England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
HIS HONOUR JUDGE SIMPKISS (SITTING AS A HIGH COURT JUDGE)

		Royal Courts of Justice Strand, London, WC2A 2LL
		29/07/2011

Sir Henry Brooke:

1.Introductory

1. The appeal and cross-appeal in this case arise out of a dispute about the level of noise emanating from a scrap metal yard in Cambridge which adjoins the main Cambridge to King's Lynn railway line. Following a six day trial in late March 2010 His Honour Judge Simpkiss, sitting as a judge of the High Court, held that the first defendants Nationwide Metal Recycling Ltd had been committing an actionable nuisance by reason of their operations at the yard between 23^rd April 2009 and early March 2010 (when they erected acoustic barriers along the boundary of their property), but that the actionable nuisance ceased when the barriers were erected. (On 11 December 2009 the defendants had told the claimants that they would be erecting acoustic barriers, but they did not provide any details of them when requested to do so four days later, so that the claimants could not assess their potential usefulness until they were erected nearly three months later). The judge awarded two sums of £5000 damages to the first claimant and to the second and third claimant respectively, and accepted undertakings by the first defendants that were framed so as to provide that their future use of the yard did not revert to being an actionable nuisance. He also awarded the claimants their costs of the action, and directed that the first defendants pay them £75,000 on account of costs pending detailed assessment or agreement. This part of his order has been stayed pending the outcome of the first defendants' appeal. The claimants' claim against the second defendants Roundwood Restorations Ltd, who are the freehold owners of the scrap yard site, was dismissed with costs, and there is no appeal against that decision. For convenience I will refer to Nationwide Metal Recycling Ltd as "the defendants" in the remainder of this judgment.
2. The claimants appeal against the judge's finding that no actionable nuisance continued after the erection of the barriers. The defendants appeal against certain aspects of the judge's ruling on costs.
3. The substantive judgment in this case was delivered on 22 June 2010. The judge conducted a further half-day hearing on ancillary issues on 8 October 2010 and gave an extempore judgment on those matters at the end of that hearing. Before I consider the issues that arise on these appeals it is necessary first to say something about the facts of the case and the judge's rulings on disputed issues.

2.The history of the dispute

4. The claimants' residential premises and the defendants' metal scrap yard lie on opposite sides of the main Cambridge to King's Lynn railway line. On the claimants' side of this railway line was a branch line, now long since disused. In early 1959 the first claimant and her husband (now deceased: he used to work for British Rail as a chartered engineer) came to live in Station House, a property which was formerly occupied by the station master of the branch line station. They later bought the house, together with two acres of garden land. The first claimant's son and daughter-in-law, who are the second and third claimants, built their home, Station Lodge, on part of her land. Except for this property, the first claimant's land runs along the old branch line for most of the width of the light industrial site opposite. The judge described the claimants' properties as being situated in a little oasis of green sandwiched between light industrial sites and bounded by the busy Newmarket Road.
5. It was a feature of the case that even if a scrap metal yard had not been operating on the other side of the main line, there were other sources of noise in the claimants' neighbourhood. Although the judge downplayed the effect of noise from the railway line, 81 passenger trains are scheduled to pass along it between 8 and 4.30 p.m. every weekday, and goods trains use it, too. The Newmarket Road is a very busy 4-lane highway, and at his site visit on a Friday afternoon in late March 2010 the judge said that traffic on that road was busy and audible from all the external parts of the area he visited. Furthermore, the defendants' scrap metal yard, formed part of a large industrial estate, and other light industrial use on the estate included a garage business, a buildings materials yard, a building supply company and a depot for heavy plant hire. It was against this background that the evidence at the trial focussed on the additional noise created by the defendants, particularly in connection with their operations involving the use of a crane which I will describe in paragraph 25 below.
6. The claimants, and in particular Mrs Thornhill, had been complaining about the presence of the scrap yard for many years: as long ago as February 1994 an officer of the Cambridge Council referred to the "everlasting saga of problems you are having there". The scrap yard site was divided into two areas – a ferrous yard opposite Station Lodge, which took the place of a former coal yard in or before 1975, and its extension to include a non-ferrous yard about 10 years later. Although no planning permission was ever obtained, lawful development certificates were issued for metal scrap yard user in 1981 and 1994. A waste management licence was granted in July 1994.
7. Mr Douglas Edwards, a director of the defendants' company and its moving spirit in these proceedings, had no involvement with the site until one of his companies bought the scrap metal business in early 2004 and ran it until October 2005 when the company passed into other hands. It was then run by a company which was eventually called SITA MR (Cambridge) Ltd ("SITA") who held the land on a lease from the second defendants until 23 April 2009. SITA's lease was then forfeited for non-payment of rent, and the defendants operated a scrap metal business on the site on their own account thereafter. However, they no longer processed any metal on the site: it was collected there and then sent to a site in Colchester for processing.
8. During the 16 years which preceded April 2009 the occupiers of the scrap yard were creating far more noise than was the focus of the judge's inquiry into the post-April 2009 history. In February 1994 used cars were being lifted by cranes and then crashed onto the ground or onto metal skips. The broken metal was then pounded by the cranes' grabbing mechanisms. Later that year there were complaints about barking dogs, waste burning and alarms going off. In July 1996 a fourth, much larger, crane joined the crane fleet, and work was being undertaken at that time six days a week between 8.30 a.m. and the start of the hours of darkness. In 1997 Mr Foulkes, the second claimant, first started working in a study on the second floor of his home at Station Lodge. His study window faced the defendants' site. He thought that there had been at least three cranes operating there since 1985, and that for most of the time there was one crane at work for most of the working day. The judge also mentioned the use of a chain saw on a daily basis, steel crane tracks which creaked and squeaked, and the operation of a mechanical shovel.
9. The judge thought it important to set out the pre-April 2009 history of the site in some detail because it was very relevant for the purposes of understanding the claimants' state of mind when the defendants took over the business in that month. After enduring so much for so long, the claimants had eventually brought court proceedings against SITA. SITA founded its defence on a clause of the conveyance under which the claimants held their land, and while it took this defence unsuccessfully to trial, it conceded shortly before the trial that subject to any defence afforded by this issue, its operations on the site constituted a nuisance for which they were willing to pay the claimants £25,000 damages and costs. After it had lost on the conveyance issue SITA submitted to an order which gave effect to these provisions. The order stated that SITA agreed that for the purposes of that action only its operators had caused a nuisance by noise and vibration and that it would not carry out scrap metal works at the site from the date of judgment.

