Easements — Right to light — Damages — Residential development — Owner of neighbouring hotel claiming infringement of right to light — Claim in nuisance — Basis upon which damages to be calculated — Whether remedy of account of profits available
The respondents obtained planning permission to build a pair of semi-detached houses on their land that adjoined the appellant’s hotel. The appellant raised various objections to the development, including a complaint that it would infringe a right to light acquired by prescription in favour of the hotel. The respondents sought to minimise the problem by amending the building plans. They also offered to pay reasonable compensation to the appellant, for which purpose they requested a visit to the hotel in order to assess the potential effect upon light to the various rooms. The appellant refused to permit such a visit until later required to do so by a court order. Meanwhile, the development proceeded.
The appellant brought various claims against the respondents, including a claim in nuisance for the interference with her right to light, in respect of which she sought: (i) an account of profits; or, alternatively, (ii) an award of damages calculated by reference to the profit made by the respondents on the development. In the county court, HH Judge Christopher Harvey Clark QC held that there were no exceptional circumstances such as to justify an account of profits. He further rejected the claim to a share of the development profits on the ground that it could not be awarded where, as here, the court would have been unprepared to grant an injunction restraining the infringement because of the appellant’s unreasonable conduct. He awarded damages of £1,848 in respect of the actual financial loss suffered by the appellant following a reduction in value to certain hotel rooms that received less light than previously. The appellant appealed against the refusal to order an account of profits.
Held: The appeal was dismissed.
The standard remedy for trespass or nuisance is an award of common law damages. These will ordinarily compensate a claimant for the loss actually suffered by reference to the amount of money necessary to put the injured party in the position it would have been in had the tort not been committed. However, they may, in appropriate cases, include a share of the profits derived from the breach, calculated by reference to what the claimant would have secured in negotiations for the relaxation of the right infringed. The court will order a defendant to pay as damages only a reasonable sum for the use of the claimant’s land or property. An account of profits is a different remedy, generally applied in cases where a defendant has misappropriated proprietary rights belonging to the claimant and requiring it to account for and disgorge the entirety of its profits attributable to that misappropriation. An actionable nuisance does not involve the misappropriation of the claimant’s rights. An account of profits can be awarded as a remedy for nuisance only in exceptional circumstances, if at all. There were no such exceptional circumstances in the instant case.
The following cases are referred to in this report.
AMEC Developments Ltd v Jury’s Hotel Management (UK) Ltd (2001) 82 P&CR 22; [2001] 1 EGLR 81; [2001] 07 EG 163
Attorney-General v Blake [2001] 1 AC 268; [2000] 3 WLR 625; [2000] 4 All ER 385, HL
Attorney-General v Guardian Newspapers Ltd (No 2); Attorney-General v Observer Ltd; Attorney-General v Times Newspapers Ltd (No 2) [1990] 1 AC 109; [1988] 2 WLR 805; [1988] 3 All ER 545, HL |page:17|
Carr-Saunders v Dick McNeil Associates Ltd [1986] 1 WLR 922; [1986] 2 All ER 888; (1986) 53 P&CR 14; [1986] 2 EGLR 181; 279 EG 1359
Chesworth v Farrar [1967] 1 QB 407; [1966] 2 WLR 1073; [1966] 2 All ER 107, QB
Ministry of Defence v Ashman (1993) 66 P&CR 195; [1993] 2 EGLR 102; [1993] 40 EG 144
Stoke-on-Trent City Council v W&J Wass Ltd (No 1) [1988] 1 WLR 1406; [1988] 3 All ER 394; (1988) 87 LGR 129, CA
Tamares (Vincent Square) Ltd v Fairpoint Properties (Vincent Square) Ltd [2007] EWHC 212 (Ch); [2007] 1 WLR 2167; [2007] 1 EGLR 26; [2007] 14 EG 106
United Australia Ltd v Barclays Bank Ltd [1941] AC 1
Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798; [1974] 2 All ER 321; (1973) 27 P&CR 296; 229 EG 617, Ch
This was an appeal by the appellant, Marcia Forsyth-Grant, from a decision of HH Judge Christopher Harvey Clark QC, sitting in Southampton County Court, refusing to order an account of profits against the respondents, Lawrence Allen and Lawrence George Allen, in an action for nuisance by the infringement of a right to light.
Nigel Ley (instructed by Wilks Price Hounslow, of Ryde) appeared for the appellant; Jeremy Burns (instructed by Careless & Kemp Solicitors, of Ventnor) represented the respondents.
