1 Statutory claim for dilapidations

9.09 On the tenant’s quitting the holding on termination of the tenancy, s 71(1) of the 1986 Act gives the landlord the right to claim compensation in respect of any dilapidation, deterioration or damage to the holding caused by the tenant’s failure to farm in accordance with the rules of good husbandry.

9.10 The landlord’s claim for damage to parts of the holding under s 71(1) should be clearly distinguished from his claim for general deterioration under s 72, discussed below. The claim for dilapidations under s 71(1) relates to specific breaches of the rules of good husbandry that have caused damage or deterioration to the holding, eg a failure by the tenant to fence adequately or maintain buildings. The reference to ‘deterioration’ in s 71(1) also brings within that claim, however, claims for damage requiring longer-term remedy. The claim under s 72, in contrast, lies where the landlord can prove ‘a general depreciation of his farm as a whole’¹⁴ over and above the cost of making good specific breaches covered by s 71(1). Thus in Evans v Jones¹⁵ it was held that where a tenant has failed to farm in accordance with the rules of good husbandry in respect of specific fields, by not adequately fertilising them, the landlord can claim the cost of bringing those fields back into a proper state of health under s 71(1), and additionally claim under s 72 for any general depreciation in the value of the farm over and above this.

9.11 The measure of compensation payable on a claim under s 71(1) is fixed by s 71(2) as ‘the cost, as at the date of the tenant’s quitting the holding, of making good the dilapidation, deterioration or damage.’ This is subject to the caveat, however, that the amount of compensation recoverable ‘shall in no case exceed the amount (if any) by which the value of the landlord’s reversion in the holding is diminished owing to the dilapidation, deterioration or damage in question’.¹⁷

9.12 This provides a ceiling for the landlord’s statutory claim, and also provides the measure of compensation where the contractual claim (below) based on the tenancy agreement is pursued. The basic test¹⁸ is the difference in the value of the reversion at the end of the lease between the property in its then state of disrepair and in the state it would have been in if the repairing covenants had been fulfilled.¹⁹ In other words, the question is how much was the market value of the landlord’s interest diminished at the end of the lease by reason of the disrepair? It does not follow, however, that future probabilities are to be totally disregarded. So, for instance, if buildings on the holding are to be pulled down after the end of the lease, so that repairs would have been useless, this will reduce the landlord’s compensation accordingly. The occurrence of some event after termination can only be taken into account, however, in so far as it provides strong evidence of what the landlord intended at the date of termination of the lease.²⁰ Finally, where repairs have been, or are going to be, done by the landlord himself, the cost of executing those repairs will provide a good guide to the damage to the reversion.²¹ The measure of damages in this case will be the sum it will take to put the property into the state of repair in which the tenant ought to have left it according to his covenant or statutory duty.²² Where the landlord does not intend to carry out the repairs himself, the proper basis for valuing the reversion will be the rent that the property would be likely to produce immediately following the termination of the lease.²³ Where the property is relet, the injury to the reversion will be quantifiable by reference to the diminution in the rent obtained by the landlord on reletting, or the allowance he will have to make to an incoming tenant for the state of disrepair of the holding.²⁴