3. The claimants' appeal

10. The claimants now appeal against the judge's finding that the actionable nuisance ceased when the barriers were erected in early March 2010. This finding is set out in paragraph 131 of the judgment, but in order to put it in context it is also necessary to recite the two paragraphs which preceded it, all of which appeared under a sub-heading "Conclusion":

"129. Although I consider that there has been some exaggeration by the claimants of the position since April 2009 for understandable reasons given their disappointment at not closing the scrap yard altogether, I am satisfied that the activities of NMR on the site prior to the erection of the barriers did constitute a nuisance but that it was only marginally over the threshold. The noise from the crane is intrusive and there is no warning when it will start up. It lasts for a significant period of time but it does not interfere with evening and weekend use of the gardens.

130. What, in my judgment, tips this case over the edge is the failure of the defendants to place any barrier between the noise and the claimants until earlier this year. For commercial reasons (no doubt sound) the defendants have approached the problem by continuing to work the site rather than waiting until remedial measures had been considered, evaluated and put into place – with or without the agreement of the neighbours. This is not a plain case of nuisance but taking all of the above matters into account I find that between those dates there was a nuisance.

131. I also find that since the barriers have gone up, and provided that use of the crane is regulated to the extent that it has been recently, then there is no nuisance. The level of noise inside is much reduced and the noise level outside is reduced. It is only in the second claimant's study that the reduction is minimal and this can be reduced by closing his windows when the crane is operating. The balance tips in favour of the defendants now that the barriers are up."

11. The parties approach paragraph 131 of the judgment from diametrically opposite standpoints. They both accept that the judge directed himself correctly on the law of nuisance, finding that the test was an objective one and citing such well known cases as Sedleigh-Denfield v O'Callaghan [1940] AC 880 per Lord Wright at p. 903; Walter v Selfe [1851] 4 De G & Sm 315 at 322; Bolton v Stone [1949] 1 All ER 237 per Oliver J at first instance at pp 238-9; and Sturges v Bridgman [1879] 11 ChD 852 per Thesiger J at p 856.
12. The defendants say that the judge performed the balancing exercise required of him by Lord Wright in the Sedleigh–Denfield case when he considered the noise level after the barriers were erected and found that the actionable nuisance was now at an end, so long as the use of the crane was regulated. It is in this context, they say, that the judge made his comment that in the only part of the Foulkes' premises that the noise reduction was minimal, namely Mr Foulkes's second floor study, he could always close his windows when the crane was operating. The claimants on the other hand, say that the judge made no such finding and that it was wrong of him to give the defendants the opportunity to escape a liability that would otherwise have fallen on them by placing an onus on Mr Foulkes to abate the nuisance by closing his study window on what might be a fine sunny day.
13. In making his substantive findings the judge had faced the difficulty that he believed the claimants had exaggerated the noise problem that arose during the defendants' occupation of the site in and after April 2009. He also found that the expert evidence was inconclusive and not very much help to him in deciding what he described as the real issues. He had not been impressed by certain features of the evidence given by the claimants' expert, and the defendants' expert, for his part, had produced figures not backed by supporting material so that they could not be effectively scrutinized. The experts were using different standards for measuring the noise, and they both accepted that neither of them was really suitable for the judge's purposes. The claimants' expert's credibility was further weakened when he was shown a report he had written in a different case which had adopted a very different approach on certain key issues, such as the effect of no longer being able to see the activity which caused the noise.
14. Despite the judge's reluctance to place much weight on the expert evidence in determining whether or not the activity on the defendants' site constituted an actionable nuisance, he thought it useful to record the decibel readings recorded by the claimant' expert before and after the barriers were erected;

