7 Rolls Buildings, London, EC4A 1NL
B e f o r e :
| JEFFREY HERRMANN
MINA GEROWIN HERRMANN
|- and -
Mr Michael Pooles QC and Mr Paul Mitchell (instructed by Reynolds Porter Chamberlain LLP) for the Defendants
Hearing dates: 6-10 and 22 February 2012
Further written submissions: 24 and 28 February 2012
Crown Copyright ©
Mr Justice Newey :
"There is a garden, they're checking on dogs on leads".
On 18 March, the Herrmanns exchanged emails about the possibility of seeing 37 Ovington Square the following day, but on 19 March Mrs Herrmann told Miss Copestake that the "second favourite house" of herself and her husband was 21 Phillimore Gardens. By 26 March, Mrs Herrmann was nonetheless expressing enthusiasm for 37 Ovington Square. Mr Herrmann said that he was bothered by the "absence of a large green space nearby or even a little strip of grass like those along the Embankment" and "the unpleasant view from the front windows and the unsightly apartment building in the square", but both he and his wife very much liked the interior, Mrs Herrmann calling it "wonderful and magical". Two days later, Mrs Herrmann wrote to Miss Copestake in an email:
"We are looking at houses and there is one I've fallen in love with".
The house in question was 37 Ovington Square.
"Access to square gardens, this supplied as courtesy by garden committee".
No answer was given to question 10, "Has the seller ever incurred any expenses for the use of the property or any of its amenities?"
13.5.1. the reply states that access to the Square Gardens are at the 'courtesy of the garden committee'. Neither the Transfer nor the Lease provides for a right to use the gardens. Who or what is the garden committee; what authority does it have; how is it able to grant rights to use the gardens?;
13.5.2. please confirm that any pass or key will be handed over on completion; and
13.5.3. please provide contact details of the garden committee and explain how access is arranged".
The additional enquiries also asked for a reply to question 10.
"I have reviewed the pre-contract papers and received the results of most of my searches. I am pleased to report that there is nothing of major concern revealed. As is usual, I am today raising some additional due diligence enquiries following the review of the papers".
"All houses that overlook the Square pay a fee to access the garden. The Seller is trying to find further information".
With regard to whether expenses had been incurred for the use of the property or any of its amenities (question 10 in the "Property information form"), Turner Debenhams replied:
"No, subject to any payments that may have been made for the use of the Square Gardens".
The letter with which the replies to the additional enquiries were sent stated:
"Our Client is looking for any further paperwork or correspondence that may be at the property and which would supplement the replies already given".
"We note that a fee is paid to access the garden, but we are searching for a legal right to be able to use the garden. Please clarify the position".
Turner Debenhams responded promptly in these terms:
"The enclosures to the letter sent to you today will I hope deal with many of the outstanding points you have mentioned, but I am making further enquiries about any Party Wall Act notices there may be, and also about the arrangements regarding the Square gardens which appear to be separate from ownership of the property".
"the Owner for the Time being of the Garden, Shrubbery, or ornamental Enclosure in the Centre Area of each of the said Squares, his Heirs and Assigns, and the Occupiers of the several Houses in and encompassing such Square, and all Persons to whom such Owner shall have granted or may hereafter grant a Right of Access to the said Garden, Shrubbery, or ornamental Enclosure, shall be entitled to have the exclusive Use of such Garden, Shrubbery, or ornamental Enclosure".
The term "Square" is defined in section 5 to "include Crescents, Circuses, Half Squares, Terraces, and ornamental Enclosures" within the Parish of St Mary Abbots, Kensington. Section 42, dealing with "What shall be deemed a House in a Square", states:
"That every House or Building the Front or Side of which shall face or form Part of the Line of any of the said Squares shall for the Purposes of this Act be deemed to be wholly situated in the Square which it shall face or form Part of the Line of, though the other Part of such House or Building may front or face on any other Street".
Section 42 also provides for residents to belong to a "Garden Committee" which is to have the "Care, Management, and Regulation of such Garden, Shrubbery, or ornamental Inclosure". The Act also makes provision for an annual levy to meet maintenance costs.
"As the definition of 'Square' included 'terrace', the fact that the Property was on a terrace leading to the Square did not preclude it from being part of the 'Square' under the Act. Indeed, it seemed to me that the definition of 'Square' was clearly intended to extend the right to use square gardens situated on terraces forming the 'neck' to a square. I also noted that the address of the terrace on which the Property was located was Ovington Square, and that in contrast the street leading off the Square at the other side was called Ovington Gardens. This further persuaded me that the Property was part of the 'Square' for the purposes of the Act".
