Rigby and another v Sun Alliance & London Insurance Ltd

Insurance–Claim by owners of bungalow against neighbours in respect of damage from tree roots–Dispute between two insurance companies as to which was liable to indemnify neighbours–Building policy and householder’s comprehensive policy–Indemnity in building policy against liability ‘Solely as owner, not occupier’–Indemnity in householder’s comprehensive policy against liability ‘as occupier and not as owner’–Basis of claim in action for nuisance caused by incursion of tree roots–Liability for nuisance normally falls on the occupier, although there are special cases where the owner is liable in place of or in addition to the occupier–Present case not within that special category–Liability would attach to occupiers as occupiers, not as owners–Hence the loss and the indemnity did not fall within the building policy In this action the plaintiffs, Mr and Mrs Charles Rigby, claimed a declaration that the defendants, Sun Alliance & London Insurance Ltd, were liable to indemnify them under the terms of a building policy against a potential liability to the owners of a bungalow on neighbouring land in respect of damage caused by the roots of oak trees on the plaintiffs’ side. The real object of the present action was to decide whether liability to indemnify the plaintiffs fell on the present defendants under the building policy or on the National Insurance and Guarantee Corporation Ltd under a householder’s comprehensive policy which the plaintiffs in the present action had also taken out. The terms of these policies so far as relevant are set out in the judgment of Mustill J. There was pending another action, referred to by the judge as ‘the main action,’ between the owners of the bungalow and the present plaintiffs claiming damages from the latter for nuisance. J M Wright QC and N V M Wilkinson (instructed by Gosling & Abbott Baldwin) appeared on behalf of the plaintiffs; J Fox-Andrews QC and B Mauleverer (instructed by Lawrance, Messer & Co) represented the defendants. Giving judgment, MUSTILL J said: In this action Mr and Mrs Charles Rigby claim a declaration that the defendants, Sun Alliance & London Insurance Ltd (‘Sun Alliance’) are obliged under policy no 964H8199878 to indemnify them against a potential liability to Mr and Mrs Kenneth Payne. In form the action raises an issue as between insurer and insured. In substance the suit is designed to resolve a dispute between two insurers as to their respective liabilities for a potential loss. The matter arises in this way. Between 1970 and 1976 the plaintiffs were owners of a house at 161 Long Lane, Hillingdon, Middlesex, in which they lived. At the material time they insured various risks in relation to this house under the policy previously mentioned (which I will call ‘the Sun Alliance Policy’). This was a buildings-only policy in familiar form. The terms of the policy material to the present issue were as follows: The Company agrees with the Insured that it will provide the insurance protection described in this policy in respect of the house and the additional protection stated herein for the period of insurance. Property covered: the building of the house, ie the dwelling . . . and its domestic outbuildings, garages, swimming pools, terraces, drives, footpaths, walls, gates, fences and landlord’s fixtures and fittings. Additional protection: In addition to any amounts payable under the above headings the Company will pay to the Insured . . . (13) the amount of claimant’s damages including costs and expenses arising out of the Insured’s liability at law attaching solely as owner, not occupier, of the house in respect of (a) accidental bodily injury (including death or illness) to any person, or (b) accidental damage (including loss) to property happening in or about the house during any period of insurance. In addition to the Sun Alliance Policy the plaintiffs also took out a Householder’s Comprehensive Policy with National Insurance and Guarantee Corporation Ltd (whom I will call NIG). This policy also covered the premises at 161 Long Lane. The printed form had two sections; the first, relating to cover of the buildings themselves, was not brought into effect. Only sections II and III were in force. These were respectively entitled ‘Contents’ and ‘Liability to third parties.’  The material parts of section III read as follows: THE CORPORATION WILL INDEMNIFY THE INSURED AGAINST ALL SUMS WHICH HE SHALL BECOME LEGALLY LIABLE TO PAY AS DAMAGES FOR: accidental bodily injury or decease of any person other than the Insured . . . accidental loss of, or damage to, property not belonging to or held in trust by or in the custody or control of the Insured . . . happening during the period of the insurance and in the circumstances described below . . . A in or about the Dwelling(s) specified in section I of the Schedule and based upon the Insured’s liability as owner of the Dwelling(s). Section I did not apply. B in or about the Dwelling(s) specified in section II of the Schedule and based upon the Insured’s liability as occupier of the Dwelling(s) and as Owner . . . For the purposes of this policy ‘the dwelling’ was defined as: ‘The main building occupied as the residence and all domestic outbuildings, garages, stables and the like on the same site.’ As previously stated, the subject-matter of these two insurances was the plaintiffs’ property at 161 Long Lane. Next door, at 163 Long Lane, was a bungalow named ‘Tall Oaks’ owned by Mr and Mrs Payne, whom I will call ‘the claimants.’  Close to the boundary between the two properties, on the plaintiffs’ side of it, were seven large oak trees. During October 1973 the claimants put in train certain building works for the purpose of enlarging their bungalow, as part of which the bungalow was extended towards the boundary between their land and that of the plaintiffs. During the summer of 1975 cracks began to appear in the structure of ‘Tall Oaks’ which appear to have led to substantial damage. In the result the claimants have sought to recover damages from a variety of persons and bodies, including the present plaintiffs, the architect in charge of the extension work at ‘Tall Oaks,’ and the local authority. So far as concerned the present plaintiffs, the claimants alleged that the damage to their bungalow was caused by the encroachment of roots of the oak trees across the boundary between the two properties. The sum claimed was large. In due course the claim became the subject of a High Court action, 1976 P No 4793, which I will call ‘the main action.’  The writ in the main action claimed damages for nuisance.31 The matter was elaborated in a statement of claim, of which the following paragraphs are material: 2. The First and Second Defendants are and were at all material times the owners of a house and land . . . adjacent to the Plaintiffs’ land . . . 6. By reason of the foregoing matters (viz the encroachment of tree roots and extraction of moisture from the clay soil) the said roots constituted and continue to constitute a nuisance. The Plaintiffs aver that the Defendants knew or ought to have known of the existence of the said nuisance as soon as they became aware of the position of the said extension . . . 10. On numerous occasions since September 1975 the Defendants have been requested to take steps to prevent the said trees continuing to cause damage as aforesaid, but the Defendants have failed to take any action to the said end and they have permitted the said nuisance to continue unabated. I understand that the main action raises factual issues of some complexity. It appears that upon investigating the claim the Sun Alliance and NIG found themselves in agreement on two points. First, that the claim should be resisted. Second, that if the claim should nevertheless succeed, one or both of the insurers would be liable to indemnify the present plaintiffs. The two companies could not, however, agree upon which of them should bear the liability. In the ordinary way a problem of this kind could be dealt with by causing the two insurers to be joined as third parties in the main action, taking over the defence of the action from their insured, and then, if the defence failed, fighting out between themselves the question of indemnity. In the present instance the insurers decided to reverse this procedure, partly because they wished to know in advance who would bear the liability, if liability there should be, and partly because it was declared that the insurer who bore the potential liability should have the conduct of the defence in the main action. Accordingly they caused the present action to be launched. Although the plaintiffs are, as previously stated, Mr and Mrs Rigby, their participation is no more than nominal. In reality the claim for declaratory relief is made on behalf and at the expense of NIG. The premise of the claim is that if the declaratory relief is refused on the basis that the Sun Alliance policy does not cover this particular loss, NIG will, without more ado, indemnify the present plaintiffs and will continue to defend the main action on their behalf. The writ in the present action was issued during July 1977 and the hearing was originally fixed to take place during the summer of 1978. For reasons unconnected with the parties the claim for declaratory relief did not come on for hearing until the beginning of May 1979. Meanwhile the main action has been making progress and is currently due for hearing towards the end of June 1979. If the present action had been brought forward for the first time in May 1979 I venture to doubt whether the court would have entertained it. The whole of the present proceedings will be academic if the claim in the main action fails. True, the insurers will have obtained a decision on a point which they regard as important, but the court will not as a rule allow itself to be drawn into the granting of declaratory relief unless satisfied that the relief would serve an immediate practical purpose. Furthermore, a decision on the application of the two policies cannot be arrived at without analysing the claim in the main action. This cannot be done simply by taking the pleadings in the action at their face value (West Wake, Price & Co v Ching [1957] 1 WLR 45). The present case requires an agreed or assumed substratum of fact, and for this purpose, as events have shown, the statement of claim–even if agreed for the purposes of argument to be well-founded in fact–may require to be supplemented by further agreed facts. This can give rise to difficulties in formulating the relief granted as well as in the trial of the issue. Again, it cannot be forecast with certainty that the shape of the claim against the plaintiffs, assumed to be correct for the purposes of the present action, will remain