Ramzan v Brookwide
| Jurisdiction | England & Wales |
| Judgment Date | 08 October 2010 |
| Neutral Citation | [2010] EWHC 2453 (Ch) |
| Docket Number | Claim No 7BM 30101 |
| Court | Chancery Division |
| Date | 08 October 2010 |
[2010] EWHC 2453 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Before Miss Geraldine Andrews QC
(Sitting as a Deputy High Court Judge)
Claim No 7BM 30101
John Stenhouse (instructed by Silks Solicitors) for the Claimant
David Mitchell (instructed by Bude Nathan Iwanier) for the Defendant
Hearing dates: Monday 19 th and Wednesday 21 st July 2010
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
GERALDINE ANDREWS Q.C.
Miss Geraldine Andrews Q.C.:
INTRODUCTION
In March 2008, following the trial on liability only, I handed down a judgment in which I held that the Defendant, Brookwide Ltd., was liable to the Claimant in damages for the continuing (and continuous) infringement of his rights to enjoy the use of his property since 23 rd May 2001, which was the date on which the Claimant acquired the beneficial interest in the property from the trustee in bankruptcy of his father, Mr Mohammed Ramzan. It now falls to me to assess those damages, which for the reasons set out in my earlier judgment include exemplary damages falling within the second of the three categories set out in Lord Devlin's speech in Rookes v Barnard [1964] AC 1129. Brookwide did not appeal against my decision that in principle this was a case in which to award exemplary damages.
It became clear in the course of argument that this case raises a number of legal issues which are potentially of wider interest, and on which there is little in the way of authority, or even guidance. In the light of this, and bearing in mind the magnitude of the sums at stake, with the assent of both counsel I exercised my power under section 42(2) of the County Courts Act 1984 to transfer the case into the High Court.
BACKGROUND
The property in question was a room on the first floor of No.125 Alcester Road, which was a “flying freehold”, that is, it was physically constructed within No.123 Alcester Road but could only be accessed from No.125. At all material times No.125 was in use as an Indian restaurant, known as “the Jewel in the Crown” and the room (to which I shall refer, as I did in my earlier judgment, as “the store room”) had been used for storage, mainly of equipment associated with that business. Access to the store room was through another room at the rear of the first floor which was used as an office. The only fire exit from the first floor was via a door in the exterior wall of the store room, which led out to an old-fashioned cast iron fire escape. The restaurant had a function room on the first floor, with a seating capacity of 60. For Health and Safety reasons, that room could only be used if the first floor fire escape was functional. The main stairs did not provide an acceptable alternative.
Brookwide is part of a group of property investment companies belonging to the Noe family. It is a wholly-owned subsidiary of Agra Limited, and it has some directors in common, including Mr Salaman Noe, who is the managing director of both companies. After their acquisition by Agra in 1988 as part of a portfolio of properties, Nos. 123 and 125 Alcester Road were managed by a firm of commercial property consultants named Lee Baron. The managing director of Lee Baron was Mr Salaman Noe's son Leo, who was also a director of Agra. Mr Mohammed Ramzan, the Claimant's father, was the lessee of No.125 from mid-1989 until he purchased the freehold from Agra on 31 st March 1992.
On 29 th April 1999, workmen engaged on behalf of Agra and Brookwide in a project to convert the first and second floors of No.123 Alcester Road into self-contained flats demolished the dividing wall, entered the store room, and thereafter bricked up and made good both the doorway leading from the store room into the office, and the fire exit door. By this means, the store room was subsumed into No.123 Alcester Road and isolated from No.125. It is now a permanent part of Flat No.1 on the first floor of No.123. The access to the fire escape was completely cut off. The workmen subsequently severed the stairs on the fire escape and removed the lower part of the staircase, rendering it impossible to use. All this was done with reckless disregard of the interests of the true owner of the store room and with a view to promoting the interests of Brookwide, which wished to exploit the combined space for its own personal gain. Had it not been for the misappropriation of the store room, there would probably have been insufficient space to create a viable flat in that location. According to Mr Landy of Lee Baron, the store room took up approximately 55% of the floor space in the flat. That also accords with my recollection of the plans that were in evidence at the trial on liability.