By virtue of a number of Acts of Parliament passed during the 1800s, you have the right to enter into and use the garden at Ovington Square. The management of the garden square is via a garden committee. The garden committee has the power to make bye-laws for the proper management of the garden for the benefit of the use and enjoyment of the users. The cost of running the garden square is charged by The Royal Borough of Kensington & Chelsea by way of an additional levy on the Council Tax, which is a fairly nominal amount. A copy of The Royal Borough of Kensington & Chelsea's note in relation to garden squares is included with this report".
"Once we had settled on the Property, I spoke to Ms Copestake almost every day. My two major concerns were access to the Garden Square and the arrangements for mortgage finance, topics which were regularly discussed with Ms Copestake. I recall that I asked Ms Copestake on a number of occasions, 'what about my garden?' and she would always rely, 'leave it to me'".
"We are asking for information about this, but our understanding is that the use of the communal gardens is not an absolute entitlement so that, even if our client has one, it may not be available for handing over".
A couple of days later, Turner Debenhams sent Withers a letter in which they said that Mrs Heyman "does not have [a key] nor is she entitled to one"; she had one, they said, "as a courtesy" at one time, but "no longer has it". Passing a copy of the letter on to Mr Ian Peel of Knight Frank on 27 May, Miss Copestake said:
"I must say that I am rather surprised by the response, given what we were told prior to exchange of contracts and given that the property was marketed with the benefit of access to the gardens. This is something that is rather important to my clients and I should be grateful for your assistance in trying to resolve this issue".
In emails of 28 and 29 May to Miss Copestake and Mr Peel, Mrs Herrmann stressed the importance that she attached to the key. For instance, she told Mr Peel that she could not be "more emphatic that this is a serious condition of closing [i.e. completion]". She observed to Miss Copestake that she had "no sense of humor about this key and access" and that she would not give in on this. She also said:
"Re: key to garden. This is featured in the brochure. It is a condition of closing. We will only close without it if GBP 100,000 is withheld. No assurances, just hold hard cash hostage. There is no leeway and I suggest you discuss with Heyman's attorneys. We heard another tale of owners getting no key for years last night at dinner here ."
In the same vein, she said that she would "not close without the key or GBP 100,000 withheld to assure they deal with it and some garden committee decides never to give a key to some Americans or whatever".
"There is an argument for saying that as you are on the side street, your house does not face or form part of the Square. However, the definition of a Square includes 'Terraces'. Your address is also in Ovington Square. It is odd however that no fee is charged via the Council Tax".
"would seem to fall within one or other of those situations, because it can be said to face the square, in that the part of Ovington Square on which it stands is part of the Square, or it can be said to form part of the line of Ovington Square to the extent that the various roadways that comprise Ovington Square form the lines of the Square".
Thirdly, section 51 refers to houses both "in" and "encompassing" a square, and 37 Ovington Square could be said to "encompass" Ovington Square.
"Having said that we have advised the Garden Committee that they do have power, by virtue of the Open Spaces Act 1906, to enter into annual licences to use the garden and if you would like to be considered for such a licence please let us know".
"The Open Spaces Act 1906 provides that a garden committee can admit other persons to have access to the garden and gives them power to regulate their admission on such terms as the committee thinks proper. The garden committee can therefore grant annual licences or enter into longer term arrangements ".
"RB [i.e. Mr Barham] indicated that the Committee might be prepared to issue some form of licence but RPS [i.e. Mr Sear] said that his clients would be concerned that this was not permanent and could be revoked at any time.
RB then went on to say that he had dealt with a similar issue at Pembroke Square where the Garden Committee were trying to raise funds for work to the garden. They had issued bonds to various householders who did not have access to the garden which gave a licence for an 80 year period and each householder paid £25,000 for the bond. RPS said that his clients would not be prepared to pay any such sum as they considered they had a right to the use of Square Garden. However, he would discuss the matter with the clients and come back to RB".
"Mr & Mrs Herrmann recently acquired the Lease to 37 Ovington Square (previously Vincent Street) which does not have legal entitlement to the use of the Ovington Square Gardens".
The notice went on to say that, in the event of legal proceedings, the Garden Committee would be grateful for donations towards costs.
