The law generally quantifies damages in order that they provide proper compensation, insofar as money ever can, for the loss suffered by another. There are various ways in which such a loss might be valued. One might value the diminution caused to the value of claimant's land by the fact that the right has been breached. One might try to calculate the extra expense to which the owners of the breached right might, in fact, be put, when, say, a drainage right was built over so increasing the maintenance costs. Compensation calculated in either of these ways might, however, turn out to be a relatively small sum.
So, in order to make a more substantial recovery for interference with a property right, claimants have often tried to claim as damages a percentage of the profit generated or permitted by the interference.
The property world often applies this approach to assessing ransom payments and frequently reference is made to the case of Stokes v Cambridge as a strict legal authority for the proposition that ransom value should always be calculated at 30% of the uplift in the value unlocked by the acquisition of ransom rights. In fact, the Stokes case is a decision which turns on its own facts and each negotiation must proceed or be decided on its own facts.
The most recent case to consider negotiating damages in any detail is Cooper v Ludgate House Ltd [2025] EWHC 1724 (Ch), the Bankside Lofts case. In that case Fancourt J reviewed the authorities and commented in this particular context, that:
“one-third is not an assumed end point for a negotiation: it is a (large) share of the (very substantial) added value that would need to be properly justified, taking into account all the circumstances, not just what the claimants would say that they want to be paid.”
There is no fixed rule for how such negotiating damages should be assessed. In particular, there is no ‘rule’ that the hypothetical negotiation must arrive at a percentage of 30% or one third or something in that region, the guiding principle as articulated by Fancourt J is:
“The negotiations are not a ransom exercise because the claimants are deemed to be willing to sell at a reasonable price and the developer is deemed to be willing to buy at a reasonable price”
Fancourt J goes further:
"It is therefore wrong to start the assessment with a traditional ransom proportion of the extra value or profit. Nor, in my judgment, is it appropriate to deem the parties to assume that if a deal is not done an injunction will be granted, as that is to leave the negotiating parties in effectively a ransom negotiation. … What it is appropriate to assume is that the parties know that the claimants could apply for an injunction, based on their rights, and that they might well obtain one, if willing to give an undertaking in damages; but since both parties are deemed to be willing to do a deal at a reasonable price, that threat is better seen as part of the context rather than as a principal driver of the negotiations.”
So, the assessment of compensation must be approached from the point of view of willing parties with reasonable expectations and depth of pocket and the fact that an injunction may be available is only a factor in that assessment. In Cooper v Ludgate House Ltd Fancourt J arrived at a figure of 12.5% of the extra profit that would be made from the further development that would be facilitated by breaching the claimants’ rights of light.
Finally, even if damages are assessed by reference to a hypothetical negotiation, it must feel right or fair as a measure of compensation for what is lost by the permanent interference with a property right. It cannot be too small or too large and, in particular, it cannot be so large a figure that it would render whatever project interferes with the right completely unviable.
