Ramzan v Brookwide Ltd

Residential property – Trespass — Flying freehold — Appellant permanently expropriating respondent’s property — Respondent obtaining award of damages for continuing and continuous infringement of right of use and enjoyment of property – Court assessing damages under various heads — Whether judge erring in law in treating various heads of damage separately resulting in double recovery — Appeal allowed in partM had purchased a property from the appellant property investment company. The property was operated as a restaurant on the ground floor with a function room on the first floor. There was also a flying freehold of a first-floor store room over adjacent premises that the appellant also owned and that provided a fire escape. The storeroom was accessible only from M’s property. When the property was transferred to M, the title registered in his name had not referred to the storeroom. The appellant subsequently transferred the adjacent property to a subsidiary company (B); the property, including title to the storeroom, was registered in its name. The adjacent property was converted into self–contained flats incorporating the storeroom. Following M’s bankruptcy, the property was transferred to the respondent, who sought a declaration that B should not be the registered proprietor of the storeroom and that he had been deprived by B of the use and enjoyment of his property. He also sought an order for rectification of the Land Register, under section 65 of the Land Registration Act 2002, so as to show that the storeroom formed part of the title to his property, or aggravated or exemplary damages or both.Following a trial on liability, the appellant was held liable to the respondent in damages for the continuing (and continuous) infringement of his rights to enjoy the use of his property. At a separate hearing, the court assessed those damages and made awards including interest totalling £588,517.43 in respect of damages for loss of profit relating to the function room, breach of trust, mesne profits, loss of access to the fire escape and exemplary damages: see [2010] EWHC 2453 (Ch); [2010] PLSCS 286. The appellant appealed, contending, inter alia, that the judge had erred in law by treating the various heads of damage separately rather than looking at them overall to check for duplication.Held: The appeal was allowed in part. (1) The judge had erred in assessing damages for loss of profit when she reasoned that, but for the misappropriation of the store room, the respondent would have acquired the property with a flourishing first-floor function room business. At the time the respondent acquired the premises, the first-floor function room business did not exist. The trespass was continuing and he could therefore sue in respect of it, but his only claim would be that the trespass had prevented him from re-establishing the earlier use of the first floor as a function room. That would take some time, and therefore some deduction should be made for it. On a conservative estimate, a deduction of six months’ profits (£12,000) was appropriate. (2) The claim for damages for breach of trust and the claim for loss of profit were not cumulative but alternative and inconsistent remedies. To award both would award the respondent damages measured both by the appellant’s and by his own loss. He could not use the store room for the purposes of the first-floor function room at the same time as the appellant obtained a profit for renting out the first floor using the store room. The two claims were not therefore cumulative merely because they related to different areas. The court had to treat the respondent as having elected to receive the larger award. He should therefore receive the damages for loss of profits and not the damages for breach of trust: Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514 and Severn Trent Water Ltd v Barnes [2004] EWCA Civ 570; [2004] 2 EGLR 95; [2004] 26 EG 194 applied.(3) A claim for mesne profits could be on the basis of the amount that the claimant would have obtained had it let the property and it did not have to show that it would have let the premises in the relevant period. In the instant case, it had not been suggested that the respondent would have let the store room on its own because he would have had to retain access to the fire escape. That access would have been only through the first-floor function room.When applying the principles of election, the court had to look to the substance of the award, not its form. Although an award of mesne profits had a compensatory element, in that it provided a remedy for the loss of the use of the room, and mesne profits might be used to measure the compensation to be given to a claimant for the loss of the use of its property, in the instant case, the predominating element was that of reversing the benefit that the appellant obtained by having the use of the room. But for that element, the claim for mesne profits would not have succeeded and it could not have succeeded as a pure claim for compensatory damages under the general law because no loss had arisen in that respect. The loss caused by the misappropriation of the store room was the inability to use the first-floor function room for the purposes of the restaurant. The respondent could not establish any further loss and the award therefore had to represent the amount of the benefit that the appellant obtained. On that basis, the mesne profits should not have been awarded in addition to the damages for loss of profits: Minister of Defence v Ashman [1993] 2 EGLR 102; [1993] 40 EG 144; Attorney-General v Blake [2001] 1 AC 268 and Devenish Nutrition Ltd v Sanofi-Aventis SA [2008] EWCA Civ 1086; [2009] Ch 390 considered.(4) Having decided that an injunction should not be granted to prevent the continuing trespass, the judge had determined that the respondent should be awarded an amount equal to the diminution in value of the property due to the loss of the store room (including the fire escape), plus mesne profits for the period he had been unable to use his property. The respondent’s interest in the store room had been extinguished on payment of its value and the continuing tort had been terminated. The respondent no longer owned the store room and, not having reserved the right to recover any further losses, could not seek damages for trespass for any subsequent loss of profits. Furthermore, the £55,000 awarded in respect of the diminution in the capital value of the property covered the loss of the fire escape. Having agreed that figure, the respondent could no longer recover damages for the loss of the fire escape in some other form.(5) The appellant’s misappropriation of the store room had a continuing effect, not only on the property but on the respondent’s life as well as that of his father. In those circumstances, exemplary damages could be awarded in favour of the respondent, taking account of the fact that he did not experience the immediate events during his period of ownership as his father had done. The judge’s award of £60,000 would be reduced by two thirds to £20,000, which still reflected the fact that the appellant’s conduct in misappropriating the store room was an unacceptable way of resolving the issues as to the ownership of property.(6) The judge had not made an adequate provision in the rate of interest for the fact that the items on which interest accrued became payable on succeeding dates so that interest was not payable on the full amount for the entire period. Her award of interest had to be set aside and replaced by an appropriate order, applying the practice adopted in Dexter v Courtaulds Ltd [1984] 1 WLR 372, which equally applied to cases other than personal injury cases.Mark Anderson QC and David Mitchell (instructed by Bude Nathan Iwanier Solicitors) appeared for the appellant; Leslie Blohm QC and John Stenhouse (instructed by Silks Solicitors, of Oldbury) appeared for the respondent.Eileen O’Grady, barrister