"We note that your clients are prepared to refrain from serving the proceedings in order to explore whether a satisfactory settlement can be reached. The question of whether 37 Ovington Square should correctly be included as one of the properties benefiting from use of Ovington Square garden under the provisions of the Kensington Improvement Act 1851 is not a question which our clients can settle. It is not in their power to determine whether or not the property has correctly been excluded but they will of course be bound by the decision of the court in this matter.
What our clients can do is offer your clients access to the garden under alternative provisions, namely section 2 of the Open Spaces Act 1906. That Act confers on our clients a right to grant access to the garden on such terms and conditions as the Committee think proper. We have discussed this matter with officers of the Garden Committee and they have confirmed that they would be prepared to put the following offer to the full Garden Committee with a recommendation for acceptance. The terms proposed are:-
1. Licence to be granted by deed to Mr and Mrs Herrmann and their successors in title to the freehold of 37 Ovington Square.
2. The licence to be for a term of 50 years.
3. The premium payable for the licence to be £25,000.
4. Use of the garden by Mr and Mrs Herrmann to be subject to the rules and regulations in force from time to time regulating the use of the garden.
5. Your clients to be responsible for the Committee's legal costs of £750 plus VAT and disbursements in respect of the licence.
Before calling an extraordinary general meeting of the full Garden Committee our clients would need to know that if these terms were approved by the Committee they would be acceptable to your clients. Please therefore confirm whether or not such an offer would be acceptable.
If the offer is acceptable in principle to your clients the Garden sub-Committee will need to arrange for a full meeting of the Garden Committee to be convened in accordance with section 44 of the 1851 Act. We estimate that it will take them probably a week to arrange for notices to be served and the notices should give two weeks' notice of the meeting. Therefore we estimate it will take approximately 21 days for the proposal to be considered by the full meeting. You have previously indicated that you will serve the proceedings on 19 May but in view of the above please confirm that if the offer is acceptable in principle to your clients you will delay service of the proceedings by at least a further 21 days from the date on which we hear from you".
"As regards the offer of a licence pursuant to the Open Spaces Act 1906, while our clients welcome the fact that an offer has been made, we are instructed that they cannot accept the offer in the form in which it presently stands because the duration of the licence proposed is too short and the sum of £25,000 is excessive. We are, however, instructed to make a counter offer.
Our clients wish to have a licence to use the Garden for as long as possible for the benefit of themselves and their successors in title at 37 Ovington Square. The obvious basis upon which the consideration for that licence should be assessed is by reference to the additional Council Tax payable by those who have a right to use the Garden under the Kensington Improvement Act 1851. Our clients would be prepared to pay by way of a licence fee the capitalised equivalent of what they would have to pay by way of additional Council Tax for the use of the Garden over the period of the licence".
i) That the property had the benefit of a right of access to the Garden under the 1851 Act;
ii) That the property had an 80-year licence which could be assigned to future owners and occupiers under the 1906 Act;
iii) That the property had no right under either the 1851 Act or the 1906 Act.
i) "[S]hould it become established that No. 37 Ovington Square has no right of access to the gardens of the square, either under the 1851 Act or the 1906 Act, then we consider the value will be reduced to reflect this by 7.5%: £510,000 ";
ii) "[S]hould an 80-year Assignable Lease for use of the gardens be available to a qualifying owner or occupier, then in order to reflect the uncertainty associated with the assignment, the reduced term below the Freehold and the uncertainty of assignment, we consider the value should be reduced by 2.5%: £170,000 ";
iii) "[S]hould a 20-Year Assignable Lease for a qualifying owner or occupier of No. 37 Ovington Square become available for use of the garden, then a 5% discount is appropriate to reflect the relatively short term and the uncertainties with regard to its re-assignment: £340,000 ".
"1. It should be for a minimum period of 80 years.
2. It should be freely assignable to future occupiers and owners of 37 Ovington Square.
3. Each party to bear their own costs in connection with the preparation of the licence."
It was explained that the figure of £2,477.83 had been calculated by reference to the additional council tax payable by those with right to use the Garden under the 1851 Act. Thring Townsend elaborated:
"The basis for that number is that it is the discounted present value of a stream of 80 annual payments of £110.53 (the current annual garden levy), discounted by the risk free rate of return (4.308% on 30 year gilts as of 13 July 2009)".
"as your offer is substantially below the figure which our client has indicated the Committee might accept, he does not feel able to recommend it for approval"."
"As you will be aware our client is not obliged to grant a licence to use the garden under the Open Spaces Act 1906. Notwithstanding this, our client has indicated the basis on which he would be prepared to recommend to the Committee that a licence be granted. Unless or until your clients abandon the proceedings against our client and make a realistic proposal for the grant of a licence there is little further that my client can do".