Giving the first judgment, Patten J said:
[1] This is an appeal by the appellant Mrs Marcia Forsyth-Grant against the judgment of HH Judge Christopher Harvey Clark QC, given in Southampton County Court on 30 March 2007, in an action for trespass and nuisance arising out of the construction by the respondents of a pair of semi-detached houses on land adjoining the Hotel Picardie at Ventnor on the Isle of Wight, which is owned by the appellant.
[2] The judge awarded the appellant damages of £5 for trespass and £1,848.63 in respect of the claim for nuisance, which concerned the infringement of rights of light enjoyed by the hotel. He rejected a claim for an account of profits. In her grounds of appeal, the appellant challenges the judge’s refusal to order an account of profits and, if successful on the first ground of appeal, also challenges the judge’s calculation of the profits made by the respondents as a result of the infringement of the appellant’s rights of light. The third ground of appeal challenges the jurisdiction of the judge to grant an injunction restraining the appellant from removing some steps, partly constructed on her land during the course of the development.
[3] Rimer LJ granted permission to appeal on these grounds but refused it on two other grounds, one of which is no longer pursued. The remaining ground relates to the judge’s order for costs. The judge ordered the appellant to bear the greater part of the costs of the action on an indemnity basis. This is said in the notice of appeal to be Wednesbury unreasonable. The appellant has renewed her application in this court for permission to appeal on this ground but, like Rimer LJ, I am not satisfied that the judge erred in principle in making the order for costs that he did, and I would refuse permission to appeal on that ground.
[4] Before I come to the detail of the grounds of appeal where permission has been granted and in order to explain the issues that they raise, I need to summarise the history and nature of the dispute and the way in which the judge dealt with the issues in the litigation.
[5] The judge found that when the appellant purchased the hotel in 1998, the area of land now developed by the respondents, which lies to the west of the hotel, was an open site that was used by the Hotel Picardie as a car park in return for the payment of a nominal rent. It had previously been the site of another hotel the Montrose Hotel that was demolished in 1961 and, for the following 40 years, it remained a cleared site. In 2001, the first respondent, Mr Lawrence Allen, purchased the site with a view to obtaining planning permission for the construction on it of a family house. Ownership of the site was subsequently transferred, probably for tax reasons, to his son, the second respondent, but the first respondent remained in charge of the project and was treated in the proceedings as the effective respondent.
[6] In 2002 or 2003, the first respondent obtained planning permission for the erection on the site of two semi-detached houses that were built in 2006. They have been named Sunrise and Sunset Sunrise being the house closest to the appellant’s hotel. The judge described the overall building in his judgment as an attractive contemporary design with a pitched roof, balconies, decking and open plan rooms all overlooking the sea.
[7] The appellant, however, was bitterly opposed to the development and, on the judge’s findings, did everything she could to prevent it. This included maintaining that her boundary with the development site extended some 6ft from the hotel. In 2003, she wrote to the Land Registry, seeking its confirmation of this. The Registry replied on 14 January 2004, declining to rectify the register so as to show the boundary in this place. The views of the Land Registry were that her title did not include a 6ft strip to the west of the hotel and was effectively on the line of the western wall of the building. At the trial, the experts were agreed that the boundary line should follow the line of the eaves of the roof of the hotel, subject to making an allowance for the fact that the west wall of the hotel had bowed out towards the respondents’ land. This meant that the boundary line was no more than 18in to 2ft from the foot of the western wall of the hotel.
[8] In the particulars of claim, the appellant had pleaded that she owned a strip 4ft 3in wide immediately to the west of the wall of the hotel but, in the light of the expert’s agreement, this contention was of course abandoned.
[9] Apart from the boundary issue, the other matter of concern was the effect that the development would have on rights of light acquired by prescription in favour of the hotel. This was first raised not by the appellant but by Mr Michael Ney, a building surveyor specialising in rights of light who had been instructed by the architect supervising the development. He was of the opinion that it could have an adverse effect upon any rights of light enjoyed by the hotel. On his advice, the plans were amended to set back the three-storey part of the new building, but even then Mr Ney remained concerned and, in September 2002, he therefore wrote to the appellant, offering, on behalf of the respondents, to pay reasonable compensation for any loss of light. He asked the appellant to contact him and explained that in order to calculate the loss of light that might be involved and the amount of any compensation, he needed to visit the hotel and to measure the affected rooms. The appellant did not reply to Mr Ney nor to a series of letters written to her throughout 2003. In fact, she refused to allow Mr Ney to visit the hotel until ordered to provide access by a district judge in January 2007, following the commencement of the proceedings.
