Mesne profits — Calculation — Whether mesne profits should be calculated by reference to the market rent or by reference to the value of the property to the trespasser
The plaintiff,
the Ministry of Defence, is the owner of 15 Perch Meadow, Halton,
Buckinghamshire, married quarters available for members of the services
stationed at RAF Halton. On going into occupation of the premises in June 1989
the second defendant, Flight Sergeant Ashman, signed a certificate
acknowledging that he was entitled to occupy the property only so long as he
remained a serving member of the Royal Air Force, living with his spouse, and
that he would be required to remove his family from the accommodation if he
ceased to live with his spouse. On February 14 1991 the second defendant moved
out of the accommodation, leaving his wife and two children in possession. His
quartering charge was £95.41 a month. On March 14 1991, the first defendant,
Mrs Ashman, and her husband were given the appropriate notice to vacate the
accommodation by May 16 1991. The first defendant and the two children did not
vacate because they had nowhere to go. On May 17 1991 a new seven-day notice
was served on Mrs Ashman alone. In this notice the ministry, for the first
time, asserted the right to claim damages for trespass at the rate of £108.93
per week from March 14 1991, following proceedings issued by the ministry on
September 30 1991, in Aylesbury County Court, for possession and mesne profits.
On November 19 1991 Judge Slack made an order for possession on December 17
1991 and adjourned the money claim. Mrs Ashman vacated the ministry’s house on
April 26 1992. The money claim was heard on April 28 1992, when evidence was
given on behalf of the ministry of the basis for the quartering charge being
fixed by starting with a notional rent calculated by reference to a national
average of local authority housing rents and then deducting 42.5%. Evidence was
also given that £108.93 per week was the appropriate market rent for the
premises. In awarding damages on the basis of the adjusted local authority
average rents, Judge Slack reasoned that, where a serviceman and his family
have taken possession of married quarters under an obligation to pay a
quartering charge, the serviceman had acted on an assurance which was both
clear and unequivocal that the charge was calculated using as its starting
point the rated average taken from local authority rent figures. The ministry
appealed.
trespasser of use of the property. Where the property is not normally let on
the open market and the trespasser remains in possession only because she is in
no position to move anywhere else. More assistance as to the proper value to
Mrs Ashman of the use of the property might be gained by looking at what she
would have had to pay for suitable local authority accommodation, had any been
available, than by focusing on evidence given on behalf of the ministry as to
market rent. It is reasonable in this case to measure the value to Mrs Ashman
of the premises by reference to local authority rents. In most cases the
measure of damages to be paid by the trespasser in residential property will be
calculated by reference to the ordinary letting value of the property in which
the defendant remains.
claim against a person who has been in occupation without his consent on two
alternative bases. The first is for the loss which he has suffered in
consequence of the defendant’s trespass. This is the normal measure of damages
in the law of tort. The second is the value of the benefit which the occupier
has received. This is a claim for restitution. The two bases of claim are
mutually exclusive and the plaintiff must elect before judgment which of them
he wishes to pursue. The ministry had elected for the restitutionary remedy.
The open market value will ordinarily be appropriate because the defendant has
chosen to stay in the premises rather than pay for equivalent premises
somewhere else, but such benefits may in special circumstances be subject to
subjective devaluation. This means that a benefit may not be worth as much to
the particular defendant as to someone else. In particular, it may be worth
less to a defendant who has not been free to reject it. There were special
circumstances in this case created by the combination of two factors. The fact
was that the defendants were occupying at a concessionary licence fee and that
Mrs Ashman had, in practice, no choice but to stay in the premises until the
local authority were willing to rehouse her.
the pleaded case was for damages for trespass and there never had been any
application to amend the pleading so as to claim restitution in the
alternative. Second, it was very doubtful whether the restitutionary remedy is
available in the case of
elect in this case to claim restitution even if it had been pleaded in the
claim. In the vast majority of cases the measure of damages in a claim for
mesne profits will be at the same rate as the previous rent. The present case
is special in that the terms on which the ministry would have been likely to
relet were the same terms on which they had previously let to Mr Ashman. The
ministry must prove their damages; although they do not have to adduce evidence
that they would have let to another tenant, they do have to show what the rent
would have been if they had. They failed to show that they would, in practice,
have recovered any more than the artificially low level of rent applicable in
the case of married quarters. That therefore should be its measure of damages.
