England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT

		Case number 4 BM 50071 BIRMINGHAM CIVIL JUSTICE CENTRE 33 BULL STREET BIRMINGHAM B4 6DS
		15 December 2005

 

1. The claimants claim is for damages to compensate them for the past and future loss of sales of Christmas trees from their land at Rowington caused by flooding from a canal running through their land. The defendant has admitted liability for the flooding and accepts that this damaged trees. This trial concerned quantum only.
2. The claimants are brothers, in partnership, who have built up and operate in Warwickshire a substantial and successful business selling Christmas trees. They began this business in the early 1970s at their Woods Farm site. They began on a small scale and have now grown to the extent that theirs is the largest single-site private retail Christmas tree business in the country.
3. The claimants now grow broad leaf and Christmas trees (and other plants) at a number of locations: Woods Farm (which comprises 42 acres, and includes the retail outlet) Haslucks Green Road (a total of 21 acres) High Chimneys Farm at Rowington (160 acres in total, of which 128.5 acres are planted with trees) Stone (12 acres) and Whitlocks End (90 acres). The claimants grow different varieties of conifer, but principally Norway Spruce, the trees the subject of this claim.

Background

4. A canal, for which the defendant has responsibility, runs across the Rowington land. The canal leaked persistently from about 1997 until March 2005. The leaks caused plantations 18 and 19 to become waterlogged. The roots of the Norway Spruce growing in those plantations were affected, and a substantial number of trees died or were damaged beyond use.
5. The claimants made numerous complaints to the defendant. Initially the defendant denied liability. The claimants called in experts to try to identify the cause of the damage to the trees. Mr Colin Palmer, an arboriculturalist, concluded that the cause of the damage was root death due to water logging of the ground. Eventually, and very shortly before trial on liability, the defendant conceded liability.
6. I have heard evidence from the two claimants and from Mr Ingram, the jointly-instructed expert. I have read witness statements prepared by Mr Bede Howell, (a chartered forester and former President of the Royal Forestry Society) and by Mr Roger Hay (Secretary of the British Christmas Tree Growers' Association). The defendant called no evidence.
7. Mr Ingram was instructed as single jointly-instructed expert in early 2005. He reported on 7 April 2005. Mr Stockill for the defendant prepared questions to Mr Ingram. Mr Ingram reinspected the claimants' land on 27 April 2005 then replied to those questions by letter dated 20 May 2005. Mr Ingram gave evidence at trial. I did not find his evidence to tend to "be helpful to the claimants" as the defendant suggests. Mr Ingram considered the points which Mr Stockill (Counsel for the defendant) made and dealt with these in detail and carefully. Mr Stockill submits that the court should be slow to rely on his evidence particularly with regard to his opinion as to the value of Christmas trees, because Mr Ingram is himself a grower. I bear in mind that Mr Ingram is a player in the market, and indeed to a degree a competitor of the claimants. However, nothing in the way he gave his evidence or in his evidence itself suggested to me that I should have concerns about his evidence. I found him to be objective and helpful to the court and I have confidence in his evidence.
8. The trees the subject of this claim were Norway Spruce, growing on plantations 18 and 19 at Rowington. In June 1994 the claimants purchased the land at Rowington in order to grow trees on part of it. The land had previously been used for arable and grass. Pursuant to a contract with the Forestry Commission and under the Woodland Grant Scheme (WGS), the claimants planted Rowington with Norway Spruce and broad-leaf trees between 1994 and 1997. The land was good for growing trees. It is not disputed that plantations 18 and 19 (which were affected by the flooding) were the best land at Rowington for Christmas trees. The claimants' case is that, but for the flooding, the Norway Spruce planted on 18 and 19 would have thrived, and been progressively thinned from about 7 years' growth i.e. from 2001 onwards. The thinnings would have been sold as first grade Christmas trees at their retail outlet at Woods Farm at their standard prices. A number of Norway Spruce trees would have been allowed to grow taller and larger, and harvested later to provide large Christmas trees.
9. It was agreed shortly before trial and is now common ground that 13,500 trees were lost as a result of the flooding. The claimants' case is that they would have sold the 13,500 lost trees over a 20-year period. Of these, about two-thirds would have been sold during the period 2001 to 2004. The remainder (which we have referred to as the residual trees) would have been left to mature and sold to the big tree market over the years up to 2024. The claimants say that they had to over thin several plots of trees at Rowington and Woods Farm in order to make up the shortfall in sales in 2001/2004 caused by lack of trees due to the flooding at Rowington. As a result of the over thinning, they will not have the residual trees to sell in the big tree market.
10. The claimants' calculation of their losses has changed during the course of these proceedings. In their initial statement of case (based on 13,523 lost trees) they claimed £162,276 (being the gross figure for lost sales based on £12 per tree) plus additional costs of some £8,000. The claimants amended their schedule of damages, putting their loss at £176,403 plus interest, in respect of the period up to December 2004, plus £364,329 future losses in respect of the residual trees, a total of at £540,732 gross. They accept that the figure for future loss must be subject to some discount for accelerated receipt and that they should give credit for some costs eg of husbandry and cutting.
11. The defendant's case is that the claimants have suffered no loss to date and will suffer no future loss. They contend that there are significantly more than sufficient trees on the claimants' land to satisfy any conceivable demand for Christmas trees.
12. Mr Ingram calculated the claimants' total loss as £269,837.57, of which £174,987.07 represented loss up to 2004 and £116,849.50 was in respect of future loss. His figures are net of harvesting and husbandry costs. Mr Ingram worked on an estimated 13,486 lost trees of which he estimated 1,692 represented residual trees. From the figure of 1,692 lost residual trees he deducts 10% for wastage, which gives a total of 1,522 lost residual trees. In other words, of the total of 13,486 Norway Spruce killed in the affected area, 11,794 would have been available for sale and 1,692 would have been left to grow to maturity. The agreed figure of 13,500 lost trees is sufficiently close to that which formed the basis of Mr Ingram's work to enable the court to find Mr Ingram's figures helpful
13. Mr Stockill submits that the claimants' future losses, if the court considers that an award for future losses is appropriate, such loss amounts to no more that £35,000, taking into account a 5% discount for accelerated payment and a 50% discount for future uncertainties.

