Boundary disputes and trespass are common occurrences, but just how much does it cost to infringe your neighbour’s rights? The recent decision of the Privy Council in Horsford v Bird & ors [2006] sheds some light on this question and provides helpful guidance on how the courts approach the assessment of damages in cases of encroachment by one landowner onto adjacent land belonging to another.

Facts

The dispute concerned two parcels of land in Antigua. Both parcels were initially undeveloped, but in or around 1986 the respondent built a house on his land, together with a swimming pool and boundary fencing, with sufficient space between the swimming pool and the fence for a vehicle to pass. The fencing was necessary for security considerations, as the respondent was then the Prime Minister of Antigua and Barbuda.

In 1989 the appellant visited his parcel and saw men working on the swimming pool, but it was not until June 2000 when he visited the land and noticed that the surface had been damaged by the respondent’s contractors that he instructed a surveyor, who confirmed that the wall and fencing encroached upon the appellant’s land by some 455 square feet.

It was accepted in the course of the litigation that the wall encroached upon the appellant’s land. Amandatory injunction for the removal of the wall was refused. What was in dispute was the quantification of damages for that encroachment in lieu of an injunction.

Damages in lieu

Damages in lieu of an injunction is a discretionary remedy that is available when the court has power to order an injunction (for example, to require the encroachment to be undone) but has decided not to exercise its discretion to do so. This discretion will only be exercised in limited scenarios and it should be remembered that if damages are awarded in lieu the court is effectively enabling the wrongdoer to acquire its neighbour’s land. This notion was helpfully encapsulated by Buckley J in the case of Cowper v Laidler [1903], where he commented:

… to refuse to aid the legal right by injunction and to give damages instead is to in fact compel the plaintiff to part with his easement for money.

There have been various cases that have discussed whether the court’s discretion should be exercised in favour of an injunction or awarding damages in lieu and if so, what those damages should be. In Shelfer v City of London Electric Lighting Co [1895] Smith LJ provided some guidance, which appears to have stood the test of time, as to when the court should exercise its discretion not to grant an injunction:

In my opinion, it may be stated as a good working rule that:

(1) if the injury to the plaintiff’s legal right is small;

(2) and is one which is capable of being estimated in money;

(3) and is one which can be adequately compensated by a small money payment;

(4) and the case is one in which it would be oppressive to the defendant to grant an injunction, then damages in substitution for an injunction may be given.

Even where there has been a blatant trespass, the court still has the power to award damages in lieu. For example, in Gooden v Ketley [1996] the defendant argued in favour of damages in lieu of an injunction on the basis that the harm caused to the claimant was not serious (particularly when compared with the harm the defendant would suffer in complying with the order). By contrast, the claimant argued that as the trespass was blatant then an injunction should follow as a matter of course. However, even though the trial judge had found as a fact that the defendant had acted with a reckless disregard of the claimant’s rights, damages in lieu were awarded, presumably due to the 18-month delay in issuing proceedings, together with the comparative harm the injunction would cause the defendant to suffer.

The next issue, and one which faced the Privy Council in Horsford v Bird, is how to assess the damages in lieu. The starting point is to remember that damages in lieu of an injunction is not designed to simply assess the actual loss suffered, but instead is intended to take account of permanent transfer of the land and the benefits the wrongdoer acquires as a result. The court may therefore attempt to assess the price that would have been paid by the wrongdoer for permission to do the thing that constitutes an infringement of the other’s rights.

Aggravated/exemplary damages

Aggravated damages is a species of damages that seeks to recognise the behaviour of one of the parties to the dispute. For example, if there has been high-handed conduct and a wilful or deliberate encroachment on to land belonging to another, the court can make a specific award of damages that recognises this conduct. It is awarded to compensate for the distress and humiliation that the claimant is presumed to have suffered.

It is also, in theory, possible to recover exemplary damages, which are only recoverable where the wrong is oppressive or arbitrary action by government servants, or where the trespass was designed to make a profit beyond the compensation payable. For example, they may be awarded where the wrongdoer was not able to obtain the property from the owner or where the wrongdoer was not prepared to pay the compensation that the owner would expect to be paid for the property. Put simply, these damages are designed to teach the wrongdoer that the trespass does not pay, rather than to compensate the claimant.

Mesne profits

It is also possible to recover mesne profits in instances of trespass, which is damages for the occupation of the land. This, in practice, assesses the value of the occupation and while arguably it is not necessarily compensatory, it often equates to the rental value of the land if the same had been let. However, any claim for mesne profits will be timebarred to six years before the date upon which possession is given.

Horsford v Bird

First instance

At first instance the claim for a mandatory injunction failed and damages in lieu of an injunction were awarded as follows:

(1) for the value of the land encroached upon;

(2) for the value of the land to the respondent; and

(3) for the manner in which the respondent had dealt with the appellant’s claim (namely in response to the respondent’s behaviour).

In total an award was made in the sum of EC$75,000.

Court of Appeal

In the Court of Appeal the third head of damages, ie aggravated damages, was dismissed because there was insufficient evidence for making such an award. The reason for this was that it had not been established satisfactorily that there was a wilful and deliberate encroachment by the respondent across the boundary onto the appellant’s land. The Court of Appeal assessed the damages as the value of the land encroached upon, arriving at a figure of just EC$13,360.

Privy Council

The matter was then appealed again and decided by the Privy Council (whose decisions are not strictly binding in the courts of England and Wales, but which are regarded as persuasive in determining what the law is in this jurisdiction). In the judgment of the Privy Council it was held that the right approach was to award damages in lieu of an injunction.

Damages in lieu of an injunction was explored in detail in the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974]. In this case, the claimant was awarded damages on this basis when houses were built in breach of a restrictive covenant. Damages were assessed in terms of the profit that the developer had acquired as a result of the infringement. It was not therefore a compensatory measure, but an approach that considered how much the claimant could reasonably have sought from the defendant to acquire the right to do that which was done without the claimant’s consent and therefore in breach of the claimant’s legal rights.

The Privy Council in Horsford v Bird adopted the Wrotham Park approach, reflecting its concern that the amenity and value of the respondent’s land had been greatly enhanced by the construction of the swimming pool. Without the wall and fence that had been built on the appellant’s land, the particular layout that had been achieved, which also included vehicular access thought to be of particular value to the respondent, could not have been achieved. Similarly, if the respondent had to rebuild the wall along the correct boundary line, he would have incurred significant costs. On this basis, the Privy Council considered that the respondent had expropriated to himself land that was worth considerably more than a simple valuation on a price per square foot basis. Using this approach, the Privy Council substituted an award of damages of EC$27,300 (as compared with the EC$13,650 that was the value of the land itself).

The Privy Council agreed with the Court of Appeal that there was no basis for awarding aggravated damages as this required trespass accompanied by ‘high-handed, insulting or oppressive conduct’.

However, the Privy Council added that the appellant had a clear claim to mesne profits. As such claims were time-barred after six years, the appellant’s delay in taking action against the respondent resulted in this claim being limited to the period from 20 November 1994 onwards. Nevertheless, mesne profits were assessed at an additional $16,892, representing an annual rate of 7.5% of the capital value.

In total the Privy Council therefore awarded EC$44,192.

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