Judgments - Wildtree Hotels Limited and Others v. London Borough of Harrow

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    In my view it will be almost impossible for any claim for damage caused by noise, dust or vibrations to satisfy all three of these rules. Being things "productive of sensible personal discomfort" within the meaning of Lord Westbury's dichotomy in St. Helen's Smelting Co. v. Tipping, 11 H.L.Cas. 642, 650, the claim is subject to the principle that a reasonable use of land, with due regard to the interests of neighbours, is not actionable. The implications for building operations were spelled out by Sir Wilfred Greene M.R. in Andreae v. Selfridge & Co. Ltd. [1938] Ch. 1, 5-6:

    "when one is dealing with temporary operations, such as demolition and re-building, everybody has to put up with a certain amount of discomfort, because operations of that kind cannot be carried on at all without a certain amount of noise and a certain amount of dust. Therefore, the rule with regard to interference must be read subject to this qualification, and there can be no dispute about it, that in respect of operations of this character, such as demolition and building, if they are reasonably carried on and all proper and reasonable steps are taken to ensure that no undue inconvenience is caused to neighbours, whether from noise, dust, or other reasons, the neighbours must put up with it."

    Actionability at common law therefore depends upon showing that the building works were conducted without reasonable consideration for the neighbours. On the other hand, immunity from liability arising out of the construction of works authorised by statute is subject to a condition that the undertaker will "carry out the work and conduct the operation with all reasonable regard and care for the interests of other persons" (per Lord Wilberforce in Allen v. Gulf Oil Refining Ltd. [1981] A.C. 1001, 1011.) Mr. Mole said that there was no daylight between these two rules: the damage was either not actionable at common law or else outside the protection of the statute: in either case it was not compensatable under section 10 of the Act of 1965. If the landowner wishes to recover for such damage, he must assume and discharge the burden of proving in an ordinary action for nuisance that the undertaker exceeded his statutory powers. My Lords, I am reluctant to say that no claim for dust, noise or vibration can escape this dilemma because one cannot foresee all cases. But the argument seems to me very compelling and I would normally expect it to apply. I can see no answer to it in this case. I therefore agree that question 1 was correctly answered by the Lands Tribunal in the negative, although I do so for the reasons succinctly stated by the tribunal rather than for those given by the Court of Appeal.

5. The second issue: claims for non-actionable loss

    The second issue is an attempt by the claimants to escape from the dilemma I have just described. Again, the issue does not emerge with great clarity from the language of the question stated to the court. As explained by Mr. Harper Q.C. for the claimants, the argument is that when a claimant has suffered injurious affection from the construction of road works which, in the absence of statutory powers, would have been a public nuisance, he can recover for all damage caused by the construction of the works, whether or not it would have been independently actionable. The principle in Andreae v. Selfridge & Co. Ltd. [1938] Ch. 1 does not protect the council from liability to pay compensation for noise and dust caused by the construction of the roads, even if it took all reasonable care.

    The Court of Appeal unanimously rejected this submission and so do I. The public nuisance which would otherwise be created by the council's interference with the highways required statutory authority. But the council, as owners of the soil of the highway, was in other respects entitled to carry on works there in the same way as any other landowner. The question of whether noise and dust created by those works was an actionable nuisance must depend upon the same considerations as would apply to any other works undertaken by a landowner upon his land. The fact that they would have been an actionable public nuisance because they interfered with passage on the highway does not create a parasitic claim to compensation for damage which has nothing to do with passage on the highway.

6. Third issue: temporary damage

    The third issue is whether temporary damage to the value of the land is excluded from compensation. Under this heading, the council wishes to exclude all compensation for the effect of the interference with access to the hotel during the construction of the works. It has been agreed that the "valuation date" for the assessment of any damage to the capital value of the hotel is the date when the works were completed. The council wishes to confine the claim for compensation to whatever loss can be proved under this head. This form of damage, which would at common law have been a public nuisance, is not subject to the rule of give and take applicable to nuisances which cause sensible personal discomfort. If the landowner cannot carry on the works without causing an obstruction of the highway which would amount to a public nuisance, he cannot without statutory authority carry them out at all. It is the statute in such a case which legitimates the public nuisance and gives rise to a claim for compensation under section 10.