[10] The judge heard expert evidence from Mr Ney and from Mr Keith Sanger, on behalf of the appellant, concerning whether the infringement of the appellant’s rights of light could have been prevented by the construction of a lightwell on the first floor of Sunrise. The experts were agreed that this would have been effective to prevent any infringement, and Mr Ney therefore considered that it was what Sunrise would have had (as he put it) to lose in order to prevent any actionable damage. The first respondent’s evidence was that had this possibility been raised with him in 2004, he would have incorporated the lightwell into the design of the house. He said, and the judge accepted, that this could have been done by incorporating the lightwell into the open-plan kitchen-dining room. His evidence was that it would not have necessitated the loss of a bedroom. The respondents’ view was that the incorporation of the lightwell would not have reduced the value of Sunrise.
[11] A surveyor called by the appellant, a Mr Anthony Flower, expressed the view that the lightwell might decrease the value of Sunrise by around £2,500 psm of the area it covered; this was 8.46m2. This would be a reduction of around £20,000, but the judge rejected his evidence as speculative and unsupported by any valuation evidence such as comparables. He accepted Mr Ney’s calculation of the incremental profit that the respondents had gained by being able to build on the area that would have been occupied by the lightwell. In his second report, Mr Ney calculated this as £4,855. It was based upon figures contained in the fifth witness statement of the first respondent. The evidence in this witness statement was that Sunrise was worth around £395,000 in 2006, based upon an offer in March of that year of £390,000. This valuation was agreed by Mr Flower. The first respondent estimated that the cost of developing Sunrise, including the cost of the land and interest on |page:18| loans, was £326,415. On the basis of these figures, he calculated that the value of the house as built equated to £3,237 psm, compared to a cost of development of £2,675 psm. The profit earned by being able to build on the 8.46m2 was therefore £4,855, that is £3,237 times 8.46 minus £2,675 times 8.46. During the hearing, Mr Ney amended his calculations to exclude from the calculation of net profit the cost of the land. This increased the net incremental profit to £6,767. The judge accepted this evidence.
[12] In the action, the appellant sought damages and injunctive relief, both in respect of alleged trespasses and the alleged nuisance caused by the infringement of the rights of light. The alleged acts of trespass were: (i) the affixing of the flight of stairs against the west wall of the hotel and on the appellant’s land to the west of that wall; (ii) the erection of a fence at the western side of the hotel obstructing access to the 4ft 3in strip claimed by the appellant; and (iii) the digging up of pipes and drains within the 4ft 3in strip. The judge found that the steps built along the boundary had been built with the consent of the appellant, who accepted at the time that they reinforced the wall of her garden. The judge held that, having agreed to this and having encouraged the respondents to spend time and money constructing the steps, she was now estopped from seeking their removal, so far as they were built on her land. He therefore refused her any relief on this ground.
[13] The abandonment of the claim to the 4ft 3in strip undermined the remainder of the appellant’s case on trespass, but in respect of various additional temporary acts of trespass carried out during the construction work which the judge considered to have been inadvertent and trivial he awarded the claimant damages of £5. There was also an award of £5 damages for trespass on the respondents’ counter-claim.
[14] That left the claim for infringement of the appellant’s rights of light. In the particulars of claim, the appellant originally sought damages for this, but the pleading was then amended to substitute for damages a claim for an account of all the profits that the respondents had made from the infringement of appellant’s rights of light and, in the alternative, damages including exemplary damages for the nuisance, calculated again by reference to the profit made by the respondents. There was also a claim for an injunction to prevent the nuisance.
[15] The judge was referred to various authorities on the court’s power to award damages calculated by reference to the profit made by a defendant from its tortious conduct and the relationship of such awards to an account of profits. These included the leading case of Attorney-General v Blake [2001] 1 AC 268. The judge also had cited to him authorities on awards of damages in lieu of an injunction, where the court has also, in a number of cases, made profit-based awards. A recent such example involving an action for nuisance in respect of rights of light is the decision of Mr Gabriel Moss QC in Tamares (Vincent Square) Ltd v Fairpoint Properties (Vincent Square) Ltd [2007] EWHC 212 (Ch)* decided on 8 February 2007, in which the judge awarded damages equal to 30% of the net profit from the development.
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* Editor’s note: Reported at [2007] 1 EGLR 26
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[16] Injunctions apart, the remedy for the tort of trespass or that of nuisance is an award of common law damages. The general rule is that this is calculated by reference to the amount of money that will put the injured party in the position that it would have been in had the tort not been committed. However, as explained by Lord Nicholls in Blake, awards of damages of certain types of tort, such as trespass or the wrongful detention of goods, have in a number of cases been calculated by reference to the benefit received by the trespasser, or what it would have paid for the use of the claimant’s rights where the financial loss actually suffered by the claimant would have been minimal or non-existent.
