Water main — Trespass — Section 159(1) of Water Industry Act 1991 — Main laid without giving requisite notice to respondent landowner — Appropriate basis for assessing damages for trespass — Whether damages restricted to those awardable under Schedule 12 of statutory scheme — Appeal allowed in part
The appellant water undertaker served notices on affected landowners of its intention to lay a new 17.5 mile water main pursuant to its powers under section 159(1) of the Water Industry Act 1991. Owing to a mistake over part of the land’s ownership, a notice was not served on the respondent. The appellant proceeded to lay a 65ft stretch of the main across a corner of the respondent’s land without his knowledge or permission.
When the mistake came to light, the respondent claimed damages for trespass. The appellant submitted, inter alia, that the appropriate measure of damages would be the sum that it would have to pay under the statutory compensation scheme of the 1991 Act. This would restrict the sum to depreciation in value of the land caused by the works. Paragraph 3(1) of Schedule 12 to the 1991 Act provided for disputed questions of compensation under the scheme to be referred to the Lands Tribunal.
The judge awarded as damages: (i) the sum that, as agreed by the parties, the Lands Tribunal would have awarded for diminution in value had the matter come before it; (ii) an additional sum to compensate for the loss of the respondent’s opportunity to negotiate with the appellant for an amount over and above that figure; and (iii) a sum representing a small percentage of the appellant’s profits from the passage of water through the main for a period of three years up to the date upon which, in the judge’s view, the matter should have been compromised. The appellant appealed the second and third of those awards.
Held: The appeal was allowed in part.
1. The appropriate measure of damages was the figure that the parties would have agreed as a fair price for the acquisition of the right to lay the main, and the bargaining position of the parties was relevant in that respect: Attorney-General v Blake [1998] Ch 349, Carr-Saunders v Dick McNeil Associates [1986] 1 WLR 922; [1986] 2 EGLR 181; 279 EG 1359 and Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798; 229 EG 617 applied. By failing to give notice before the works were carried out, the appellant had, in effect, compulsorily acquired the right to run its water main under the appellant’s land, without complying with the statutory procedures that would have limited the respondent’s compensation to that awarded by the Lands Tribunal. Accordingly, the judge had been right to treat as the fair price the likely reasonable outcome of any negotiations that would have taken place had notice been served prior to the works being undertaken.
2. The judge had erred in making his third award. The respondent had no power to prevent the works from being done. In the circumstances, the true measure of his loss was not the loss of any valuable right to charge the appellant an annual charge for installation and use of the main, but loss of the right or opportunity to seek, by negotiation, to obtain a higher sum than that which the Lands Tribunal could have been expected to award. That sum had been covered by the judge’s second award. Moreover, in trespass cases of the present kind, there was no right to share in the trespasser’s profits, and those profits were relevant only as a helpful reference point when seeking to fix upon a notional “fair price”. The court was not obliged to have regard to them, and, in the present case, there was no practical or sensible way of assessing the profits accruing to the appellant from using 65ft of a water main that ran for 17.5 miles.
David Stockill (instructed by the solicitor to Severn Trent Water Ltd) appeared for the appellant; Nicholas Yell (instructed by Hargreaves Hadcroft, of Birmingham) appeared for the respondent.
Sally Dobson, barrister