Pemberton Greenish also said that their client was not aware of any licence being granted voluntarily.
"37. The issue is a short one: what is meant by 'the several Houses in and encompassing such square'? It is a crucial question since it is the occupiers of houses which fulfil that test who enjoy garden right.
38. The difficulty is, as Mr Harpum stated, that the Act does not provide a definition of the key concept of a 'square'. It includes houses but which? It may take a variety of forms in that it is not confined to the four-sided shape popularly associated with the notion of an urban square. It has a garden in or belonging to (or associated with) it. (I accept Mr Harpum's suggestion that 'belonging to' must mean 'associated with'.) But that is as far as the draftsman goes. Instead, as it seems to me, the draftsman appears to have assumed that, subject to including 'Crescents, Circuses, Half Squares, Terraces and ornamental Enclosures' within its meaning, the concept of 'square' requires no explanation. As appears from section 42, his focus has been to clarify what the position is at those points where the square intersects with a street which is not within it. What is of interest about section 42 is that it assumes that a house which is in a square must have either its front or one of its sides facing some part of the square or forming part of 'the Line' of some part of the square.
39. In one sense this begs the question as to what the square is. But the fact that its concern is to include (as a house wholly within the square) a house any part of which may 'front or face on any other Street' rather suggests that a house, a part of which fronts an access street (such as Ovington Gardens [i.e. the road running from the north-western corner of the rectangular area containing the Garden to Brompton Road] or the Terrace [i.e. the stretch of road in which 37 Ovington Square is located] in the instant case) will only be within the square if some part of the front or side of the house (but not its rear) faces the square or forms part of the line of the square.
40. The concept of the 'Line' of the square, which the Act does not explain, suggests to me a notional line which follows the outline of the square (be it a square in the popular sense or a square in the extended sense indicated non-exclusively in section 5) and traces a course along the edge of each property (along either the property's front or one of its sides) which is within the square. It is a line which one would expect to mirror the general shape of the square, half square, circus, crescent or terrace in question.
41. Beyond those considerations there is another factor which has weighed with me in coming to a view on what the Act means by a square. That is that the Act must be readily workable. By section 41 the initiative to bring a square within the operation of the Act comes from the owner of the garden and the owners and lessees of the 'Messuages constituting any such Square'. The garden committee is drawn from among those persons.
42. I think it highly unlikely that the determination of what those properties are would turn on the kind of matters prayed in aid in the instant case concerning the circumstances in which the square and its access roads were constructed, for example whether they were designed or built by the same person or as a single development or are to be regarded as architecturally indistinguishable, much less on matters such as the street names which they bore when completed. The Act, which was intended to apply to garden squares already in existence as well as those yet to be constructed, was and remains, a facultative measure of indefinite duration. In the instant case the Square was only brought within the Act a century or so after it had been constructed and the Act had been passed. (I was told that it was one of 31 or so garden squares brought within the operation of the Act after 1901 and that most of those 31 were brought within the Act between 1953 and 1980.) The very fact that Mr Herrmann has devoted so much time and energy to researching the history of the Square, and has produced an exceptionally detailed account cross-referenced to treatises on the history of the Square, estate plans, memorials of deeds listed in the now defunct deeds registry, census and poor rate returns, street directories and the like, suggests to me (even ignoring those parts of his account that go to the parish boundary question) that the draftsman can never have intended the operation of the Act to depend on such matters.
43. In the circumstances, I have reached the clear conclusion that 'Houses in and encompassing such square' appearing in section 51 refer to those houses which have a front or side which wholly or in part faces the open square, half square, circus crescent or terrace, as those expressions are popularly understood, within which or associated with which is the garden in question. In short, the square (whether foursided, or having some other shape) must be of a kind which, with its attendant garden, the average man in the street would have no difficulty in recognising. Once identified, it is the houses within that square which qualify. Section 42 operates to resolve any argument at the fringes of the square.
44. I do not therefore consider that 'square' has the extended meaning for which Mr Harpum argued. Nor do I consider that his alternative argument, based on the expression 'encompass', has any validity. In any event, it was an alternative argument which Mr Harpum urged only faintly.
