Mesne profits — Calculation — Whether mesne profits calculated by reference to previous rent or benefit to trespasser
In July 1989
Sergeant Thompson, his wife, the defendant and their three children occupied a
four-bedroom house at 31 Gunner Lane, Woolwich, London SE18, under a licence
granted by the Ministry of Defence. The licence fee was £104 a month, which was
considerably less than the rent for which the house could, if the ministry had
been so minded, have let in the open market. In August 1991 Sergeant Thompson
left his wife and on September 2 the ministry gave Mrs Thompson notice to leave
the house by December 3. On February 12 1992 the ministry issued proceedings
claiming possession and mesne profits from December 4 1991. At the hearing
evidence was adduced by the ministry that the market rental value of the
premises was £113.35 per week. The judge made a possession order and gave
judgment for mesne profits calculated by reference to the previous rent rather
than the open market rent. The ministry appealed the latter part of the
judgment.
were established in Ministry of Defence v Ashman [1993] 40 EG
144, [1993] 2 EGLR 102, namely: (1) an owner of land which is occupied without
his consent may elect whether to claim damages for the loss which has been
caused or restitution of the value of the benefit which the defendant has
received; (2) the fact that the owner if he had obtained possession would have
let the premises at a concessionary rent, or even would not have let them at
all, is irrelevant to the calculation of the benefit for the purposes of a
restitutionary claim. What matters is the benefit which the defendant has
received; (3) a benefit may be worth less to an involuntary recipient than to
one who has a free choice as to whether to remain in occupation or move
elsewhere; (4) the value of the right of occupation to a former licensee who
has occupied at a concessionary rent and who has remained in possession only
because she would not be rehoused by the local authority until possession has
been made would, ordinarily, be whichever is the higher of the former
concessionary rent and what she would have paid for local authority housing
suitable for her needs if she had been rehoused at the time when the notice
expired. On the evidence before the judge he was entitled to determine the
value at the figure which he did.
The following
case is referred to in this report.
Ministry
of Defence v Ashman [1993] 2 EGLR 102; [1993]
40 EG 144
This was an
appeal by the plaintiff, the Ministry of Defence, from a decision of Judge Cox
in Woolwich County Court, who determined the amount of mesne profits payable by
the defendant, Mrs Thompson, in respect of her continued occupation of 31
Gunner Lane, Woolwich, following the termination of a licence granted to her
husband, Sergeant Thompson.
Patrick
Routley (instructed by Walter Stein & Grover) appeared for the appellant;
Sharon Tregaskis (instructed by Hudgell & Partners) represented the
respondent.
Giving the
first judgment at the invitation of Glidewell LJ, HOFFMANN LJ said: This
appeal from Judge Roger Cox in Woolwich County Court concerns the calculation
of mesne profits payable by a deserted army wife who remains in occupation in married
quarters after her husband’s licence to occupy the premises has been
terminated.
Sergeant
Thompson, with his wife and three children, occupied a four-bedroom house known
as 31 Gunner Lane, Woolwich, under a licence granted by the Ministry of Defence
in July 1989. The licence fee, which for convenience I shall call the rent, was
£104 a month. This was considerably less than the rent for which the house
could, if the ministry had been so minded, have been let in the open market.
The licence
was terminable in various circumstances including a change in marital status,
which was defined to include a husband and wife ceasing to live together.
In August 1991
Sergeant Thompson left his wife and on September 2 the ministry gave Mrs
Thompson notice to leave the house by December 3. There is no dispute over the
validity of this notice. Mrs Thompson did not leave because she had nowhere to
go and she could not establish a priority need to be rehoused by the local
authority until an order for possession had been made by the court. On February
12 1992 the Ministry of Defence issued proceedings claiming possession and
mesne profits from December 4 1991.
On March 26
1992 Judge Cox made an order for possession which was not resisted. For the
purposes of calculating mesne profits, the ministry adduced the evidence of a
surveyor, who said that the market rental value was £113.35 a week or a little
less than £500 a month compared with the previous concessionary rent of £104 a
month.
The judge gave
a short judgment in which he said that mesne profits should be calculated by
reference to the previous rent rather than the open market value.
I think it is
fair to say that the judgment gives no reasons for this choice, but the judge
added a note saying that it was his understanding that the only use of the
premises by the ministry was for letting to service personnel.
The ministry
appeals against this part of the order and asks this court to substitute an
order for mesne profits calculated by reference to market value.
A similar point
came before this court somewhat differently constituted in the case of Ministry
of Defence v Ashman*, which concerned the wife of a flight sergeant
in the Royal Air Force and which was decided on April 1 1993.
*Editor’s
note: Reported at [1993] 2 EGLR 102 anti.
In spite of Mr
Patrick Routley’s submissions that Ashman is distinguishable, its principles
are, in my judgment, equally applicable to this case. In both cases the husband
of the defendant in possession had been occupying as a serviceman at a
concessionary rent, and in both cases the defendant wife remained in possession
involuntarily in the sense that she could not, in practice, move out of the
premises until there had been an order of the court by which she could
establish her priority need to be rehoused.
The principles
in Ashman may, in my judgment, be summarised as follows: first, an owner
of land which is occupied without his consent may elect whether to claim
damages for the loss which he has been caused or restitution of the value of
the benefit which the defendant has received.
Second, the
fact that the owner, if he had obtained possession, would have let the premises
at a concessionary rent, or even would not have let them at all, is irrelevant
to the calculation of the benefit for the purposes of a restitutionary claim.
What matters is the benefit which the defendant has received.
Third, a
benefit may be worth less to an involuntary recipient than to one who has a
free choice as to whether to remain in occupation or move elsewhere.
Fourth, the
value of the right of occupation to a former licensee who has occupied at a
concessionary rent and who has remained in possession only because she could
not be rehoused by the local authority until a possession order has been made
would ordinarily be whichever is the higher of the former concessionary rent
and what she would have paid for local authority housing suitable for her
needs, if she had been rehoused at the time when the notice expired.
In the present
case, the only evidence before the judge was the former rent and the open
market value. The judge was, in my
value as of providing him with no assistance as to the value of the benefit
received by Mrs Thompson. He had no evidence of what Mrs Thompson would have
had to pay for suitable local authority housing.
In those
circumstances, the only relevant figure before the judge was the previous rent,
which represented a minimum in the sense that it was what Mr and Mrs Thompson
had voluntarily been willing to pay for that house and, therefore, must have
been the minimum value of the benefit of occupation to them.
Mr Routley
does not ask that the case be remitted to the county court judge to determine
whether the benefit might have been of greater value and I have some doubt as
to whether it would, in any event, be appropriate to do so.
In my
judgment, on the evidence before the judge he was entitled to determine the value
at the figure which he did and the appeal should therefore be dismissed.
GLIDEWELL
LJ and SIR JOHN MEGAW agreed and did not add
anything.
Appeal
dismissed.
