Trespass – Air–conditioning units – Assessment of damages – Whether claimant entitled to restitutionary damages and mesne profits – Whether negotiating damages model constituting appropriate measure of damages – Whether defendant liable for aggravated and exemplary damages – Claim allowed in part
The claimant management company held a headlease of a substantial block of mansion–style flats in central London. The defendant was the underlessee of two flats in the block. In June 2007, the defendant installed air-conditioning apparatus on the roof of the building. 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.
Both at first instance and on appeal, it was held that the presence of that air-conditioning apparatus on the roof was a trespass by the defendant, since the roof belonged to the claimant 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 the damages payable by the defendant to the claimant for that trespass, together with the costs of the proceedings on an indemnity basis.
The claimant sought restitutionary damages, compensatory damages and mesne profits for the period of trespass. In addition, it mounted claims for aggravated and exemplary damages.
Held: The claim was allowed in part.
(1) Since the defendant had made no financial gain from the presence of the trespassing air-conditioning apparatus on the roof, there was nothing on which restitutionary damages could bite. Even if the defendant had derived financial profit, the court would not have awarded restitutionary damages by awarding the claimant 100% of the defendant’s profit. An account of profit was not available as a common law damages remedy. In any event, there would have been nothing, on the facts of the case, to justify awarding an account of profits: Stadium Capital Holdings (No 2) Ltd v St Marylebone Property Co plc [2010] EWCA Civ 952; [2010] PLSCS 201 considered.
(2) The negotiating damages model was the appropriate measure for assessing damages in this case, representing such sum as the claimant might reasonably have demanded from the defendant as a quid pro quo for permitting the continuation of the breach of covenant or other invasion of right. Notwithstanding that the claimant might have suffered no loss through the trespass, negotiating damages were clearly compensatory in nature. Such damages were not confined to cases involving the permanent acquisition of some right from the claimant but also applied to a temporary trespass case, bearing in mind the more limited nature of the exercise and taking into account the considerations that would have been relevant to negotiations for the limited permission being sought: Lunn Poly Ltd v Lancashire Properties Ltd [2006] 2 EGLR 29 and Sinclair v Gavaghan [2007] EWHC 2256 (Ch); [2007] PLSCS 201 considered.
(3) While the alternative possibilities open to the defendant were highly relevant factors, which would have influenced the hypothetical negotiations, it was not open to the defendant, as part of that exercise, to say that he would, if confronted with a demand for payment, have avoided making any use of the claimant’s land at all. The purpose of the assessment was to calculate a sum that compensated the claimant for the trespass that had actually occurred. Alternatives could not be brought into the equation if their very effect would be to eliminate the trespass. The fact that the claimant had the right to refuse consent and prevent the trespass was not any form of “trump card”. The purchase of the appropriate consent was the very subject matter of the hypothetical negotiations: Enfield London Borough Council v Outdoor Plus Ltd [2012] 2 EGLR 105; [2012] 29 EG 86 and Stadium Capital Holdings Ltd v St Marylebone Property Co plc (No 2) [2012] 1 EGLR 103 considered.
(4) In the present case, the subject matter of the hypothetical negotiations was not a permanent irrevocable licence but a temporary licence to have the trespassing air-conditioning lawfully in place on the roof for a specified period. No permanent rights were created, nor did the temporary rights increase the capital or rental value of the flats. The hypothetical negotiations should not be calculated on the unreal basis that the defendant had to pay for a permanent licence when all it got was a temporary licence. On the evidence, the parties, acting reasonably, would have agreed a capital sum of £6,000 for a temporary licence, that was the sum to be awarded as damages. Since the negotiating damages awarded were damages for the whole of the trespass, there was no scope for any additional award of mesne profits.
(5) Trespass to land accompanied by high-handed, insulting or oppressive conduct might warrant an award of aggravated damages but such an award would be to compensate the claimant for the distress and injury to his feelings. A corporation was not entitled to damages for injury to feelings and thus could not recover aggravated damages: Horsford v Bird [2006] 1 EGLR 75 considered; Hays plc v Hartley [2010] EWHC 1068 (QB) applied; Messenger Newspapers Group v National Graphical Association [1984] IRLR 397 not followed.
(6) The threshold for awarding exemplary damages was high but ultimately it was a matter for the court’s judgment. In the present case, the defendant’s conduct had not been sufficiently outrageous to justify the punitive and last resort award of exemplary damages. Further, the court’s disapproval of its conduct had already been reflected in the indemnity costs orders previously made.
Jonathan Arkush (instructed by Stockler Brunton) appeared for the claimant; Christopher Lundie (instructed by Brian Harris & Co) appeared for the defendant.
Eileen O’Grady, barrister
