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Neutral Citation Number: [2006] IEHC 254

THE HIGH COURT

1999 No. 2103 P

BETWEEN/

ARTHUR CONNERAN AND JOHN O'REILLY

PLAINTIFFS

AND

CORBETT AND SONS LIMITED AND

RADICAL PROPERTIES LIMITED

DEFENDANTS

Judgment of Miss Justice Laffoy delivered on 31^st May, 2006.

Liability

By agreement of the parties I determined the issue of liability in this matter in a judgment delivered on 15^th December, 2004. Having found for the plaintiffs on the liability issue, this judgment is concerned with the remedy to which the plaintiffs are entitled. In essence, it is concerned with the quantification of the damages to which the plaintiffs are entitled. While the plaintiffs claimed injunctive relief in the proceedings, the plaintiffs did not apply for an interim or an interlocutory injunction and, in effect, the claim for permanent injunctive relief was not pursued.

I determined that the defendants are liable to the plaintiffs because –

(a) the plaintiffs, as lessees, acquired, by virtue of their leases, easements to receive and make deliveries of stock and material for storage in Unit No. F (but limited to the use of Unit No. F as a store for goods supplied in Units Nos. 11 and 12) or directly to and from Units Nos. 11 and 12 Corbettcourt Shopping Mall in Galway through the car park delivery doors via the loading bay and the car park from and to the public roads, which were accessed at either Barrack Lane or Whitehall, subject to regulation by the lessors under the terms of the leases, and

(b) there was a real and substantial interference by the defendants with those rights, which was actionable at the suit of the plaintiffs.

In relation to the use of the plaintiffs of the hatch doors and the chute for receiving deliveries, I determined that such use was permitted under a separate agreement, which post-dated the grant of the leases, and was in the nature of a revocable licence, which could be revoked on reasonable notice.

This judgment should be read in conjunction with the judgment delivered on 15^th December, 2004, in which the geography and physical features which gave rise to the issues in these proceedings are described.

The claim for damages as pleaded

The claim for damages as pleaded in the plaintiffs' second amended statement of claim delivered on 26^th February, 2004, which does not differ materially from the claim as pleaded in the amended statement of claim delivered on 16^th July, 1999, particularised the following components of alleged extra expense, inconvenience, loss and damage (stated in Irish pounds but converted to Euro in the following summary) incurred by the plaintiffs by reason of the defendants' alleged wrongdoing:

(1) Additional wages, stated to amount to "a little over a half of one employee's wages", arising from the necessity to employ additional personnel to deal with deliveries to the Units via the alternative access at the public street available to the plaintiffs after the closure of the car park delivery doors and the development of the loading bay and the car park. The additional wages were calculated at €6,789.29 (IR£5,347) for the first year of the disruption, that is to say, from February, 1998 to February, 1999 and estimated at €8,207.59 (IR£6,464) for the second year. It was also pleaded that it was expected that employment costs would increase "in the amount of 3% arising from wage agreements and inflation". On that basis the cost of additional wages which would be incurred by the plaintiffs over the residue of the terms of the leases, which was put at 28 years, would be €352,905.92 (IR£277,936).

(1) Additional cost of €761.84 (IR£600) per annum, representing the cost of delivering large items to the buyers' addresses, which additional costs were alleged to be incurred by reason of the fact that customers were unable to drive into the rear of the premises (i.e. into the car park and loading bay) to collect large items. These additional costs for the residue of the terms created by the leases were calculated at €32,756.70 (IR£25,798).

(2) Loss due to reduced trading activity, which component was not pursued.

(3) Additional cost of an external warehouse at a rent of €6,348.69 (IR£5,000) per annum, which over the residue of the terms (28 years) "incorporating 3% inflation rate" was calculated at €272,978.45 (IR£214.988).

(5) Diminution in the value of Unit No. F, which it was stated was calculated at €71,105.33 (IR£56,000). In fact, no evidence was adduced of the alleged diminution in value of Unit No. F.

At the hearing, evidence was adduced only in relation to the alleged losses at (1), (2) and (4), that is to say, additional wages costs, additional delivery to customer costs and the additional cost of external warehousing. The figures at (1), (2) and (4) aggregate €658,641.07 (IR £518,722.00).

The damages were claimed in respect of breach of contract, trespass and nuisance.

The evidence in support of the claim

The expert evidence adduced by the plaintiffs to support the contention that the interference with the rights they acquired under the leases gave rise to losses of the nature and to the degree alleged in the statement of claim consisted of the evidence of an engineer with specialised knowledge of time and motion studies, an accountant and an actuary. All of the plaintiffs experts' evidence was to a large extent premised on facts supplied by the plaintiffs. The first plaintiff testified as to those facts.

The engineering evidence

The engineer, Mr. Con O'Donovan, addressed the additional work involved in receiving stock via the routes available from March, 1998 onwards after access via the car park and loading bay through the car park delivery doors had been cut off. His evidence was based on time studies carried out by him at the request of the plaintiffs on 7^th and 8^th July, 1998.