[17] So, in the context of the tort of trespass, the Court of Appeal in Ministry of Defence v Ashman (1993) 66 P&CR 195† held that where a trespasser has made use of the claimant’s land, the measure of damages is the value to the trespasser of the use of that land. That particular case concerned the unlawful occupation of a house owned by the Ministry of Defence, which sought as damages the open market letting value of the property. Kennedy LJ said, at p119, that assistance as to the proper value to Mrs Ashman of the use of the property might be gained by looking at what she would have had to pay for suitable local authority accommodation elsewhere. The court was seeking to establish the value of the benefit that the defendant had received.
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† Editor’s note: Also reported at [1993] 2 EGLR 102
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[18] There is discussion in the judgments in Ministry of Defence as to the correct jurisprudential basis for awarding damages by reference to the benefits accruing to the tortfeasor. Hoffmann LJ described an award of this kind in that case as “restitutionary”. Lloyd LJ took a different view and expressed doubts as to whether damages could be assessed other than on a purely compensatory basis. These issues were, however, resolved by the decision of the House of Lords in Blake. In his speech, Lord Nicholls dealt with the common law approach to cases of trespass in the following passage, at p279D-E, where he said:
Recently there has been a move towards applying the label of restitution to awards of this character: see, for instance, Ministry of Defence v Ashman [1993] 2 EGLR 102, 105 and Ministry of Defence v Thompson [1993] 2 EGLR 107. However that may be, these awards cannot be regarded as conforming to the strictly compensatory measure of damage for the injured person’s loss unless loss is given a strained and artificial meaning. The reality is that the injured person’s rights were invaded but, in financial terms, he suffered no loss. Nevertheless the common law has found a means to award him a sensibly calculated amount of money. Such awards are probably best regarded as an exception to the general rule.
[19] In respect, however, of claims in nuisance, it is, I think, significant that the possibility of an award of damages on a restitutionary basis has been limited by the decision of this court in Stoke-on-Trent City Council v W&J Wass Ltd (No 1) [1988] 3 All ER 394 , which is, of course, binding on us. At p401D-H, Nourse LJ said:
It is characteristic of the development of the common law that the invention and increasingly extended application of the user principle should appear to have come about by accident rather than by design. Thus it seems from the interlocutory observations of members of this court in Whitwham‘s case [1896] 2 Ch 538 that they were initially resistant to the principle of the wayleave cases. But they saw in it a basis for the just decision of that case, and once it had been so decided the application of the principle to analogous states of affairs, for example the wrongful detention of chattels, seems to have been a perfectly natural development. However, in a process of development it is sometimes necessary to stand back from the authorities and to ask not simply where they have come to, but where, if a further extension is made, they may go next.
Although I would accept that there may be a logical difficulty in making a distinction between the present case and the wayleave cases, I think that if the user principle were to be applied here there would be an equal difficulty in distinguishing other cases of more common occurrence, particularly in nuisance. Suppose a case where a right to light or a right of way had been obstructed to the profit of the servient owner but at no loss to the dominant owner. It would be difficult, in the application of the user principle, to make a logical distinction between such an obstruction and the infringement of a right to hold a market. And yet the application of that principle to such cases would not only give a right to substantial damages where no loss had been suffered but would revolutionise the tort of nuisance by making it unnecessary to prove loss. Moreover, if the principle were to be applied in nuisance, why not in other torts where the defendant’s wrong can work to his own profit, for example in defamation? As progenitors of the rule in trespass and some other areas, the wayleave cases have done good service. But just as their genus is peculiar, so ought their procreative powers to be exhausted.
[20] Whatever the basis of calculation of such awards in these cases, they remain, of course, awards of damages. An account of profits is a distinct and different remedy. It was historically one of the standard remedies of the Court of Chancery, the other being an injunction. The original jurisdiction of the courts of equity did not include the power to award damages, but in cases involving interference with property rights the court would require the defendant to account for the profits that it had made from its appropriation of the plaintiff’s rights.
[21] In some of these cases involving the misuse, for example, of confidential information, the defendant will be in a fiduciary position in respect of the claimant and, as such, accountable by virtue of that relationship for the entirety of any unauthorised profit made at the claimant’s expense. However, this jurisdiction to require the defendant to account for and to disgorge all of its profits has also been applied as a measure of liability to cases of interference with certain types of |page:19| property rights, even where there is no pre-existing duty to account. These include actions for the infringement of trademarks, copyright and patents, where to this day a successful claimant can elect between an award of damages and an account of profits.