The following
cases are referred to in this report.
Central
London Property Trust v High Trees House
[1947] KB 130; [1956] 1 All ER 256
Clifton
Securities Ltd v Huntley [1948] 2 All ER 283
Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, HL
Morris v Tarrant [1971] 2 QB 143; [1971] 2 WLR 630; [1971] 2 All ER
920
Penarth
Dock Engineering Co Properties Ltd v Pounds
[1963] 1 Lloyd’s Rep 359
Phillips v Homfray (1883) 24 ChD 439
Swordheath
Properties Ltd v Tabet [1979] 1 WLR 285;
[1979] 1 All ER 240; (1978) 37 P&CR 327; [1979] EGD 330; 249 EG 439, [1979]
1 EGLR 58, CA
Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538
This was an
appeal by the plaintiff, the Ministry of Defence, from a decision of Judge
Slack in Aylesbury County Court, in an award of damages by way of mesne profits
for the continuing trespass of the first defendant, Mrs CW Ashman, in remaining
in married quarters originally granted by a licence to the second defendant,
Flight Sergeant W L Ashman.
Nicholas
Huskinson (instructed by Parrott & Coales, of Aylesbury) appeared on behalf
of the plaintiff; the first and second defendants, Mr and Mrs Ashman, appeared
in person.
Giving the
first judgment, KENNEDY LJ said: This is a plaintiff’s appeal from a
judgment of Judge Slack sitting in Aylesbury County Court on May 19 1992, when
he gave judgment for the plaintiff against both defendants, jointly and
severally, in the sum of £872.28, together with costs assessed at £168.
The second
defendant was at all material times a flight sergeant in the Royal Air Force
and the first defendant was his wife. After they separated she stayed on in the
married quarters which they had occupied together. The issue raised by this
appeal is the way in which, in such a situation, mesne profits should be
calculated. Should they be calculated by reference to the market rent; by
reference to the subsidised rent paid by the serviceman, so long as he and his
family remained in lawful occupation; or in some other way?
The plaintiff,
represented by Mr Nicholas Huskinson, who has been of great assistance to us,
contend in favour of the former. The judge based his judgment on the assumption
that they should be assessed in another way.
The property,
owned by the Ministry of Defence, was at 15 Perch Meadow, Halton, about half a
mile from RAF Halton. On going into occupation in June 1989 the second
defendant signed the certificate by which he acknowledged, first, that he was
entitled to occupy the property only so long as he remained a serving member of
the Royal Air Force, living with his spouse. Second, that he would be required
to remove his family from the accommodation if he ceased to live with his
spouse. That certificate does not say, as perhaps it should have done, that the
ministry would seek to recover an open market rental rate should the second
defendant or his family remain in possession unlawfully.
On February 14
1991 the second defendant moved out of the accommodation, leaving his wife and
two children in possession. His quartering charge was then £95.41 a month. The
first defendant, in her letter of April 7 1992, says that when her husband
informed the families’ officer at RAF Halton that he had moved out he was told
that a charge of about £250 per month would be made against his wife, if she
and the children failed to vacate in the time allowed.
On March 14
1991 Mrs Ashman and her husband were given the appropriate notice to vacate the
accommodation by May 16 1991; that notice being given by Mr Ashman’s commanding
officer in accordance with the certificate which he, the second defendant, had
cosigned. The first defendant and the two children did not vacate because they
had nowhere to go.