Mr. O'Donovan's understanding of the rights of the plaintiffs in relation to receiving deliveries via the car park and the loading bay through the concrete building, which was based on information given to him by the plaintiffs, was subject to certain misconceptions. Most importantly, his understanding was that the hatch doors and the chute were part of the "Goods Inwards Access" in respect of which the plaintiffs were granted rights in the lease. As I found in my judgment of 15^th December, 2004, that assumption is not correct. The terminus of the "Goods Inwards Access" within Corbettcourt Shopping Mall was the car park delivery doors. Further, insofar as there was an implication in Mr. O'Donovan's statement that "there was a capability to store goods at the bottom of the chute and also on the chute incline" that the plaintiffs had a right to such storage, the statement is incorrect. The plaintiffs did have a revocable licence to use the chute for the purpose of bringing goods into their storage area at Unit No. F, which was determinable on reasonable notice. In my judgment of 15^th December, 2004 I found that the plaintiffs effectively got no notice of the revocation of this licence. However, in my view, on the evidence, the failure to give reasonable notice could give rise to little more than nominal damages, because, given the circumstances, relatively short notice, say two weeks would have been reasonable. The significant point is that on the revocation of the licence the plaintiffs would have had to make and receive deliveries through the double doors, which on the evidence they rarely did while the chute was available, or by one of the other routes available.

In reaching his conclusions, Mr. O'Donovan does not appear to have factored in the fact that, while the hatch doors were at ground level to the exterior loading bay, the car park delivery doors (which in my judgment of 15^th December, 2004 I erroneously stated were at level 1, rather than level 2, of the interior of the concrete building) were a few feet higher than the level of the loading bay, so that palletized deliveries could not be brought in through them. He did not carry out any time and motion study in relation to the delivering of goods via the car park and loading bay through the car park delivery doors and from thence to the plaintiffs' units, which is the mode of delivery of which the plaintiffs have been deprived. However, Mr. Bryan Egan, the consulting engineer called by the defendants, was satisfied that the methodology used by Mr. O'Donovan, giving what he described as "the Chute route" a time/cost value of zero without directly analysing the costs of making deliveries to the store room, was correct. However, Mr. Egan considered that, in the light of the determination that the plaintiffs did not have rights in relation to "the Chute route", it was necessary to review Mr. O'Donovan's conclusions.

Mr. O'Donovan's studies related to the three alternative routes available for bringing in deliveries to the plaintiffs' Units in July, 1998, which were through –

(i) the main entrance at Williamsgate Street,

(ii) Ball Alley Lane, and

(iii) Eyre Square Shopping Centre loading bay.

The study established that the Ball Alley Lane route was the most time and cost efficient of the three routes. To the extent that it indicated that the plaintiffs could mitigate their loss by adopting the Ball Alley Lane route, the study was useful.

Mr. O'Donovan calculated the additional man hours involved in bringing in deliveries via Ball Alley Lane at 58.4 hours per month, comprising three components, two of which were calculated on the basis of information furnished to him by the plaintiffs that there had been 817 deliveries of packages or cartons to the plaintiffs in Corbettcourt Shopping Mall in the month of May, 1998, which was taken as an average month. The first component was 26.7 hours per month, which was the product of 1.96 standard minutes per carton by 817. The 1.96 standard minutes per carton represented the time involved in loading the van in the plaintiffs' store in Ballybane, which was 2.7 miles from Ball Alley Lane, the journey time from Ballybane to Ball Alley Lane, unloading at Ball Alley Lane and delivering the stock to Unit No. F. Included in the figure of 1.96 is Mr. O'Donovan's calculation of the delivery time from a van parked in Ball Alley Lane to Unit No. F at 0.70 standard minute per carton. The second component was 19.50 hours for van utilisation, which, as I understand it, reflects the time during which a van was "tied up" on the job. This calculation was based on the product of 1.43 standard minutes per carton and 817 cartons. The third component was 12.2 hours use of a forklift truck for loading (7.2 hours) and unloading (5 hours) per month.

Mr. Egan's evidence was that, if the plaintiffs chose to deliver via Ball Alley Lane, they would use an additional 37.2 man hours per annum. In doing this calculation, Mr. Egan adopted the 817 cartons per month average used by Mr. O'Donovan but limited the additional time to 0.70 standard minute per carton, that is to say, the time involved in delivering stock from a van parked in Ball Alley Lane to Unit No. F. He did not take into account the time factor involved in loading at, and journeying from, Ballybane, or the time the van was tied up or the forklift use time. Mr. Egan rationalised his approach on a number of grounds. First, he contended that a fourth alternative route is still available. This is the route through Edward Square Shopping Centre from Castle Street and Barrack Lane to the porch entrance which, as I stated in my judgment of 15^th December, 2004, was created during the development of Edward Square Shopping Centre. This route only became available around September, 2003 and it will be clear from my determination on the liability issue that I do not consider that route as an appropriate substitute for the rights which the plaintiffs acquired as lessees under their leases. Mr. Egan also made the point, which is a fact, that the warehouse at Ballybane was acquired before the closure of the loading bay and car park and not as a consequence of the closure. While Mr. Egan analysed the time involved in bringing deliveries from the car park delivery doors to Unit No. F and came up with a result of 0.474 standard minute per carton, he does not seem to have utilised that figure.