    As I have said, the majority in the Court of Appeal accepted the council's argument. They did so for two reasons: first, on authority, and secondly, as something which followed inevitably from the principles upon which compensatable loss was measured.

    The question of whether damage was temporary can arise in a number of contexts. In the first place, a temporary obstruction of the highway (such as leaving a skip in the road for a few days) may not be a sufficiently serious interference with the public's right of passage to amount to a public nuisance at all. This was the principle relied upon by the court in Herring v. Metropolitan Board of Works (1865) 19 C.B. (N.S.) 510 to hold that compensation was not payable for obstruction caused by temporary hoardings. In Lingké v. Christchurch Corporation [1912] 3 K.B. 595 the Court of Appeal thought that the court in Herring was probably too generous to the defendants on the facts but the principle is not in doubt. The time for which an obstruction has existed can also be relevant to whether the plaintiff can show that he has suffered special damage. Or it may affect the question of whether the damage is to the plaintiff personally or to his land. The latter was the basis upon which it was held that the level crossing (which was shut only when trains were passing) caused only personal inconvenience to the house owner in Caledonian Railway Co. v. Ogilvy (1856) 2 Macq. 229. In Metropolitan Board of Works v. McCarthy, L.R.7 H.L. 243, 254, Lord Cairns L.C. mentioned the temporary nature of the obstruction in Ricket as a reason why the plaintiff's loss was damage to the trade without being damage to the value of the property. It may be that neither case would have been decided the same way on the facts after Caledonian Railway Co. v. Walker's Trustees, 7 App. Cas. 259 but in principle there is no reason why the temporary nature of the damage should not be relevant on both these issues.

    But none of these questions arises in the present case. The question here is whether particular damage to the claimant's land, which would have been actionable in the absence of statutory immunity, should be denied compensation because it is temporary. Your Lordships have been referred to no authority for such a proposition before Ricket v. Metropolitan Railway Co., L.R.2 H.L. 175, where the distinction between damage caused by the temporary and the permanent works of the undertaking is relied upon only by Lord Chelmsford. It will be noticed that Lord Chelmsford was concerned not so much with whether the damage was temporary but whether it had been caused by the temporary works involved in constructing the railway, such as street hoardings and excavations for tunnels which are afterwards covered over, rather than by the permanent works such as the lines, embankments and buildings. But no doubt in practice the damage caused by the temporary works was likely to be temporary, as it was in Ricket's case itself. Lord Chelmsford took the view that damage caused by the temporary works did not fall within section 68 of the Act of 1845 (or section 6 of the Railways Clauses Consolidation Act 1845, which was also relied upon) because they applied only to damage caused by the "execution of the works" and this meant the works when executed. It did not apply to damage caused in the course of execution.

    My Lords, I do not find this construction very convincing and I think it is not surprising that it did not appeal to Lord Selborne L.C. in Caledonian Railway Co. v. Walker's Trustees, 7 App. Cas. 259 or to any other judge who has considered the subject. It was rejected by all members of the Court of Appeal in Ford v. Metropolitan and Metropolitan District Railway Cos. (1886) 17 Q.B.D. 12. The claimant was a tea merchant in Great Tower Street in the City. He had a lease for seven years from March 1880 of 3 rooms at the back of the building. The construction of the railway involved pulling down the front of the building and interfering with the access to the street while the works were in progress. When they were completed, access was restored. An arbitrator awarded him £600 for injurious affection. In the Court of Appeal counsel for the railway company took the point (as far as one can see, for the first time in reply) that "temporary damage cannot be the subject of compensation" and cited Ricket's case. Lord Esher M.R., at p. 20, rejected the submission. He said it was based upon Lord Chelmsford's speech, but he thought that he had probably been misreported. Cotton L.J. said that the interference with the access materially affected the value of the rooms and therefore fell within the principle formulated by Thesiger Q.C. in Metropolitan Board of Works v. McCarthy, L.R. 7 H.L. 243. As for the exclusion of temporary damage, he said that it would be:

