Property Series Part 7: Assessing Damages on the Basis of the User Principle – and Horses for Courses

Sydney JacobsBarrister and mediator Sydney Jacobs continues his series by assessing damages on the basis of the user principle by examining past cases. For more of his insights into an array of property matters, follow his series here.


In Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, Lord Shaw remarked (at 120):

For wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or of hire. If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: “Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise.”

Lord Shaw regarded the use of the concept of a royalty as “an excellent key to unlock the difficulty”.

Yates J put this in more modern words in Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) (2015) 241 FCR 271; [2015] FCA 1327 at [13] as follows:

… Under this principle, a plaintiff is entitled to recover, by way of damages, a reasonable sum from a defendant who has wrongfully used the plaintiff’s property. The plaintiff may not have suffered actual loss from the use, and the wrongdoer may not have derived actual benefit. Nevertheless, under the principle, the defendant is obliged to pay a reasonable sum for the wrongful use. The reasonable sum is sometimes described as a reasonable rent, hiring fee, endorsement fee, licence fee or royalty (amongst other expressions), depending on the property involved and the nature of the wrongful use.

Lord Shaw’s words are apt to apply to a wide range of circumstances, because “property” is such a wide concept. It obviously includes land, as well as tangible chattels, such as a horse.

However, as the analysis at [21.90] of my work Commercial Damages (loose leaf, ThomsonReuters) demonstrates, Lord Shaw’s observation has come to extend much wider than mere land and tangible chattels, to both choses in action (e.g. a lease), and intellectual property (e.g. passing off). It has now gained serious judicial traction in Australia, including its strong endorsement in the reasoned judgment of Yates J in the Federal Court trade mark and passing off case: Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) (2015) 241 FCR 271; [2015] FCA 1327. The issue of the user principle was centre stage in that case in Round No 4: see further discussion at [26.100]ff and [27.100]ff of Commercial Damages.

A number of academic writers and judges have pointed out that this way of quantifying damages can combine compensation and restitution: Winnebago (No 4) (ibid) at [14].

The above article is extracted from a recent round of updates to my loose leaf service Commercial Damages (ThomsonReuters), from the chapter on the User Principle. In that chapter , I trace how this principle extends to various contexts well beyond its genesis in the way-leave cases, including: trespass cases [21.90]; detinue [21.100]; infringement of copyright [21.110]; patent  infringement [21.120]; misuse of confidential information [21.130]; trade marks and passing off [21.140]; and other categories as well [21.200].
Each of these sub-categories are canvassed in their own separate chapters in Commercial Damages.

Sydney Jacobs obtained his Masters Degree in Law from Cambridge and practices in the areas of commercial/equity including real property , partnership disputes and building and construction law. Many contracts he is called to advise on, have mediation/arbitration clauses.

He has acquired in -depth experience in the area of property law including eg sales of property “off the plan”, challenging notices to complete, issuing notices to perform, obtaining easements via applications under Sec 88 K of the NSW Conveyancing Act , advising and drafting papers in applications to remove easements as being obsolete and seeking interim and permanent injunctions against interference with easements. His arbitration experience includes being a NSW Bar accredited arbitrator, appearing in arbitrations and technical references, and being part -author of what is understood to be the definitive loose -leaf arbitration service in Australia, published by ThomsonReuters.

He is the sole author of two other major services for ThomsonReuters , Commercial Damages and Injunctions: Law & Practice

Prior to being called to the Bar, Sydney was a commercial litigator with a construction law focus, at a Minter Ellison and Deacons James & Graham (now Norton Fullbright).

For a full list of his cases ,articles and Thomson Reuters publications , feel free to view

You may connect with Sydney via email or LinkedIn

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