Woodland Grant Scheme

14. The claimants grow some of their trees at Stone and Rowington pursuant to the Woodland Grant Scheme (WGS). This is a tax-exempt initiative to encourage the establishment of woodlands. Growers are encouraged to grow hardwoods interplanted with Christmas trees. The latter are beneficial to the hardwoods, encouraging these to grow straight. So far as Rowington is concerned the claimants entered into a contract with the Forestry Commissioners on 3 October 1994. The contract was expressed to run for a period of ten years. Pursuant to this they planted a mixture of broad leaf and conifers at Rowington between 1994 and 1997. The planting was subject to monitoring by the Forestry Commission who did indeed oversee the woodland in the early years and inspected the land annually. They made their final inspection in 2004 and paid the final tranche of the grant. They have made no complaint about the claimants' use of the land.
15. It was a term of the contract that all Norway Spruce trees be removed after ten years. The claimants have not done this. However, the wording of the Forestry Commission contract is loose and the unchallenged evidence of Mr Howell is that it is not the practice of the Commissioners to enforce such a term. In practice, the claimants are likely to be permitted to continue thinning Christmas trees, without restriction of time beyond the ten-year period of the contract, provided they do not compromise or damage the hardwoods. A licence to fell is required for larger trees. In practice, such a licence is readily granted. The consequence is that the claimants may leave Christmas trees to grow to up to 50' if they choose to do so. I am satisfied that it is unlikely that the Forestry Commission will seek to require removal of Christmas trees at an earlier stage. Even if the term were enforced, the claimants would probably be permitted about five years (i.e. growth years 11-14) to remove Norway Spruce. But the only sanction for failure to do so would be repayment of the grant plus interest - in this case, only £2,270 plus interest, a sum which is immaterial in the context of this case. There is thus no real concern that there might be a flood of trees on to the market in year 10. It is clear to me that the WGS and the Forestry Commission contract have no material effect on the quantification of loss.