45. Since the front or side of No.37 does not face the Square in the sense intended, it follows that the Herrmanns, as occupiers of that property, do not enjoy the garden right that they claim. It is, in my judgment, irrelevant that it is possible to see the garden from the front windows of number 37. Equally irrelevant (although this was not a point urged in argument) is the fact that the front elevation of number 37 juts forward from the front elevation of 35 Ovington Square by a few inches with the result that the face of those few inches might be said to be 'facing' the Square. The reference in section 42 to the side of a building facing or forming part of the line of any part of the square is, in my view, to the whole or substantially the whole of that front or side."
Sir William Blackburne said that he was the readier to reach his conclusion as the rival approach to the 1851 Act "would not only have resulted in great uncertainty over what precisely a square is in any case but have potentially opened the door to numerous claims by occupiers of many other properties which have not hitherto been regarded as fronting an open square". Sir William Blackburne went on (in paragraph 57 of his judgment):
"Not the least of the difficulties would have been to establish where along an access road such as the Terrace the 'square' would end. Indeed, it was by no means clear where, on Mr Harpum's argument, the Square ended along Ovington Gardens ".
"[Counsel for the Committee], while conceding the fact of interference and accepting the general position in law where an easement, or a statutory right in the nature of an easement, is interfered with, submitted nevertheless that his client should not be liable. He submitted that under the Act it is the Commissioners (now represented by the Royal Borough) who take control and management of the garden. It is only those who are liable to pay the extra charge to cover the garden's care and maintenance that are entitled to exercise garden right. The garden committee has no involvement in determining who has that entitlement and who therefore is to be subject to the extra charge. On the contrary, a proper understanding of the statutory scheme which applies once a garden has been taken under the Royal Borough's control and management involves that the garden committee is obliged to allow persons who pay the extra charge to have access to the Garden and are no less obliged to prevent persons from having access who do not pay the charge. It is not for the garden committee to second-guess these matters. In those circumstances, he submitted, even though it was the Committee, through Mrs de Stanford, who denied the Herrmanns access to the Garden, in so acting it was doing no more than carrying out the obligations placed on it under the Act and is to be absolved from liability on that account. The liability, if there was any, was that of the Royal Borough."
Sir William Blackburne said (in paragraph 61) that he considered that counsel for the Garden Committee was right in his submissions.
i) Were Withers negligent?
ii) What would the Herrmanns have done?
iii) Are the Herrmanns open to criticism for failing to mitigate?
iv) Quantum issues.
Were Withers negligent?
"But even accepting [counsel for the solicitors'] submission that Mr Erdozain's and the judge's confident interpretation [of the covenant] was entirely defensible, so that there was no way of saying that a competent solicitor could not arrive at it, it could on no defensible view have been so confident as to relieve Mr Erdozain of the need to enter the caveat that a court might construe it differently".
Similarly, it appears to me that Withers were not entitled to be so confident of their interpretation of the 1851 Act as to relieve them of the need to enter the caveat that a Court could take a different view.
What would the Herrmanns have done?
"If we had been advised that there was any risk that we would not have an automatic and absolute right to use the Garden Square when we became owners of the Property, we would not have purchased it. Further, we would not have wanted to take the risk of purchasing the Property and then applying to the Garden Committee for permission to access it as a courtesy".
In similar vein, Mrs Herrmann said this in her witness statement:
"I have no doubt that we would not have purchased this Property had we been aware that there was any risk that we might not have an absolute right of access to the Garden square, or that litigation might be necessary to enforce such a right".
Are the Herrmanns open to criticism for failing to mitigate?
"Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticize the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken."