Ferrous Yard	Before barriers erected	After barriers erected
Station Lodge: South garden	61.5	52.3
First floor level	63.8	52.3
Second floor level	63.8	60.4
Non-Ferrous Yard
Station Lodge: [Ground] floor	65.4	58.9
First floor	67.1	61.5
Second floor	67.9	64.4

The judge added that the noise affecting Station House, which was further away, was lower.

15. In a brief joint statements the two experts, who had visited the site together on 10^th March 2010, said that the comparative figures for the Station Lodge garden were 61 and 52. After reciting the competing arguments on the effect and extent of the background noise which had to be factored in before any conclusions could be reached, the judge ended this part of his judgment by saying:

"117. The expert evidence is inconclusive and not much help to me in deciding the real issues in the case. Even putting [the claimants' expert's] figures at their highest, the case for the ground floor noise at Station Lodge is weak. Other factors are relevant to the higher floors as I will now turn to."

16. Apart from the evidence of the noise recordings on different floors of Station Lodge, the only live evidence the judge received as to the effect of the noise on someone occupying a second floor room in that property came from Mr Foulkes. (Since the judge heard no evidence on the effect of the noise on the daytime occupiers, if any, of any of the other rooms on the second floor it is not legitimate for us to conclude that the noise nuisance affected any other rooms on that floor). At a hearing in October 2009 the defendants had undertaken to use a crane grab for cumulative periods of not more than two hours per day, and only between 8 am and 4.30 pm on Monday to Friday each week, but Mr Foulkes complained that it was always impossible to predict when the noise would start or finish on any given day. After describing the general effect of Mr Foulkes's evidence (in which he accepted that there were now long periods of time when the crane was not operating, but believed that the noise was now more intense when the crane was in use), the judge went on to say:

"83. The second claimant agreed that there were benefits in not being able to see the yard since the barrier went up, but this did not apply when he was in his study, as he could see over the top. The top of the crane was, when raised, visible at ground level when it was in operation.

84. When asked if the operations were subjectively quieter since the barriers were put up, he agreed that they must be "but I have been out there when there was noise and I was disappointed." He said that he couldn't perceive any difference, while acknowledging that logic told him that it must make a difference. From his study he didn't think it made much difference.

85. In my judgment, a significant bit of evidence came out when the second claimant was cross-examined about this. He had said that he thought that there had only been two collections of scrap since the barrier had gone up. He said that when he was working in his study it was the noise that alerted him to the collections. It is clear from the documents that I have referred to above that there have been several collections since the beginning of March 2010. He was asked to explain how he hadn't noticed collections and his reply was: It is possible that I have not noticed a delivery because I have been concentrating on my work… This last few weeks I have started a new job and nearing the financial year I'm working harder. I have a lot of phone calls."

86. Two points arise from this answer. Firstly, when he is working hard the noise does not stop his concentration and secondly, now that the barrier is up he is not able to see quite so much of what is going on in the yard. It was also clear that on the site visit that the noise in his study is much lower when the window is closed.

87. It is right to say that there was no loading activity between 15^th March and 25^th March 2010 but the barriers outside the ferrous yard provided shielding from the ferrous yard from the end of February 2010."

17. In my judgment the defendants' interpretation of the judge's findings was correct. He was entitled to regard the problems experienced by Mr Foulkes as being of no material significance when he reconsidered the situation in the round after the barriers had gone up. He made it clear that he placed weight on the evidence that there had been occasions when Mr Foulkes did not notice the noise at all from his study, and he was entitled to do so. The judge had visited the site himself and listened to the noise when the study window was open. He concluded that it did not cause an actionable nuisance. When he said that the noise could be reduced if the window was closed, he was merely making a statement of the obvious. He was not saying that what would otherwise have been a nuisance could be successfully abated in this way. It should be remembered that he was unwilling to resolve the matter by placing overmuch reliance on the claimant's expert's decibel readings.
18. The claimants sought to challenge this part of the judgment by contending that the judge had committed an error of law. They asserted that he had confused the nature of nuisance (a tort about damage to property) with interference in respect of personal discomfort. They relied on a passage in the judgment of Lord Hoffmann in Hunter v Canary Wharf Ltd [1997] 1 AC 655 at p 706B-C:

"In the case of nuisances 'productive of sensible personal discomfort' the action is not for causing discomfort to the person, but as in the case of the first category, for causing injury to the land. True it is that the land has not suffered 'sensible' injury, but its utility has been diminished by the existence of the nuisance. It is for the unlawful threat to the utility of his land that the possessor and occupier is entitled to an injunction and it is for the diminution in such utility that he is entitled to compensation."

