Eaton Mansions (Westminster) Ltd v Stinger Cia de Inversion SA
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lord Justice Christopher Clarke,Lord Justice Tomlinson,Lord Justice Aikens |
| Judgment Date | 30 October 2013 |
| Neutral Citation | [2013] EWCA Civ 624,[2013] EWCA Civ 1308 |
| Docket Number | Case No: A3/2012/3284,Case No: A3/2012/3284(Y) |
| Court | Court of Appeal (Civil Division) |
[2013] EWCA Civ 1308
Lord Justice Patten
Lord Justice Tomlinson
and
Lord Justice Christopher Clarke
Case No: A3/2012/3284
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, CHANCERY DIVISION
EDWARD BARTLEY-JONES Q.C. SITTING AS A DEPUTY HIGH COURT JUDGE HC09CO1375
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Jonathan Arkush (instructed by Cubism Law) for the Appellant
Mr Christopher Lundie (instructed by Brian Harris & Co) for the Respondent
This appeal raises two short but important points of law which have arisen in the course of proceedings between a landlord and its tenant for damages for trespass to parts of the landlord's premises not included within the tenant's demise. They are:
(i) whether on an assessment of damages on what has been called the negotiating basis the parties in the hypothetical negotiations for a licence fee are to be taken to be negotiating for a licence period equivalent to the actual duration of the trespass which has occurred or some other more extensive period (in this case the residue of the tenant's lease); and
(ii) whether the court can (or should) make an award of aggravated damages in favour of a company.
There has been protracted litigation between the parties on the issue of trespass but the facts and procedural history relevant to this appeal can, I think, be summarised quite shortly. The claimant, Eaton Mansions (Westminster) Limited ("EML"), is the head lessee of a block of mansion flats known as Eaton Mansions at Cliveden Place, London, SW1. Its lease was granted on 23 rd June 1978 for a term of 75 1/2 years from 24 th June 1978. The freehold of the building is owned by the Grosvenor Estate. The defendant, Stinger Compania de Inversion SA ("Stinger"), was at all material times the lessee of two flats in the building (flats 8 and 10) under separate leases also granted on 23 rd June 1978 for terms of 75 1/2 years less 5 days from 24 th June 1978. Neither lease included any part of the roof of the building or the chimney stack.
The headlease of Eaton Mansions contains a covenant by EML not to make external alterations to the building without the consent of the Grosvenor Estate and it is common ground that the covenant extends to any air conditioning equipment placed on the roof for the benefit of the tenants of individual flats. But for a number of years prior to the events with which this action is concerned such equipment has been in situ on the roof (presumably with the consent of the Grosvenor Estate) and EML has not charged its tenants for the use of the roof space.
Flats 8 and 10 are on the third and fourth floors of the building and both are what are described as front flats. Flat 10 is therefore directly above flat 8. Stinger is a Panamanian company, the shares of which are held by a Cayman Islands trust of which Mr Hamid Jafar ("Mr Jafar") is the protector. His evidence on the assessment of damages was that the trust was set up for the benefit of his family but the deputy judge (Mr Edward Bartley-Jones QC) found that he was the person who made the decisions in respect of the trust's ownership of the two flats.
The leases of flats 8 and 10 were acquired by Stinger in 1979 and work then commenced to convert them into a single flat on two floors. Mr Jafar told the judge that he regarded it as essential for the flat to have effective air conditioning. He had lived in London during the summer of 1976 and had found the lack of air conditioning intolerable. There was also evidence from the expert witnesses called on both sides that air conditioning would be an important feature for most purchasers of flats in the building. EML's case on the assessment was that the trespass occasioned by the installation of air conditioning by Stinger had as its primary objective the increase of the capital value of the flats. But the judge rejected this and accepted that the comfort of Mr Jafar and his family rather than the value of Stinger's investment was the motive for installing the equipment.
