CP Homes Ltd v Zhong Xing Investment (SI) Ltd [1998] SBCA 4; CA-CAC 5 of 1997 (27 February 1998)

IN THE COURT OF APPEAL OF SOLOMON ISLANDS
Civil Appeal No 5 of 1997

BETWEEN	C. P. HOMES LIMITED First Appellant
	SOLOMON TROPICAL PRODUCTS LIMITED Second Appellant
AND	ZHONG XING INVESTMENT (S I) LIMITED (Trading as DALSOL LIMITED) Respondent
CORAM:	MASON P, McPHERSON J A, CASEY J A.
HEARING	WEDNESDAY, 10 DECEMBER 1997
JUDGMENT	27 February 1998

JUDGMENT

THE COURT: On 21 April 1997 the High Court (Lungole-Awich J) awarded the respondent $18,000 damages in respect of the appellants’ trespass on its industrial land at Ranadi over a period of some 13 months up to the date of judgment, when an order for possession was made in the respondent’s favour. The appellants’ challenge to the finding that there had I been a trespass was not pursued in this Court, and the only issue on the appeal is the amount of the damages.

The respondent was at all material times the registered owner of a fixed term estate in the land granted by the Commissioner of Lands for a period of 50 years from 1 March 1990 at an annual renta1 of $300, having purchased it from the previous grantee for $60,000 on 28 May 1993.There was a small house on the property which was used for a time to accommodate the respondent’s workers and for an office.

In March 1996 the first appellant (C.P.Homes Ltd) thought the land was vacant and applied to the Commissioner for an estate. The latter then discovered that the rent payable by the respondent was in arrears and that it had failed to comply with a condition for development of the land, and he set about forfeiting its grant. Because of a failure to serve the prescribed notices, the attempted forfeiture was ineffective. Nevertheless, the land was offered by the Commissioner to the first appellant and on 16 September 1996 it received a new grant from him for a fixed term estate for 50 years from 1 January 1996. It went into possession and allowed second appellant (Solomon Tropical Products Ltd) to store machinery on the premises.

It is quite clear that the Commissioner’s actions did not affect the earlier grant to the respondent which remained throughout in lawful possession of the land and was entitled to maintain application for trespass against the appellants, as found by His Lordship. Furthermore, the Commissioner accepted payment of arrears of rent by the respondent between November 1996 and I January 1997, so that he can no longer rely on those defaults to support new forfeiture action. Nor was there any evidence that he intended to take such action: to the contrary, his letter of 6 July 1996 to the first appellant revoked the grant made to it and confirmed the respondent’s ownership. It was the sight of a fence put up by the first appellant which alerted the respondent to that company’s entry. After correspondence between their solicitors the High Court proceedings forming the subject of this appeal were instituted.

His Lordship regarded the trespass as inadvertent so that punitive damages were not called for. He rejected a submission that only nominal damages should be awarded, pointing out that by the erection of the fence the respondent had had been kept out of its land, which it could have used for gain. After referring to evidence that the second appellant was using the land for keeping some machinery, he observed that a trespasser should not be allowed to derive value from trespassed land and escape paying in damages compensation that would take into account the value unlawfully gained by him. He had regard to two rental valuations accepted in evidence which indicated that the respondent could have expected between $1000 and $1500 per month if the land had been rented from it. On the basis that the appellants had been in occupation for almost 13 months he thought $18,000 an appropriate award and directed that each should pay $9,000 towards it. He allowed them 30 days to remove the fence.

There was no injury to the land or diminution of its value to the respondent as a result of the trespass, nor was any specific loss of income or other pecuniary loss established. The evidence indicated that it had no intention of letting or leasing the property. Its General Manager said that after buying the land in 1993 it allowed its subsidiary (Dalsol Ltd.) to use it, and that company’s workers slept in the house for a period. During 1994 it was used as an office. He said the intention was to build a shop on the land to sell timber, but they could not proceed with that development because of litigation which they won in November 1996. The property was evidently vacant when C.P .Homes Ltd entered in May 1996.