Record keeping

16. The defendant is critical of the claimants' lack of records. There is, however, a reason for this. The tax regime is such that the claimants are not required to account for the proceeds of sales of trees sold pursuant to the provisions of the WGS. The claimants grow trees pursuant to WGS at their Stone and Rowington sites. Their partnership accounts do not cover Stone or Rowington. None of the income or expenditure relating to the growing and sales of trees at these sites is recorded in the partnership accounts. The only reference in those accounts to sales of trees from these two sites is the entry for the injection of cash found in the balance sheet. Most of the claimants' income from sales of trees currently comes from sales from Rowington. It is all in cash, as the claimants do not accept debit or credit cards. Members of the claimants' families help with sales of Christmas trees from their retail outlet at Woods Farm. The evidence, which I accept, was that cash received for trees subject to the WGS tax regime was kept separately from cash received on sales of trees which fell outside the scheme and in respect of which, therefore, the claimants had an obligation to account.
17. The claimants do not keep records of the cash they receive from sales under the WGS umbrella. There is nothing sinister in this. As the sales are made under the WGS umbrella, it is not necessary to account for these sales. The claimants do keep records of the cash they receive for the sale of trees which have not been grown pursuant to WGS as they must account for those sales. The claimants' accounts deal only with those parts of the business in respect of which they must account to the tax authorities. They contend that they sell between 29,000 and 31,000 trees each year, of which they must account to tax for between 10,000 and 12,000 trees. Their accounts record those latter sales.
18. The partnership accounts to 5 April 2004 show partners' capital accounts standing at over £1 million, assets of over £2 million and no significant debt save for the long-term bank loan to finance the purchase of land. The size of the claimants' capital accounts gives some indication of the volume of tax exempt sales of trees.
19. Prior to trial the defendant sought, but was refused, permission to rely on the opinion of a forensic accountant. At trial, the claimants were questioned about the way in which they operated their finances. However, I accept that, as there is no requirement to account for sales of trees under the WGS, no VAT or income tax returns are required for such sales. The cash generated by the sales of trees is used by the claimants from time to time to finance various aspects of their business interests. The cash is not included in the partnership accounts. Records are not available which would assist the defendant with the enquiries it said it wished to make or on which a forensic accountant could have expressed opinions. Equally, records do not exist to help support the claimants' case. For the detailed reasons I gave at the time, I refused the defendant's application for permission to rely on the expert evidence of a chartered accountant. The defendant does not in terms suggest that the claimants are guilty of any reprehensible conduct in the way they deal with their financial affairs. Certainly I have heard nothing to suggest that any valid criticism can be made.

Methods of planting and thinning programme

20. The 13,500 trees which were destroyed were spread over plantations 18 and 19. They were the equivalent of every tree on 2.2 acres. The claimants' practice is similar to that of other growers of trees. They clear the land and prepare it. This involves substantial work. They plant broad leaves interspersed with conifers. Over time, trees are removed as they begin to compete with each other. Conifers are thinned to a greater extent than the broad leaved trees. The claimants' approach is to thin the crop systematically, until they are left with a number of 40'-50' trees, which can be sold at prices of £600 or more (as at today's prices). The claimants' practice at Rowington was to thin the conifers progressively from about 7 years' growth onwards and to sell these as Christmas trees. The second thinning takes place the following year and the third a year later. In all, about 75% of the total planted will have been thinned by that stage. Once a tree has grown to 8 feet, it has reached the peak of expenses in terms of cultivation. After that, the tree is left to grow and the cost of cultivation is reduced. The defendant does not challenge the thinning programme to which the claimants worked.