i) The grant of a licence under the 1906 Act would have alleviated to a great extent the disadvantages of falling outside the ambit of the 1851 Act. Not only would the Herrmanns have been able to use the Garden themselves for however long they continued to own 37 Ovington Square, but they could have sold the property with the benefit of access to the Garden. The significance of the latter point should have been brought home to the Herrmanns by the valuation reports they commissioned from Bishop Beamish and Cluttons. On Bishop Beamish's figures, the property would have been worth £340,000 more with an 80-year assignable licence than with no right of access, and even a 20-year licence could be expected to enhance the value by £170,000. For their part, Cluttons considered that, with an 80-year assignable licence, the property's value would be raised by £300,000 and would be only £50,000 less than the £6.8 million the Herrmanns paid. When giving evidence, Mr Herrmann said of the valuation reports:"when you look at the data or the absence of data and the reasoning or the absence of reasoning and you consider that they differ by a factor of 350 per cent in the impact of getting a licence in terms of how much value is not recovered, then you have to say to yourself: can I rely on this in making a decision to settle our lawsuit?"However, the surveyors' views on the extent to which the value of 37 Ovington Square would be increased by a licence differed very little; the views they expressed should not have been regarded as startling; no expert had expressed a contrary view; and the Herrmanns did not seek a further opinion. In the circumstances, I do not think the conclusions reached by Bishop Beamish and Cluttons could be reasonably disregarded;
ii) Of course, the Garden Committee did not offer the Herrmanns an 80-year licence that could be assigned to occupiers. Pemberton Greenish's letter of 13 May 2009 proposed the grant of a 50-year licence for the Herrmanns and "their successors in title to the freehold of 37 Ovington Square". The likelihood is, however, that the Herrmanns could have secured an 80-year licence assignable to occupiers. Mr Barham confirmed that the difference between a 50-year term and one of 80 years would not have been important to the Garden Committee (see paragraph 58 above), and Mr Barham had referred to 80-year licences when speaking to Mr Sear on 23 January 2009 (see paragraph 40 above). Thring Townsend's letter of 14 July 2009 was understandably seen as "leav[ing] little room for further serious discussions" (see paragraph 58 above); as Pemberton Greenish said in their reply, the offer contained in Thring Townsend's letter was rejected because the amount the Herrmanns were prepared to pay was "substantially below the figure that our client has indicated the Committee might accept". Had the Herrmanns appeared more receptive to its overtures, the Garden Committee would probably, I think, have been willing to grant a licence that would be for 80 years and assignable to occupiers;
iii) As well as being much less than the likely uplift in the value of 37 Ovington Square, the £25,000 for which the Garden Committee was prepared to grant a licence was, when compared with the price at which the Herrmanns had bought the property, a relatively small sum. It was also far less than the costs the Herrmanns stood to incur in contested litigation. In fact, it was foreseeable that the Herrmanns could find themselves unable to recover costs of upwards of £25,000 even if ultimately successful in such litigation;
iv) One of the justifications advanced for not pursuing the offer of a licence was that the Herrmanns were optimistic that they would be successful in establishing that 37 Ovington Square had the benefit of rights under the 1851 Act. While, however, the Herrmanns may (like Miss Copestake) have thought that their property was probably within the scope of the 1851 Act, I do not think they were reasonably entitled to regard it as a foregone conclusion. The very matters that the Herrmanns rely on in support of their allegation that Withers were negligent indicate that the Herrmanns ought reasonably to have appreciated that there was real doubt about the construction of the 1851 Act. There is, moreover, no evidence that the Herrmanns' legal advisers advised that they were bound to succeed in their claim to have a right of access under the 1851 Act. The fact that Mr Sear of Thring Townsend gave the impression that he thought Pemberton Greenish's offer of January 2009 a reasonable one (see paragraph 41 above) tends to suggest that the Herrmanns' lawyers did not think that they would necessarily win;
v) The Herrmanns' counter-proposal none the less involved paying no more than they would have had to pay with a right of access under the 1851 Act. As Thring Townsend said in their letter of 19 May 2009, the Herrmanns were prepared to pay "the capitalised equivalent of what they would have to pay by way of additional Council Tax" (see paragraph 50 above; see also paragraph 56). In effect, the Herrmanns were offering nothing at all in respect of the chance that 37 Ovington Square did not enjoy a statutory right of access. That was not, in the circumstances, a reasonable approach. The Herrmanns evidently felt that it would be "fundamentally unfair" for them to be required to pay so much more than other users of the Garden, but (a) the Herrmanns' position differed significantly from that of users as to whom there was no doubt but that they had statutory rights of access and (b) the figure put forward by the Garden Committee was only £25,000;
vi) Mr Herrmann explained that he had thought it implicit in the Garden Committee's proposals that they would have to renounce any claim under the 1851 Act. However, he accepted that it was not clear that that was the case, and he and his wife never seem to have thought it worth investigating the point; they did not, for example, take any steps to establish the views of the Garden Committee or, perhaps more importantly, the Borough. For my part, I find it difficult to see that the Herrmanns would have been required to give up their claim under the 1851 Act;
vii) The Herrmanns appear to have felt that, if they used the Garden pursuant to a licence rather than the 1851 Act, they would have a second-class status. However, it is difficult to see that the differences between a licence and a statutory entitlement were likely to be of much practical importance. In any case, I cannot see that the differences were such as could have justified the Herrmanns in declining to pursue a licence capable of increasing the value of their property by so much. Moreover, as I have already indicated, I do not think the Herrmanns had a stark choice between fighting to establish a right under the 1851 Act and accepting a licence; they could potentially have done both.