unchanged when the main action comes on for trial. Alterations in the factual or legal basis of that claim may cause the declaration to miss its mark. Finally, the argument in the present action involves a consideration of matters which, at least in theory, may have to be traversed again by the judge who tries the main action, and the plaintiffs in that action are not parties to the present proceedings. The trial of that action might be hampered by the existence of a decision in a different suit between parties on what is in essence the preliminary issue in the main action. Notwithstanding these possible grounds of objection, it appeared reasonable in all the circumstances to proceed with the hearing. The present action was launched and fixed for hearing a substantial time ago. After two adjournments (not of their own choosing) the parties presented themselves ready for argument and willing to take the risk that the issue might prove to be academic. I was assured that whatever might be the position in theory the main action will in practice turn on the facts, and that the insurers will not be raising in the main action any issue as to the constituents in law of an action for nuisance. On any view these present proceedings serve some practical purpose in deciding which insurer is to control and finance the defence in the main action. The grant of declaratory relief in respect of a liability which has not yet accrued can, on occasion, be useful: and this appears to be such an occasion. I now turn to the substance of the dispute. In order to decide whether the putative liability of the plaintiffs to the claimants was a liability which attached ‘solely as owner (not occupier) of the house,’ it is necessary to ascertain the legal basis of the claim in the main action. For this purpose it is common ground that one must look at the true nature of the cause of action and not at the way in which the claimants happen to have expressed it (see West Lake, Price & Co v Ching, supra). Thus, for example, the loss cannot be shown to be within the Sun Alliance cover merely by pointing to the fact that in their statement of claim Mr and Mrs Payne allege that the plaintiffs were owners of the insured premises and make no reference to their being occupiers. The statement of claim does however contain a useful description of the facts which the claimants will set out to prove in the main action, and, since these facts must be used as the starting point in the present action, it was agreed between the insurers that for the purposes of this action only the facts alleged in the statement of claim, and in particular those quoted above, should be taken as proved. In the course of the argument it was recognised that further assumptions of fact would be required before the issue could be determined, and it was accordingly agreed for the purposes of this action only that (a) the plaintiffs were occupiers of the insured premises; (b) the plaintiffs knew or ought to have known of the risk that the tree roots would penetrate into the claimants’ land and create a risk to the claimants’ bungalow and its extension; (c) it would have been reasonably practicable for the plaintiffs to eliminate the risk by measures such as cutting the roots or felling the trees. One further matter of agreement must be mentioned, namely, that if the loss falls within the words ‘solely as owner, not occupier, of the house’ it is covered by the Sun Alliance policy. This makes it unnecessary to consider whether a claim of the present type is for ‘accidental damage to property happening in or about the house,’ although the latter words do, of course, form part of the background against which the issue of construction must be determined. I now turn to the issues upon which the liability of the Sun Alliance depends. These are (1) What kind of liability is comprised in the words ‘solely as owner, not occupier, of the house?’  (2) Is the putative liability of the plaintiffs a liability of that kind?  It is convenient to place these issues in context by considering the categories of person against whom a claim in nuisance will lie. I was helpfully referred by counsel to a number of authorities to illustrate the historical development of the tort of nuisance. These were as follows: Russell v Shenton (1842) 3 QB 449; Harris v James (1876) 35 LT 240; Sedleigh-Denfield v O’Callaghan [1940] AC 880; St. Anne’s Well Brewery Co v Roberts (1928) 140 LT 1; Hall v Beckenham Corporation [1949] 1 KB 716; Mint v Good [1951] 1 KB 517; Smeaton v Ilford Corporation [1954] Ch 450; Esso Petroleum Company Ltd v Southport Corporation [1956] AC 218; Goldman v Hargrave [1967] AC 645; Brew Brothers Ltd v Snax (Ross) Ltd [1970] 1 QB 612; Salmond on Torts 17th ed32 pp 64 and 68; Winfield & Jolowicz on Tort, 10th ed pp 325 and 340; Clerk & Lindsell on Torts, 14th ed paragraph 1418; Bullen & Leake, Precedents of Pleadings, 12th ed 708, Halsbury’s Laws of England, 3rd ed vol 23, p 570, and vol 28, pp 126 and 155. It is unnecessary for present purposes to attempt a general review of the law of nuisance in its current form. The following propositions, which in my judgment flow from these authorities, provide a sufficient background for the issues of construction stated above: (1)  The tort of nuisance is concerned with the wrongful use of land. (2)  Two different categories of nuisance may be distinguished. They may be labelled ‘active’ and ‘passive.’  