21. The defendant raises questions as to the density of the planting of Norway Spruce trees at Rowington. They doubt that trees grown at significant density would have been saleable after about five years' growth. Mr Geoffrey Gilbert said that the density was about 2.67' x 2.67'. He had seen trees grown at 2'.6" x 2'6" which had been satisfactory. He referred to the shearing work which would be undertaken to produce saleable trees grown at the density adopted at Rowington. He explained that there was a market for narrow trees: not all trees needed to be fat and bushy. Mr Ingram at trial expressed the opinion that the planting had been at a density of 2' x 3', which he said was very tight spacing. He said that, if the planting had been allowed to proceed another one or two years, trees would have suffered as a result of overcrowding.
22. Mr Stockill calculated density figures by reference to figures contained in Mr Ingram's report concerning areas and numbers of trees planted, and on the basis of Mr Stockill's own observations when he visited the claimants' land.
23. I am not persuaded that the density of the planting at Rowington has a material effect in this case. As Mr Ingram explained, what was essential was to thin progressively as trees grew to a height of 5'. That is what the claimants were doing. He accepted that some taller trees would be narrow. Mr Ingram was challenged by Mr Stockill on the conclusions he drew in his report as to losses, given the tight density at Rowington and the extent of progressive thinning which Mr Stockill submitted would be needed. It seemed to me that Mr Ingram considered Mr Stockill's propositions carefully but declined to change his position. Mr Stockill criticises him for not having changed his opinion. I do not share that criticism. Broadly, Mr Ingram maintained his opinion that the destroyed trees on 18 and 19 were saleable. It seems to me a reasonable conclusion to reach.
24. Having calculated the number of lost residual trees at 1,692, Mr Ingram arrived at a figure of 11,794 lost trees which would have been sold as thinnings prior to 2004. He set out his finding in a table giving a breakdown of the estimated number of trees of sizes varying from under 5 feet to over 13 feet. From the 11,794, Mr Ingram deducted 10% wastage, to arrive at a total of 10,615 trees available for sale. Of these he calculated that 5,307 would have been sold in 2002, 3,184 in 2003 and 2,123 in 2004. He calculated the gross value of those sales, deducted £3 per tree for harvesting cost for each of those years plus 10pence, 20 pence and 30 pence per tree, for each of 2002, 2003 and 2004, respectively, in respect of husbandry. He arrived at a net total of £64,922.30 for 2002, £48,696.67 for 2003 and £39,368 for 2004, a total of £152,986.97. He estimated losses for 2005 at a net sum of £42,131.80, giving a total of £195,118.87 for lost sales of thinnings.
25. Mr Ingram explained in his answers to Mr Stockill's questions that the 10,615 trees would have been sufficient to supply 4,000 – 5,000 trees over the following 4 or 5 years. It is common practice amongst growers to cut back larger trees if these are in abundance in order to satisfy demand for smaller trees if those are in short supply.
26. The claimants accept that 10% wastage should be applied to the gross figures. As I explain below, I conclude that the number of lost residual trees is likely to be 2,328, rather than the 1,552 (net of wastage) set out in Mr Ingram's report. As a consequence of that adjustment, there is a reduction in the value of the claim for lost thinnings up to 2004. The total number of trees is reduced from 10,615 to 9,839 (both net of 10% wastage), with a corresponding reduction in Mr Ingram's figure for losses for the period to 2004 from £152,986 to £141,802.
27. I bear in mind that many of the relevant figures given in this case are approximate. It would have been a difficult and no doubt expensive task for Mr Ingram, or any other expert involved, to have made a precise count of trees. Numbers of lost trees have been calculated on an approximate basis. The number agreed between the parties, 13,500, is itself a yet further approximation. Mr Stockill's approach depends on more a more precise approach to the figures than is valid given that the basic data are imprecise.
28. Having heard all the evidence, in my judgment, on balance of probabilities, the 13,500 (gross ie about 12,150 net of wastage) lost trees were saleable whether as thinnings prior to 2004 and in the 2005 season or later as mature trees. There would have been about 9,839 Norway Spruce thinnings available for sale in the period up to December 2004 and December 2005 and 2,328 residual trees would have been available for sale as bigger trees. I therefore consider, first, whether the claimants were likely to have been able to sell 9,839 thinned trees between 2001 and 2004 and, secondly, whether it is likely that the claimants would have been able to grow the residual trees to maturity and sell these in the big tree market.