[22] The other relevant line of authority concerns the court’s power to award damages in lieu of an injunction. In Wrotham Park Estates Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798*, Brightman J, in exercising the jurisdiction under what was then section 2 of the Chancery Amendment Act 1858, held that, in a case of breach of a restricted covenant where no real financial loss had been proved, it was none the less open to the court to calculate an award of damages in lieu of an injunction by reference to the amount that would reasonably have been agreed with the developer for the relaxation of the covenant. The judge set this, in that case, at 5% of the developer’s anticipated profit.
[23] In [22] of his judgment in Tamares, the judge summarised the relevant principles derived from the cases on damages in lieu of injunctions as follows:
1. The overall principle is that the Court should must attempt to find what would be a “fair” result of a hypothetical negotiation between the parties;
2. The context, including the nature and seriousness of the breach, must be kept in mind;
3. The right to prevent a development (or part) gives the owner of the right a significant bargaining position;
4. The owner of the right with such a bargaining position will normally be expected to receive some part of the likely profit from the development (or a relevant part);
5. If there is no evidence of the likely size of the profit, the Court can do its best by awarding a suitable multiple of the damages for loss of amenity;
6. If there is evidence of the likely size of the profit, the Court should normally award a sum which takes into account a fair percentage of that profit;
7. The size of the award should not in any event be so large that the development (or relevant part) would not have taken place had such a sum been payable;
8. After arriving at a figure which takes into consideration of all the above and any other relevant factors, the Court needs to consider whether “the deal feels right”.
[24] The last point is a quotation from the judgment of Mr Anthony Mann QC, as he then was, in AMEC Developments Ltd v Jury’s Hotel Management (UK) Ltd [2001] 1 EGLR 81. He also held that the hypothetical negotiations will ordinarily be deemed to have taken place before the transgression occurs, but with the parties being assumed to know the relevant figures upon the basis of which the likely profit was calculated.
[25] It is, however, important to emphasise that an award of damages on this basis, just as in the cases of trespass and other torts that I mentioned earlier, is not the same as an account of profits. In the latter case, the court will order the defendant to pay over the entire profit that it has earned from its unlawful conduct. In the case of damages, the common law, as explained by Lord Nicholls, requires the defendant to pay only a reasonable sum for the use of the claimant’s land or property, and it will be for the court to decide what percentage of the profit ought to be reflected in the award that it makes.
[26] In Blake, the House of Lords accepted that it might be appropriate in some cases of breach of contract to order an account of profits. The claim made in that case was for all the profits from Blake’s book. At pp284H-285B, Lord Nicholls said:
My conclusion is that there seems to be no reason, in principle, why the court must in all circumstances rule out an account of profits as a remedy for breach of contract. I prefer to avoid the unhappy expression “restitutionary damages”. Remedies are the law’s response to a wrong (or, more precisely, to a course of action). When, exceptionally, a just response to a breach of contract so requires, the court should be able to grant the discretionary remedy of requiring a defendant to account to the plaintiff for the benefits he has received from his breach of contract. In the same way as a plaintiff’s interest in performance of a contract may render it just and equitable for the court to make an order for specific performance or grant an injunction, so the plaintiff’s interest performance may make it just and equitable that the defendant should retain no benefit from his breach of contract.
On behalf of the respondents, Mr Jeremy Burns submitted to the judge that this was not an exceptional case such as to justify an order for an account of profits, and that the judge should be guided by the decisions in Carr-Saunders v Dick McNeil Associates Ltd [1986] 2 EGLR 181 and Tamares, where, as mentioned earlier, the court awarded a sum representing its assessment of what the developer would have agreed to pay in order to avoid an injunction to restrain the nuisance. The judge accepted this as the correct approach, but indicated that, as a check, he would also make an assessment of what the profit earned by the infringement of the rights of light would be. However, having rejected an account of profits as inappropriate, the judge then went on to accept a further submission from Mr Burns that, in order to award damages on a Wrotham Park basis, he had first to be satisfied that an injunction would have been granted. The judge accepted that if no injunction would have been granted in any event, the damages should be assessed upon the basis of the loss actually suffered by the appellant, which would amount to the capitalised diminution of the letting value of the rooms whose light was affected by the development of Sunrise. After considering the evidence of both experts on this basis of calculation, the judge preferred the evidence of Mr Ney and held that the financial loss to the appellant for the infringement was £1,848.63. There is no challenge to that assessment, assuming that an account of profits is inappropriate.