19. I can see no evidence that the judge made any such error. He showed himself familiar with the legal attributes of the tort of nuisance. He had to decide whether the problem identified by Mr Foulkes constituted a material interference to the second and third claimants' use and enjoyment of their property (so long as the defendants complied with their undertakings to the court) and he concluded that it did not. He heard all the evidence and he also paid a site visit, and it is not open to this court to interfere with his conclusion.
20. For these reasons I would dismiss the claimants' appeal.

4. The defendants' appeal on costs

21. This appeal raises two distinct issues:

(1) That because the claimants expressly refused to engage with the Practice Direction (Pre-Action Conduct) in circumstances where such engagement could and arguably should have avoided the proceedings altogether, costs should have been awarded in the defendants' favour;

(2) The judge erred in principle by completely failing to consider awarding the claimants only a proportion of their costs (as opposed to all of them) taking into account their conduct, including their pre-action conduct and the serious criticisms of the claimants and their expert in the substantive judgment.

22. The first issue arises in this way. As I have said, the claimants had brought proceedings against SITA, the previous occupiers of the scrap metal site. These proceedings had resulted in a concession by SITA that its activities had constituted an actionable nuisance and a willingness, if a technical defence did not succeed, to submit to an order for the payment of £25,000 damages and the costs of the proceedings, an order which was duly made.
23. What the claimants did not know was that the second defendants had forfeited their tenants' lease for non-payment of rent, so that on the day the order was made the first defendants were allowed access to the site and started to run their own scrap metal business there. The judge said that their action was understandable on commercial grounds, because their business might have foundered if word had got around that the scrap metal yard was no longer in use, but this did not of course mean that the claimants had to accept the position if they could show that the running of the yard still constituted an actionable nuisance.
24. The defendants were anxious, however, to make peace with the claimants. On 24^th April 2009, the day after they commenced their business, Mr Edwards visited them to discuss the outcome of the recent court proceedings. He explained how and why the defendants were moving onto the site themselves. A letter to the claimants' solicitors dated 13^th May 2009 recorded that one of the purposes of that visit was:

"to reassure [them] that [the defendants] wished to be good neighbours and had no intention of causing excess noise or other disturbance."

He added in that letter:

"I also discussed in detail [the defendants'] proposals for reducing the impact of its operations by installing an acoustic barrier or alternatively by moving operations to the southern end of the site and housing the plant and machinery inside a new building and invited your clients' observations and thoughts on these two alternative proposals. Mrs Foulkes did not believe that the acoustic barrier would provide an adequate sound barrier. She preferred the latter option. I have enclosed a proposed plan which I intend to take to the council for their opinion with the view to seek a planning consent. I welcome your comments on this."

25. He went on to say that his company were with immediate effect erecting a temporary barrier along the boundaries between their site and the railway line by stacking containers on top of each other. This would not only act as a sound barrier but a visual barrier as well. He added that there were significant differences between the way in which they were operating the site and the way in which SITA had previously operated it. Instead of using a teleporter and loading shovel, since 7 May they had been using a crane to load their lorries, arrangements which produced far less noise. They also ensured that loading activities were restricted to two hours per day.
26. Their anxiety to resolve any dispute without anyone having recourse to litigation was evidenced in a later passage of this letter in which Mr Edwards said:

"Whilst we do not accept that any of the operations we carry out give your client[s] any right to sue for nuisance, we are anxious to minimise the visual and sound impact of our operations on neighbouring properties in the interest of maintaining good neighbourly relations, and avoiding expensive and in our view entirely unnecessary litigation."

They had therefore instructed a noise expert and asked if arrangements could be made whereby he might be afforded reasonable access to the claimants' properties.

27. Because a letter from the claimants' solicitors (to which I refer in paragraph 28 below) had provided no evidence in support of their threatened claim for an injunction, they asked if they might be provided with the sound readings and other evidence on which any such claim would be based. He also asked for a copy of the judgment in the action against SITA and for copies of the claimants' noise expert's reports in that action. The letter ended:

"It is our intention to be, as I said, 'good neighbours' and welcome the input from Mrs Thornhill and Mr & Mrs Foulkes on the future development of the site."