Sales prior to December 2004

29. There is a large market in the UK for real Christmas trees. On a national basis, on average about 25% of Christmas trees sold are Norway Spruce though it appears there are some local variations. The Norway Spruce variety is at the cheaper end of the market. Norway Spruce account for some 50%-60% of the claimants' Christmas tree sales. Prices of Christmas tree vary according to the variety and length. There is a demand, which of course varies in degree, for trees of many different sizes. So far as the domestic retail market is concerned, householders tend to buy smaller trees, in the range 6'-8'. The defendant does not challenge the claimants' prices. For example, a 6' tree realises £15, an 8' tree £20-£25 and taller trees, of 20' and more, can fetch £100 or more. The very tall trees command high prices. In December 2004, the market price for Norway Spruce was £3 per foot. The claimants' claim is based on that price. I accept that, in practice, they are able to change a higher price for some Norway Spruce.
30. The claimants have good entrepreneurial skills. They have built up a large market for trees and have established a reputation for selling good quality trees at reasonable prices. Their trees are fresh, having been cut shortly before sale. This results in better needle retention. Mr Ingram's evidence was that Norway Spruce is a very satisfactory variety, well liked and received by the public. It has a well-established niche at the lower end of the market and which it was likely to retain. Mr Ingram reported that the claimants' prices are at the lower end of the national spectrum. The claimants explain that one factor leading to their being able to charge low prices is that they do not need to charge VAT.
31. Mr Ingram explained that in plantations 11 and 12 (planted in 1998) there had been heavy over-thinning, which indicated to him a shortage of smaller Norway Spruce over the previous two or three seasons. As he comments, that indicates that there would have been demand to support sales of the lost trees.
32. The sales outlet at Woods Farm is a large operation. There is a very big undercover area and extensive parking. The parking area has been extended on at least two occasions to accommodate increasing numbers of purchasers. The outlet has clearly been developed in order to handle a large number of buyers. I watched a video recording illustrating the number of visitors to the outlet and the business under way there on a busy day in the run up to Christmas. That supported the evidence of the claimants and Mr Ingram as to the large and successful nature of the business
33. In 2002 the claimants ran a television advertising campaign, at a cost of £25,000, and say that this was followed by an increase in sales estimated at between 25% and 40%. They decided not to repeat the television advertising after the losses of trees at Rowington became apparent. Whilst it must be difficult to identify a direct correlation between a television advertising campaign and the level of sales achieved, it seems to me that the claimants' decision to spend a substantial sum on television advertising illustrated their confidence that they would be able to supply the anticipated demand. I accept their evidence that they can sell all the trees they produce and are actively looking for more land on which to grow trees. If they had trees available, it is likely that they would run another television advertising campaign.
34. The claimants' business was featured positively in an edition of the television programme, Gardeners' World. The claimants' trees performed well in a comparison of trees to test needle retention properties.
35. The claimants say that they sell some 18,000 trees a year. There is no documentary evidence to support that assertion. Mr Stockill has made submissions as to the numbers of trees sold based on the claimants' accounts. However, as I have explained, these do not assist in understanding what revenue was generated from sales of WGS trees. I found both claimants to be credible witnesses. On balance, I accept that their estimate of the number of trees sold is more accurate than Mr Stockill's assessment. The claimants' figures demonstrate that theirs is a large operation and that they are able to handle and sell very large numbers of trees.
36. Based on his calculations, Mr Stockill submits that the trees actually harvested from Rowington have been sufficient to satisfy demand to date. I reject that submission, which is based on incorrect assumptions as to the number of trees which the claimants sell. Mr Ingram rejected Mr Stockill's proposition that it would be impossible for the claimants to sell what Mr Stockill calculated would be 10,000 Norway Spruce trees each year. To the contrary, his analysis and experience indicated to him that there would hardly be sufficient saleable trees to supply the claimants' retail business over the next five years.
37. Mr Stockill submits that there was no need for the claimants to have over thinned. I reject those submissions. Mr Stockill builds his case on the incorrect assumption that the claimants could not have sold trees in the very large numbers they claim and that the hole created by the lost trees could have been "healed" as he puts it because trees were coming on stream from other parts of the claimants' land. If there is a market for the lost trees, and in my judgment there was, those trees have to be found somewhere. As the claimants pointed out, once a tree is lost, it cannot be easily replaced. The claimants were able to sell trees at the Woods Farm outlet and, understandably, wanted to do so. They needed trees for customers to buy. Those trees had to come from somewhere. It is understandable that the claimants preferred to have trees to sell rather than do without. I set out below my conclusions as to the claimants' decision to over thin their own land rather than buy in from outside.
38. The claimants are very optimistic about the future. They rely on customer loyalty, hence the perceived need to maintain their reputation for selling freshly-cut trees. They believe firmly that they are able to sell as many trees as they can produce. Mr Graham Gilbert said that they did not yet know what the limit on the market might be but he believed they had not yet reached it.
39. I accept that the claimants are entitled to take an optimistic view as to the future. Their optimism is shared by Mr Ingram, himself a Christmas tree grower. The claimants have demonstrated a current demand for large trees. It appears that such demand is likely to continue. The claimants are one of the few suppliers able to satisfy such demand. The claimants are shrewd and very successful business men. There is ample evidence of current strong demand for Christmas trees. The evidence suggests that that demand is likely to grow.
40. The defendant's case is that the claimants have not established that they could have sold all the trees on the Rowington land which were lost as a result of the flooding. In that context, Mr Stockill submits that the Rowington trees had no value, they were worthless assets. I reject that submission. The claimants have demonstrated on balance of probabilities that they could have sold large numbers of trees and I accept that they would probably have sold in 2001–2004 the majority of the lost 13,500 Norway Spruce. I accept, on balance of probabilities, that the claimants could have sold all these at the claimants' normal prices without difficulty, as thinnings, through the retail outlet at Woods Farm before the 2004 season. The claimants' net receipts from these sales (ie after deducting the costs of husbandry and harvesting which Mr Ingram referred to) would have amounted to £141,802 plus, say, $40,000 in revenue likely to have been generated from lost thinnings in 2005. The residual trees would have been grown to maturity and been subject to progressive cutting in later years. I accept that that practice was one which the claimants followed on other farms of theirs and it made commercial sense.

