In this case, the Court of Appeal considered whether on an assessment of damages for trespass, the parties are taken to be negotiating for a licence period equivalent to the actual duration of the trespass which has occurred, or for some more extensive period, and whether the Court is able to make an award of aggravated damages in favour of a company.
In June 2007, the Respondent and Tenant of two flats, Stinger Compania De Inversion S.A. (“Stinger”), placed two air-conditioning units on the roof of the building, outside of the demise of the flats and without the consent of the Landlord, and Appellant, Eaton Mansions (Westminster) Ltd (“EML”). The Leases were subsequently assigned in March 2010. Upon completion of the sale, the new tenants sought, and obtained, consent for the trespass from EML. EML brought a successful claim against Stinger for the trespass and on assessment was awarded damages in the sum of £6,000. EML subsequently appealed the assessment of damages and the Court of Appeal’s decision is considered below.
Assessment of Damages
EML accepted that it had suffered little direct loss from the trespass however their claim was for substantial damages, calculated by reference to what Stinger would have agreed to pay at the outset for a licence to place the air-conditioning equipment on the roof, therefore extending beyond the limited period of trespass, to include the residue of the lease. EML argued that it was clear that Stinger wanted to obtain a right to install permanent air-conditioning, which would be assignable on sale, and therefore the damages should be assessed accordingly.
The Court noted that the general principle regarding assessment of damages is that they are compensatory for loss or injury. As is commonplace in trespass cases, and as occurred in this case, a trespasser who enters another’s land may cause the landowner little, or no, financial loss. Accordingly, the common law has long recognised that in such a case, damages are measured by the benefit received by the trespasser by the use of the land. The damages recoverable will be the price a reasonable person would pay for the right of use. Further, they recognised that as a result of Section 2 of the Chancery Amendments Act 1858, the Court have the right to assess damages to include losses likely to follow from the anticipated future continuance of the wrong, as well as the loss suffered before the claim is issued.
In considering EML’s arguments, the Court noted that a property right has value to the extent only that the court will enforce it or award damages for its infringement. The Court confirmed that although hypothetical negotiations for a licence fee have been adopted as a convenient means of valuing the benefit to the trespasser resulting from their trespass, its accuracy depends on the negotiations centering on the period, and extent, of the trespass which actually occurred. The parties must be treated as having negotiated for a licence which covered the acts of trespass that actually occurred; the Court held that the trespasser cannot be compelled to pay damages for anything else. On this basis, the Court could not award damages for EML’s loss of opportunity in being able to negotiate a licence fee for what Stinger would have been prepared to pay for a permanent, assignable, right to place the air-conditioning units of the roof. Instead, EML were limited to recovery of what Stinger would have paid for the rights which it illegally obtained. The Court held that the trespass ceased upon assignment of the Lease and therefore the judge was right in the award for damages that he made.
In the alternative, EML sought aggravated damages for the way in which Stinger conducted itself in connection with the trespass. In considering this, the Court found that aggravated damages are designed to compensate for distress and injury to feelings. They confirmed that a company has no feelings to injure and accordingly no such an award was possible.
This case is a useful reminder that damages for trespass cannot be based on the claimant’s loss of opportunity to negotiate a higher licence fee for the grant of the licence, but that the claimant is limited to recovering what the trespasser would have paid for the rights it actually obtained, albeit illegally. Further, it provides confirmation that a company cannot be awarded aggravated damages.
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