Accountancy and actuarial evidence

Mr. O'Donovan did not attempt to convert additional time into additional

wages. This was left to the accountant, Mr. Prionsias Kitt, Chartered Accountant, of the firm of D.H.K.M., Chartered Accountants, who practises in Galway. However, Mr. Kitt did not use the figure of 58.4 additional man hours per month which Mr. O'Donovan calculated as the consequence of having to bring deliveries in via Ball Alley Lane. He effectively used a figure of 109.5 man hours per month.

Mr. Kitt's role was to approve the figures set out in the statement of claim, which were based on a report the accountants furnished to the plaintiffs in May 1999. In relation to the first year, the figure of €6,789.29 (IR £5,347.00) was a figure given to the accountants by the plaintiffs. His projected figure for the second year, €8,207.59 (IR £6,464.00) was based on the actual hours which documentation, time cards, furnished by the plaintiffs to their accountants indicated represented actual additional time (109.5 hours) spent by two employees during the month of April, 1999 handling deliveries in consequence of the deliveries having to be brought in via Ball Alley Lane. The accountants took that information at face value. They did not conduct any audit of what activities the two named employees were actually engaged in, nor did they do any review of the time involved in handling deliveries which were brought in via the car park delivery doors prior to the closure of the car park. Their task was to multiply the monthly figure supplied by twelve. They viewed Mr. O'Donovan's study as "an academic exercise to prove a point" and "as a comfort factor". The actual costs for the succeeding six years were not ascertained. So, in effect, the accountants merely did a calculation of the additional cost on the basis of the information furnished by the plaintiffs for the residue of the terms of the leases, 28 years, factoring in an envisaged 3% increase in wage costs annually. The figure that they arrived at is the figure which appears in the particulars in the statement of claim – €352,905.92.

Similarly, they calculated the additional delivery to customer costs at €32,156.70 on the basis of information furnished by the plaintiffs that they were incurring additional costs of €12.70 (IR£10) per item in respect of 60 large items per annum purchased by customers, arriving at the figure of €32,756.70 which appears in the statement of claim. Much was made of the first plaintiff's evidence that 70 such deliveries were made in the year 1999 and that the figure of 60 was an underestimate. No evidence was adduced of the actual deliveries in the succeeding six years. They also calculated the additional cost of external warehousing at €272,978.45, the figure which appears in the statement of claim, on the basis of information furnished to them by the plaintiffs.

The position, therefore, is that, on the basis of information furnished by the plaintiffs, the accountants calculated the additional wages costs, the additional delivery to customer costs and the additional warehousing cost, incorporating a 3% inflation factor, over the 28 years residue of the leases which remained unexpired in 1998/1999 at €658,640 in aggregate. Mr. Kitt's evidence was that, if account had been taken of a 9% inflation factor, the figure would be €1,225,285.76. In my view, on the evidence there is absolutely no justification for an annual provision of 9% for inflation over the 28 years from 1998/1999. I regard this part of the evidence as hyperbole.

Unlike Mr. O'Donovan, Mr. Egan did attempt to convert his opinion on additional time into additional wages. As I have stated, his opinion was that, if the plaintiffs chose to deliver via Ball Alley Lane, they would use an additional 37.2 man hours per annum which, in his view, was equivalent to additional wages cost of €940 per annum. He based his calculation on the Construction Industry Federation rate for a tradesman or driver as of 10^th October, 2006, which he put at €16.50 per hour, and he allowed a factor of 1.5 for calculating the "built-up" rate.

As with the accountants, the actuary, Mr. Joseph Byrne, had a relatively simple task. He was asked to capitalise the current value of the future losses which it is contended will be incurred by the plaintiffs annually on account of additional wages and delivery costs. He did the calculation on the assumption that the loss will be incurred annually for the residue of the terms of the leases which is currently twenty years, without making any allowance for "mortality" and on the basis of an anticipated future rate of investment return of 3% per annum for the purpose of discounting back to the present time. On the basis that the plaintiffs will be liable for income tax at the rate of 42%, Mr. Byrne's evidence was that the appropriate multiplier was 16.915. Mr. Byrne's calculation of future loss, on the basis of additional costs of €10,977 per annum for wages at the time of the hearing and deliveries to customers was €185,676 and he calculated the loss to date at €74,702. These calculations gave a total of €260,378 in respect of the plaintiff's losses to date and projected over the residue of the terms of the leases by reason of additional costs of wages and customer deliveries. The difference between Mr. Byrne's total and Mr. Kitt's corresponding figure (€385,662) is presumably attributable to the fact that Mr. Kitt did not discount for the fact that, if awarded a capital sum, now the plaintiffs would be able to invest it and get a return on it.

General observations on the expert evidence

Leaving aside the appropriateness or otherwise of the method of quantification of the loss they contend resulted from the interference with their rights at issue in these proceedings adopted by the plaintiffs, I would comment on the evidence adduced in support of that approach as follows.

First, in relation to the evidence adduced to support the claim for the additional wages costs, Mr. O'Donovan's expertise and the results of the study he conducted were not utilised in the calculation of the loss. There was no objective analysis of the man hours claimed for the first year of the interference or in respect of the two named employees whose activities form the basis of Mr. Kitt's calculations. The evidence was that in the three accounting periods following the interference with their rights, wages as a percentage of sales were shown as having decreased in the accounts of the plaintiffs' business. Various explanations were proffered for this, for instance, that the management of the business had improved and that the plaintiffs' wives helped out in the business. While the explanations were not supported by any hard facts, I do not think it proper to infer that that the plaintiffs have incurred no actual loss in the past eight years by reason of the interference with their rights and will incur no prospective loss over the residue of the terms of the leases.