In her letter
of April 7 1992 the first defendant, Mrs Ashman, says that at the end of March
1991 her husband was told that the plaintiff, the ministry, had changed its
policy and in future an amount equivalent to the market rent would be charged.
Although it was suggested to him that the result would be much the same, he was
prudent enough to contact the defence land agents who advised him that the new
figure would be about £500 per month.
On May 17
1991, the day after possession should have been given, pursuant to the
commanding officer’s notice, a new seven-day notice was served on Mrs Ashman
alone. In this notice the ministry for the first time asserted the right to
claim damages for trespass at £108.93 per week. By then Mrs Ashman had written
to the local authority seeking alternative accommodation, but she had no
priority. She wrote to her member of Parliament, who sought assistance from the
Ministry of Defence, but the Under Secretary of State, in his reply, did not
really address the problem, which was that she could neither afford to remain
nor find anywhere else to go at the price she could afford.
On September
30 1991 the ministry commenced these proceedings seeking possession and mesne
profits from March 14 1991 at £108.93 per week plus interest. The first
defendant, by her defence, asserted that she was entitled to stay on because
she had no alternative accommodation and both defendants asserted that mesne
profits should be calculated only from May 25 1991, the date of expiry of the
second notice.
On November 19
1991 the matter came before Judge Slack in Aylesbury County Court. He ordered
the first defendant to give possession on December 17 1991 and adjourned the
money claim. Mrs Ashman advised the local authority of the possession order.
She was then told she could not be placed on the active housing list until the
local authority received notice of her decree of divorce being made absolute.
It was made absolute on January 28 1992. In March 1992, the defendant’s
daughter got married and left home, so Mrs Ashman was able to advise the local
authority that two-bedroom accommodation would suffice. On March 23 1992 she
received an offer of a two bedroom flat at £33.44 a week. She accepted that
offer and vacated the ministry’s house on April 26 1992.
The money
claim was heard by Judge Slack two days later on April 28 1992 when the
ministry was represented by a solicitor, Mr Couzens, and the defendants
appeared in person. A chartered surveyor employed by the ministry, Mrs Jocelyn
Jones [ARICS], gave evidence and explained that a quartering charge is fixed by
starting with a notional rent calculated by reference to a national average of
local authority housing rents and then deducting 42.5%. Where there is
unauthorised occupation the ministry seeks to recover on the basis of a market
rent. In the course of her evidence, the witness referred to part of a study
made by Arthur Young some years ago for the ministry and to a Treasury circular
dated February 2 1989. A rent assessment officer was then called who explained
how he arrived at a figure of £108.93 per week as the appropriate market rent
for 15 Perch Meadow. That figure included a television aerial connection which,
if it was not working (as the defendants asserted), would reduce the rent by
less than a pound a week.
Both
defendants gave evidence. Mrs Ashman said she never was a tenant and that
anything above the quartering charge would really amount to a penalty. Mr
Ashman said he assumed he would have to pay a fair rent until his wife and
family were rehoused and, in fact, both defendants had made payments at the
quartering-charge rate up to the date of the hearing.
In his
reserved judgment the learned judge set out the background and summarised the
evidence. He said he found the assessment of the open market rent given by the
rent officer ‘totally compelling and persuasive’. He referred to three
authorities, the third of which, Swordheath Properties Ltd v Tabet
[1979] 1 WLR 285*, was a decision in which Megaw LJ at p288E set out the
approach to be adopted by a court assessing damages for trespass. He said:
. . . the
plaintiff, when he has established that the defendant has remained on as a
trespasser in residential property, is entitled, without bringing evidence that
he could or would have let the property to someone else in the absence of the trespassing
defendant, to have as damages for the trespass the value of the property as it
would fairly be calculated; and, in the absence of anything special in the
particular case it would be the ordinary letting value of the property that
would determine the amount of the damages.
*Editor’s
note: Also reported at (1978) 249 EG 439, [1979] 1 EGLR 58.
