Stadium Capital Holdings (No.2) Ltd v St Marylebone Property Company & Anor

Damages for trespass may be assessed by reference to a hypothetical negotiation for permission to use the claimant’s land. The measure is the price that reasonable parties would agree for the relevant use, rather than automatically the defendant’s entire profit. A claimant’s ability to prevent the defendant obtaining any benefit is a relevant bargaining factor, but it must be balanced against the costs, risks, delay and uncertainty of alternative lawful arrangements. The hypothetical parties are reasonable parties in the objective position of the landowner and trespasser. Personal characteristics and events occurring after the valuation date are generally excluded. On the evidence, a 50 per cent share of the expected net advertising revenue represented the appropriate licence fee.

The claimant owned a development site adjoining property owned by the first defendant. An advertising hoarding attached to the first defendant’s wall projected into the claimant’s airspace. The first-instance judge awarded the claimant the whole of the advertising licence revenue received by the first defendant. The Court of Appeal allowed an appeal on quantum, holding that the assessment required fuller evidence and leaving the basis of assessment open.

The issue before the court was the proper measure of damages for the trespass between 23 January 2005 and 2 October 2008, particularly how the hypothetical negotiation should account for the claimant’s ability to prevent the hoarding’s use.

1. Basis of assessment. Damages were to be assessed by reference to a hypothetical negotiation between a willing buyer and willing seller at the commencement of the trespass. The relevant sum was the price a reasonable person would pay for the right of user, or the sum reasonably demanded as the quid pro quo for permitting the trespass. The exercise compensated for the trespass into the claimant’s airspace, rather than directly awarding an account of the defendant’s profits.
2. Relevant assumptions. Events after the valuation date were generally irrelevant. The fact that one party might in reality have refused to deal was also irrelevant. Personal characteristics of the actual parties were to be disregarded, although the objective circumstances confronting reasonable parties were relevant.
3. The trump card. The claimant’s ability to stop the hoarding being used, and thereby prevent the defendant obtaining the advertising revenue, was a material bargaining factor. It was not decisive. The court also had to consider the uncertainty and delay involved in obtaining planning permission and Network Rail’s consent, the direct and professional costs of constructing a replacement hoarding, the risk of losing or renegotiating the existing lucrative licence, and the immediate benefit of retaining the existing arrangement.
4. Result. The competing factors did not make either party’s position overwhelming. A reasonable negotiation would have produced a fee equal to 50 per cent of the expected net revenue from the advertising licence. Damages were therefore assessed at £156,986.35 for the relevant period, subject to checking the arithmetic with counsel.

High Court (Chancery Division): Sir Donald Rattee previously awarded £313,972.70 for the trespass.

Court of Appeal: On 15 July 2010, Marylebone’s appeal on quantum was allowed. The issue was remitted for assessment by a Chancery Division judge, with the basis of assessment left open.

High Court (Chancery Division): The present judgment reassessed the damages at £156,986.35.