28. The claimants' attitude to all this had been evidenced by their earlier solicitors' letter. Following a telephone call they had received from Mr Edwards three days after his meeting with the claimants, the claimants' solicitors sent him the court order against SITA under cover of a brief letter dated 6 May 2009 in which they said:

"We note your comments that you wish to be a good neighbour. However, our instructions are that since SITA left the Swann's Road site just over two weeks ago, your activities at the site are already causing unacceptable noise. In the circumstances, we would be grateful if you could stop any noisy or nuisance activities at the site immediately. It is our views that any scrap metal operations at the above site are almost certain to cause a nuisance, simply because of the nature of the operation.

If you do not stop all noisy activities within 21 days from the date of this letter (i.e. by 27 May 2009) we will advise our clients to seek an injunction from the Court to order you to stop. We hope that matters do not come to this and look forward to confirmation that you will stop all noisy operations at the site, by return."

29. The claimants' solicitors' reply, dated 15 May 2009, to Mr Edwards' letter of 13 May was uncompromising. After reserving the right to respond more fully (a right they did not exercise) they said they would send him a copy of the SITA judgment when it was received from the Court, would seek approval from their clients' expert that he was content for his report to be released, and would also contact him about the arrangements which should be made for the defendants' noise expert. They then made observations about the status of the site under the Planning Acts and said:

"Our clients will resist any application to the Council to develop the site as a scrap yard. Further, our clients object to the development of any temporary barrier at the site by stacking containers; this will be visually offensive, detrimental to amenity and ineffective in reducing noise at our clients' homes."

30. There matters rested for the next ten weeks. The defendants continued to operate the site, confining their loading operations to two hours each weekday. They did not erect a wall of containers as a temporary noise-muffling expedient, in view of the claimants' opposition. Instead they explored with their architects and the planning authorities the possibility of enclosing their noisier activities within a building, a possibility which in due course they decided to abandon on cost grounds. After using the shovel between 23 April and 7 May, thereby generating rather more noise, they used the crane consistently after that date. The claimants did not disclose their noise measurements or other evidence of excessive noise. Nor did they make any arrangements for the defendant's noise expert to be afforded access to their homes for the purpose of taking noise measurements.
31. On 27^th July the silence was broken. In a letter of that date which was sent to both defendants the claimants' solicitors said:

"Our clients have been reviewing the level of activity from your scrap yard operations since May to see whether you were, as you said, going to act as a reasonable neighbour and operate at a level that it did not annoy or interfere with our clients' use and enjoyment of their homes.

Regrettably, the level and intensity of the works at Swann's Road continue to be a nuisance. Moreover, we are of the view that, taking into account the continued nuisance operations over the last three months, [you] are incapable of carrying on your operations without causing a noise nuisance, such pollution being inherent in scrap metal operations."

32. They had therefore been instructed to issue legal proceedings for injunctive relief and to seek an interim injunction in the short term. They said they were enclosing a copy of an synopsis report by their expert dated 2 July 2009 – it was in fact disclosed two days later – and they would send a copy of the transcript of the judgment in the SITA proceedings when it was available.
33. This letter prompted the defendants to consult their solicitors, and on 29 July their solicitors wrote a long letter in reply. They expressed surprise that the defendants' noise expert had not yet been afforded access if indeed the claimants had been reviewing the level of activity from their clients' operations since May. Nor had they yet received the claimant's noise expert's sound readings, although they had been requested on 13 May and a synopsis report had been apparently been available since 2 July.
34. They then made a number of forceful observations on the claimants' apparent non-compliance with the Practice Direction on Pre-Action Conduct. In particular they said:

"In our view it is quite premature of your clients to embark upon litigation at this stage. Paragraph 6.1(1) of the Practice Direction states that '…unless the circumstances make it inappropriate, before starting proceedings the parties should – (1) exchange sufficient information about the matter to allow them to understand each other's position and make informed decisions about settlement and how to proceed; (2) make appropriate attempts to resolve the matter without starting proceedings, and in particular consider the use of an appropriate form of ADR in order to do so.'

To date, your clients have failed without good reason to provide our clients with copies of any of their expert evidence … As set out in Mr Edwards' letter of 13 May 2009, Mr Edwards visited your clients on 24 April 2009 to reassure them that [the defendants] wished to be good neighbours and had no intention of causing excess noise or other disturbance and to discuss some details relating to [the defendants'] proposal for reducing the impact of its operation. Unfortunately, Mr Edwards' efforts to avoid dispute and litigation received short shrift from your clients. To put it bluntly, neither you nor your clients have made any effort to resolve the matter without the need for proceedings.