[27] The judge held that, in view of her unreasonable conduct, the court would have refused to grant the appellant an injunction in respect of the infringement of her rights of light, and that an award of damages calculated on the Carr-Saunders or Wrotham Park basis was therefore inappropriate. The correctness of this finding is not challenged as part of this appeal and it is not necessary for me to express any view about it.
[28] The judge therefore awarded damages in the sum of £1,848.63, mentioned above. However, he then went on to do the calculation of profit resulting from the respondents being able to build on the site of the lightwell, which would have been relevant to any account of profits or profit-based award of damages. As mentioned earlier, he assessed the profit in the sum of £6,767. He then reduced this figure by a further 85% so as to produce the percentage of the profit that he held and would have allowed on a Wrotham Park basis. This amounts to £1,050.05, which is, of course, less than the award of damages calculated by reference to the financial loss suffered by the appellant. On the judge’s findings, this is therefore a case in which the appellant has suffered a real and calculable financial loss and where a profits-based award, at the levels set by the judge, would not have increased the amount of damages even if, contrary to the judge’s view, it had been an available option. The appellant’s prospect of recovering a larger sum depends upon the respondents being required to account for the entirety of the £6,767 profit that they made by not having to construct the lightwell.
[29] The first ground of appeal advanced by Mr Ley, on behalf of the appellant, is, therefore, that the judge was wrong to hold that he could order an account of profits only in exceptional circumstances. Lord Nicholls, in Blake, confined himself in terms to cases of breach of contract. The law relating to tort, Mr Ley said, is set out in Chesworth v Farrar [1967] 1 QB 417, in which Edmund-Davies J, in an action for damages against a bailee, refers, at p417, to a person against whom a tort is committed being able to sue for damages for the tort or to waive the tort and sue in quasi-contract to recover the benefits received by the wrongdoer.
[30] In Blake, Lord Nicholls, at p280E-F, referred to this as an example of the common law affording the wrong party a choice of remedies:
A notable example is the wrong of conversion. A person whose goods were wrongfully converted by another had a choice of two remedies against the wrong doer. He could recover damages, in respect of the loss he had sustained by the conversion. Or he could recover the proceeds of the conversion obtained by the defendant: see United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 34, per Lord Romer. Historically, the latter alternative was achieved by recourse to an element of legal fiction, whereby the innocent party “waived the tort”. The innocent party could suppose that the wrongful sale had been made with his consent and bring an action for the money “had and received to his use”: see |page:20| Lamine v Dorrell (1705) 2 Ld) Raym 1216, 1217. Holt CJ observed that these actions had “crept in by degrees”.
[31] Although interesting in itself, it is not clear to me what this has to do with an account of profits. The cases relied upon in which the claimant has been able to waive the tort and seek a restitutionary remedy are cases of conversion in which the defendant has misappropriated the claimant’s property. So far as I am aware, there is no decided case in which an account of profits has been ordered as an alternative to damages in an action for nuisance, and it is difficult to see why such a jurisdiction, if established, would not also be subject to the same requirement to show exceptional circumstances as the House of Lords has held applies in cases of breach of contract.
[32] An actionable nuisance does not involve the misappropriation of the appellant’s rights in the same way, even as in a case of trespass let alone as in a case of conversion or copyright or trademark infringement. The essence of the tort is that the appellant’s rights to the reasonable enjoyment of her property have been infringed by the use that the respondents make of their own land. On the face of it, this should not entitle the appellant, in my judgment, to more than compensation for the loss that she has actually suffered; but the highest that it could be put on the authorities is that the appellant can, in appropriate cases, obtain an award calculated by reference to the price that the respondents might reasonably be required to pay for a relaxation of the appellant’s rights so as to avoid an injunction. This, as already explained, falls a long way short of being awarded the entire profit for the development, which is far in excess and completely unrelated to the measure of loss suffered by the appellant. The decision in Stoke-on-Trent supports this approach.
[33] Mr Ley referred us to a passage in Lord Keith’s speech in Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, but that was also an action for breach of confidence where equity has always asserted a jurisdiction to order an account of profits; it is not authority for the making of such an order in a case of nuisance. It seems to me that the judge would have been entitled to reject the claim for an account of profits outright, simply on the basis that it was not an available remedy in an action for nuisance; but even should that be wrong, his acceptance that one needs to show exceptional circumstances is not, in my judgment, open to criticism.
