Eaton Mansions (Westminster) Ltd v Stinger Compania De Inversion S.A.

Negotiating damages for temporary trespass must reflect the period and extent of the trespass which actually occurred. The hypothetical parties are treated as negotiating for a licence covering those acts, even if the trespasser originally wanted a more extensive or permanent right. The defendant need not pay for rights it never obtained or for a loss the claimant never suffered.

Aggravated damages compensate for distress and injury to feelings caused by high-handed, insulting or oppressive conduct. A limited company cannot experience such injury and therefore cannot recover aggravated damages.

A head lessee claimed damages after a tenant installed air-conditioning equipment on the roof and chimney stack outside the tenant’s demise. Liability for trespass had already been established. The trespass ended when the tenant sold its leases in March 2010.

On assessment, the deputy High Court judge awarded £6,000 in negotiating damages, representing the value of temporary, revocable and unassignable permission lasting until the sale. He refused aggravated damages because the claimant was a company.

The claimant appealed. It argued that the hypothetical negotiation should concern permission lasting for the residue of the leases and that a company could recover aggravated damages. The central questions were the proper subject matter of the hypothetical licence and the availability of aggravated damages to a limited company.

1. Appeal dismissed. Negotiating damages for trespass had to be assessed by reference to a hypothetical licence covering the period and extent of the trespass which actually occurred. The hypothetical negotiation is a valuation mechanism for measuring the benefit obtained by the trespasser and the corresponding loss caused by the infringement. Its subject matter is therefore shaped by the actual legal wrong: per Patten LJ, with whom Christopher Clarke and Tomlinson LJJ agreed.

2. The actual duration of the trespass was not a post-valuation event of the kind discussed in Lunn Poly Ltd v Liverpool and Lancashire Properties Ltd [2006] EWCA Civ 430. It defined the right to be valued. The parties had to be treated as negotiating for permission lasting only until the trespass ceased in March 2010.

3. The tenant’s desire for permanent, assignable permission did not justify valuing a right which it never obtained. Nor had the landlord lost an opportunity to negotiate the price of such a right. The landlord was unwilling to grant permanent permission, the trespass ended on the sale, and the purchasers had to obtain their own consent. The £6,000 valuation of the temporary, revocable and unassignable permission was therefore upheld.

4. Aggravated damages may ordinarily be awarded for trespass where the defendant acts in a high-handed, insulting or oppressive manner. Their function is compensatory, however, and rests upon distress or injury to the claimant’s feelings. A limited company cannot experience such injury and cannot recover aggravated damages.

5. Messenger Newspapers Group Ltd v National Graphical Association [1984] IRLR 397, which had awarded aggravated damages to a company by focusing on the manner of the wrongdoing while excluding injured feelings, was wrongly decided. Its reasoning was more appropriate to exemplary damages and failed to answer the objection that a company has no feelings capable of injury.

1. Court of Appeal (Civil Division): By [2013] EWCA Civ 1308, unanimously dismissed the landlord’s appeal from the assessment of negotiating damages and the refusal of aggravated damages.
2. High Court, Chancery Division: A deputy High Court judge assessed negotiating damages at £6,000 and refused aggravated damages in a reserved judgment delivered on 27 November 2012. No citation is stated.
3. Court of Appeal (Civil Division): By [2011] EWCA Civ 607, dismissed the tenant’s earlier appeal against the determination of liability for trespass.
4. High Court, Chancery Division: By [2010] EWHC 1725 (Ch), gave judgment for the landlord for damages to be assessed.