viii) Another point made on the Herrmanns' behalf was that Withers had not provided any assistance or guidance in relation to their proceedings against the Borough and the Garden Committee. To my mind, however, there is nothing in this point. Apart from anything else, Withers were neither given access to all the advice the Herrmanns were receiving nor even informed of the Garden Committee's proposals.
i) The £25,000 the Herrmanns would have paid for the licence;
ii) £135,000 in respect of the difference between the value of 37 Ovington Square in May 2009 with a statutory right and its value with a licence;
iii) £28,000 in respect of interest paid/forgone on the additional £135,000;
iv) £5,400 in respect of the stamp duty attributable to the additional £135,000;
v) £55,906.28 in respect of Thring Townsend's fees up to 31 May 2009;
vi) The legal costs which would have been incurred in relation to negotiating and agreeing the licence;
vii) Damages for loss of amenity and enjoyment, anxiety and disappointment.
i) £50,000 in respect of the difference between the value of 37 Ovington Square with a statutory right and its value with a licence. As I understand it, half of this sum can be attributed to the £25,000 that the Herrmanns would have had to pay for the licence;
ii) Compensation for interest paid/forgone on that £50,000;
iii) £2,000 in respect of the stamp duty attributable to the £50,000;
iv) Reasonable costs (which could not exceed £55,000) of the litigation with the Borough and the Garden Committee up to the date the licence would have been granted.
i) Should the damages take account of legal costs that the Herrmanns would have incurred in connection with the grant of a licence but, no licence having been granted, have not in fact incurred?
ii) What was the difference between the value of 37 Ovington Square with a statutory right and its value with a licence?
iii) How far are the Herrmanns entitled to recover the £55,906.28 they had incurred in respect of Thring Townsend's fees by the end of May 2009?
iv) What (if any) damages should be awarded in respect of loss of amenity and enjoyment, anxiety and disappointment?
Legal costs that would have been incurred in connection with the grant of a licence
"failure to mitigate precludes recovery of losses that would otherwise not have been incurred; it does not create a new head of loss for costs which ought to have been incurred but weren't".
Difference between the value of 37 Ovington Square with a statutory right and its value with a licence
"This property does not enjoy the rights of access to the key gardens. However, they can be purchased by approaching the local garden committee".
"Both valuers appear to have arrived at their conclusions by a forensic analysis of valuation data from comparable properties. [M]y opinion remains that the data does not stand up to close professional scrutiny of this type and, whilst I believe that they do represent their professional opinion, I would accordingly suggest that the percentages arrived at are based, perhaps unconsciously, more on gut feeling and general intuition".
"The consensus of opinion between valuers in the market place would appear to be between 5% and 10% and, in my view, a figure at this higher end is justified both with regard to the state of the market and the likelihood that a purchase at such a discount could have been negotiated".
He therefore put the value of 37 Ovington Square in April 2008 at £6.1 million, £700,000 lower than the £6.8 million that the Herrmanns paid.
Thring Townend's fees up to the end of May 2009
"where the claimant does take reasonable steps to mitigate the loss to him consequent upon the defendant's wrong, he can recover for loss incurred in so doing; this is so even though the resulting damage is in the event greater than it would have been had the mitigating steps not been taken. Put shortly, the claimant can recover for loss incurred in reasonable attempts to avoid loss".
"At one time the rule clearly was that where costs incurred by a claimant incurred in other proceedings are recoverable in damages the amount recoverable would be his costs taxed as between solicitor and client less his costs taxed as between party and party recovered by him in the earlier proceedings".
"The then RSC Ord.62 on costs was entirely recast to enable the successful party in litigation to recover costs either on what was termed the standard basis, which allows costs reasonably incurred and reasonable in amount, or on what was termed the indemnity basis, which allows costs except where unreasonable in amount or unreasonably incurred, standard costs being the norm in civil litigation".
"[P]arty and party costs only permitted the recovery of costs necessarily incurred and there was a wide margin between such costs and costs reasonably incurred. This difference has now been alleviated and enables the successful party who is awarded costs on a standard basis to recover a reasonable amount in respect of all costs reasonably incurred. The only difference between that and the indemnity basis being that on the standard basis the burden of proof is upon the receiving party, whereas on the indemnity basis the burden is upon the paying party."
Scott LJ said:
"The standard basis formula corresponds closely, in my opinion, to the yardstick that would have to be applied to a contractual or tortious damages claim".
