The Court of Appeal’s recent judgment in Ramzan v Brookwide Ltd1 is a useful reminder of the principle that a claimant cannot recover more than once in respect of the same wrong and that even the most culpable conduct may only be met by a modest award of exemplary damages.
Mr Ramzan (senior) owned the freehold of The Jewel in the Crown curry house in Moseley, Birmingham, from 1992 until its transfer to his son in 2001. The restaurant occupied the ground floor with a first floor function room directly above, regularly hired out for special events. Adjoining the function room was a store room, in which Mr Ramzan kept some tools and which had clearly been included in the 1992 transfer to him but which, unusually, projected over the boundary line with the neighbouring property; in other words, the first floor store room was owned by Mr Ramzan when neither the floor beneath it nor the roof above it belonged to him – hence the “flying freehold.” Brookwide owned the property next door. The importance of the store room was that it allowed access to a fire escape which was necessary to allow Mr Ramzan to continue to use his function room. Unfortunately, and unbeknownst to Mr Ramzan, the Land Registry plan was incorrect and showed the store room as part of next door, even though there was no access to it from that property.
In 1999, builders, acting on Brookwide’s instructions, broke into the store room, removed the wall which prevented their access, bricked up the wall on Mr Ramzan’s side, disposed of his tools, cut through his alarm cables and destroyed the part of the fire escape which gave him access. This was part of Brookwide’s plan to convert its property into flats, and Brookwide proceeded to rent out the first floor, including Mr Ramzan’s expropriated store room into the demise.
The claim in Birmingham District Registry
Some years later, Mr Ramzan (senior) issued proceedings in conversion to recover his stolen belongings and Mr Ramzan ( junior) began proceedings for trespass and rectification of the Register to show the true boundary. Whilst the judge accepted that Brookwide’s title was subject to an overriding interest entitling Mr Ramzan to call for rectification (the physical configuration took precedence over the incorrect plan), the delay was so great that damages were awarded in lieu of rectification. The appeal concerned those damages and the proper method of calculation.
The judge had awarded Mr Ramzan ( junior) (1) damages for past and continuing trespass, breach of trust and denial of title from the date he had purchased the property in 2001 (not from 1999); (2) damages representing all profits obtained by Brookwide from leasing out the store room as part of its demise; and (3) exemplary damages. It was also made clear that Mr Ramzan had not chosen any one head of damage over another, perhaps because no careful consideration had been given at that stage as to which head of damage would give him the best result.
When damages came to be assessed, under the first head, Brookwide was ordered to pay “the diminution in value” of the Ramzans’ property due to the loss of the store room. Significantly, the parties agreed to characterise this as the capital value of the store room including the fire escape in the sum of £50,000. “Mesne profits” for the wrongful occupation of the space occupied by the store room were also ordered at 4.5% per annum of the previously agreed capital value. The judge also awarded in excess of £72,000 for reinstatement of the fire escape on the basis that “damages in tort are designed to put the injured party in the position in which he would have been if the wrong had not been committed”, and more than £220,000 based on the premise that the function room, if viable, would have earned £24,000 per annum profit for the Ramzans during the relevant period.
Under the second head, Brookwide was ordered to pay just over £19,000; it had held the store room on trust for Mr Ramzan and, as a result, had disgorged the profits it had obtained but this sum was to be set off against the mesne profits figure to avoid double recovery. The judge also awarded £60,000 “exemplary damages” to deter Brookwide from “repeating its objectionable behaviour” although she had also expressed the view that Brookwide was unlikely to be so deterred.
Brookwide appealed, arguing that the award contained a number of elements of double counting or that it was “excessive”. Lady Justice Arden, delivering the leading judgment, largely agreed and gave a careful review of the authorities relating to the doctrine of election (choosing which remedy to pursue) and the way to calculate exemplary damages.
She held that no damages for breach of trust should be payable at all if damages were awarded for loss of profits:
“the [respondent] has suffered a single wrong, that is, misappropriation of his store room. If his claims for damages are inconsistent [(which she found they were)], he must make an election between the two causes of action because they are for the same wrong and he can only recover once.”
As to the timing of this election, she cited Lord Nicholls2:
“Faced with alternative and inconsistent remedies a plaintiff must choose, or elect between them. He cannot have both. The basic principle governing when... is simple and clear... when, but not before, judgment is given in his favour and the judge is asked to make orders against the defendant. He must make up his mind when judgment is being entered against the defendant.”
Additionally, she held that the loss of the fire escape had been included in the £55,000 agreed capital value of the store room and so no sum at all could be allowed for its reinstatement.
Finally, she reduced the exemplary damages award to £20,000 commenting that it was rare to award exemplary damages and that, in many cases, the fact of making such an award should largely be in itself sufficient. It was also incorrect for an exemplary award to be linked to a loss of profits claim if the victim had elected to accept a compensatory award. All that could be said was that the sum should be “principled and proportionate”. In this case, however, the claim was being brought by Ramzan ( junior) and the trespass and conversion was complete before the 2001 transfer; but, Brookwide’s conduct in contesting and dragging out the proceedings had had a significant and continuing effect on both father and son’s health, justifying an award.
The judgment also contains interesting commentary on circumstances where damages can be awarded even if no loss has been suffered3 and on the risks of failing to produce an expert report until the last minute4.