[34] The second ground of appeal turns on the way in which the judge calculated the profit attributable to not having to build the lightwell. Given my decision on the first ground of appeal, this point does not arise. The third ground of appeal is that the judge had no jurisdiction to grant an injunction to prevent the appellant from exercising what is said to be her right to remove any part of the steps constructed on her land. As mentioned earlier, the judge held that she was estopped from seeking to remove them. I have to say that I am puzzled by this ground of appeal. Although the judge said, in [24] of his judgment, that:
The steps must stay in position, and the Claimant will be in contempt of court if she seeks to damage them in any way,
he did not make any injunction against her, and there is therefore no order to appeal against. Doubtless, if the appellant does in the future attempt to remove any part of the steps, she will be faced with proceedings for an injunction based upon the judge’s findings in this case. However, the respondents have established a right to maintain the steps in their current position on the principles of proprietary estoppel. There is no challenge as such to the judge’s finding of estoppel. What is said is that he had no jurisdiction to grant an injunction.
[35] There are two points to make about that. The first is that he did not grant an injunction; the second is that the doctrine of proprietary estoppel can be used to establish such rights as are necessary to give effect to what the person estopped has agreed or encouraged the other party to do. The equity can be satisfied by the grant of an irrevocable licence or some other proprietary right. I do not therefore accept that, on those principles, the judge would have had no jurisdiction to grant an injunction preventing the removal of the steps.
[36] For these reasons, I would dismiss the appeal on the grounds set out in the notice of appeal. However, after this matter had been considered by Rimer LJ on paper, the appellant issued a further application seeking to amend the notice of appeal by adding a challenge to the judge’s findings about the profit made by the respondents on the construction of Sunrise. This application is supported by evidence derived from subsequent proceedings in the county court between the respondents and their contractors. A finding that the profit was in excess of the £6,750 assessed by the judge would of course be relevant, both to damages calculated on a Wrotham Park basis and to an account of profits. However, by the end of the trial the appellant was not seeking Wrotham Park damages. If, on the other hand, this court had ordered an account of profits, the new evidence would fall to be considered as part of that process. Although the judge was not told that there was a dispute between the respondents and the contractors about the sums payable in respect of the construction of the building, this evidence does not go to any other issue that, so far as I can see, would have affected the outcome of the case, including the judgment on the issue of trespass.
[37] Given my decision on the first ground of appeal, none of this material is therefore relevant to the issues on this appeal and, for my part, I would therefore dismiss the application to adduce the additional evidence and to amend the notice of appeal.
Giving the second judgment, Toulson LJ said:
[38] I agree that this appeal should be dismissed. Infringement of a right to light is part of the law of nuisance. For nuisance, as for tort generally, the standard pecuniary remedy is damages, and the measure of damages is the amount required to place the injured party in the same position as though it had not sustained the wrong. Depending upon the circumstances, this would usually be assessed either by the diminution in the value of the land or, where this can reasonably be achieved, by the cost of work to remedy the nuisance. On the facts of this case, the latter alternative does not arise. However, damages may, in an appropriate case, be calculated by what the appellant could reasonably have bargained for, adopting what has been referred to in the authorities as the “user principle”: see Carr-Saunders v Dick McNeil Associates Ltd [1986] 2 EGLR 181, cited with approval in Stoke-on-Trent City Council v W&J Wass Ltd (No 1) [1988] 3 All ER 394.
[39] In the present case, there was every reason not to give the appellant compensation on the basis of what she could have bargained for because the respondents had been willing to bargain, but she refused their invitation to do so. Since she refused that opportunity, I cannot see, as a matter of justice, why she should be entitled to any greater remedy for the infringement of her rights to light than damages for loss that she actually suffered as a result of the infringement and that the judge assessed.
[40] The appellant seeks a novel pecuniary remedy for this type of case, variously expressed in argument as an account of profits and a restitutionary claim. Under a fully coherent system of law, it might be thought that there should be no difference between the two, and that an account of profits is merely a mechanism for giving effect to a restitutionary claim. However, as Lord Nicholls explained in Attorney-General v Blake [2001] 1 AC 268, the common law courts and courts of equity have not followed identical paths in the remedies that they have developed. The courts of equity have developed an account of profits as a flexible remedy that is discretionary but that, in some circumstances, will be granted almost as a matter of course. Typically, it is appropriate in cases where there is a fiduciary relationship between the parties because equity has always taken a very strict approach against personal gain made by fiduciaries without the wholly informed consent of the beneficiary.
[41] The rationale is that a fiduciary ought to be acting for its beneficiary and therefore the beneficiary is to be put in the same position as though the fiduciary had done so, and, accordingly, the fiduciary must disgorge any profits obtained from the use of its position. An account of profits may also be given where the parties are in a quasi-fiduciary relationship, such as a relationship of confidence. Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 and Blake are both cases in which the wrongdoer abused his position of trust as a member of the security services by acting as a traitor and |page:21| thereby obtained a profit for which he was judged accountable to the state. In Guardian Newspapers, there was no direct claim to account against the former agent, but his legal position formed a necessary part of the reasoning of the court in considering the liability of the newspapers against whom an account of profits was claimed.