"The expenditure on the professional fees of solicitors was, as I have held, expenditure incurred by the plaintiffs in reasonably mitigating their loss. Prima facie therefore, it is claimable under the ordinary rules relating to mitigation. However, litigation costs have traditionally been subject to special rules for policy reasons. Prior to the change in the taxation rules there was an established distinction between such costs incurred in proceedings between the same parties, and those incurred in proceedings against third parties. This was anomalous, given that similar policy considerations applied in each case. The most recent cases show that the position must be re-considered in the light of the changes to the taxation rules. This enables the anomaly to be resolved. Under the new dispensation, taxation on the standard basis is to be regarded as equivalent to the solicitor and client basis referred to by McGregor [on Damages]. Accordingly, where costs on the standard basis have been recovered from the defendant in other proceedings, there is no basis for an additional claim by way of damages".
"Like Ferris J, I see considerable force in some, at least, of the criticism of British Racing Drivers Club Ltd in McGregor. There are serious policy issues here which would benefit from consideration by a higher court. For my part, were this a case on the ordinary measure of damages where foreseeability was in issue, I would follow Carnwath J, and the other judges who have felt constrained to follow him. I would not do so, however, with the same enthusiasm as did Evans-Lombe J".
"Where the amount of costs is to be assessed on the standard basis, the court will-
(a) only allow costs which are proportionate to the matters in issue; and
(b) resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party".
In contrast, where costs are assessed on the indemnity basis, "the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party" (see CPR 44.4(3)).
"The component of proportionality in the standard costs basis of assessment clearly introduces discretionary elements of assessment which are to be superimposed on the reasonableness tests and therefore may be extraneous to the failure to mitigate tests. They operate to reduce recoverable costs by reference to CPR policy considerations which are not necessarily relevant to the failure to mitigate tests. The introduction of this component, in my judgment, displaces the basis of the argument in The Tiburon  2 Lloyd's Rep 26, Lonrho plc v Fayed (No 5)  1 All ER 188,  1 WLR 1489 and the British Racing Drivers' Club case that there was substantial equivalence between the standard basis and the indemnity basis of assessment".
Sir Anthony Colman also expressed "serious doubt" as to whether the reasoning in British Racing Drivers' Club Ltd v Hextall Erskine & Co could be supported on public policy grounds (paragraph 25).
Damages for loss of amenity and enjoyment, anxiety and disappointment
"A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy.
But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective. A contract to survey the condition of a house for a prospective purchaser does not, however, fall within this exceptional category.
In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort. If those effects are foreseeably suffered during a period when defects are repaired I am prepared to accept that they sound in damages even though the cost of the repairs is not recoverable as such. But I also agree that awards should be restrained ".
"[D]isappointment merely at the fact that the contract has been breached is not a proper ground for an award. The mere fact of the loss of a bargain should not be the subject of compensation. But that is not the kind of claim which the plaintiff is making here. What he is seeking is damages for the inconvenience of the noise, the invasion of the peace and quiet which he expected the property to possess and the diminution in his use and enjoyment of the property on account of the aircraft noise".
"I would add that if there had been an appreciable reduction in the market value of the property caused by the aircraft noise, Mr Farley could not have recovered both that difference in value and damages for discomfort. To allow both would allow double recovery for the same item".
This comment was, however, obiter, and it is described in McGregor on Damages as "dubious" (see paragraph 3-026). McGregor on Damages goes on to say this:
"Allowing both [i.e. difference in value and damages for discomfort] would surely not be double recovery as [Lord Scott] suggests; pecuniary loss and non-pecuniary loss lead to two separate and distinct recoveries. Lord Scott might be right in a Ruxley situation where the non-pecuniary award may be considered to be dependent upon the non-existence of a pecuniary one but in Farley the discomfort and distress caused by the excessive noise was completely independent of its effect upon the market value of the property".
i) The £25,000 the Herrmanns would have paid for the licence;
ii) £2,600 in respect of the stamp duty attributable to the additional £65,000; and
iii) Interest paid/forgone on the additional £65,000.
i) Damages of £104,600 in respect of the £25,000 the Herrmanns would have had to pay for a 50-year licence, legal costs which would have been incurred in relation to negotiating and agreeing the licence (£10,000), the residual reduction in the value of 37 Ovington Square (£65,000), stamp duty attributable to the £65,000 (£2,600) and loss of amenity and enjoyment, anxiety and disappointment (£2,000);
ii) Damages for interest paid/forgone on the £65,000;
iii) Thring Townsend's costs up to 31 May 2009 on the indemnity basis; and
iv) Appropriate statutory interest.