Trespass – Damages – Assessment – Respondent successfully claiming damages for trespass to land – Judge directing inquiry as to mesne profits – Master calculating base rental value – Whether master adopting correct approach to base value – Appeal allowed
The respondent owned an area of derelict land, previously used for tipping activities, adjoining a waste-recycling depot that was owned and operated by the appellants. It brought a claim against the appellants for trespass, alleging that they had encroached on its land over several years by creating mounds of earth, parking vehicles and plant and storing materials. In their defence, the appellants relied on oral agreements regarding the boundary that had been purportedly concluded between its predecessors in title and a site manager who had acted on behalf of the respondent’s predecessor. They argued that the agreements gave rise to a proprietary estoppel, binding the respondent with an overriding interest, under section 70(1)(g) of the Land Registration Act 1925.
The court held that, on the evidence, the site manager’s authority had not extended to making boundary agreements with neighbouring landowners without reference to, and the approval of, the then beneficial owner of the respondent’s land. In the absence of such authority, the alleged agreements could not have been binding. The court directed an inquiry as to the mesne profits and interest that the appellants should pay to the respondent in respect of their trespass: [2006] PLSCS 44.
The master held that the appellants had to pay £170,325 by way of damages, plus interest of £34,065, the base rental value of the land being £5 per square foot (psf), to which figure he applied various discounts. In assessing that sum he referred to the evidence of two chartered surveyors who had relied on a number of comparables, including leases of two small rectangular parcels of land from the British Waterways Board (BWB) abutting the depot. The appellants were granted permission to appeal on the issue of the correct base value, which they argued should be no higher than £1.75 psf in line with the BWB comparables.
Held: The appeal was allowed.
A challenge to the type of evaluation made by the master rested on considerations that were similar to those applicable to a challenge against an exercise of discretion, which the court approached with caution. It would usually succeed only if the judge was shown to have failed to take account of a material matter, or had taken account of an immaterial matter, or arrived at a decision that was unreasonable. In the instant case, the master’s decision was clearly wrong.
The correct approach to the determination of the rental value of the subject land lay in proceeding by reference to comparables. It was rare that any comparable would be a perfect match for the valuation exercise in issue because the comparable would be unlikely to relate to a property with identical characteristics or to reflect a transaction effected at the same time. The most helpful comparables would be those whose characteristics were close to those of the subject property and in respect of which the transaction was also effected close to the material time. It was for the tribunal to assess the help that could be derived from the comparables; and to have regard to the different characteristics of comparables that could provide assistance in making adjustments for the purpose of assessing the rental value of the subject land. The exercise would usually be dependent on expert evidence.
In the instant case, the two comparables relied on by way of analogous transactions were, prima facie, worthless since there was a gap of seven years between the valuation date and the comparables. As the lapse of time between the transaction and the valuation date increased, the comparable became progressively unreliable as evidence of the rental value at the valuation date: Segama NV v Penny Le Roy Ltd [1984] 1 EGLR 109; (1983) 269 EG 322 considered.
It was apparent that the BWB transactions represented the best comparables because they were for leases of land that formed part of the depot and used for the same purposes as that for which the subject land was used during the assessment period. Although there was no explanation of the difference between the rents for the two leases, that did not prevent them being the best guidance. It was for the respondent to prove otherwise and it had not done so. In failing to have primary regard to the BWB transactions, the master had fallen into error and arrived at the wrong decision: Trans-World Investments Ltd v Dadarwalla [2007] EWCA Civ 480; [2008] 1 P&CR 480 considered.
Given the lack of evidence, the best guide regarding the rental value of the land was derived from the two BWB transactions; there was no basis on which to prefer one rate to another. Accordingly, the figure of £1.75 psf would be adopted as base rental value.
Wayne Clark (instructed by DMH Stallard LLP) appeared for the appellants; Alexander Hill-Smith (instructed by Read & Co) appeared for the respondents.
Eileen O’Grady, barrister