The judge in
the present case had already ascertained the ordinary letting value by
accepting the evidence of the rent assessment officer. So he turned to see if
there was anything special in the particular circumstances of this case
which might cause him to adopt some other multiplicand.
The judge then
referred to the way in which quartering charges are assessed, as set out in the
Arthur Young study, starting with the weighted average taken from the local
authority rent figures and discounting it by 42.5%. As the study explains:
This
reduction is due to the view held by the Armed Forces Pay Review Body that the
local authority rents include an element of long-term security of the tenure as
capital costs. This abatement takes into account the disadvantage of Service
occupation as failure to accrue long-term benefits from improvements to the
house or garden, lack of choice of position, type, furniture, decoration,
heating, cooking and other facilities.
The judge then
reasoned thus:
If,
therefore, the starting point prior to the abatement, as the plaintiffs assert,
represents the appropriate rental value subject to the reduction as expressed
for the disadvantages of living in service quarters, it is not in my judgment
open to the plaintiffs to advance a figure which by way of rental or damages is
in excess of that starting point. When a serviceman and family take possession
of a married quarter under an obligation to pay a quartering charge so
calculated, the serviceman has acted on an assurance which is both clear and
unequivocal that the charge is calculated upon the basis set out above. It is
not open to the plaintiff to disregard that assurance and seek to claim a
higher rate.
The judge then
went on to suggest that it would not be open to the ministry to change the
situation by giving notice, because the serviceman and his family would not be
able to assume their original position. But as no relevant notice was given, at
any rate until the second notice was served in the present case, that
observation was not material. He then awarded damages on the basis of the
adjusted local authority average rents (that is to say, the quartering charge
with the abatement of 42.5% added back) from May 16 1991 (the date of expiry of
the commanding officer’s notice) to April 26 1992 when the ministry obtained
possession.
The argument
put before us on behalf of the ministry runs thus: market rent or ‘ordinary
letting’ value is what those words imply and the ministry is not estopped from
proving ordinary letting value because, for the special purpose of calculating
a quartering charge, it started from a different base figure, namely the
weighted local authority average rent. It never gave any assurance to either of
the defendants that the weighted average was the figure it would seek to
recover if either defendant stayed on as trespassers. The judge’s reference to
the decision of the Court of Appeal in Central London Property Trust v High
Trees House [1947] KB 130 has no relevance to the circumstances of this
case.
Thus far I
agree. The finding of estoppel made by the judge cannot be sustained. That
leaves open the question of how the judge should have approached the problem of
quantifying damages in this case. In my judgment, it is helpful to start, as
Megaw LJ did in the Swordheath case, with the statement of principle to
be found in Halsbury’s Laws of England 4th ed vol 12 at para 1170. The
paragraph begins:
Particular
rules have been evolved in cases of trespass to land.
A plaintiff
is entitled to nominal damages for trespass even if no damage or loss is
caused; if damage or loss is caused, he is entitled to recover in respect of
his loss according to general principles.
A little later
there is a passage cited by Megaw LJ which reads:
Where the
defendant has by trespass made use of the plaintiff’s land the plaintiff is
entitled to receive by way of damages such sum as should reasonably be paid for
the use. It is immaterial that the plaintiff was not in fact thereby impeded or
prevented from himself using his own land either because he did not wish to do
so or for any other reason.
In further
support of that passage Megaw LJ referred to Penarth Dock Engineering Co
Properties Ltd v Pounds [1963] 1 Lloyd’s Rep 359. There the
defendant failed to recover a pontoon he had purchased from the plaintiff
company, which could not of itself point to any loss. Lord Denning MR said at
p362:
. . . the
test of the measure of damages is not what the plaintiffs have lost, but what
benefit the defendant obtained by having the use of the berth . . . If he had
moved it elsewhere, he would have had to pay on the evidence, £37 10s. a week
for a berth for a dock of this kind.
