for those three years, but you cannot have damages for personal injury anyway, so you would in fact have been better off never claiming damages for personal injury at all.
93. In fact I am quite satisfied on the evidence put before me that Mrs. Vukelic has not suffered any personal injury of a type in respect of which the law can give compensation. From an objective point of view Mrs. Vukelic has been treated perfectly disgracefully by the Council over many years. Understandably that has caused her great distress and worry. Those are normal human reactions to the abnormal situation in which she found herself. In Behrens v. Bertram Mills Circus Ltd. [1957] 2 QB 1 at page 28 Devlin J pointed out that there is a

"general principle embedded in the common law that mental suffering caused by grief, fear, anguish and the like is not assessable."

Mr. Rylance drew to my attention that in McLoughlin v. O'Brian [1983] AC 410 at page 431 Lord Bridge of Harwich had said something rather similar:-

"The common law gives no damages for the emotional distress which any normal person experiences when someone he loves is killed or injured. Anxiety and depression are normal human emotions."

94. In support of her claim for damages for personal injuries Mrs. Vukelic put before me a report dated 17 December 2002 from Dr. Stanford Bourne, a distinguished psychiatrist. In his report Dr. Bourne summarised his conclusions in this way:-

"An adjustment disorder, a depressive reaction due to her life situation, especially due to her feelings that her restaurant which was her pride and her livelihood have been destroyed by forces she could not control."

Having given in his report an account of Mrs. Vukelic's history and symptoms he set out a "Preliminary summary of symptoms", which was:-

"Gloom, anxiety, anger, shame. Some suicidal thoughts at times. Sleeps badly."

That led him to his diagnosis, which was:-

"… a mixed anxiety and depressive reaction, an adjustment disorder due to stress. "

95. Mrs. Vukelic was also seen by Dr. Michael Browne, who is another distinguished psychiatrist. Dr. Browne prepared a report dated 28 January 2003 which was put in evidence. In that report Dr. Browne set out Mrs. Vukelic's history and the results of his examination of her. In the "Opinion" section of his report Dr. Browne included these comments:-

"Mrs. Vukelic has had a prolonged period of perceived stress and aggravation with regard to work at her restaurant which she blames on the Council's failure to meet their commitments in this respect…

In my opinion Mrs. Vukelic's mental state is one mainly of anger at perceived wrongs which manifests itself in recurring depressive emotionalism. I believe that she is not mentally ill in the clinical sense though she is undoubtedly an unhappy person….

Dr. Bourne has made a diagnosis of adjustment disorder taken from the ICD 10 classification. In the ICD 10 F43.2 the description of adjustment disorder states "a subjective distress and emotional disturbance usually interfering with social functioning and performance and arising in the period of adaptation to a significant life change or the consequences of a stressful life event. The stressor may have affected the integrity of the individual's social network through bereavement or separation experiences.

This description seems to me to be closely akin to the earlier concept of reactive depression where an individual reacted to a stressful situation in a manner inconsistent with that of his fears ie he took it badly in lay terms."

In the "Conclusion" section of his report Dr. Browne said:-

"I do not believe that her present mental state or that over the prolonged period with which we are dealing is indicative of mental illness, ie an adjustment disorder as suggested by Dr. Bourne. I repeat that her present mental state is consistent with the reaction of any normal individual to the stresses which she perceives to have been inflicted on her.

Whilst much sympathy may be extended to Mrs. Vukelic in her present predicament I do not consider her to be mentally ill. Her condition is one of distress and anger at her perceived loss, no different from that of others who have suffered losses in business or in other circumstances."

