Caravan park – Terms of occupation – Claimants operating caravan park – Restriction on occupation of caravans during winter months – Claimants seeking injunction preventing defendant caravan owners from occupying outside permitted times – Court holding defendants entitled to interest by way of constructive trust – Appropriate method of compensation – Ruling accordingly
The first claimant held a lease of a caravan park from the local authority. The second claimant, a related company, held the site licence under section 3 of the Caravan Sites and Control of Development Act 1960. The lease contained a covenant not to allow caravans or mobile homes on the park to be occupied otherwise than between March to October inclusive, together with weekends at other times of the year and 10 days over the Christmas and New Year period. The site licence replicated the terms of the lease. Planning permission was conditional on the caravans being occupied only on the specified dates.
The defendants had each purchased a mobile home or lodge on the site from the second claimant. The claimants applied for an injunction preventing the defendants from occupying the lodges during the day throughout the closed period, when occupation was forbidden. The defendants maintained that they had purchased the lodges on the strength of promises that they would be granted leases under which, although they could not sleep in the lodges during the closed period, they would be able to use them during the day. They sought declarations that they had rights in equity to be granted those leases.
The High Court found for the defendants and held that the first claimant, as long leaseholder, was the constructive trustee of beneficial interests in respect of each defendant’s plot on terms reflecting those promises: [2008] EWHC 1928 (QB); [2009] 1 EGLR 117.
An issue arose as to the appropriate relief. The first defendant applied for planning permission, which, if granted, might have solved the problem. However, that application had not been heard when the court was asked to determine: (i) whether the defendants’ compensation should be a money award or an order for the grant of a lease permitting occupation during the day in the closed period; and (ii) the method of assessment of any money award.
Held: The court ruled accordingly.
The fundamental question for the court was what relief would satisfy the equity. Relevant factors included: (i) the nature of the expectation created by a defendant’s conduct; (ii) the detriment suffered by a claimant in reliance on the defendant’s representations; (iii) the degree to which a defendant’s conduct had been unconscionable; and (iv) the need for some proportionality between a claimant’s expectation and his or her detriment: Cobbe v Yeoman’s Row Management Ltd [2006] EWCA Civ 1139; [2006] 3 EGLR 107 and McGuane v Welch [2008] EWCA Civ 785; [2008] 3 EGLR 45; [2008] 40 EG 178 considered.
In the instant case, the appropriate measure of compensation was to be decided by asking why the compensation was being awarded. The award to the first and second defendants was for not being able to use their lodges during the day in the closed period. Accordingly, the appropriate measure of compensation was the “cost of accommodation measure”, that is, the additional cost of securing accommodation for the daytime as well as the night-time in the closed period. That would be the difference between the cost of bed-and-breakfast accommodation (after deducting the cost of breakfast) and renting. The use of a lounge in the daytime in bed-and-breakfast accommodation was not equivalent; the use would be limited and the lounge could not be used as one’s own. To that difference would be added compensation for the disturbance and discomfort of not being able to use the lodge in the closed period during the day. The cost of renting needed to take account of the fact that properties could not be rented by the day or the week. The comparison would also have to take account of the fact that, with bed and breakfast, no utility bills would have to be paid.
No compensation could be awarded to the third defendant since she had stated that unless she and her grandson could stay overnight in the closed season, they would have to be rehoused. The bar against overnight occupation was forcing her to move regardless of the position as to daytime occupation; she could not claim compensation for being forced to move.
Furthermore, a declaration would be made that the defendants were entitled to a lease giving effect to the promises made to them, save that it would prohibit daytime occupation during the closed period. That prohibition would be removed if such occupation became permissible in accordance with a planning permission relating to the site and the site licence, and would not constitute a breach of the headlease.
Anthony Tanney (instructed by Ellisons Solicitors, of Colchester) appeared for the claimants; Stephen Cottle (instructed by Shelter Legal Services) appeared for the defendants.
Eileen O’Grady, barrister