Decision to thin rather than buy in

41. The claimants' case is that, because they could not use thinnings from Rowington, as they had anticipated, for the 2001 – 2004 market, they were instead obliged to over-thin other areas including other plots at Rowington. Had the lost trees been available, there would have been no need for the claimants to over thin any of their land. The defendant criticises the claimants' decision to over thin in this way.
42. It is in my judgment understandable that, in order to meet demand, the claimants chose to cut their own trees rather than buy in trees from another grower. Their own trees would be much fresher (being cut only two days before sale) than bought-in trees, which would have been cut weeks before sale by the claimants. The claimants had built up a reputation for freshly-cut trees and consequent needle retention. That had been reinforced, as I have explained, by the Gardeners' World programme.
43. It would have been necessary to purchase large loads, of 1,000 - 1,500 trees, to be economic. That would not necessarily have fitted comfortably with the claimants' practice of cutting to meet demand. Had the claimants purchased the number of trees they required, that would have put them into a different category so far as VAT was concerned rendering them liable – ever more - to VAT at 17.5% rather than 4%. This would have had a significant impact on their business, and indeed would have increased the price of their trees.
44. A consequence of the decision to over thin their own trees rather than buy in from outside, or indeed go without the trees needed to meet demand, was that the claimants reduced the number of trees left growing and thus the number which would have been left to grow to the tall trees which are likely to attract a high sales price. The claimants were faced with a difficult decision. Given the factors to which I have referred, it was, in my judgment, reasonable for the claimants to have chosen to over thin their own trees rather than buy in from others or indeed do without the trees needed to supply the demand. That was a reasonable course for them to have followed.
45. The defendant's case is that the consequence of the claimants' actions, in choosing to over thin rather than buy in stock to sell, is that they have merely postponed the date on which they could expect to receive the benefit from sales of large trees. They have simply postponed by, say, 10 years the income stream. That, however, is flawed. Given that there is a market for the trees, once trees are lost from the claimants' land, they can be replaced only by buying in from outside. That, as I have explained was not an acceptable option. For the reasons I give below, it would not have been possible to replace lost trees by replanting.

Replant or interplant?

46. It is clear that it was not open to the claimants simply to clear all the affected land and replant from scratch, as this would have meant removing the broad leaves. Nor was it open to them to attempt to retrieve something by interplanting around the broad leaves on the affected land. Interplanting would interfere with the broad leaves. A requirement of WGS is that the conifers must not interfere with the broadleaves. Accordingly, neither clearance and replanting nor interplanting was an option. Mr Stockill indicated in closing that the question of replanting "is not particularly pressed."