Your clients' reluctance to observe the Practice Direction is a serious matter and in the event that proceedings are issued without due regard to the Practice Direction our clients reserve the right to draw the matter to the court's attention particularly in relation to costs, and/or to apply to stay the proceedings until the Practice Direction has been complied with."

35. They then gave a warning that their clients' losses would be very large if an interim injunction had the effect of forcing them to cease trading from the site. They ended their letter by suggesting a timetable for the disclosure of the claimants' noise evidence, a visit to their homes by the defendants' noise expert and the disclosure of his report, and a meeting between the experts in order to narrow issues.
36. The claimants' solicitors responded the same day by disclosing their clients' noise report and offering a choice of dates on or before 21 August for a visit by the defendants' noise expert. So far as the Practice Direction was concerned, they said that they had put the defendants on notice in their earlier letters that the operation at their site was a nuisance and had invited them to resolve them within 21 days. Instead the defendants had chosen to continue the scrap operations regardless, "and, as such, constituted a nuisance." Their clients were no longer prepared to put up with further nuisance and would therefore be applying for injunctive relief. They added: "We can, of course, avoid any interim injunction if your clients provide an undertaking to carry on its business without causing a nuisance between now and trial." They would seek an interim hearing after 24 August to enable the defendant's consultant to take readings and advise. Proceedings, together with a supporting witness statement and a further copy of the noise expert's report, were served the following day, together with notice that the interim injunction application was listed for 26 August 2009. Witness statements by each claimant were served on 6 August, together with a copy of the judgment in the proceedings against SITA. On the morning of 21 August the defendant's noise expert attended the claimants' premises for the first time, and later that day the defendants' solicitors served his report and a witness statement by Mr Edwards. They added:

"In our view, an interim injunction is quite inappropriate in the circumstances and we invite you now to withdraw it. That said, we are happy to agree to directions to have the matter listed for trial quickly."

37. On 25 August, the day before the hearing, a skeleton argument settled by junior counsel for the claimants was served. He noted that SITA, who had been represented by leading and junior counsel, had accepted that their operations had constituted a nuisance. He referred to Mrs Thornhill's view that the scrap yard was wholly incompatible with the green open space that surrounded the claimants' homes. He mentioned the claimants' disappointment that no sooner had they returned home with the benefit of the judgment against SITA the defendants had recommenced scrap yard activities at a level and intensity that caused a material interference with their homes and the quality of their lives. Their evidence, supported by their expert, was to the effect that the current noise, dust and vibration were of a similar character to that caused by SITA and materially interfered with the enjoyment of their homes. However, because there was a difference of opinion between the noise experts and because the claimants were in no position to provide an undertaking as to damages if it turned out that an interim injunction should not have been granted, they were content to seek an interim order in terms suggested by the defendants themselves (which among other things regulated the times when noisy activities might be carried out and the maximum level of noise that would be permitted).
38. They also sought an expedited trial (which was granted) and a costs cap on both parties' costs of £50,000. The application for a costs cap (which was pegged to the costs the claimants were permitted to incur under their BTE insurance cover) was not made on notice, as the CPR requires, and was not subsequently proceeded with. Counsel said, however, that the costs cap was being sought because this was an environmental claim to which the Aarhus Convention applied, and the claimants should be able to bring their claim without exposure to a crippling adverse bill of costs.
39. In the event the judge accepted the defendants' undertakings and ordered the claimants to pay 80% of their costs of the interim injunction application. An early trial was ordered, and in due course the six-day trial started on 24 March 2010. After a mediation failed on 9 November 2009, the claimants' solicitors said that their clients' costs to date were £30,000 and that their current estimates of costs up to and including trial was £65,000. On 11 December the defendants' solicitors said that their clients' costs to date were £60,000, and their current estimate of costs up to and including trial (including costs already incurred) was £145,000.
40. This proved to be a more or less accurate prediction: their costs (including the cost of the hearing on ancillary issues) were £160,000. The claimants' base costs of £150,000, however, turned out to be far higher than the £65,000 estimate. We were told that the parties' cumulative costs bill at the end of the October 2010 hearing was £560,000, taking into account a CFA success fee uplift of 100% and an ATE premium of over £163,000. These costs are, no doubt, even higher now.
41. There seems to be general agreement that the main substantive failure of the CPR reforms has been the spiralling of litigation costs in actions that are not amenable to settlement. It is little short of horrifying that it costs so much to resolve a dispute like this in contested court proceedings. However, as the law now stands, subject to any dispute about their reasonableness, successful claimants with the benefit of a Conditional Fee Agreement are entitled to recover 100% success fees and very large insurance premiums from the losing party, and we are bound to decide this costs appeal in accordance with the principles currently set out in the Costs Rules and any relevant Practice Direction.
42. In his judgment on costs the judge awarded the claimants their costs of the action. Although counsel addressed him on the effect of the Practice Direction on Pre-Action Conduct, the judge did not mention it at all in his judgment. He was mainly influenced by the fact that in spite of all the claimants' protests the defendants had continued to operate their metal scrap yard until shortly before trial in a manner that constituted an actionable nuisance.
43. The relevant part of the judgment reads;