Staying with the additional wages costs, I do not find Mr. O'Donovan's evidence to be a sound basis for quantifying loss under this head of claim. Mr. O'Donovan's calculation of the additional man hours per month occasioned by the interference with the plaintiff's rights, which is approximately half the figure which was used, on my reading of the appendices to his report involved two personnel, a driver and a helper, from the time loading started at the warehouse in Ballybane to the time unloading was completed in Unit No. F, apart from the forklift truck time. While I have no reason to think that Mr. O'Donovan did not adopt a reasonable approach in comparing the logistics of bringing in deliveries via the three routes which were available to the plaintiffs in 1999, his calculation of 58.4 additional man hours per month, cannot be accepted as a reasonable reflection of the additional man hours involved in the plaintiffs having to take deliveries in via Ball Alley Lane rather than through the car park, the loading bay and the car park delivery doors. I appreciate that it is a major plank of the plaintiffs' case that the closure of the car park, the loading bay, and the car park delivery doors necessitated the adoption by them of a new model for servicing the units in Corbettcourt Shopping Mall with stock and material, which involved the stock and material being delivered by suppliers to the store at Ballybane rather than directly to Corbettcourt Shopping Mall. While a new model may have been adopted which was economical, even parsimonious as Mr. O'Donovan testified, I do not think that, as a matter of probability, it was necessitated by the defendants' activities.

Secondly, even if the additional cost to the plaintiffs in terms of man hours of the interference with their rights is a proper legal basis for quantifying their loss in these proceedings, I cannot see how the cost of delivering, say, a flat-packed kitchen trolley to the home of a customer living in Salthill is a necessary consequence of the interference with the plaintiffs' rights, the costs of which should be visited on the defendants. In my view, at most, a reasonable case could be made for the additional man hours involved in bringing the item in question to an adjacent car park, for example, the car park of the Eyre Square Shopping Centre. The fact that prior to its closure in February, 1998 the car park existed as a facility for customers shopping in the "Options" shops was not based on any right or entitlement of the plaintiffs under their leases.

Thirdly, as regards both additional wages costs ands additional delivery costs, the claim for alleged losses to date is estimated on the basis of a number of "snap shots" over short periods of time, for example, the 109.5 hours ascribed to the two named employees in April 1999. Given that the actual losses over the past eight years are quantifiable, the claim as so presented lacks credibility.

Fourthly, if it is appropriate to apply the actuarial evidence, it must be applied with caution because, as Mr. Byrne properly pointed out, he made no allowance for "mortality", which I take as meaning the type of contingency which, during the residue of the terms of the leases, might have impacted on the plaintiffs' trading as "Options". In Reddy v. Bates [1983] I.R. 141, delivering his judgment in the Supreme Court, Griffin J., albeit in the context of a claim for future loss of earnings by an individual in a personal injuries action, stated at p. 147:

"Whilst the mathematical calculations made by an actuary may be constant and correct, they should be applied in the particular circumstances of every case with due regard to reality and common sense."

In my view, those observations apply whatever the legal context in which actuarial calculations are used to calculate loss.

Fifthly, in my view, the component of the plaintiffs' claim which seeks a capitalised amount for the additional cost of external warehousing is wholly unsustainable. Unit No. F comprises about 1,000 sq. ft. of storage space. It is clear on the evidence that is has been utilised up to and beyond its maximum capacity by the plaintiffs in the intervening years since the interference with the plaintiffs' rights. In fact, the evidence establishes that frequently during that period the overflow from Unit No. F at level 1 in the concrete building has given rise to complaints by the insurance brokers and the insurers who insure Corbettcourt Shopping Mall and by the fire officer. On the evidence there can be no doubt but that since February, 1998 the plaintiffs have received value for the rent payable in respect of Unit No. F, which was restricted to use as a store for goods supplied in Units Nos. 11 and 12. The evidence of the first plaintiff, which was that Unit No. F has been of little practical use to the plaintiffs and has only been used "as a back-up store" and not for receipt of goods from suppliers since February 1998, has to be viewed in the context of the evidence of the plaintiffs' business operations as a whole. In the relevant period the plaintiffs carried on a retail business at three other locations: Headford Road Shopping Centre in Galway, where they have been trading since 1996; Tuam, where they have been trading since 1993; and, for a while, in Loughrea. They also carried on a wholesale business from 1995/1996 until 2005. They acquired a lease of a warehouse in Ballybane (1,500 sq. ft) in 1996, around the same time as they acquired the unit in the Headford Road Shopping Centre. In July, 1999 they moved their warehousing operations to Tuam and since then have warehoused at three different locations in Tuam. While the evidence is somewhat imprecise, in that the square footage is approximate, my understanding is that currently the plaintiffs retail from Units Nos. 11 and 12 (3,000 sq. ft.), Headford Road Shopping Centre (1,500 sq. ft.) and Tuam (1,000 sq. ft.). They have 1,000 sq. ft. of storage space in Unit No. F and they have a warehouse (1,500 sq. ft.) in Tuam. I do not think that it is reasonable to infer that 1,000 sq. ft. of warehouse space in Tuam has been, and is, necessitated by the interference with the plaintiffs' rights in issue here. I consider this aspect of the plaintiffs' claim to be not only unrealistic but also exaggerated, although, as I stated in my judgment of 15^th December, 2004, I am of the view that the plaintiffs were deprived of the only suitable route for efficient bulk deliveries of the merchandise retained in Unit No. 12.