Damages were
claimed in that case at a lower rate. That rate was awarded. As Megaw LJ later
explained, damages in the Penarth Dock case were calculated by reference
to ‘the proper value to the trespassers of use of the property’.
In the Swordheath
case the Court of Appeal was able to apply that approach, which may be somewhat
analogous to quasi-contractual restitution, to a claim by a landlord against
occupants of residential property who had remained in unlawful possession. The
landlord was held entitled to recover ‘the proper letting value of the
property’ for the relevant period, that being in an ordinary case, in a free
market, the value to the trespassers of its use.
But where, as
in the present case, the property is not normally let on the open market and
the trespasser remains in possession only because she is in no position to move
anywhere else, it seems to me that more assistance as to the proper value to
Mrs Ashman of the use of the property might be gained by looking at what she
would have had to pay for suitable local authority accommodation, had any been
available, than by focusing on evidence given on behalf of the ministry as to
market rent.
As Mr
Huskinson in the course of his submissions pointed out, if an elderly widow
living alone were to hold over possession of a mansion while attempting to
arrange accommodation more suited to her needs, the court might conclude that
the value to her of the use of the mansion was less than its rented value on
the open market. Of course, even if that be the right approach, the figure
which Mrs Ashman paid to the local authority for her flat for the period from
April 1992 would not necessarily be the right multiplicand from May 16 1991 to
April 26 1992 because, even if rents were stable in that period until her
daughter married in March 1992, she would have needed accommodation with three
bedrooms and there may be attributes of 15 Perch Meadows, which can reasonably
be said to have increased its value to her so long as she remained in
occupation. If so, I am not aware of them. I do not exclude that possibility.
Accordingly, I
would allow the appeal and remit the matter to the county court judge so that
he may decide what was in that relevant period the value to Mrs Ashman of the
use of the property. For the purposes of that hearing Mrs Ashman might be wise
to obtain from the local authority information as to what rent she would have
had to pay for three-bedroom accommodation for the period from May 16 1991 to
April 4 1992, had such accommodation been available.
Because the
judge was attracted by the idea that there may have been some form of estoppel,
I have considered whether what was said to Mr Ashman in February and March 1991
by the families’ officer at RAF Halton as to the payments Mrs Ashman would be
required to make if she failed to vacate might be construed as an assurance
which
their detriment. I am satisfied nothing occurred at that stage which could now
be relied upon as any form of estoppel for at least two reasons.
First, the
second defendant, Mr Ashman, verified the information, so he was not misled.
Second, the defendants did not alter their position in reliance on the
information. The first defendant maintained the position to which she was
already committed because in reality there was no escape.
Last, I must
emphasise that the circumstances of this case are unusual. Clearly the
quartering charge was well below the open market rent. But from an early stage
both the first and second defendants made it clear to the ministry that they
would be willing to accept for Mrs Ashman local authority accommodation, which
accommodation she was likely to be offered only if the ministry obtained an
eviction order against her as in the end it did. So the ministry knew how to
mitigate what was, in effect, going to be its loss. It is reasonable in this
case to measure the value to her of 15 Perch Meadows by reference to local
authority rents, just as in the Penarth Dock case it was appropriate to
consider what the defendant would have had to pay for a berth if he had moved
the pontoon elsewhere. In most cases, the measure of damages to be paid
by the trespasser in residential property will be calculated by reference to
the ordinary letting value of property in which the defendant remained as
happened in the Swordheath case.
For those
reasons I would order that this appeal be allowed and the matter returned to
Aylesbury County Court for damages to be reassessed.
Agreeing, HOFFMANN
LJ said: A person entitled to possession of land can make a claim against a
person who has been in occupation without his consent on two alternative bases.
The first is for the loss which he has suffered in consequence of the
defendant’s trespass. This is the normal measure of damages in the law of tort.
The second is the value of the benefit which the occupier has received. This is
a claim for restitution. The two bases of claim are mutually exclusive and the
plaintiff must elect before judgment which of them he wishes to pursue. These
principles are not only fair but, as Kennedy LJ demonstrated, also well
established by authority.
