Pollution of land – Prospective purchaser withdrawing – Liability under Nuclear Installation Act 1965 – Damages
In July 1989 marshland on the plaintiff’s Aldermaston Court Estate was physically damaged by radioactive matter, including plutonium, which overflowed from the adjacent atomic weapons establishment owned by the Ministry of Defence. In January 1993 the MOD made full disclosure of the contamination whereupon the prospective purchaser of the estate immediately broke off negotiations.The level of contamination was such that, under regulatory legislation, substantial quantities of soil had to be removed from the marshland area. This remedial work, undertaken by the MOD at its own expense of £350,000, was completed in December 1994. The plaintiff itself incurred costs totalling £143,963. Although the remedial work was completed satisfactorily, the market value of the land was affected by the residual stigma from the incident.
The plaintiff claimed damages against the MOD, whom the judge found in breach of statutory duty to the plaintiff under section 7 of the Nuclear Installations Act 1965. He found that: (1) but for the damage and its disclosure, there was a 75% chance that the prospective purchaser would have completed for £10.35m; (2) the stigmatised value of the estate was £3.78m in December 1994, £5m in July 1996; and (3) the estate was being run at a loss. Those losses totalled £283,957 from April 1993 to December 1994; £974,527 from April 1993 to July 1996. On that basis he awarded damages, which amounted to £6,045,617.65 inclusive of interest, under two heads: (1) loss of the chance of sale to Sun, namely 75% of £10.35m plus the running costs from April 1993 to July 1996 less the stigmatised value of the estate at July 1996; and (2) the plaintiff’s clean up costs.
The MOD appealed contending, inter alia, that any physical damage to the land was done only to a tiny and insignificant part of the plaintiff’s estate, that in terms of the estate as a whole was not physical but rather by way of stigma, and that stigma represented the fear of future harm, for which damages were not recoverable.
Held The judge’s order was varied to the extent that the damages to be paid by the defendant be £5,216,930.70 plus interest to be agreed.
1. Section 7 (1)(a) of the Act did not limit physical damage to particular types of damage. Damage occurred where there was some alteration in the physical characteristics of the property caused by radioactive properties which rendered it less useful or less valuable: see Hunter v Canary Wharf Ltd [1997] AC 655 at p676; Merlin v British Nuclear Fuels plc [1990] 2 QB 557 distinguished.
2. The Act imposed strict liability and even though the physically damaged marshland formed only a small part of a large estate, the contamination stigmatised the whole estate and the plaintiff, as a direct and foreseeable result of the damage, was entitled to be compensated in full for the loss it had suffered.
3. The chain of causation ended at the completion of the remedial work in December 1994. The plaintiff’s loss crystallised at that date and therefore when assessing the damages, the 1994 value of £3.78m, not the 1996 value of £5m, should have been used.
4. The risk of future contamination was to be estimated as being 10% of the overall consideration of the price to be paid. The 1994 value, determined by the judge as £3.78m, would be increased by that amount. Therefore the value after clean-up, excluding the fear of future contamination and making no deduction in respect of the plaintiff’s occupation, would be £4.07m. There was also to be added a figure to reflect the loss of the remaining 25% of the depreciation to the estate cause by stigma.
Charles Flint QC and Thomas Croxford (instructed by the Treasury Solicitor) appeared for the appellant; Ronald Walker QC, Antony Edwards-Stuart QC and Stephen Worthington (instructed by Reynolds Porter Chamberlain) appeared for the respondent.
