Trespass – Air-conditioning units – Damages – Respondent lessee of flats installing air-conditioning on roof of building – Presence of units held to constitute trespass against appellant as headlessee of building – Quantum of damages – Hypothetical negotiation for grant of licence to retain units – Whether temporary licence for limited period of respondent’s actual trespass or permanent licence to retain units for residue of lease term – Whether award of aggravated damages available – Appeal dismissed
The respondent was the lessee of two flats in a substantial mansion block in London, of which the appellant was the headlessee. In 2007, the respondent installed air-conditioning apparatus on the roof of the building without the appellant’s consent. Part of that apparatus, namely two large air-conditioning units, was removed in February 2008 but then replaced in December by two smaller units. The air-conditioning apparatus in that form remained on the roof when the defendant completed its sale of both flats to a third party in March 2010.
In proceedings between the parties, it was held both at first instance and on appeal that the presence of the air-conditioning apparatus on the roof was a trespass by the respondent since the roof belonged to the appellant as headlessee: see [2010] EWHC 1725 (Ch); [2010] PLSCS 192 and [2011] EWCA Civ 607; [2011] PLSCS 132.
The matter returned to the High Court for an assessment of damages. The judge awarded damages of £6,000, which he found to be the sum that would have been agreed in hypothetical negotiations between the parties for the grant of a temporary licence permitting the respondent to retain the air-conditioning units for the period of the trespass to March 2010. He rejected a claim for aggravated or exemplary damages on the ground that such damages were designed to compensate the successful claimant for distress and injury to feelings, which was not possible where the appellant was a company: see [2012] EWHC 3354 (Ch); [2012] PLSCS 258.
The appellant appealed. It contended that: (i) the relevant licence for the purposes of the hypothetical negotiations was a permanent licence for the entire residue of the leases of the two flats, since it would have been apparent, at the relevant time in 2007, that the respondent wanted a right to install permanent air-conditioning in the flats and sell them on that basis; and (ii) the judge had erred in refusing to award aggravated damages.
Held: The appeal was dismissed.
(1) In most cases where damages were granted in lieu of an injunction, such as for breach of a restrictive covenant, the amount awarded was intended to compensate the claimant for the permanent loss or infringement of its legal rights. Cases of trespass might or might not fall within that category. For example, in a boundary dispute, the refusal of an injunction would result in the claimant forfeiting the use of part of his land. However, in other cases the trespass might not be permanent in duration: Sinclair v Gavaghan [2007] EWHC 2256 (Ch); [2007] PLSCS 201 applied. The instant case was of the latter kind. When assessing damages, the court had to have regard to the actual period of trespass and treat the parties as having negotiated for a licence on that basis. If the “hypothetical negotiations” approach was to provide an accurate means of valuing the benefit to the trespasser, the parties had to be treated as negotiating for a licence that covered the acts of trespass that actually occurred, for the period and extent of the actual trespass. While it was true that the respondent would not have been interested in a licence that subsisted only until 2010, its trespass had given it no more than that. Accordingly, there was no other basis for valuing the gain that it actually received. Such a licence would have been revocable, unassignable and of no value to a purchaser, and it fell to be valued accordingly. The judge’s figure of £6,000 was inaccurate for the advantage that the respondent had actually obtained.
There was no justification for reaching a higher valuation on the ground that the respondent would have been prepared to pay a substantial sum of money for a permission that it could, in effect, sell to any purchaser of the flats. The appellant’s claim in damages was not for the loss of an opportunity to negotiate a substantial licence fee for the grant of such a right but was limited to recovering what the respondent would have paid for the rights that it had in fact illegally obtained. The respondent had not de facto obtained a permanent right. Its trespass had ceased in 2010 when it sold the flats. The purchasers of the flats had to negotiate their own permission.
(2) Aggravated damages could not be awarded unless the defendant’s conduct had injured some subjective feelings of the claimant. The focus on the effect of the defendant’s conduct on the claimant’s feelings excluded a claim by a company. For that reason, aggravated damages were not recoverable by a company: Messenger Newspapers Group Ltd v National Graphical Association [1984] IRLR 397 wrongly decided.
Jonathan Arkush (instructed by Cubism Law) appeared for the appellant; Christopher Lundie (instructed by Brian Harris & Co) appeared for the respondent.
Sally Dobson, barrister