At the time of this incident Brookwide was the registered proprietor of the freehold property registered under Title Number WM278950, which included the store room, though it should not have done. This came about because, when Mr Mohammed Ramzan purchased the freehold of No.125 Alcester Road from Agra in 1992, the plan annexed to the Transfer mistakenly delineated the segregation between Nos 123 and 125 Alcester Road on the basis of a straight division along the party wall. The plan therefore did not accurately reflect the configuration of the two properties at first floor level. The mistake was perpetuated in the new title deeds and plan relating to No.125 Alcester Road. Two years later, in May 1994, Agra transferred the freehold of a number of properties under Title no WM 278950, including No.123 Alcester Road, to Brookwide. There was no evidence of any consideration passing to Agra. Since the title plan to Title No. WM278950 wrongly depicted the store room as part of the land registered under that Title, Brookwide became the registered proprietor of the store room by mistake, around 5 years before the room was forcibly subsumed into No. 123 Alcester Road.
Thus at all material times Agra, and subsequently Brookwide, held the store room on trust for the beneficial owner. Initially that was Mr Mohammed Ramzan. However, he was adjudicated bankrupt on 10 th September 1997 and his interest in No.125 Alcester Road (including his beneficial interest in the store room) automatically vested in his trustee in bankruptcy. That was the situation at the time of the expropriation. The Claimant subsequently purchased No.125 Alcester Road from the trustee, and he became the beneficial owner of the store room on 23 rd May 2001, when No 125 Alcester Road was conveyed to him.
The Court now has to assess the damages arising from the expropriation of the store room. In paragraph 11 of the Order dated 28 th April 2008 that was drawn up on terms agreed by counsel for both the parties following the trial on liability, damages were awarded in principle under three broad heads:
a. Damages for past and continuing trespass, breach of trust and denial of title by Brookwide from 23 May 2001 and continuing;
b. Damages representing all profits obtained by Brookwide from leasing out the Room as part of the property demised by Brookwide at 123 Alcester Road to tenants for profit; and
c. Exemplary damages for the wrongful and continuing appropriation of the Room by Brookwide.
DAMAGES FOR TRESPASS, BREACH OF TRUST AND DENIAL OF TITLE
The object of an award of damages for any tort is to put the injured party, so far as possible, in the position in which he would have been if the wrong had not been committed. This case has the rather unusual additional feature that the expropriator of the property held it in trust as a result of a mistake for which its immediate predecessor in title (and parent company) was responsible. If a trustee profits from his breach of trust, he will be required to disgorge any profits he receives, and there are a number of authorities that would be relevant to the question of whether or not he is entitled to take into account the cost to him of making those profits. The fact that there is a parallel liability for breach of trust is a relevant consideration when, in due course, I come to consider the question of double recovery, but in the event it has proved unnecessary for me to consider those authorities.
In a case where the defendant wrongfully deprives the claimant of his land, the claimant will be entitled to claim damages, known as “mesne profits” for loss arising from the wrongful period of occupation by the defendant. If the court declines to order recovery of the land, the claimant will be entitled to its value in addition to mesne profits up to the date on which the value is awarded. That is the situation in this case.
A. The value of the land – damages in lieu of recovery of the land
The first head of damages claimed, and the one about which there was ultimately the least controversy, is damages in lieu of reinstatement.
In Horsford v Bird [2006] UKPC 6, a case which provides the nearest analogy to the present case that Counsel were able to find, the defendant had erected a boundary wall and fence in the wrong place, which resulted in the misappropriation of some 455 square feet of his neighbour's land. The judge had refused to grant a mandatory injunction restoring the status quo, just as in the present case I refused an order for reinstatement by rectification of the land register. Most of the appeal in Horsford v Bird was taken up with the issue whether an award of aggravated damages was appropriate, which is not relevant to the issues I have to decide. However, the Privy Council also considered how the basic award of damages in that situation was to be assessed, and their approach affords valuable assistance in the...
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