| DAMAGES — Trespass — Measure of damages — Claim for injunction to restrain council from continuing its trespass — Whether council liable for trespasses of its tenants — Whether damages recoverable on hypothetical negotiation basis
Field Common Ltd v Elmbridge Borough Council [2008] EWHC 2079 (Ch); [2008] WLR (D) 298
Ch D: Warren J: 27 August 2008
The correct approach to the assessment of damages on a landowner’s claim against a council in respect of its tenants’ trespasses was the hypothetical negotiation approach, based on what the council would have paid on a hypothetical negotiation between the claimant and the council for the grant to the council of the necessary rights.
Warren J, sitting in the Chancery Division, so held when assessing damages on the claim by the claimant, Field Common Ltd, that the defendant, Elmbridge Borough Council, the owner of an industrial estate south of the claimant’s land, had trespassed on a strip of the claimant’s land by causing tarmac to be laid, continuing to maintain the tarmac and permitting its servants, agents and/or licensees to pass on foot and with vehicles over the strip of land. The claimant sought an injunction restraining the council from continuing its trespass and/or damages in lieu of an inunction.
WARREN J said that the claimant sought an alternative measure of damages on the basis that the council was liable for the acts of trespass by its tenants of the units on the industrial estate and that it should pay a sum which it would have agreed to pay following a negotiation between two hypothetical parties in the position of the claimant and the council. Lord Nicholls of Birkenhead had considered the relevant principles in Attorney General v Blake [2001] 1 AC 268, 277–287. Where the hypothetical negotiation had been adopted, it was the case that the value of the benefit to the particular defendant could be seen to be the value of the benefit which any person in the position of the defendant would receive. Where it was not so, a hypothetical negotiation might not give the right answer, or, if that approach none the less had to be applied, it would be important to recognise that it was designed to establish the value of the wrongful use to the defendant and not some objective person as between hypothetical persons negotiating for a hypothetical licence: even if damages were seen as compensation for loss of an opportunity to negotiate, that negotiation would be one between the actual parties, albeit that they were to be treated as parties willing to deal with each other with a view to reaching a reasonable result. The authorities all concerned a claimant whose rights had been infringed by a defendant who had himself obtained the benefit of the wrong. The position was different in the present case because it was, principally, the tenants and their visitors who had enjoyed the benefit of access. The council was not itself the actual trespasser. The alternative measure had been seen by Lord Nicholls as an exception to the general rule; to hold the council liable on the hypothetical negotiation basis would represent an extension to the exception from that general rule. It was right in principle that the claimant should recover compensation in respect of the benefits which the council had enjoyed as a result of the tenants’ trespass; such benefit as the council had enjoyed was to be treated as if it were an enjoyment of the land itself in respect of which the claimant was entitled to recover damages. Although it had an even greater flavour of a restitutionary remedy than was found in Ministry of Defence v Ashman [1993] 2 EGLR 102, it was a principled extension of the approach which Lord Nicholls explained and of which he approved. The exception to the general rule should be extended. Accordingly, the correct approach to the assessment of damages was the hypothetical negotiation approach; it was an approach which reflected the justice as between the parties. That was, however, a conclusion which was critically dependent on the factors which were to be taken into account in the hypothetical negotiation envisaged.
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