96. Neither Dr. Bourne nor Dr. Browne gave oral evidence before me. Each described Mrs. Vukelic's symptoms in a very similar way. Where they differed was simply on the question whether what they both saw amounted to mental illness or a normal reaction to an abnormal situation. Mrs. Vukelic herself told me that she was not mentally ill. I agree with her. In fact it is a tribute to her strength of character that she has endured as well as she has the frustrations, worry and anger caused by the outrageous conduct of the Council over many years. Although she has from time to time become upset, always for readily understandable reasons, during the conduct of this action insofar as I have been concerned with it, she has always conducted herself with great dignity and moderation, given the appalling circumstances created for her by the Council and its prolonged inactivity and manifest lack of concern for her situation. She told me that the Council had ruined her life. I do not think that that is an overstatement. However, the policy of the law, to which I have to give effect, is that no compensation can be awarded for the feelings of anger, frustration, worry and so forth which are normal human reactions to abnormal situations, or for the inevitable stress and strain of being involved in legal proceedings.
97. In the result there can be no award of damages for personal injury.

Exemplary damages

98. It will be apparent from what I have said already in this judgment that I take a very dim view of the performance of the Council over the matters which have led up to the events in respect of which I have to assess damages, and over those events themselves. It is also right to say that the Council has not exactly set out to ingratiate itself with the Court or with Mrs. Vukelic in relation to how it has conducted this action. I have already mentioned the harrying of Mrs. Vukelic to produce material which the Council should have known perfectly well that she did not have and could not afford to obtain. I have also mentioned the question of the limitation defence. The Council is, of course, the custodian of the public purse in the area for which it is responsible. It must obviously have regard to what resources are available to it and to what is the best use of those resources. No doubt for that reason it was thought appropriate to raise a defence of limitation to the claims of Mrs. Vukelic. Limitation is a defence which it is open to a defendant to raise, but he does not have to if he chooses not to. If the Council Tax payers of the London Borough of Hammersmith and Fulham were aware of the circumstances of this case it may well be that a majority of them would feel that paying Mrs. Vukelic compensation for the full period over which she has suffered would not be an inappropriate use of their funds. However that may be, a limitation defence has been raised and it is a perfectly proper defence to raise.
99. In all the circumstances of this case it is easy to understand why the thoughts of Mrs. Vukelic and those helping her turned to the possibility of claiming exemplary damages. However, Mr. Rylance very properly reminded me that the circumstances in which exemplary damages can be awarded were considered by the House of Lords in Rookes v. Barnard [1964] AC 1129 and were held to be very limited. For practical purposes there are two circumstances in which exemplary damages can be awarded, namely in the case of "oppressive, arbitrary or unconstitutional action by servants of the government" or in the case in which "the defendant's conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff" – see per Lord Devlin in Rookes v. Barnard at page 1226. Mr. Rylance submitted that in the present case there could be no question of the Council calculating that it would make a profit which could exceed the amount of any compensation payable to Mrs. Vukelic. He further submitted that, so far as the first of the categories in which exemplary damages can be awarded is concerned, the focus is abuse of power, so that mere negligence, even if sustained over a long period, is not enough.
100. I accept the submissions of Mr. Rylance in relation to exemplary damages. Moreover, it does not seem to me that the conduct of the Council in this case, lamentable as it was, amounted to anything like targeted malice towards Mrs. Vukelic. It was really want of motivation on the part of the Council officers involved to seek to deal with the problems which Mrs. Vukelic was facing and, at times, especially in the case of Mr. Back, a lack of ordinary human compassion. In the light of authority binding upon me that does not admit of any award of exemplary damages, and I make none.

The counterclaim

101. Whilst I have every sympathy with Mrs. Vukelic's opinion that it is not fair in the circumstances for the Council to insist that she pay her rent, as a matter of law, in my judgment, the Council is entitled to the rent which it claims and to the interest which it also seeks. There is no dispute that the sum due as at 3 February 2003 was £126,264.20. The figures in the schedule of rent and interest to that date which was put before me were not in a form which makes easy the calculation of a daily rate for interest since 3 February 2003, but the figure seems to be of the order of £22. On the assumption that that daily rate is sufficiently accurate for present purposes, as at the date upon which this judgment is handed down a further 15 days interest, amounting to £330, will be due. Mrs. Vukelic is, however, entitled to set off against her liability to pay rent and interest the sums which I have awarded her as damages and interest. Those sums total £215,216.95. There is thus a net balance in her favour of £88,622.75. I will hear argument as to the precise form of order which should be made to give effect to my judgment, but at least in practical terms it will be that the Council should pay to Mrs. Vukelic the sum of £88,622.75.