Residual trees

47. I now turn to whether the claimants have demonstrated that they would have left the remaining Norway Spruce on the land to grow to maturity and whether there would have been a market for large trees. As I have explained, it is unlikely that the Forestry Commission would have raised any objection to the claimants retaining some trees to grow to maturity. The trees which remain are healthy. It is not challenged that plantations 18 and 19 were the best at Rowington. There was no evidence to suggest that the residual trees would not have remained healthy. There is nothing in the evidence to suggest that there is any problem with the health of the claimants' trees except in so far as some were killed or damaged by the defendant's flooding.
48. The claimants already have contracts to supply large Christmas trees i.e. 20' and over, to a number of local authorities and large organisations. Mr Graham Gilbert's evidence is that there are very few who can supply trees as big as 40'. A council such as Birmingham City Council requires trees of this size. Their practice is to place one order with a supplier for trees of all sizes. It follows that the council will place its order with a supplier which can supply not only trees up to 25' but also those of 40'-50'. Without the larger trees, the orders for smaller trees can often be lost.
49. Mr Ingram reports that there is a "considerable" market for Christmas trees in the UK. Some 90% of the larger tree market is supplied by Norway Spruce. In his report, he lists the likely number of buyers in England of display trees ie the larger trees. Potential buyers include county and district authorities, town, parish and community councils, hotels and guest houses, schools, churches, shops and businesses.
50. It is clear from the evidence that there is currently demand for large trees, between 35' and 50', mainly at Christmas but also at other times of the year.
51. Demand for Christmas trees is likely to grow dramatically from 2005, as a result of a European Commission decision to remove the grants payable to Christmas tree farmers in the EU. Christmas tree farmers in some member states enjoyed grants and subsidies, but as these schemes are being discontinued, some of those farmers are turning to other crops. Changes within the rules governing EC financial support are changing. Mr Ingram reports that it is expected that there will be a shortfall of some 4 million trees within Europe for the 2005 Christmas season.
52. As at December 2004, a 40'-50' tree could be sold for between £600 and £1,000. As at December 2004, the claimants sold 20' trees for £120, 30' trees for £340 and 40' trees for £600 or more. Trees of 50'–60' commanded higher prices again. The claimants estimate that the price of trees will increase at about £35 per annum. Mr Ingram gives prices for larger trees, charged by other suppliers which are in line with the claimants' figures. The defendant does not challenge the claimants' prices for big trees.
53. The claimants take a long-term approach to their business. Their long-term aim is to achieve a large number of large Christmas trees. Mr Graham Gilbert's evidence, which I accept, is that the position of the claimants' farms in the West Midlands is unique: there are no other suppliers of big trees for 100 miles. This gives the claimant an advantage in relation, for example, to transport costs which, for a big tree, can be very high.
54. Trees of 35'-50' foot are scarce, because of the length of time taken to grow to that height. The claimants have been prepared to wait for trees to grow. Woods Farm for example now comprises mainly plantations of trees of 20' and over, following systematic thinning of smaller trees for sale. The claimants have invested in the equipment necessary to fell and handle very large trees. The need for such equipment is one reason why there are few suppliers of large trees.
55. It is clear that the claimants have the financial strength to take a long-term view. I accept that, at material times, they planned to allow some Norway Spruce to grow tall and intended to sell these as tall Christmas trees, for which there is a market. The claimants have the financial strength and patience to take this course.
56. On his visit on 27 April Mr Ingram carried out a more detailed analysis of trees remaining in the unaffected areas and the quality of those trees than he had previously undertaken. In his replies to Mr Stockill's questions he dealt with this information and the consequences. He explained that he believed that he had achieved about 20% accuracy in assessing the numbers of residual trees. Mr Ingram also explained that assessing saleability of trees was subjective. He had tried to adopt the claimants' approach as regards acceptability of quality in a tree to be sold.
57. Mr Ingram estimates the losses relating to lost residual trees. To arrive at that figure, he looked at trees in four unaffected sample areas near plantations 18 and 19. On the basis of those sample plots, he calculated that 1,552 residual trees would have remained at Rowington to grow for the big tree market. Mr Ingram calculated the loss to be £116,849.50 net of harvesting and husbandry costs. The difference between the claimants' and Mr Ingram's figures arises not from price but from the number of residual trees. Mr Ingram based his estimate on his observation of trees standing in four apparently unaffected areas. In his report he stated that he considered that this was more realistic than the number produced by the claimants' theoretical thinning programme.
58. The defendant has also challenged Mr Ingram's calculations in an attempt to reduce the figure for losses in respect of future sales.
59. Mr Ingram had calculated the number of residual trees by reference to his observation of planting on four sample plots, A-D. However, these plots had, themselves, been over thinned as a consequence of the flood damage. It became apparent that Mr Ingram had not appreciated that when he made his calculation. At trial, he accepted that these sample plots had been over thinned and that there was probably room for a greater number of trees than he had estimated, and he agreed that his figure should be increased by some 50% on the figure he had arrived at on inspection of the sample plots.
60. It seems to me that Mr Ingram carried out his task diligently. I accept his adjusted estimate that, but for the flooding, there would have been about 2,328 residual trees (ie 1,552 x 1.5% = 2,328). It follows that the value of the residual trees, for the purposes of calculating future losses, is not Mr Ingram's initial sum of £116,849.50 but instead £175,274.25 .

The Law

61. There is no real dispute as to the law. Mr Tedd QC for the claimants submits that the court should decide what the claimants would actually have done but for the flooding and whether that course was reasonable. He also contends that the defendant is liable under the rule in Rylands v Fletcher and in nuisance. Mr Tedd draws to my attention the statement of principle in the speech of Lord Blackburn in Livingstone v Raywards Coal Co61 (1880) 5 App. Cas.25 at page 39: "the sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation."
62. Mr Stockill for the defendant submits that the proper basis for calculating any recoverable loss is the tortious compensatory basis: were it not for the inactions or actions of the defendant, in what position would the claimants find themselves: the court should award damages based on the difference. Here, causation has been specifically admitted by the defendant. The defendant also concedes that the loss claimed was reasonably foreseeable. Whilst the main loss claimed is economic loss the defendant concedes that it is not "pure" economic loss since the loss of business profits arises from the direct physical damage to the trees. The defendant does not contend that the court should be considering diminution in value of the land as the appropriate measure of loss. It accepts that the claimants are entitled to claim consequential losses, namely the loss of profits on trees which would otherwise have been sold, less costs of production and of harvesting.
63. The fundamental propose of damages is to put the claimants into they position they would have been in had the tort not occurred. I must, therefore, consider what is likely to have occurred if there had been no flooding. The burden of proof of course lies on the claimants. If the defendant is able to demonstrate that the claimants have acted unreasonably, then the claimants' loss is irrecoverable.
64. Mr Stockill submits that the claimants had not really considered mitigation of loss. I am not persuaded by that. In any event, as I have set out earlier, I make no criticism of the decisions the claimants took with regard to over thinning their own crop in order to meet the shortfall of trees at their retail outlet and in not purchasing from outside sources. I do not consider that they should have taken some alternative course of action to meet the shortfall, which resulted from the flooding. In any event, as Mr Tedd QC submits, on Mr Ingram's evidence, the mitigatory steps which the claimants took resulted in at least as great a loss as if no over thinning had been undertaken. It follows that they are entitled to recover their loss rather than the cost of the mitigatory steps. Their original loss remains recoverable.

