Dilapidation claims - latent development value

For anyone looking for an analysis and summary of the law relating to dilapidation claims, they would be well-advised to read paragraphs 11 to 70 of the judgment of His Honour Judge Toulmin CMG QC in
PGF II SA & Anor v Royal & Sun Alliance Insurance Plc & Anor [2010] EWHC 1459 (TCC), and in particular his analysis of the assessment of damages in cases where a property has a latent development value which may (or may not) be realised at some stage in the future, giving rise to an argument that the possibility of valuable development means that there is therefore no diminution in the value of the reversion, whatever state the premises are left in. This, says the judge, is not a point that has been successfully argued in the 83 years since the statutory ceiling on damages was introduced by section 18 Landlord and Tenant Act 1927 Act, and was not a point he was now about to allow. He said: “It would be unreasonable if a landlord was told that he could not have the cost of the disrepair of the previous tenant because of a development value which at the date of the termination of the lease, he had no intention of realising.” Damages for disrepair, he says, are not ruled out by the latent development value of the property, unless the landlord intends to take advantage of it, or it was inevitable that such was the only reasonable decision likely to be taken.