    "to take a very narrow view of this Act, to say that compensation for injury caused by the exercise of the powers vested in the company is to be confined to injury caused by the works when constructed. In my opinion the right to compensation ought to include also injury caused to the house, not only by the works when finished, but by the exercise of the powers of the Act in the course of putting up those works: 17 Q.B.D. 12, 24"

Bowen L.J., at p. 28, said likewise that temporary damage was not excluded:

    "It is urged that the injury which was caused to the house by the taking away of the enjoyment of this hall, was an injury caused only during the progress of the works, and therefore was not such an injury as was intended to be compensated by section 6 of the Railways Clauses Act, which provides for compensation being given for an injury done to lands by the construction of a railway. But the question seems to me rather to be what is the character of the injury inflicted, than what is the period during which it occurs. I cannot help thinking that on the plain reading of the Act of Parliament an injury may be done to houses and land, (if it is an injury sufficient to lessen the value of the property,) quite as fully during the progress of work, as by the works after they have been constructed."

    25 years later, in Lingké v. Christchurch Corporation [1912] 3 K.B. 595, 607, Fletcher Moulton L.J. summed up the development of the law as follows:

    "It is quite true that in the long line of decisions (not consistent with one another in all cases) there was a time when it was thought that there was a fundamental difference between damage caused by temporary interference with property and the user of it and permanent interference. But since the case of Ford v. Metropolitan and Metropolitan District Ry. Cos., which was decided in this court in 1886, it has been settled law that the fact that an interference is only temporary and that it takes place during the construction of the works is not fatal to the right to compensation. Where the interference would give ground for compensation if perpetual, then if it is temporary, but not for a negligible time, it will also give ground for compensation."

    In the Court of Appeal, Pill L.J. [1999] Q.B. 634, 652-656 examined Ford v. Metropolitan and Metropolitan District Railway Companies (1886) 17 Q.B.D. 12 and said that he did not think it bore out what Fletcher Moulton L.J. said. But in my opinion it plainly does and I think that the reluctance of the majority of the Court of Appeal to take it at face value was based upon a view of the principles of assessing compensation which was fundamentally mistaken. To this I now turn.

    The majority in the Court of Appeal thought that compensation for temporary damage was inconsistent with the process of valuation required by the Act. The point was put clearly by Peter Gibson L.J., at pp. 672-673:

    "What in my judgment is crucial is the date at which the value of the land is to be assessed. In the present case it was accepted before the Lands Tribunal that the date by reference to which compensation must be assessed is the date when the works giving rise to the entitlement to compensation are complete. In the light of that, as well as the acceptance of the principle that there must be a loss in the value of the land for compensation to be recoverable, I do not understand how a temporary loss of value which would have been observable at earlier dates but which was no longer obtaining at the agreed date of assessment can give rise to a claim for compensation."

    This reasoning assumes that compensation under section 10 of the Act of 1965 can only be assessed by considering the capital value of the claimant's land at a given date and deducting that sum from an estimate of what its value would have been if it had not been injuriously affected. But there is nothing in the section which says that compensation for damage to the land must be calculated in this way. The claimant is simply entitled to compensation for the damage to his land. Obviously if one is considering damage of which the effects will continue for some time into the future, such as the permanent deprivation of light or a right of way, it is sensible to take a valuation date and capitalise the value of the future loss at that date. But in respect of damage which has occurred in the past, there seems to me no reason why one should not calculate the effect which it has had upon the value of the land in the sense of reducing its letting value in the open market while the damage continued.