Other losses

65. The claimants claim £3,500 as the extra cost of harvesting in 2002. That sum is contained in the claimants' amended schedule of damages. The claimants contend that they were obliged to employ manual labourers to harvest trees in fields adjoining the affected field as a result of the claimants' inability to use agricultural vehicles on waterlogged land. That evidence was given by Mr Graham Gilbert in his witness statement, as was his evidence that the claimants lost at least 380 trees due to their inability to access fields for harvesting. Mr Stockill submits that there is no evidence as to extra harvesting or clean up costs so none should be awarded. But that is not correct – this is covered by Mr Graham Gilbert's statement and the defendant did not challenge that evidence. I accept Mr Gilbert's evidence on those matters. The claimants are entitled to recover £3,500 plus interest.

Interest

66. The claimants are entitled to interest on the £141,802. Mr Martin of Counsel for the claimants has prepared a helpful schedule of interest calculations. It is based on Mr Ingram's total of £152,986. Given the late agreement as to the total number of lost trees, there is no breakdown of the total of £141,802 as between the years 2002, 2003 and 2004. I have undertaken a rough pro-rata exercise to calculate interest on £141,802, which results in the following:

2002 : £60,180.77 interest @ 8% for 3 years = £14,443.38

2003 : £45,135.58 interest @ 8% for 2 years = £7,221.69

2004 : £36,485.65 interest @ 8% for 1 year = £2,918.85

Interest on that basis totals £24,583.92. Whilst the calculation is taken to the end of 2005, and we have not quite arrived at that date, the starting point for calculation of interest is necessarily uncertain. In my judgment, it would not be unjust to the defendant to require it to pay interest in that sum.

67. Interest on £3,500 from 2002 to date amounts to £840.

Acceleration

68. It is common ground that the damages for future loss should be discounted to reflect accelerated payment. Mr Tedd QC suggests that the court should make reference to the table for consolidated compound interest set out in Butterworth's Personal Injury Damages Statistics when considering the discount to make for early receipt of capital. He adopts 3% as a conventional return rate and sets out in detail the consequence of applying that discount to future sales. Mr Stockill submits that a discount of 5% not 3% should be made for acceleration.
69. I prefer the approach adopted by Mr Tedd QC and as set out in the helpful schedule prepared by Mr Martin of Counsel. Mr Martin's calculation is based on the figure of £116,849.50 which results, according to Mr Martin's calculation based on Mr Tedd's approach, in a sum of £87,186. I have adopted a rough and ready approach, calculating a pro-rata discount from £175,274.25 as £130,772.11.

Discount for uncertainty?

70. Mr Stockill submits that, in addition to the discount for accelerated payment, there should be a further substantial discount for future uncertainties. This is to take into account matters such as natural causes and changes in the market. While the future may now look rosy for the sale of Christmas trees, the future is uncertain. Mr Stockill submits that the discount for future uncertainties should be 50%. I accept that some discount for future uncertainty is appropriate here, though that should be modest. The evidence suggests that the market will grow, so that is of little significance in this context. There must be a possibility that the trees might be affected by disease or other natural disaster. In my judgment, a discount of 10% is appropriate to allow for future uncertainties.

Conclusion

71. It is a startling proposition that, while the defendant destroyed some 13,500 trees, the claimants have nevertheless suffered no loss. For all the reasons I have given, in my judgment the claimants have proved on balance of probabilities that they have suffered loss as a result of the defendant's flooding of their land. The appropriate level of damages, to put them into the position in which they would have been but for the flooding is £323,941, calculated as follows:

Loss of thinnings: £141,802 plus interest of £24,554

Loss of thinnings for 2005, say £40,000

£3,500 for extra labour, plus interest of £840

Future losses: £113,245 (ie £175,274.25 discounted for accelerated payment and less 10% of £175,274.25 for future uncertainties)

72. I invite submissions on costs.