Sixthly, the plaintiffs' claim, and the evidence adduced to support it, do not manifest any recognition by the plaintiffs of their duties to mitigate their loss, save to the extent that they followed Mr. O'Donovan's advice that the Ball Alley Lane route was the most time and cost efficient of the routes for receiving and making deliveries available to them after February, 1998. In particular, I think there is substance in the defendants' submission that the formulation of the plaintiffs claim on the basis of an inflation proof annual sum for each year of the residue of the terms of the leases, which the defendants characterised as simplistic, fails to take into account the duty of the plaintiffs to organise their business so as to minimise their losses. I think it is likely that the plaintiffs have minimised their losses, but a claim for loss to date based on "snap shots" in time more than six years ago does not reflect this.

Finally, it was submitted on behalf of the defendants that the court must take into account the fact that the plaintiffs have been paying the same rent for Unit No. F. since 1992, the rent reviews which arose in 1996, 2000 and 2004 not having been determined. The evidence is that there are six rent reviews outstanding, which I understand to mean that the rent reviews due in respect of both Unit No. F and Unit No. 12 in 1996, 2000 and 2004 have not been determined. A letter dated 2^nd January, 2004 from Michael Fitzpatrick MRICS, who was appointed as independent expert to conduct the reviews, was put in evidence. That letter was in response to a request from the plaintiffs for a postponement of the determination by the expert pending the outcome of these proceedings. Mr. Fitzpatrick suggested that the parties might agree to him fixing two rents for each take which, as I understand it, would reflect the "before and after" interference with the plaintiffs' rights scenarios. That seems to me to have been a very sensible suggestion, but it was not taken up. Counsel for the defendants cautioned that the court must have regard to the possibility that the plaintiffs will seek to be compensated twice for the same loss: by way of a direct capital payment; and by a reduction in the rent payable in respect of the premises. For the reasons I will outline later, the approach the court is constrained to take is to assume that, in determining the rent payable on the reviews, the expert will take cognisance of the finding of the court that there has been an interference with the rights the plaintiffs acquired under the leases and that the reviewed rents will reflect the diminished rights.

Legal principles applicable to quantification of loss

Counsel for the defendants invoked the decisions of the Supreme Court in Vesey v. Bus Éireann [2001] 4 I.R. 193 and Shelley-Morris v. Bus Átha Cliath [2003] 1 IR 232, not on the basis that any of the plaintiffs' witnesses had been untruthful but on the basis that contradictory and confusing evidence had been adduced on behalf of the plaintiffs and that the court should not attempt to unravel the contradictions or lack of clarity. In the most recent of those decisions Denham J. stated as follows at p. 257:

"I wish to reiterate what was said by this court in Vesey v. Bus Éireann … that the onus of proof in these cases lies on the plaintiff who is, of course, obliged to discharge it in a truthful and straightforward manner. Where this has not been done 'a court is not obliged, or entitled, to speculate in the absence of credible evidence' (per Hardiman J. at p. 199). To do so would be unfair to the defendant. …"

While that dictum has to be applied by this Court, I think it is fair to say that the quantification of the plaintiffs' loss in this type of case is likely to give rise to more difficulty than the quantification of damages in a personal injuries action, where the approach to be adopted is well established. At the end of the evidence I sought written submissions in this case because I considered that I needed guidance on the proper approach to the quantification of the plaintiffs' loss.

Restitutionary damages

In their written submissions the plaintiffs argued for an entitlement to restitutionary damages relying on –

the commentary in McGregor on Damages (17^th Edition), at chapter 12 and the English authorities referred to in the commentary, in particular, the decision of the Chancery Division of the High Court in Wrotham Park Estate Company Limited v. Parkside Homes Limited [1974] 1 W.L.R. 798, the decision of the Court of Appeal in Jaggard v. Sawyer [1995] 1 WLR 269, and the decision of the House of Lords in A.G. v. Blake [2001] 1 AC 268 and

the commentary in Clark on Contract Law in Ireland (5^th Edition) in chapter 19, and the commentary in McDermott on Contract at para. 22.113, in each of which there is reference to the decision of this court (Finlay P.) in Hickey & Company Limited v. Roches Stores (Dublin) Limited (No. 1) (High Court, Unreported, 14^th July, 1976).

The plaintiffs' argument was that the court should assess damages by reference to, or direct an account of, the profit made by the defendants from the development of the Edward Square Shopping Centre, which it was asserted was carried out in a manner which breached the plaintiffs' property rights and in the knowledge of the nature of the plaintiffs' claim but blindly ignoring it. The basis on which it was contended that the first defendant is liable for restitutionary damages was that the first defendant received, as the purchase price for the land sold to the second defendant, consideration in excess of €1.5 million and, in addition, received several units in the new development. The bases on which it was contended that the second defendant is so liable is that, notwithstanding knowing the particulars of the plaintiffs' claim, they proceeded with the development "at a cost of many millions of pounds/euro" and "it is clear that the Edward Square Shopping Centre has been a major success".