    There must have been many cases in which the person claiming compensation for injurious affection held the land on a short lease at a rack rent. The plaintiff in Ford v. Metropolitan and Metropolitan District Railway Cos., 17 Q.B.D. 12 had a lease of seven years from 1880, of which part must have been expired when the works took place. We are not told what rent he paid but, with so short a tenancy, the chances are that it was a rack rent. There could be no question of calculating the reduction in the capital value of his interest in the land, whether the damage to the rooms he occupied was, as I think, temporary, or, as Pill L.J. thought, permanent. His leasehold interest probably had no value at all. But the injurious affection meant that for some period his rooms were worth less on the open market than they would otherwise have been - probably less than the rent he was paying. It was for this loss that he was entitled to compensation. In Ford, 17 Q.B.D. 12, 19-20 Lord Esher M.R. illustrated this point by reference to the fact that the works made it temporarily impossible to employ a housekeeper:

    ". . . the absence of a housekeeper during the alteration of the building . . . is evidence to shew that the building, as business premises, was rendered of inferior value, because if a building cannot be used as a business building to the same advantage as it was before, it is an injury to the building as a business building."

    I therefore do not accept that a claim for loss of past rental value, or for or anticipated rental over a short period in the future, is an attempt, as Peter Gibson L.J. said [1999] Q.B. 634, 673, to "dress up part of the temporary loss of profits as a loss of value of land when that value has not in fact been lost . . ." The answer of Lord Westbury in Ricket v. Metropolitan Railway Co., L.R.2 H.L. 175, 204 seems to me as convincing today as it was then:

    "It seems difficult to deny that the occupier of a public house, the value of which depends on its custom, has his interest in that house materially damaged by loss of custom. It may always have been used as a public house, and as such has been let to the occupier, who takes it and pays a high rent for it as a public house. When he took it, its value was ascertained and the rent fixed by reference to the custom it had; and it seems in the highest degree unreasonable to strip the house of its character, and of the use and purpose for which it has been constructed, fitted, and employed; and, having so done, to say that the interest of the occupier has sustained no damage because the building or structure has not been deteriorated. A man gives a rent of £100 per annum for a public house with good custom, long established in some much frequented thoroughfare, which house, if not used as a public house, would not be worth £50 per annum. Suppose, then, that the thoroughfare should be wholly or partially obstructed, and the custom of the house thereby diminished by one-half, is it consistent with common sense to say that the interest of the tenant in the house is not materially prejudiced?"

    What the decision of this House in Argyle Motors (Birkenhead) Ltd. v. Birkenhead Corporation [1975] A.C. 99 establishes is that one cannot make a claim for loss of profit as such. Non constat that the interference which caused such loss of profit, which may have been attributable to the special nature of the business, has had the same or indeed any effect upon the open market letting value of the premises. But there is nothing in authority or logic to say that the letting value of the premises cannot be affected by an interference which makes it less convenient to conduct the kind of business for which they would otherwise have been suitable. A plaintiff who can prove such a reduction in value, for whatever period, is entitled to compensation. So in the Court of Appeal in Argyle Motors (Birkenhead) Ltd. v. Birkenhead Corporation [1975] A.C. 99, 114 Buckley L.J. said that although no claim could be made for loss of profits:

    "To avoid confusion, however, we add that this does not mean that, if injury to a business can be shown to have occasioned a diminution in the value of the land where the business is carried on, compensation cannot be recovered for that injurious affection of the land."

    In the House of Lords Lord Wilberforce also said, at pp. 130-131, that "if [the appellants] can prove that a loss of profitability affects the value of their interest in the land they can recover compensation for this loss of value." There is no reason to suppose that Lord Wilberforce was thinking only of capital values.

8. Conclusion

    I would therefore allow the appeal to the extent of restoring the opinion of the Lands Tribunal on question 3 but otherwise would dismiss it.

 
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