"21. If all the claimants had recovered was an award of damages of £10,000 then that might have been so disproportionate to the amount of costs as to enable the court to find that the claimants had not succeeded. That is not the case as they have achieved much more. They have stopped the nuisance that was going on until March 2010. I accept that steps were taken to try and sort out some planning matters in relation to placing this inside a building, but that proved to be economically unviable. There has not until late 2009 been a serious attempt to put up a barrier, but what shines out above all else in this case is that the defendants continued their operation. I may have found that this was for good commercial reasons, but that is not relevant to the question of whether or not the claimants have succeeded. A way of meeting that problem might have been for the defendants to say:

'We are concerned about how this business is going to be perceived by you and we are anxious to ensure that we are good neighbours, and what we propose is that we will not carry on any noisy works on the site until we have worked out a solution with you.'

And if the claimants had said at that point:

'We are not interested in discussing anything'

then one can see that that would have a significant effect on the costs, but what the defendants chose to do was to go straight in and start work and use the crane, and commit nuisance against the background that I have described. In these circumstances I think it is quite clear that the claimants have succeeded.

22. Of course in considering costs I can consider a number of other matters as to whether or not I should not let costs follow the event. The general rule is that costs should follow the event having found that the claimants have succeeded.

23. The first thing is that the claimants have acted unreasonably in failing to negotiate with the defendants at an early stage. The claimants were in rather a difficult position in that the noise was continuing, and that must have affected their confidence. No positive proposals were put forward to them about the barrier, other than a suggestion that this would be done, until they were told that one was going to be put up in December. Furthermore even today that barrier has been put up without planning permission, and it is common ground that it is therefore from a planning point of view unlawful. It was not a solution which is sufficiently powerful for the claimants to be deprived of costs for not engaging more positively than they did."

44. The defendants rely heavily on the terms of the Practice Direction on Pre-Action Conduct in support of this part of their appeal. Because its provisions appear to have been unfamiliar to the representative of the claimants' solicitors who conducted this litigation, and because it is essential that all parties to any prospective litigation and their solicitors should take this Practice Direction seriously, it is necessary to set out relevant extracts from it in some detail:

1. AIMS

1.1 The aims of this Practice Direction are to –

(1) enable parties to settle the issue between them without the need to start proceedings (that is, a court claim); and

(2) support the efficient management by the court and the parties of proceedings that cannot be avoided.

1.2 These aims are to be achieved by encouraging the parties to –

(1) exchange information about the issue, and

(2) consider using a form of Alternative Dispute Resolution ('ADR').

2. SCOPE

2.1 This Practice Direction describes the conduct the court will normally expect of the prospective parties prior to the start of proceedings….

3. DEFINITIONS

3.1 In this Practice Direction… –

(3) 'ADR' means alternative dispute resolution, and is the collective description of methods of resolving disputes otherwise than through the normal trial process; (see paragraph 8.2 for further information); and

(4) 'compliance' means acting in accordance with, as applicable, the principles set out in Section III of this Practice Direction, the requirements in Section IV and a relevant pre-action protocol. The words 'comply' and 'complied' should be construed accordingly

4. COMPLIANCE

4.1 The CPR enable the court to take into account the extent of the parties' compliance with this Practice Direction or a relevant pre-action protocol … when giving directions for the management of claims … and when making orders about who should pay costs (see CPR rule 44.3(5)(a)).

4.2 The court will expect the parties to have complied with this Practice Direction or any relevant pre-action protocol. The court may ask the parties to explain what steps were taken to comply prior to the start of the claim. Where there has been a failure of compliance by a party the court may ask that party to provide an explanation.

Assessment of compliance

4.3 When considering compliance the court will –

(1) be concerned about whether the parties have complied in substance with the relevant principles and requirements and is not likely to be concerned with minor or technical shortcomings;

…

(3) take account of the urgency of the matter. Where a matter is urgent (for example, an application for an injunction) the court will expect the parties to comply only to the extent that it is reasonable to do so.

Examples of non-compliance

4.4 The court may decide that there has been a failure of compliance by a party because, for example, that party has –

(1) not provided sufficient information to enable the other party to understand the issues…

(3) unreasonably refused to consider ADR.

Sanctions for non-compliance

4.5 The court will look at the overall effect of non-compliance on the other party when deciding whether to impose sanctions.

4.6 If, in the opinion of the court, there has been non-compliance, the sanctions which the court may impose include –

(2) an order that the party at fault pays the costs, or part of the costs, of the other party or parties.

