Damages in lieu of injunction – Measure of damages – Claimants building extension encroaching on defendant’s land – Court awarding damages in lieu of injunction – Court assessing quantum of damages – Whether departure from normal valuation date appropriate – Assessment of damages made
In the underlying proceedings, the claimants sought, inter alia, a declaration that the boundary between their property and that of the defendant did not encroach upon the latter’s land. They also sought justification of the original land transfer and consequential rectification of the registers of title at the Land Registry. Those claims failed, as did the defendant’s counterclaim for an injunction to remove the part of the claimants’ extension to their property that constituted a trespass to her land. Instead, the judge ordered the claimants to pay the defendant damages to be assessed under section 50 of the Supreme Court Act 1981, which conferred on the court a power to award damages as well as, or in substitution for, an injunction or specific performance.
The claimants had also made a claim for damages pursuant to section 3 of the Protection From Harassment Act 1997, and the defendant was directed to pay the claimants £3,000 in respect of that claim, which was to be set off against the damages awarded to the defendant. A separate hearing was subsequently held for the assessment of damages.
The defendant argued that the proper approach was to consider the sum that would have been reached in negotiations between the parties had each been making reasonable use of their respective bargaining positions without holding out for unreasonable amounts. The claimants argued that the court was not limited to any specific basis for assessing damages in lieu of an injunction. Damages should compensate the defendant for any loss that she had sustained by reason of the trespass by the claimants and the award was not restitutionary in nature.
Held: The assessment of damages was made.
Nothing in the present case would justify the court departing from the normal rule. Bearing in mind that negotiating damages under the 1981 Act were meant to be compensatory and were normally to be assessed or valued as at the date of the breach, principle and consistency indicated that post-valuation events were usually irrelevant. In the light of the quasi-equitable nature of such damages, the judge might direct a departure from the norm where there were good reasons for doing so, either by selecting a different valuation date or by directing that account be taken of a specific post-valuation-date event.
The valuer would assume that the price was being negotiated between a willing grantor and a willing grantee, each of which was looking to agree a proper basis for the grant. The actual conduct of the parties was irrelevant and it was to be assumed that the hypothetical parties would put forward their best points in the negotiations, which would have taken place before the transgression occurred. Moreover, the parties were assumed to know what real people in the same position would have been able to discover: Horsford v Bird [2006] UKPC 3; [2006] 1 EGLR 75; [2006] 15 EG 136, Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] EWCA Civ 430; [2006] 2 EGLR 29; [2006] 25 EG 210 and AMEC Developments Ltd v Jury’s Hotel Management (UK) Ltd [2001] 1 EGLR 81; [2001] 07 EG 163 considered; Johnson v Agnew [1979] 2 EGLR 146; (1979) 251 EG 1167 distinguished.
In any negotiation, the expert valuer’s calculations, science and rationality could take the matter only so far. At the end of the day, the deal had to feel right. The damages questions in the instant case were a matter of judgment that was incapable of strict rational, logical exposition from beginning to end.
Taking account of all those considerations, the appropriate net award to the defendant, inclusive of interest, was £17,220.
Stephen Lennard (instructed by Burkill Govier) appeared for the claimants; William Hansen (instructed by Mackrell Turner Garrett, of Woking) appeared for the defendant.
Eileen O’Grady, barrister
