Damages for trespass are generally calculated on a compensatory basis. The party bringing the claim is therefore entitled to recover damages only for loss actually suffered.
The law has for some while recognised that in certain instances this approach won’t produce an equitable outcome. In these cases damages are measured by reference to the benefit which the trespasser has gained by the use of the land in question.
In the recent case of Stadium Capital Holdings -v- St Marylebone Property Company the High Court appeared to have extended this exception by awarding damages equating to the total income earned by the defendant from unlawfully erecting a hoarding in air space over land owned by the claimant. The Court of Appeal has now decided that awarding such a high level of damages, without appropriate evidence, was wrong . The proper approach will ordinarily be to award damages equating to the “hypothetical licence fee” i.e. the amount the parties would have negotiated as a reasonable licence fee in order to permit the relevant activity.
A party accused of trespass should keep an eye on its potential liability, bearing in mind the comments made by the Court of Appeal, that where appropriate evidence is submitted, a higher level of damages than was ultimately awarded in the Stadium Capital Holdings case might be appropriate. A party considering pursuing an action for trespass will be well advised to gather as much “appropriate” evidence before bringing a claim.