It is true
that in the earlier cases it has not been expressly stated that a claim for
mesne profit for trespass can be a claim for restitution. Nowadays I do not see
why we should not call a spade a spade. In this case the Ministry of Defence
elected for the restitutionary remedy. It adduced no evidence of what it would
have done with the house if the Ashmans had vacated. In my judgment, such
matters are irrelevant to a restitution claim. All that matters is the value of
benefit which the defendant has received. For reasons given by Kennedy LJ I
agree that the judge’s finding that the ministry was estopped from claiming
full value of benefit cannot be sustained.
That leaves
only the question of how one values the benefit which Mr and Mrs Ashman
received. In Swordheath Properties Ltd v Tabet [1979] 1 WLR 285
Megaw LJ said ‘in the absence of anything special in the particular case’ it
will ordinarily be the rental value of the property in the open market. This
the judge found to be £472 a month as against the concessionary licence fee of
£95 a month, which Mr Ashman had previously been charged. As the only special
feature found by the judge was the estoppel we have held to be unsustainable,
the ministry asks that we substitute a figure of £472 a month for that ordered
by the judge.
In my judgment,
however, the law of restitution is not so inflexible. The open market value
will ordinarily be appropriate because the defendant has chosen to stay in the
premises rather than pay for equivalent premises somewhere else. But such
benefits may in special circumstances be subject to what Professor Birks, in
his Introduction to the Law of Restitution, has conveniently called subjective
devaluation. This means that a benefit may not be worth as much to the
particular defendant as to someone else. In particular, it may be worth less to
a defendant who has not been free to reject it. Mr and Mrs Ashman would
probably have never occupied the premises in the first place if they had to pay
£472 a month instead of the concessionary licence fee of £95. Mrs Ashman would
certainly not have stayed in the premises at the market rate if she had any
choice in the matter. She stayed because she could not establish priority need
to be rehoused by the local authority until the eviction order had been made
against her. Once the necessary proceedings had been taken she was able to
obtain local authority housing at £145 a month.
In my
judgment, therefore, the special circumstances in this case are created by the
combination of two factors. First, the fact that Ashmans were occupying at a
concessionary licence fee. Second, the fact that Mrs Ashman had, in practice,
no choice but to stay in the premises until the local authority were willing to
rehouse her. The first factor is important because I think if the Ashmans had
voluntarily paid the ordinary market rate they could not claim that the
premises had become less to them because they could not find anywhere else to
go.
The second
factor is important because I do not think the defendant can say that the
premises were worth less to him than suitable accommodation which he could
realistically obtain. In the circumstances of this case the value to Mrs Ashman
was no more than she would have had to pay for suitable local authority
housing, if she could have been immediately rehoused. Allowing subjective
devaluation in circumstances like this case will not cause any injustice to a
landlord. If he has suffered greater loss (for example, because there would
have been a reletting at market value) it is always open to him to elect for
the alternative tort measure of damages. Although Mrs Ashman produced an
agreement of the local authority showing the rent she now pays, there was no
evidence on this point before the judge. The action must therefore be remitted
to the county court as Kennedy LJ has proposed. But, I have no doubt, the
parties will be able to agree on a figure which will, in practice, obviate the
need for a further hearing.
Also agreeing,
LLOYD LJ said: I agree with Kennedy LJ that, for reasons he has given,
the judgment below cannot stand. Although the certificate which Mr Ashman was
required to sign on June 27 1989 may be regarded as misleading, or at least
incomplete, and although the notice to vacate dated March 14 makes no mention
of the rate at which Mrs Ashman would be required to pay damages if she
remained in possession as a trespasser, these matters provide no basis on which
the judge could make a finding of estoppel. I also agree that the case will
have to be remitted to Aylesbury County Court in order to determine the amount
which the plaintiffs are entitled to recover, unless the parties can reach
agreement in the mean time. But in other respects I find myself approaching
this case along rather different lines from Kennedy and Hoffmann LJJ.