I find it unnecessary to express any view on the circumstances in which a claim for restitutionary damages will succeed in this jurisdiction, because I consider that the submission made by counsel for the defendants that, even if this were a case in which it would be appropriate to award restitutionary damages, no such award could be made because the plaintiffs did not claim restitutionary damages nor did they adduce evidence which would support such a claim.

As regards pleading, it was accepted on behalf of the plaintiffs that a claim for restitutionary damages was not pleaded. While the plaintiffs claimed an injunction, they did not claim damages in lieu of, or in addition to, an injunction under the Chancery Amendment Act, 1858 (Lord Cairns' Act), nor did they claim exemplary damages. No particulars of the factual basis for such a claim were pleaded. The issue of restitutionary damages as the proper basis of assessment in this case first arose in the plaintiffs' written submissions, so that the defendants were not on notice that they might have to counter such a claim until the evidence had closed.

The evidence adduced by the plaintiffs was not directed in any way to such a claim and there was no evidence which would support such a claim. It is true that the agreement for sale between the first defendant and the second defendant was put in evidence during the hearing which led to the decision on liability. While it was not reintroduced during the hearing on quantification of damages, I assume that the consideration is correctly stated in the plaintiffs' written submission. However, on the basis of what I stated in my judgment of 15^th December, 2004, it is clear that the consideration was paid in return for considerably more property than the property affected by the plaintiffs' rights, including the entirety of the car park and Corbett House. Moreover, even if it were appropriate in this case to adopt an approach similar to that adopted by –

• Brightman J. in Wrotham Park Estate Company v. Parkside Homes Limited (where damages were awarded in a sum that might reasonably have been demanded by the plaintiffs from the defendant, which had built 14 houses in contravention of a restrictive covenant, as a quid pro quo for relaxing the covenant), or

• Graham J. in Bracewell v. Appleby [1975] 1 All E.R. 993 (where the defendant built a house which could be accessed only over the plaintiffs' property over which he did not have a right of way appurtenant to the site of the house, and having refused an injunction to restrain use of the right of way, which would have rendered the house uninhabitable, the court awarded damages equivalent to a proper and fair price which would be payable for the acquisition of a right of way),

(whether such methods of assessment are properly categorised as compensatory or restitutionary), here no evidence whatsoever was adduced as to the value of the rights which were interfered with, either by reference to the difference, if any, between the value of the plaintiffs' leasehold interests with those rights and without them (i.e. diminution in value), or the sum the plaintiffs might reasonably have demanded for their surrender, or as to the benefit in monetary terms which accrued to either defendant from the interference with the plaintiffs easements in carrying out the development of Edward Square Shopping Centre.

Apart from the pleading and evidential difficulties, on the facts as established, I would regard the plaintiffs' argument in relation to an entitlement to restitutionary damages as being both fanciful and lacking obvious merit, particularly, as planning permission for the development of Edward Square Shopping Centre was granted prior to the institution of these proceedings and the plaintiffs, who had been appellants on the appeal to An Bord Pleanála, had withdrawn their appeal on payment of a sum of money, albeit without prejudice to their contention that their property rights were being interfered with.

Irish authorities relied on by the plaintiffs

The only Irish authorities which the plaintiffs cited in which the court was concerned with the award of damages for interference with an easement were McGrath v. Munster and Leinster Bank Limited [1959] I.R. 313; and Scott v. Goulding Properties Limited [1973] I.R. 200. Each was concerned with interference with an easement of light. As an easement of light is intrinsically different from the type of easement under consideration here, it is not surprising that neither case gives much practical guidance as to the assessment of damages.

It was submitted on behalf of the plaintiffs that the award in the McGrath case was a generous award, the implication, I assume, being that the award in this case should be generous. I do not agree with the plaintiffs' interpretation of the award in the McGrath case, which was concerned with compensating the plaintiff for the diminution of light to office of the plaintiff, who was a solicitor, in consequence of the reconstruction to a much greater height than hitherto of an adjoining building. Dixon J., in addressing the issue of damages, stated as follows at p. 328:

"It is not easy to assess damages in a matter of this kind, as the greatest injury to the plaintiff is in the rather intangible realm of loss of convenience and amenity in the use of her office. There is no real likelihood of any loss of business or of profits, except insofar as the greater use of artificial light entails additional expense."

Dixon J. had found earlier (at p. 326) that from early in 1958 the plaintiff had been subjected to interference with light. She held under a lease which was due to expire in June, 1970, which was subject to a yearly rent of £75 and rates. The valuation evidence was that a fair rent for the office subject to the diminution in light would be £55 per annum with rates, so that there was a depreciation of £20 per annum. Dixon J. also recorded that it was contemplated that some decoration and internal rearrangement of the room at a cost of £120 was contemplated, which would necessitate upkeep at a cost of about £30 every four years. The loss of depreciation for twelve years and the expenditure contemplated would have come to £450. Dixon J. did remark that the redecoration would to some extent offset the additional cost of artificial lighting. The total sum awarded, as damages in lieu of an injunction, which was £500, clearly included a modest sum, around £50, in respect of general damages.