The undertaking to carry out works

102. In advance of hearing how the discussions between the parties have progressed in relation to an undertaking to be offered on behalf of the Council it may be helpful to comment that the point taken by Mr. Cornet that Mrs. Vukelic has covenanted under the Lease to undertake internal repairs and decorations, so that the Council has no responsibility for such matters other than in respect of redecoration of the immediate areas in which repair work has been carried out, may be productive of misunderstanding. It seems to me that the correct approach to the question what decorative works should the Council undertake is to remind oneself that, where the Council has caused works to be done to remedy the nuisances which it has admitted, it is likely that there will be a consequent need to redecorate. The need to redecorate in such circumstances is not a need to perform Mrs. Vukelic's obligations under the Lease, but a need to remedy the effects of the nuisance for which the Council is liable. If the need to redecorate arises in this way, then the decoration should be undertaken utilising good quality materials and a good standard of workmanship. It is not, in my judgment, demonstrating a good standard of workmanship to hang a couple of strips of non-matching wallpaper on a wall where the other paper would not otherwise need replacement, or to patch a hole in wallpaper caused by removal of a light switch by sticking a random piece of non-matching wallpaper over the hole. It makes no difference, as it seems to me, that the non-matching wallpaper and the original wallpaper is then painted the same colour if the non-matching wallpaper remains, as it seemed to me on my view it did, obtrusive. What is manifestly required, in my judgment, is complete replacement of all the wallpaper in the restaurant area – there was not that much of it – with a uniform paper. Again, I am satisfied that the visible scratch damage to the bar counter in the restaurant area was caused by carelessness during the carrying out of the works by Contrad and should now be made good. I take the same view of the damage to the nosing on the step from the bar into the kitchen, although the replacement, if thought desirable, of the linoleum in the bar area would be a matter for Mrs. Vukelic. It seems to me that all redundant pipework should be removed and resultant holes, as well as holes where any pipework runs through walls, should be made good and redecorated as appropriate. There was no obvious reason for the omission of spotlights in the pattern otherwise adopted in the suspended ceiling in the restaurant area from the far left hand corner as one looks from the entrance to the restaurant from the street. Good workmanship in my view would involve the provision of lighting to a consistent pattern.

Mrs. Vukelic's advisers

103. In conclusion I feel that I should acknowledge the very considerable assistance provided to Mrs. Vukelic during this action at all stages by Dr. Martin Kazuka and by Mrs. Milka Yovichic. I have sometimes felt that Mr. Rylance and Miss Bond, about whose courtesy, consideration and professional conduct I have not the slightest criticism, underestimated the difficulties facing Mrs. Vukelic in seeking to conduct her case in person. She has no legal training and has had to grapple with concepts and issues which were completely foreign to her. Without the help of Dr. Kazuka that burden might have proved impossible. Not the least of Mrs. Vukelic's difficulties has been that she has had to seek to conduct the action in a language which is not her first language and of which her command, although no doubt entirely adequate for the ordinary conduct of daily life, is less than total. Without the assistance of Mrs. Yovichic the language problem might have proved insuperable. Mrs. Yovichic's role as interpreter not only of Mrs. Vukelic's oral evidence, but of her submissions and of her questions to other witnesses was a taxing one, not least because of Mrs. Yovichic's personal involvement in some of the events which had to be considered. However, she made every effort to observe proper boundaries for her role, and in this she was, in my judgment, triumphantly successful.