The
plaintiff’s claim is for possession of the premises and for the payment of
mesne profits. There is no problem as to the claim for possession. As to mesne
profits they are, as I understand it, simply damages for trespass recoverable
against a tenant who holds over after the lawful termination of his tenancy. A
claim for mesne profits is thus to be distinguished from an action for use and
occupation where the tenant holds over with the consent of his landlord. The
former action is grounded in tort, the latter in quasi-contract. So far as I
know, it has never been held that in the former case the landlord has the
option of waiving the tort and claiming restitution unless, of course, the
landlord consents to the holding over, which is not suggested here. In the
present case Mr Huskinson, for the plaintiff, contends that he is entitled to
ask for restitution and Kennedy and Hoffmann LJJ have so held.
There are two
difficulties about that. In the first place the pleaded case is a claim for
damages for trespass and nothing else. This is not surprising since the second
notice to vacate given on May 17 1991 makes clear that, if Mrs Ashman failed to
comply with that notice, damages for trespass would be claimed against her.
This is what the plaintiff has done. There has never been any application to
amend the pleading so as to claim restitution in the alternative.
Second, it is
very doubtful, as the law now stands, whether the restitutionary remedy is
available in the case of wrongful occupation
out in Goff and Jones on Restitution 3rd ed at p607. Three reasons are
discussed. The substantial reason is that it was so decided by the majority of
this court in the case of Phillips v Homfray (1883) 24 ChD 439.
The editors of Goff and Jones express the view that Phillips v Homfray
should be overruled and the dissenting judgment of Baggalay LJ preferred. But Phillips
v Homfray was recently followed obiter by Lane J in the case of Morris
v Tarrant [1971] 2 QB 143 and is, in any event, binding on us. We would
be rash indeed to express a view about Phillips v Homfray without
having heard full argument on both sides. We have not had that advantage in
this case. So, with respect, it was not open to Mr Huskinson to elect in this
case to claim restitution even if he had pleaded such a claim.
Where does
that leave us? Mr Huskinson told us that
if the plaintiffs could not claim restitution, they could recover nothing at
all since they had failed to prove any damage. I think in that respect he did
less than justice to his client’s claim. It is true that the plaintiff did not
prove that it had an alternative tenant who was waiting to move in. But that
does not mean it cannot claim and recover damages. This was the very point
decided in the case of Swordheath Properties Ltd v Tabet [1979] 1
WLR 285. In that case Judge Solomon had held that, since the landlord had
failed to adduce any evidence that it would have been able to relet the
premises, it had failed to prove any damages. The Court of Appeal exposed the
error.
Megaw LJ said
at p288:
It appears to
me to be clear, both as a matter of principle and of authority, that in a case
of this sort the plaintiff, when he has established that the defendant has
remained on as a trespasser in residential property, is entitled, without
bringing evidence that he could or would have let the property to someone else
in the absence of the trespassing defendant, to have as damages for the
trespass the value of the property as it would fairly be calculated; and, in
the absence of anything special in the particular case it would be the ordinary
letting value of the property that would determine the amount of the damages.
I find nothing
in that passage which suggests that Megaw LJ thought he was enforcing a
restitutionary remedy. He was clearly awarding damages for trespass. The same
is true of the case of Penarth Dock Engineering Co Properties Ltd v Pounds
[1963] 1 Lloyd’s Rep 359, the decision of Lord Denning MR at first instance.