In the former the defendant has himself created the state of affairs which constitutes the wrongful use of land. In the latter the state of affairs has come into existence independently of any direct act of the defendant, for example by the operation of nature or by the act of a third party, but the circumstances are such that the defendant is nevertheless regarded as having continued the nuisance or indirectly participated in the creation of it. (3)  The person liable for an active nuisance is the person who created it. In practice this will almost always be the occupier, for he is the person most likely to be in a position to put the land to an improper use. Current occupation of the land is not, however, an essential element in a liability of this kind. In particular an owner who has created a nuisance and subsequently gone out of possession may be liable if the nuisance continues unabated. (4)  Where the nuisance is of the ‘passive’ variety the identity of the defendant will depend on the circumstances. Since liability for this type of nuisance is founded on the premise that the defendant has a sufficient connection with the land to justify the inference that he knows, or should know, that the nuisance exists, and can and should take steps to abate it, the occupier will usually be the correct defendant, since in the ordinary way he will be the person with the requisite means of knowledge and powers. This will not, however, always be so. On occasion either the owner alone, or both the owner and the occupier, may be liable. Thus an owner who has parted with possession will be liable if he expressly or impliedly authorised the occupier to create the nuisance, or if he knew of the nuisance when he went out of possession, or if he had an express or implied right to enter into possession and then abate the nuisance. I now return to the first issue, namely what is meant by the expression ‘solely as owner, not occupier, of the house.’  Mr Wright QC put the argument for the plaintiffs in two rather different ways. In the first instance he invited the court to look at the origin of the plaintiffs’ assumed liability. The contention can be illustrated by the following series of questions and answers which was referred to in argument: ‘Q. Why are the plaintiffs liable?  A. Because they are treated by the law as having continued the nuisance created by the natural growth of the roots. Q. Why are they so treated?  A. Because they were in a position to know of, and prevent, the incursion of roots. Q. Why were they in that position?  A. Because they had exclusive control over the activities on that land. Q. Why did they have that control?  A. Because they were owners of the land and had not yielded the possession to anyone else.’  It is true, the argument continues, that the plaintiffs were occupiers as well as owners, but it is their status as owners which accounts for the fact that they are liable to the claimants. I cannot accept this argument. No doubt it would be possible to draft a form of words sufficiently wide to entail that a liability would fall within the scope of the cover if the insured’s ownership of the land formed part of the chain of circumstances out of which the liability had ultimately sprung. Conceivably, an expression such as ‘arising in connection with’ could be employed for this purpose. The words used in this policy are, however, of a much more precise nature. The liability must attach to the insured ‘as owner.’  These words are apt to describe not the capacity of the insured or the history of the liability, but the character of the liability itself. To my mind they denote that the status of the insured as owner is an integral part of the cause of action against him, and not merely that in practice he would never have found himself in the position of receiving a claim and being held liable if he had not been the owner of the premises. This view corresponds with the opinions expressed on a very similar point by McNair J, and Diplock LJ delivering the judgment of the Court of Appeal, in Sturge v Hackett [1962] 1 Lloyd’s Rep 117 at p 124, and [1962] 1 WLR 1257. There remains Mr Wright’s second way of putting the matter, namely that the words ‘attaching as owner’ simply entail that it must be possible to say, before a liability can be regarded as falling within the cover, that an assertion of ownership is a necessary averment in at least one valid way of pleading the claim against the insured. The words ‘solely’ and ‘not occupier’ are there merely for the purpose of making explicit what would in any event have been the true meaning of ‘attaching as owner.’  