"Contumelious Disregard" Costs Tenant Dearly

What is the proper measure of damages payable by a tenant for breach of promise not to alter premises without landlord consent? A decision handed down by The High Court this month confirms that the appropriate measure of damages for breach of such promise is the cost to reinstate the building rather than the loss in value of the building caused by the alteration.

In the case, the landlord had constructed the foyer of a commercial building with particular care using high quality materials including special granites. It then leased the building and, six months later, the tenant partially demolished and reconstructed the foyer without the landlord's consent. Consent was sought but not given pending provision of details of the proposed works. The tenant proceeded to alter the foyer in breach of the alteration provision despite the landlord's protests. The tenant's conduct was described by the trial judge as being in "contumelious disregard" of the landlord's rights.