There is perhaps a whiff of restitution in the latter case, because of the
statement that damages should be assessed by reference to the benefit to the
defendant rather than loss to the plaintiff. But it was still a claim for
damages and nothing else; and the reference to benefit in Lord Denning’s
judgment is perhaps explained by Lindley LJ’s judgment in Whitwham v Westminster
Brymbo Coal & Coke Co [1896] 2 Ch 538. That was the case in which the
plaintiff tipped soil on to the defendant’s land. Lindley LJ said that the
plaintiff had been injured in two respects. In the first place the value of its
land had been diminished. In the second place it had lost the use of its land
and the defendant had it for its own benefit. But both these aspects of the
plaintiff’s claim, it will be noted, were regarded as injuries to the
plaintiff. That is why the editor of McGregor on Damages para 15-18 does
not regard this line of cases as an exception to the general rule stated by
Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas
25 at p39, but rather as special cases where the plaintiff can apparently
recover more than his loss.
What, then, is
the measure of damages in a claim for mesne profits? In the vast majority of cases it will be at
the same rate as the previous rent: see Halsbury’s Laws of England 4th
ed vol 27 para 255 footnote 3. If the market has risen, the landlord may
recover more: see Clifton Securities Ltd v Huntley [1948] 2 All
ER 283. Presumably, if the market has fallen, he will recover less. I see no
difficulty in the landlord recovering damages at the market rate even though he
has adduced no evidence that he would or could have relet the property. That
is, as was held in Swordheath, the appropriate measure of damages in the
normal case. But the question still remains whether the present case is indeed
normal.
The judge
obviously thought that it was. It is here, in my judgment, that he went wrong.
The valuer, whose evidence the judge accepted, based her valuation on a similar
type of house on a similar estate. But the reality is that the Ministry of
Defence is not a normal landlord and Mr Ashman was not a normal tenant.
In Woodfall
on Landlord and Tenant vol 1 para 19.013 I find:
The amount of
the mesne profits for which the trespasser is liable is an amount equivalent to
the ordinary letting value of the property in question. This is so even if the
landlord would not have let the property in question during the period of
trespass.
Where the
rent payable under the former lease is the fair letting value of the property,
mesne profits are awarded at the rate of the rent; but if the rent is less than
the true letting value of the premises, then mesne profits may be awarded at a
rate exceeding the rent. The precise basis of valuation for the purpose of
calculating mesne profits is not the subject of authority. It is considered,
however, that the valuation should be on the basis of a short term letting at a
rack rent on the terms which would in practice form the terms on which the
landlord would let.
There was some
evidence in the present case that married quarters are occasionally let on the
open market. But I am unwilling to accept on the evidence that that would be
anything other than exceptional. The terms on which the plaintiff would have
been likely to relet, if it had, are surely the same as the terms on which it
had previously let to Mr Ashman. It is for the plaintiff to prove its damages.
It does not have to adduce evidence that it would have let to another tenant,
but it does have to show what the rent would have been if it had. It has failed
to satisfy me that it would, in practice, have recovered any more than the
artificially low level of rent applicable in the case of married quarters
occupied by members of Her Majesty’s services. That, therefore, should be its
measure of damages. It might, of course, have recovered more by way of
liquidated damages if there had been a suitable provision in the certificate
which Mr Ashman signed on July 27 1989. But there was no such provision.
I thus find
myself in substantial agreement with the argument put forward by Mrs Ashman in
her letter of April 7 1992 where she says:
To sum up,
the Ministry of Defence cannot claim market rate on property as they cannot let
the property on the open market. The rent they would normally receive for
property amounts to approximately £100 per month. I feel that given they have
created this catch 22 position themselves by their failure to evict me
immediately they should continue charging the normal rent in the interim.
For ‘cannot
let the property at the open market’ I would substitute ‘would not in practice
have let the property on the open market’. Otherwise, I agree. I would,
therefore, have remitted the case with a direction to the judge to assess
damages on the basis which I have outlined. But as Kennedy and Hoffmann LJJ
have taken a different view, I am content to go along with the basis proposed
by Kennedy LJ, that the damages should be based on the value of the benefit to
Mrs Ashman. It may be that, in the end, it will not make much difference in
terms of money.
Appeal
allowed and case remitted to Aylesbury County Court.