[42] An account of profits may also be given in cases of passing off or various other forms of intellectual property case. Lord Nicholls, in Blake, explained this as a pragmatic development of the law because, in many cases of that kind, it is easier to assess profit to the wrongdoer than loss to the party whose incorporeal property rights have been infringed.
[43] Mr Ley has not cited any case in which an equitable account of profits has been ordered other than cases where there has been a fiduciary or quasi-fiduciary relationship or a usurpation of the appellant’s proprietary rights. He sought to draw an analogy between rights to enjoyment of property protected by the law of nuisance and intellectual property rights. I am unpersuaded that the analogy is a sound one.
[44] Turning to the common law, the common law courts in a number of cases, notably conversion, allowed a claim for profits through a quasi-contractual action for indebitatus assumpsit, which the appellant could invoke by “waiving the tort”. The theory was that the claimant, whose property was wrongly taken from him and sold by the wrongdoer, was entitled to proceed on the fiction that it had consented to the defendant dealing with the property as he had, but that the defendant had impliedly promised to account to him for the proceeds, hence indebitatus assumpsit. As the House of Lords pointed out in the landmark case of United Australia Ltd v Barclays Bank Ltd [1941] AC 1, this was a fiction because the wronged party was not in truth waiving the wrong: it was electing between alternative remedies. As Goff and Jones observe in the Law of Restitution (7th ed) 2007, in para 36 005:
Although jurists have sought to justify restitutionary claims on a number of grounds, no English court has sought to weave any sophisticated golden thread to unite the cases on so-called “waiver of tort”.
[45] The law in this area is still in the state of development. The modern tendency has been to eschew resort to legal fictions and to consider, as a matter of principle, whether a claim in restitution should lie. In the current edition of Clarke and Lindsell on Torts (19th ed) 2006, in para 29 151-152, edited by Professor Andrew Burrows, it is observed that there are cases in which restitutionary claims have been allowed in tort, but the extent to which this remedy is available remains controversial, as is the question of the extent to which it should be available. He is correct in those observations.
[46] Mr Ley has not cited any authority to show that common law courts have developed the waiver of tort doctrine so as to extend to claims in nuisance. There is no precedent for a claim for restitutionary damages on facts directly comparable to the present case. I would reject the argument that this remedy is, or should be, generally available as a matter of course in cases of nuisance. As already mentioned, there is a volume of academic writing on the subject. This is not an appropriate case for seeking to analyse the arguments in depth, but it is perhaps worth noting that Goff and Jones, who are themselves in general terms supporters of the development of restitution in this area, do not suggest that it should be generally available in cases of nuisance. They give an illustration of why the subject needs to be approached with caution. They take the case of a factory that belches out smoke and fumes over an area covering thousands of neighbouring households. Suppose that the owner had previously rejected a proposal to install an anti-pollution device on the ground of expense and is later held liable in nuisance. If there were a generally available restitutionary remedy to those affected, this would give rise, as the authors point out, to a legion of questions. What is the factory owner’s benefit gained at each household’s expense? Is it the sum that the factory owner would have had to pay each owner for the privilege of polluting its property? Or is it a proportion of the owner’s profits, or a proportion of the sum that it has saved from not installing the anti-pollution device? Does the owner of a nearby mansion recover more than the owner of a nearby terraced house? They observe that the difficulties confronting a court in measuring and valuing the benefit are powerful reasons for not recognising the existence of some general restitutionary claim. Moreover, legal problems apart, any judicial enquiry with complex attendant evidence could well be inefficient in economic terms.
[47] Having rejected Mr Ley’s general proposition that such a remedy is available as a course on facts such as the present, I would leave open the question of whether a restitutionary award may be available on the facts of a particular case of nuisance, given the developing state of the law, because it seems to me better that any such question should be addressed in the light of the particular features said to justify that remedy in the particular case. If it be that the law does develop in such a way as to make such relief available in an appropriate case, I am satisfied that this is not such a case. On the judge’s findings, if the appellant had been co-operative, the respondents would in all probability have built their property in a way that did not infringe her right to light. Her unreasonable failure to co-operate did not destroy her right of light, but for the infringement of that right I see no justice, as I have already said, in her being awarded anything more than a fair valuation of the loss that she has suffered.
Mummery LJ said:
[48] I agree that this appeal should be dismissed for the reasons given by Patten J.
Appeal dismissed.
