Compensation – Injurious affection – Damage to land – Diminution in value – Claimants applying for compensation for depreciation in value of land following construction of underground sewage reservoir by respondent on neighbouring land – Preliminary issue arising – Whether claimed diminution in value of land being damage to, or injurious affection of, land within paragraph 2(3) of schedule 12 to Water Industry Act 1991 – Preliminary issue determined accordingly
The claimants owned Bleach Green Farm, Alum Waters, New Brancepeth, a rural property near Durham. The property comprised 16.38 acres, including a farmhouse, gardens, a range of buildings, two fields and some woodland. It had the benefit of an easement over a track from the highway; the claimants did not own their access.
In recent years, there had been increasingly frequent overflows from the sewers in the locality and in response to that the respondent constructed an underground sewage storage reservoir in 2018 on neighbouring land, 20m from the boundary of the property and about 100m from the farmhouse.
The claimants applied for compensation for depreciation in the value of the property following the construction of the reservoir by the respondent on the neighbouring land.
A preliminary issue arose whether compensation for diminution in value of their property, caused not by the works to install the reservoir but by its continued presence and use nearby, was recoverable under the terms of the Water Industry Act 1991.
The question was whether the claimed diminution in value of the claimants’ land was damage to or injurious affection of land within the meaning of para 2(3) of schedule 12 to the 1991 Act.
Held: The preliminary issue determined accordingly.
(1) The term “injurious affection” was a term of art with a meaning developed through case law in the context of section 10 of the Compulsory Purchase Act 1965. The right to compensation under section 10 was dependent on the fulfilment of a number of conditions:
(i) The injurious affection had to be the consequence of the lawful exercise of statutory powers, otherwise the remedy was in an action in the civil courts;
(ii) The injurious affection had to arise from that which would give rise to a cause of action if done without the statutory authority for the relevant scheme of works;
(iii) The damage or injury for which compensation was claimed had to be in respect of some loss of value of the land of the claimant;
(iv) The loss or damage to the claimant’s land had to arise from the execution of the works and not from the authorised use of the lands compulsorily acquired following completion of the works; and
(v) The amount of compensation had to be ascertainable in accordance with the general principles which apply to damages in tort (Metropolitan Board of Works v McCarthy (1874) LR 7 HL 243 and Argyle Motors (Birkenhead) Ltd v Birkenhead Corporation [1975] AC 99 applied).
It was inescapable that “injurious affection” in paragraph 2(3) of the 1991 Act had the same meaning as in section 10 of the 1965 Act. Since the claimants did not satisfy conditions (ii) and (iv), they could not establish an entitlement to damages for injurious affection.
(2) The injurious affection had to be the consequence of the lawful exercise of statutory powers, otherwise the remedy was in an action in the civil courts. It had to arise from that which would give rise to a cause of action if done without the statutory authority for the relevant scheme of works. The damage or injury for which compensation was claimed had to be in respect of some loss of value of the land of the claimant. The loss or damage to the claimant’s land had to arise from the execution of the works and not from the authorised use of the lands compulsorily acquired following completion of the works. The amount of compensation had to be ascertainable in accordance with the general principles which applied to damages in tort.
In the present case, the diminution in value claimed did not arise from anything that would give rise to a cause of action if done without the statutory authority for the pipe-laying works. It arose from the presence of the reservoir on the neighbouring land, and neighbours were entitled to make reasonable use of their land. The presence of the reservoir was not in itself a tort. The damage claimed arose from the authorised use of the neighbouring land and not from the works carried out to put the reservoir there.
(3) The words “damage to… any land” could not include diminution in value. Section 2(1) referred to a diminution in value in respect of private land. It was inconceivable that two sections referred to the same right using completely different language and it would be inconsistent with the public policy behind the 1965 Act. Damage required physical damage. A diminution in value with no physical basis could not be compensated under section 2(3).
Although it could include a claim for temporary diminution in value, that was not what was claimed here and it remained the case that injurious affection was restricted to claims that would otherwise be available in tort and to claims arising from doing work rather than from the continued use of an installation (Wildtree Hotels Ltd v Harrow London Borough Council [2000] 2 EGLR 5 considered).
(4) The words “damage to … any land” and “injurious affection” were not synonyms in paragraph 2(3). There were cases where the word “damage” was widely used when discussing injurious affection in the context of section 10 but that did not indicate that in a different statute the term “damage to… any land” could not have a wider meaning.
It was inconceivable that “damage to… any land” in paragraph 2(3) could include diminution in value of the kind sought by the claimants. It would mean that paragraphs 2(1) and 2(3) would each confer the right to compensation for diminution in value yet used completely different language. It would be inconsistent with the public policy in the 1965 Act and in the case law surrounding injurious affection that, as against their neighbour, landowners were entitled to use their land as they wished provided that it was not tortious.
A diminution in value for purely intangible reasons with no physical basis could not be compensated under paragraph 2(3). Accordingly, the preliminary issue would be determined against the claimants.
Simon Goldberg KC (instructed by Gibson & Co Solicitors of Hexham) appeared for the claimants; Melissa Murphy KC (instructed by Eversheds Sutherland International) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Charlton and another v Northumbrian Water Ltd