6. OVERVIEW OF PRINCIPLES

6.1 The principles that should govern the conduct of the parties are that, unless the circumstances make it inappropriate, before starting proceedings the parties should –

(1) exchange sufficient information about the matter to allow them to understand each other's position and make informed decisions about settlement and how to proceed;

(2) make appropriate attempts to resolve the matter without starting proceedings, and in particular consider the use of an appropriate form of ADR in order to do so.

8. ALTERNATIVE DISPUE RESOLUTION

8.1 Starting proceedings should usually be a step of last resort, and proceedings should not normally be started when a settlement is still actively being explored. Although ADR is not compulsory, the parties should consider whether some form of ADR procedure might enable them to settle the matter without starting proceedings. The court may require evidence that the parties considered some form of ADR (see paragraph 4.4(3)).

8.2 It is not practicable in this Practice Direction to address in detail how the parties might decide to resolve a matter. However, some of the options for resolving a matter without starting proceedings are –

(1) discussion and negotiation;

(2) mediation…

(3) early neutral evaluation…

(4) arbitration….

45. The claimants failed to comply with this Practice Direction in five important respects:

(1) They ignored Mr Edwards's suggestion that they should engage in discussion or negotiation;

(2) They failed to provide information about their noise expert's findings, when requested to do so;

(3) They failed to comment on the plan for reducing the noise on site which Mr Edwards sent to them;

(4) They failed to accede to Mr Edwards's request that his noise expert might be allowed access to the claimants' properties;

(5) They failed to respond timeously to his request for a copy of a transcript of the judgment in the SITA action.

46. The only possible excuse for this non-compliance with the Practice Direction is that the claimants were seeking an injunction if the Defendants did not stop the nuisance within 21 days. However, Practice 4.3(3) of the Practice Direction is apt to cover a case in which urgent relief is sought, often on a "without notice" basis in the first instance. It does not provide any excuse in a case like this. Even if the claimants were unwilling to engage in discussions or negotiations because of their dominating wish to stop the scrap yard operating or to drive its activities indoors, there was really no reason why they could not have complied with the other four requirements. If they had done so, the parties could have engaged with each other much earlier with a far clearer idea of the strength of each other's cases.
47. In the event, however, the claimants were penalised in costs when they were ordered to pay 80% of the defendants' costs of the application for an interim injunction. By that time the shortcomings of the claimants' pre-action conduct had been put right. The action was not amenable to settlement so long as the defendants continued to commit what the judge found to be an actionable nuisance, and I see no reason why the defendants should be given any other relief on account of the claimants' pre-action conduct. The first ground of appeal therefore fails.
48. The defendants then complain that in making his costs order the judge erred in principle by completely failing to consider the possibility of awarding the claimants only a proportion of their costs. In this context they relied on criticisms the judge made of the evidence given by the claimants' expert and what he found to be exaggerations by the claimants about the nature and extent of the nuisance by noise after the defendants had taken over the site.
49. The judge, however, did form a view on the claimants' own evidence. He continued his judgment after the passage cited in paragraph 43 above by saying:

"24. The second point is that I have criticised the claimants for overstating their case on the basis that they were extremely disappointed having succeeded against SITA to find that they had not stopped the noise. In my judgment while they have overstated the noise and effect of the barrier – or at least the lack of effect of the barrier – it is not sufficient for me to say that this is a claim that is so exaggerated that that should be reflected in costs. They wanted to stop the nuisance and they have succeeded in doing that in obtaining the [undertakings]."

I see no grounds for disturbing this assessment by the judge who saw and heard all the witnesses. The judge was plainly alive to the possibility of awarding the claimants only a proportion of their costs.

50. The defendants, however, also complain that they are obliged to bear all the costs arising from some of the claimants' expert's evidence of which the judge was very critical. This was not a point that they took in their submissions before the judge, except in the context of a written submission in support of a contention (no longer pursued) that they had in essence been the winners and the claimants should pay 75% of their costs. We do not know what ruling the judge would have made if the point had been a discrete topic of argument before him, but it was not. We do not have any transcript of the evidence given at the trial, and although there are indications in the judgment which might have led the judge to make an order limiting the claimants' recoverable costs in some way, he was not invited to do so, and I do not consider that we have the material before us which would enable us to interfere.
51. For these reasons I would dismiss the defendants' appeal. Since appeal and cross-appeal have both been dismissed, it would appear appropriate for the costs of the appeals to lie where they fall, but the court will be ready to receive written submissions from either party should they be contending for a different order. The stay on the enforcement of the interim costs order should be lifted forthwith.

Lord Justice Tomlinson:

52. I agree.

Lord Justice Ward:

53. I also agree.