The head note in Scott v. Goulding Properties Limited succinctly sets out the effect of the decision as follows:

"Obstruction of part of the light reaching the ancient lights of a building on a dominant tenement gives the person in possession of that tenement a cause of action for damages consisting of compensation for the resultant diminution in the value of the tenement and for the resultant loss of amenity; but such damages should not include any element of compensation or the reduction, caused by the same act of obstruction, of the amount of light reaching modern windows of the building."

As the majority judgment in the Supreme Court, delivered by Fitzgerald J., indicates, the order of the High Court had not indicated that the trial judge had differentiated between ancient lights and modern lights in assessing the compensation. Further, it was not indicated in the judgment how the trial judge obtained the figure of £1,700 which he awarded, but the Supreme Court was informed that the judge had indicated that he was allowing £1,500 for depreciation in value and £200 for loss of amenity.

Fitzgerald J., at p. 220, stated the basis on which the damages should be assessed as follows:

"Damages for loss of amenity are properly awarded in respect of the injury sustained up to the date of the trial and for such further period, if it can be estimated, as the plaintiff may continue to occupy the premises. In my view, damages for depreciation should relate to loss in selling value in the future if and when the plaintiff decides to dispose of the property. Where there is no definite evidence as to whether or when the plaintiff is likely to dispose of the property, a global figure for general damages has to be awarded without necessarily segregating the figure in compartments for loss of amenity and depreciation on future sale."

Fitzgerald J. went on to say that the amount of £1,700 appeared to him to bear no reasonable relation to the extent of the injury suffered by the plaintiff as a result of the obstruction of the light to the ancient windows themselves and the loss of amenity or depreciation in value. Accordingly, the judgment for £1,700 was set aside.

The report of the decision of the Supreme Court in the Irish Reports notes that the parties agreed to have the damages re-assessed by the Supreme Court and they were reassessed in the sum of £1,200. Despite that information, it is not possible to analyse the award, as it is clear from the dissenting judgment of Walsh J. that there was a conflict on the evidence of the valuers called by the plaintiff and the defendant as to the depreciatory effect of the diminution of light on the market value of the property.

In reliance on the decision in the Scott case, it was submitted on behalf of the plaintiffs that, as they did not call a valuer to prove the depreciation in the value of the premises, the damages awarded should be wholly attributed to the loss of amenity. It seems to me that that submission is based on a misunderstanding of the approach advocated in the judgments in the Scott case, including the dissenting judgment of Walsh J., which are analysed in Bland on The Law of Easements and Profits à Prendre (Dublin, Round Hall, Sweet and Maxwell, 1997) at p. 334. Fundamentally it ignores the distinction between general damages and special damages and the fact that what the plaintiffs have sought to prove here is special damage, the extra expenses involved in bringing in and making deliveries. Further, given that the absence of any valuation evidence coupled with the fact of the outstanding rent reviews means that it is impossible to make any assessment of the real impact in financial terms of the interference with their easements on the value of the leasehold interests to which they were appurtenant, it is not possible to arrive at a global figure for depreciation and loss of amenity.

The normal measure of damages

Although the jurisprudence of the courts in the United Kingdom which culminated in the decision of the House of Lords in Attorney General v. Blake permeates the commentary in the 17^th Edition of McGregor, it contains some statements on the normal measure of damages in situations analogous to the situation which arises in this case, which are indicative of the approach which might be adopted to proving loss in this case. Bearing in mind that the plaintiffs have claimed damages in both contract and tort, I will consider the position in relation to each cause of action.

The relationship of landlord and tenant in this jurisdiction is based on contract rather than tenure (s. 3 of the Landlord and Tenant Law Amendment Ireland Act, 1860, Deasy's Act). The leases of the Units in Corbettcourt Shopping Mall create the relationship of landlord and tenant between the plaintiffs and the first defendant. In the context of the proper measure of damages for breach of the lessor's covenants in a lease, McGregor states as follows at para. 23-011:

"Apart from specific covenants, breach of the overarching obligation of the lessor not to derogate from his grant may give rise to the issue of damages. In Platt v. London Underground [[2001] 2 E.G.L.R. 121] loss of profits resulting from the derogation of grant were awarded; … The loss of a right to park on land retained by the lessor was regarded as a derogation from grant in Saeed v. Plustrade Limited [[2002] 2 EGLR 19, C.A.] and led to an award based upon rental value of the parking lot but discounted by 10 per cent in recognition of the possibility that the lessee, in competition with others, might not always find the parking lot available."

In the context of sale of land, McGregor points out at para. 22-049 that, in the case of a breach by a covenantor of a restrictive covenant, the diminution in the value of the adjoining or retained land, that is to say, the land benefited by the covenant, will still form the starting point in the assessment of damages, but goes on to discuss the measure of damages which is an alternative to diminution in value, which has emerged for restrictive covenants, which is based upon the sum of money for which the covenantee might reasonably have demanded of the covenantor for releasing him from his covenant. The fons et origo of this alternative measure is the Wrotham Park Estate Company case, which leads back to the question whether the quantification of damages should be restitutionary rather than compensatory.

