Trespass – Advertising hoarding – Damages – Claimant obtaining judgment against defendant for trespass to its airspace by erection of hoarding – Judge at first instance awarding damages representing entirety of licence fees earned by defendant from advertising – Decision overturned and case remitted for trial on quantum of damages – Whether appropriate to apportion licence fees between claimant as owner of airspace and defendant as owner of wall and hoarding – Damages awarded accordingly
The defendant owned a building on Finchley Road, London NW3, on the flank wall of which it displayed, with planning consent, an advertising hoarding that an advertising company was permitted to use in return for a licence fee. The hoarding faced out across an adjacent cleared development site belonging to the claimant and was visible to passing traffic. In 2004, the claimant’s predecessor in title served the first defendant with a notice requiring it to remove the hoarding on the ground that it projected out into its airspace and constituted a trespass. The hoarding was removed in 2008. In that year, the claimant purchased the development site and took an assignment of the vendor’s rights in respect of the hoarding.
The claimant then brought claim for damages for trespass for the period from January 2005, when the 2004 notice requiring removal of the hoarding had expired, to the date of its eventual removal. That claim was allowed and, at first instance, damages of £313,972 were awarded, representing the entirety of the licence fees that the defendant had earned from the hoarding during that period: see [2009] EWHC 2942 (Ch). The defendant was successful in an appeal against that decision and the matter was remitted for a hearing on quantum.
The claimant contended for damages assessed by reference to a hypothetical licence fee for the use of its land, taking into account that it would be entitled to erect its own hoarding entirely on its own land, obscuring the defendant’s hoarding; it submitted that the hypothetical negotiation would result in it taking most of the profits from the defendant’s hoarding with the defendant retaining only £42,000, being 13.4% of the gross licence fee. The defendant contended that the site owner would not achieve better than a 50/50 split in negotiations.
Held: Damages were awarded accordingly.
In cases of this kind, it was appropriate to award damages based on a hypothetical negotiation between a willing buyer and a willing seller at the appropriate time; in the instant case, that was accepted to be the date when the trespass began. Events after the valuation date should generally be ignored. Personal characteristics of the parties, as opposed to the objective facts with which they were faced, were to be disregarded. The fact that one party might have refused to agree was irrelevant but, where one party held a trump card and could have prevented the defendant from obtaining any benefit, that would be relevant. The exercise was to ascertain the value of the trespass to a reasonable person in the position of the particular defendant, namely the price that a reasonable person would pay for the right of user, or the sum of money that might reasonably have been demanded for permitting the trespass: Wrotham Park Estate Co v Parkside Homes Ltd [1974] 1 WLR 798, AMEC Developments Ltd v Jury’s Inn Hotel Management (UK) Ltd (2001) 82 P&CR 22, Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] EWCA Civ 430 and Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2009] UKPC 45; [2010] BPIR 73 applied.
The claimant was entitled to damages representing the licence fee that would have been payable as a result of the hypothetical negotiation to grant a licence to the defendant enabling the hoarding to overhang the claimant’s airspace. That was a different question from a pure split of the proceeds received from the advertising company. Reasonable parties negotiating a licence fee in the weeks leading up to January 2005 would have consulted experts and would have become aware that many wayleave agreements granted in similar circumstances resulted in a 50/50 split. They would also have been aware of the difficulties and inconvenience of either seeking an injunction to stop the use of the hoarding as an advertising site or of trying to erect another hoarding in from of it to enable the site owner to obtain 100% of the available income for itself, and of the uncertainty, costs and delays associated with any application for planning permission for the latter course. Those factors would make it more attractive for the site owner to settle for an immediate share of the proceeds of the existing and lucrative advertising deal and thereby obtain a percentage of a secure income, rather than the whole of a risky one. In such circumstances, the trump card held by the claimant was not overwhelming. Both sides brought important benefits to the negotiations and both would have had strong pressures to reach a reasonable compromise. They would have negotiated a licence fee payable to the site owner amounting to 50% of the expected revenue from the advertising licence and, accordingly, that was the sum that should be awarded by way of damages, resulting in an award of £156,986.
John Furber QC (instructed by Thrings LLP) appeared for the claimant; Janet Bignell (instructed by Mills & Reeve LLP) appeared for the defendant.
Sally Dobson, barrister
