Ramzan v Brookwide Ltd

A claimant may advance distinct heads of loss arising from trespass, but the court must examine their substance and prevent double recovery.

Compensatory damages measured by the claimant’s lost profits and a gain-based account for the defendant’s profit from the same misappropriation are alternative and inconsistent remedies. The claimant must take the higher remedy, not both. Mesne profits are likewise unavailable where, in substance, they would duplicate compensation for the same lost use.

Agreed compensation for the capital loss of an asset cannot be combined with reinstatement costs for that same loss. Exemplary damages must be punitive, moderate and proportionate. Interest on losses accruing over time must reflect when the loss was incurred.

Brookwide incorporated a first-floor store room and fire escape, forming part of No 125 Alcester Road, into a flat at the neighbouring No 123. The removal of the fire escape prevented use of No 125’s first-floor function room.

In 2001, the original owner’s trustee transferred No 125 to the respondent. He claimed for the continuing trespass and breach of trust from his acquisition. The High Court declined restoration of the room and assessed damages, including lost profits, mesne profits, breach-of-trust damages, reinstatement costs, exemplary damages and interest: [2010] EWHC 2453(Ch).

Brookwide appealed, principally contending that the awards duplicated recovery and that the awards for lost profit, exemplary damages and interest were excessive.

Arden LJ, with whom Lloyd and Tomlinson LJJ agreed, allowed the appeal in part.

1. The award for lost profits was sound in principle. A court assessing a hypothetical future loss must make the best assessment it can from the available material and significant contingencies. The respondent, however, acquired the premises when no function-room business was operating. His recoverable loss began only after a reasonable six-month period for re-establishing it. The award was therefore reduced from £225,073.50 to £213,073.50.

2. The claimant could not receive compensatory lost-profit damages and also mesne profits or gain-based damages for breach of trust. Those awards would compensate the same practical deprivation in different forms. Applying Severn Trent Water v Barnes [2004] EWCA Civ 570 and Tang Man Sit v Capacious Investments Ltd [1996] AC 518, damages measured by the claimant’s loss and an account measured by the defendant’s gain were alternative remedies. The claimant was treated as electing the higher lost-profit award. No mesne profits or breach-of-trust damages were payable.

3. The agreed £55,000 capital-value award included the loss of the fire escape. Once the court had refused injunctive relief and extinguished the claimant’s interest in the store room on payment, he could not also recover £85,269.75 to replace the fire escape. That award was set aside.

4. Exemplary damages remained available because Brookwide’s serious misconduct continued to affect the respondent after his acquisition. But the award had to be proportionate and could not replicate the profit-based remedy which he had not elected. The punitive award was reduced from £60,000 to £20,000.

5. Interest could not run on the whole accrued loss throughout the entire period. Applying the practice in Dexter v Courtaulds Ltd [1984] WLR 372, simple interest at 6% was awarded on one half of the lost-profit sum from 23 November 2001 to 8 October 2010, amounting to £56,759.01. No pre-judgment interest was payable on the other sums.

• Court of Appeal (Civil Division) Allowed Brookwide’s appeal in part and varied the damages assessment: [2011] EWCA Civ 985.
• High Court of Justice, Chancery Division, Birmingham District Registry Ms Geraldine Andrews QC, sitting as a Deputy High Court Judge, held Brookwide liable and later assessed damages: [2010] EWHC 2453(Ch).