The principle relevant to the assessment of damages in trespass to land where no actual loss is proved by the plaintiff has been summarised by the Privy Council in Inverugie Investments Ltd v Hackett [1995] 1 WLR 713. Their Lordships adopted the description “user principle” given by Nicholls L.J. to the underlying principle in such cases, in his judgment in Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406. At p 718 their Lordships said:

“The plaintiff may not have suffered any actual loss by being deprived of the use of his property. But under the user principle he is entitled to recover a reasonable rent for the Wrongful use of his property by the trespasser. Similarly, the trespasser may not have derived any actual benefit from the use of the property. But under the user principle he is obliged to pay a reasonable rent for the use which he has enjoyed. The principle need not be characterised as exclusively compensatory, or exclusively restitutionary; it combines elements of both.”

This case involved trespass to residential property, as did the earlier decision of Megaw L.J. in Swordheath Properties Ltd v Tabet [ 1979] 1 WLR 285, from which their Lordships cited with approval the following passage:

“It appears to me to be clear, both. as a matter of principle and of authority, that in a case of this sort the plaintiff, when he has established that the defendant has remained on as a trespasser in residential property, is entitled, without bringing evidence that he could or would have let the property to someone else in the absence of the trespassing defendant, to have as damages for the trespass the value of the property as it would fairly be calculated; and in the absence of anything special in the particular case it would be the ordinary letting value of the property that would determine the amount of the damages.”

We see no reason for confining this ‘‘user pays” principle to residential property. Logically its application seems equally appropriate to commercial or industrial property of the kind involved in the present case. It was adopted by Chitty J. in Whitwham v Westminster Brymbo Coal and Coke Co [1896] UKLawRpCh 62; [1896] 1 Ch 894 (unauthorised use of colliery land), where at p543 Rigby L.J. said “the principle is that a trespasser shall not be allowed to make use of another person’s land without in some way compensating that person for that user.”

It is true that the respondent was able to make little or no use of the land until resolution of its litigation in November 1996, and its defaults under the conditions of the fixed term grant made it unlikely that there would be any interest in a lease or tenancy. However, these matters cannot excuse the appellants from liability to pay for their use of the property, as was made clear in Swordheath Properties Ltd and Inverugie Investments Ltd above. The respondent claimed that after November 1996 it was prevented by their occupancy from proceeding with its planned development.

We are satisfied that the appellants should pay a reasonable rent based on the ordinary letting value of the property for the 13 months they were found to have occupied it. In fixing this at $l8, 000 his Lordship in effect awarded $1385 per month, which is over halfway between the valuation certificate figures of $1,000 and $1500. There is no evidence of how these wee, made up, nor any discussion in the judgment about the way the figure of $18,000 was arrived at beyond his Lordship’s comment that he thought it appropriate.

General damages are very much in the discretion of the trial Judge, and an appellate Court is always reluctant to interfere with an award which, as in this eke, was made in accordance with settled authority. However, while the relative circumstances of the parties in relation to the land cannot affect the principle that the trespasser must pay for his occupation, they may have a bearing in fixing a reasonable sum for its use. In this case the appellants used the property only for the storage of machinery, so they can hardly be said to have received a benefit from it beyond the market rental value. Accordingly, there can be no question of their having to account for any added advantage under the restitutionary principle noted by their Lordships in the passage cited above from Inverugie Investments Ltd

The respondent paid $60,000 for the property and had a rental liability to the Commissioner of $300 p.a. The lower rental valuation figure of $1,000 per month would produce a gross return of 20% p.a. on this investment, which may be regarded as very generous compensation for the appellants’ trespass. To give more is in effect to confer a profit on the respondent for its grievance and this is not the purpose of compensatory damages.

We have therefore concluded that the award of $18,000 made by his Lordship was excessive and that it should be reduced to $13,000. Because he was unsure pf the relationship between the defendants, he felt that their liability should not be joint and several and gave a separate judgment of $9.000 against each. But this was a joint trespass by both appellants and each must be jointly and severally liable to the respondent for the full amount, even though his Lordship found it just and equitable that as between themselves they should share it equally. Respondent’s counsel asked that the judgment record this situation.

Orders

The Court makes the following orders:

1. Appeal allowed to the extent of reducing the damages from $18,000 to $13,000 for which the appellants are jointly and severally liable to the respondent. As between themselves each appellant is liable to contribute $6,500 towards this total.

2. Respondent to pay the appellants’ costs in respect of the appeal against the amount of damages only.

Mason P.,
President Court of Appeal

McPHERSON J.A
Judge of Appeal

CASEY J.A
Judge of Appeal