In outlining the normal measure of damages in torts affecting land, trespass and nuisance, McGregor considers the particular case of nuisance at para. 34-015 stating:

"Where the nuisance does not entail physical damage to land, diminution in value and cost of abatement again appear as acceptable measures of damages. Thus in Snell & Prideau v. Dutton Mirrors [[1995] 1 E.G.L.R. 259, C.A.], where the claimant's right of way was obstructed and narrowed by building by the defendants, the claimants' entitlement to damages was said to amount to the difference between the value of their property with the full right of way, including the right of passageway for vehicles, and its value with the more limited right now existing."

As is noted by McGregor, the defendants in the Snell and Prideau case were not ordered by mandatory injunction to pull their building down. The issue of the quantification of damages was dealt with in that case in the judgment of Stuart v. Smith L.J. who stated (at p. 264):

"Although, in my opinion, the plaintiffs have suffered substantial damage, with the loss of vehicular access and the restriction imposed by the proximity of the defendants' building on the free and easy use of trolleys and forklift trucks, the fact is that, for many years, they made virtually no use of it and they do have an alternative access at the front of the building. Indeed at one time they had two such accesses the garage and the loading bay, although the garage has now been converted to offices or a showroom. In the light of these considerations, I consider that the plaintiffs can be adequately compensated by an award of damages which will reflect the difference in value between the plaintiffs property with the benefit of the full right as compared with its value with the limited right as now exists".

What all of the foregoing extracts from McGregor illustrate is that the cornerstone of the traditional or normal measure of damages for breaches analogous to the breach of the plaintiffs' rights complained of here is diminution in value. The absence of evidence of diminution in value in this case undermines the court's ability to measure damages in accordance with the normal measure. In particular, the approach adopted in the Snell and Prideau case, which commends itself because of the similarity of the factual circumstances in that case and here, cannot be adopted.

Application of legal principles to the facts

At the outset, I set out the nature and extent of the rights of the plaintiffs which the defendants have interfered with so as to render them liable in damages to the plaintiffs.

I have then analysed the plaintiffs' claim and outlined the evidence adduced in support of the claim. I have concluded that the third surviving component of the plaintiffs' claim, the cost of additional warehousing, is unsustainable. In relation to the first of the other two surviving components, the additional wages costs, the inconsistency as to the additional man hours necessitated by the interference with the plaintiffs' rights between Mr. O'Donovan's finding, adopting a scientific approach, and the additional man hours which formed the basis of the accountant's and the actuary's calculation, gives an appearance of artificiality and unreality to the plaintiffs' claim. It is in fact artificial and unreal because it not based on additional wages costs actually incurred to date, which are quantifiable. As regards the second, the additional cost of deliveries to customers, the claim does not reflect the reality of the limited extent to which the plaintiffs would have been entitled, as a matter of law, to facilitate customers had their rights not been interfered with. Overall, I think the claim presented by the plaintiffs to the defendants was exaggerated and the approach adopted in the proceedings opportunistic.

As regards the defendants, although I have concluded that a claim for restitutionary damages does not fall to be considered, for completeness, I find on the evidence that the plaintiffs have not established mala fides on the part of the defendants in the sense envisaged by Finlay P., as he then was, in Hickey & Company v. Roches Stores (Dublin) Limited [1980] I.L.R.M. 107. On the evidence I am satisfied that there was a genuine belief on the part of the principals of the first defendant that they were entitled to interfere with the access for deliveries to Corbettcourt Shopping Mall under the terms of the leases which had been created and that the interference with the plaintiffs' rights which I have found was wrongful was neither wilful nor deliberate nor a cynical denial of such rights. However, I do not accept the defendants' contention that the plaintiffs have not sustained any loss on account of the interference with their rights and that they should recover no damages.

Having regard to the state of the evidence, I have found it impossible to determine what is a fair measure of damages in this case as between the plaintiffs and the defendants for the interference with the plaintiffs' rights. No evidence has been adduced which enables the court to determine the extent in money terms to which the interference has diminished the value of the leasehold interests in Units No. 11, 12 and F. The revised rents payable in respect of Units No. 12 and F since 1998, which have yet to be fixed, would be relevant factors in that determination. The absence of evidence of diminution in value of the leasehold interests means that there are no evidential points of reference against which it is possible measure compensation for loss of amenity or inconvenience. The only evidence adduced, evidence of special damage alleged to have been incurred by the plaintiffs by way of additional costs, overstates the real loss.

Nonetheless I am satisfied that the plaintiffs have incurred extra costs and have suffered inconvenience. In relation to loss to date in respect of Units Nos. 12 and F, the revised rents for the review periods since 1996 should partially redress that. Going forward, the revision of the rents reserved by the three leases should reflect the plaintiffs diminished rights.

Because of the state of the evidence, it is not possible to assess what would be a fair measure of damages to compensate the plaintiffs for the wrongs they have suffered, but, as the saying goes, the plaintiffs will have "another bite of the cherry" in the rent revision processes. In relation to the loss which will not be addressed in those processes, while I have found it extremely difficult to put a figure on it, I have come to the conclusion that a global figure of €50,000 is all that is justified on the evidence. The approach I have adopted, acting on the assumption that overall fairness as between the plaintiffs and the defendants will be achieved in the rent revisions processes, may be somewhat unorthodox, but it is an approach which has been forced on the court by the state of the evidence, which is entirely of the plaintiffs' doing.

Decision

Accordingly, there will be judgment in favour of the plaintiffs in the sum of €50,000.

Approved

Laffoy J.