Had it not been for the added words, the argument would have raised a difficult problem. Sturge v Hackett, supra, was argued throughout on the basis that, if there existed a valid cause of action in which an assertion that the insured was ‘occupier’ was an essential averment, the loss fell within the policy even though there was also an alternative cause of action in which the fact of occupancy played no integral part. It is true that this had been conceded by counsel, but Diplock LJ, speaking for the Court of Appeal, expressly stated that the concession was right. There are, however, two earlier cases which might be regarded as pointing the other way, namely Goddard & Smith v Frew [1939] 4 All ER 358, and West Wake, Price & Co v Ching, supra. In particular there is an elaborate discussion by Devlin J in the latter case of ‘mixed’ claims against the insured, which can certainly be read as concluding that if there are two valid causes of action in respect of the same liability, one within and the other without the scope of the cover, the insured has no right of indemnity. It may well be that there is in fact no conflict among these authorities, and that the earlier cases merely show that the primary or natural cause of action must lie within the cover and must be the real root of the insured’s liability, and that if this requirement is satisfied the existence of a secondary cause of action is immaterial. It is, however, unnecessary to reach a conclusion on this point, for in my view the added words ‘solely’ and ‘(not occupier)’ make the extent of the cover quite clear. If ‘attaching as owner’ means ‘attaching to the insured in his capacity as owner,’ then the phrase as a whole must mean ‘attaching to the insured in his capacity as owner and in no other capacity, and particularly not in his capacity as occupier.’  This reading of the words does not, of course, entail that the claim under the policy must fail unless the liability of the insured can be founded on an assertion that the insured was owner, with nothing more; for this would mean that the indemnity under the policy would never extend to a liability in nuisance, and the parties are at one in agreeing that such liabilities are indeed covered. (It was decided in Russell v Shenton, supra, that a declaration in an action for nuisance stating that the defendant was ‘owner and proprietor’ of the defective premises was demurrable in the absence of an express assertion that the defendant was in occupation. It is true that a pleading in similar terms might nowadays be more sympathetically construed, and it is also true that later decisions have enlarged the situations in which an owner not in possession may be held liable in nuisance, but there is nothing in these decisions to suggest that ownership alone is sufficient.)  I therefore read the Sun Alliance policy as covering only those claims in which the status of the insured as owner of the property is an essential, although not the only essential, element in establishing him as the person liable in respect of a claim. This interpretation is in my view consistent not only with the words of the clause but also with its commercial purpose. The main body of the cover provided by the Sun Alliance policy, which is described as a ‘buildings-only’ policy, is concerned with damage to the structures comprising ‘the house.’  The optional ‘additional protection’ of which the liability cover forms part is of a wider and more miscellaneous variety but is also concerned in part with losses sustained by the insured in relation to the house qua house. Policies of this kind are issued in the contemplation that where, as will usually be the case, the insured is an owner-occupier he will supplement his buildings policy with a householder’s comprehensive policy. Whatever the precise terms of such a policy it will usually provide cover33 which is in the main referable to risks which the insured incurs because he is living in the house. This being so, one would expect that in order to avoid double insurance the bulk of the occupier’s risks would be excluded from the buildings policy and that so far as concerns the cover in respect of liabilities the buildings policy would be left with only those liabilities which are strictly concerned with the insured’s status as proprietor. These considerations all point to the conclusion that the Sun Alliance policy covers only those liabilities in nuisance in respect of which it can be said that, however the claim is expressed, an allegation of ownership is always material and an allegation of occupation is never material. Such claims may not be very common but the authorities previously summarised show that they can indeed exist. In the light of this interpretation one may now turn to the second issue: Is the claim by Mr and Mrs Payne of a type in which proof of ownership is necessary and proof of occupancy is not?  It seems to me that it is not. The only varieties of nuisance where proof of ownership is a prerequisite to success are those passive nuisances where ownership and occupation are divided and where for some reason the owner, in place of or in addition to the occupier, is being sued. The present case does not fall into this category. It would be pointless for the claimants to prove that the plaintiffs were owners of the property unless they intended to go on to allege that there was some special feature of their relationship with the persons in occupation which made their ownership a source of liability. For obvious reasons this will not be the shape of the main action. The claimants need do no more than establish that the plaintiffs were in occupation. There being, on the assumptions of fact previously stated, nothing to displace the prima facie inference that the occupier has a sufficient power of control to render him liable in nuisance, an investigation into the ownership of the house will be quite immaterial. The liability will attach to the plaintiffs as occupiers. It will not attach to them as owners, either ‘solely’ or at all. For these reasons I hold that the loss does not fall within the Sun Alliance policy. Judgment was given for the defendants with costs.