One of the oddest (and probably most expensive) trespass cases we have reported (see here for the first Court of Appeal report) has ended up back in the Court of Appeal yet again.

Eaton Mansions (Westminster) Ltd v Stinger Compania De Inversion S.A. [2013] EWCA Civ 1308

As a very brief recap, Eaton Mansions (EM) were the head leaseholder of a mansion block. Stinger (S) had the lease of a number of flats. Stinger had mounted huge air conditioning units on the roof without EM’s consent (and EM would have required the freeholder’s consent too – the Grosvenor Estate), and then refused the remove them. Stinger conducted the subsequent litigation in a manner described as ‘unreasonable’ and ended up losing a claim for trespass and having to pay EM’s costs at the indemnity rate.

This appeal concerned damages, arising from the hearing for assessment of damages that had followed the Court of Appeal hearing on liability that we previously reported (do keep up at the back there).

At that hearing, the Judge had found that there was no increase in the rents or sale value of Stinger’s flats (which had been sold in 2010) due to the trespass. Damages were assessed on the basis of the value of a hypothetical licence to install the air con units, assessed at £6,000, plus the limited direct loss to EM of £1,716 in the costs of removing the air con units. The hypothetical licence was taken by the Judge to have been for the period of the trespass up to the point Stinger sold the flats in March 2010.

EM appealed on two grounds:
i) The Judge should have valued the damages on the basis of the value of a licence for the whole of the remainder of the term of the sub-leases.
ii) The Judge should have awarded aggravated damages on the basis of Springer’s conduct.

On i) the Court of Appeal considered various statements of principle, following on from s.2 of the Chancery Amendment Act 1858 (Lord Cairns’s Act), including Attorney-General v Blake [2001] 1 AC 268 and Sinclair v Gavaghan [2007] EWHC 2256 (Ch). The decision was that, contrary to the general rule in AMEC Developments Ltd v Jury’s Hotel Management (UK) Ltd (2001) 82 P&CR 22 that ‘post valuation events’ should not be considered in awarding damages, here:

the court has to have regard to the actual period of trespass and to treat the parties as having negotiated on that basis because to do otherwise would disconnect the licence fee and therefore the damages from the legal wrong for which they are intended to provide compensation. In this case, Stinger would be required to pay for rights which their trespass never gave them and for a loss which EML never suffered. […]

Although the hypothetical negotiations for a licence fee have been adopted as a convenient means of valuing the benefit to the trespasser (and, in that sense, the loss to the claimant) which results from the defendant’s tortious conduct, its accuracy depends upon the negotiations centering on the period and extent of the trespass which actually occurred. The nature and duration of the trespass is not a valuation event in the sense in which that term was used in Lunn Poly but rather it is what dictates and shapes the nature of the valuation exercise. It is therefore wrong to say that the parties would not have known at the commencement of the trespass how long it would last. The valuation construct is that the parties must be treated as having negotiated for a licence which covered the acts of trespass that actually occurred. The defendant is not required to pay damages for anything else.

EML’s argument that Mr Jafar [Stinger] would not have been interested in a licence which subsisted only until 2010 is doubtless true. But since Stinger’s trespass gave it no more than that, there is no other basis for valuing the gain which Stinger actually achieved.

The award of damages by the first instance Judge was right.

On ii) aggravated damages, the first instance Judge had declined to award these, not because Stinger’s conduct wouldn’t justify such an award (high-handed, insulting or oppressive: Horsford v Bird [2006] UKPC 3), but because an award was intended to compensate for distress and injury to feelings. EM was a company, and therefore could not suffer distress and injury to feelings.

The Court of Appeal held that the position would be perfectly clear, were it not for Messenger Newspapers Group Ltd v National Graphical Association (1982) [1984] IRLR 397. In that case there had been an award of aggravated damages to a company. However, there had been no other cases that had followed that one. The Court of Appeal considered that the Judge’s reasoning for the award in Messenger did not really deal with the issues involved and that it was wrongly decided.

There can be no award of aggravated damages to a limited company simply because a company is not capable of injured feelings.

Appeal dismissed on both grounds.

This may be the end of this case, though somehow I wouldn’t be surprised if it wasn’t. A claim that has been to the Court of Appeal twice, that had involved Stinger putting in costs estimates of £150,000 for the application for permission to appeal and a one day appeal hearing, or £47,000 for an application to adduce further evidence, much to the Court’s incredulity, and that resulted in indemnity costs on damages of some £7,000, has now seen the successful Claimant lose on appeal and likely face a hefty costs hit in doing so. Somehow the actual damages figure doesn’t seem to be the issue for either party…

Still, at least it cleared up a couple of points of law on damages for trespass.