In 1980 Stinger, with the consent of EML, placed three air conditioning units with associated pipework on the roof. By 1998 these had increased to six units. The additional units were not consented to by EML in advance but the evidence was that they remained there until 2006 without objection. In 2006 EML needed to carry out repairs to the roof and told Mr Jafar and the other tenants that the units would have to be re-located. By this time Mr Jafar had decided to turn the two flats back into separate units and to refurbish them for his two sons. The judge found that this was a major project (involving expenditure of about £1m on each flat) which commenced in 2006. The existing air conditioning units were removed from the roof as requested but Stinger anticipated replacing them in due course with new equipment.
In June 2007 the first act of trespass complained of occurred. Two condenser units were placed on the roof and linked to the chimney flues down to flats 8 and 10 by breaking into the external brickwork of the chimney stack. These two units were extremely large and very much bigger than anything which had hitherto been placed on the roof. So large were they that they required a crane to hoist them into place and were then still visible from the street. They were installed in breach of planning control and would never have been consented to by the Grosvenor Estate. The Grosvenor Estate had expressly excluded the installation of air conditioning from the consent which it gave in 2006 to the refurbishment work to the flats.
The judge made findings as to whether the decision to install the 2007 units was taken deliberately in the knowledge that EML's consent would not be forthcoming. In his judgment, at the trial on liability, Wyn Williams J had said that their installation was in flagrant disregard of the need to obtain the consent of the Grosvenor Estate. But the judge on the assessment acquitted Stinger of any intention to (as he put it) bully EML by producing a fait accompli. There had been discussions with EML's managing agents which led Stinger's architect to believe that the replacement units would be acceptable. The reality was that EML had no objection to the installation of units similar in size to the ones previously removed. But it did not and could not consent to units which required (but had not been given) planning permission and which would not meet with the approval of the Grosvenor Estate.
In February 2008 the 2007 units (but not the associated pipework) were removed and discussions continued with EML about what could be placed on the roof. By this time Stinger's plans had changed and it had been decided to sell the flats once refurbished. Mr Jafar, honestly as the judge found but in fact mistakenly, believed that EML was seeking to charge Stinger a premium for installing replacement units on the roof even though no similar charges had been imposed on other tenants. In December 2008 he decided to resolve the impasse in the negotiations by instructing contractors to enter on to the roof and to install two new units which they attached to the condensers which had been put in place in 2007 but not subsequently removed. The result was to give each flat a functioning air conditioning system.
Wyn Williams J described the action taken in December 2008 as high handed and unreasonable. Mr Bartley-Jones said that the aim on this occasion was to bully EML into submission with a fait accompli which was followed up with the threat of proceedings by Stinger against EML for loss resulting from its inability to market the flats due to EML's unreasonable refusal to allow the replacement units to be installed. In the end, however, such proceedings did not materialise and it was EML which issued its claim form on 22 nd April 2009 seeking an injunction and damages for trespass. On 11 th March 2010 Stinger completed the sale of the two underleases and the claim continued as one for damages alone. On 9 th July 2010 Wyn Williams J on an application under CPR Part 24 gave judgment for EML for damages to be assessed: [2010] EWHC 1725 (Ch). Stinger's appeal against this judgment on liability was dismissed by the Court of Appeal on 18 th May 2011: [2011] EWCA Civ 607.
The assessment hearing took place in July 2012 and a reserved judgment was handed down on 27 th November 2012. The two flats had been let for a year following the completion of the refurbishment works in 2009. As I have indicated, they were then sold. The existence of the ongoing dispute with EML about the right to position the air conditioning equipment on the roof was disclosed to the purchaser of the two flats. But the judge found that neither the 2009 rents nor the purchase price on the sale in 2010 had been increased because of the presence of the disputed equipment on the roof which provided air conditioning to the two flats. Since the purchase the new owner appears to have obtained planning permission for air conditioning equipment and the consent of both EML and the Grosvenor Estate to it being positioned there. But the detail of that is irrelevant to this appeal. It is common ground that the trespass continued until completion of the sale of the flats on 11 th March 2010 which is the end of the period in respect of which EML was awarded damages.
Negotiating damages
EML accepts that it has suffered no direct loss from the trespass except for the cost of removing the trespassing equipment from the roof...
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