Elmbridge Borough Council owned an industrial estate. The council had a right of way over a private road, owned by FCL, which led to the industrial estate. The units on the estate were let to various tenants.
In order to improve the quality of access for its tenants, the council re-surfaced the private road. Unfortunately, the tarmac surfacing extended beyond the area over which the council had a right of way. The additional strip of land which had been unlawfully re-surfaced was referred to in the case as the "Red Land". The original road was single track only. The effect of the inclusion of the Red Land in the re-surfacing was to allow vehicles to pass each other.
The council's tenants used the full extent of the re-surfaced road, including the Red Land. FCL brought a claim against the council for trespass.
The High Court held that the continued presence of the tarmac was a trespass which continued from day to day, giving rise to a new cause of action daily. Two issues then arose. The first was whether the council was also liable for the trespasses of its tenants in using the Red Land for access. If so, the second question was what was the correct measure of damages against the council?
The answer to the first question depended on whether the council had "caused or permitted" its tenants to trespass. The judge thought that merely being the owner of the industrial estate was not sufficient to make the council liable for the acts of its tenants. However, the council had laid tarmac on the road and the Red Land, with the result that there was no distinction on the ground between the part of the access road over which the tenants did have a right to pass and the part over which they did not.
The laying of the tarmac was an encouragement to the tenants to use the Red Land and the council had therefore "permitted" the trespass by its tenants. In addition, in some of the later leases the right of way granted to the tenants expressly included the Red Land.
The measure of damages then had to be decided. Conventionally, damages for trespass (as for any other tort) are compensatory, so that a claimant is entitled to recover money in respect of the loss which he has suffered. Loss can be suffered either because the value of the land is diminished or because the claimant has been deprived of the use of his land.
However, in certain cases of trespass, the landowner can recover compensation notwithstanding that it has suffered no loss. Damages may instead be measured by the benefit received by the trespasser for the use of the land. On this approach, the loss to the landowner may be measured by what the landowner might have extracted from the trespasser in return for permission to use the land.
FCL therefore argued that damages in this case should be calculated on the basis of the sum which the council would have agreed to pay following a hypothetical negotiation between the council and FCL for the grant of a right to use the Red Land.
In determining what the council might have been willing to pay, the court may take into account the profits earned from the trespass by the trespasser. In all of the cases cited to the court, the defendant was itself the trespasser. This situation was different because the trespass had not been committed by the council but by its tenants. The proper approach was therefore to start with an assessment of what the council would perceive itself as likely to be able to extract from its tenants for the right to use the Red Land for access.
Clearly, the council could not compel its existing tenants to pay any more rent. Some tenants might be content with access over the narrow access road and therefore not be willing to pay additional sums for the extended access. Another relevant factor was that if the council were to pay for a licence, it would be unable to able to prevent tenants from using the Red Land without payment. The court found that existing tenants of smaller units would be far less likely to agree to any payment than those of larger units.
When a unit became vacant, the council would be able to charge a rent which reflected the use of the Red Land. In contrast with the existing tenants, the council could be assured in these circumstances of obtaining the benefit of the increased rent. However, at the relevant time the estate was fully let and so this represented only a very small potential.
The council held the industrial estate under a long lease, which contained rent-sharing provisions with the superior landlord. The council only retained 35% of the rent it received from the tenants of the units. In addition, it could be assumed that the council and FCL would share the benefit of the extra rent the council did receive on a 50/50 basis.
Taking all these factors into account, the court arrived at a figure for the hypothetical licence fee.
Things to consider
The measure of damages claimed in this case is similar to that in the well-known case of Wrotham Park Estate Company Ltd v Parkside Homes Ltd. Wrotham Park involved a claim for breach of a restrictive covenant where damages were awarded instead of an injunction. This measure of damages has also been awarded in the context of rights to light – see The Shining Beacon.
This method of calculation will not be appropriate in all cases of trespass. For example, the court thought that in cases where a landlord seeks mesne profits from a tenant who is holding over without consent, the basis of assessment would normally be the open market rental value of the property.
Field Common Ltd v Elmbridge Borough Council