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

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/04/2012

Mr Justice Ramsey :

Introduction

1. In this judgment I deal with the claim by the Schedule A Claimants ("the Claimants") for interest on the general damages which I awarded for nuisance in the Second Judgment, [2011] EWHC 3253 (TCC). There is a disagreement between the parties about the basis on which interest should be awarded on an award of general damages for nuisance

Submissions

2. The Claimants claim interest under section 35A of the Senior Courts Act 1981. They point out that the award of general damages was based on a percentage of the monthly rental values for each property and was assessed as a sum by way of damages for each year. They say that where, for instance, Mr Taylor was awarded damages for the period 1999 to 2007, he has been deprived of the money awarded as damages in respect of the year 1999 for 12 years and therefore they submit that it would be just to award him interest on that sum. They submit that such interest should be awarded at the full special account rate from the end of each calendar year during which the nuisance was suffered until payment.
3. Thames Water, on the other hand, submit that the Claimants' approach to interest on general damages is contrary to authority. They say that the general damages awarded to the Claimants are damages in respect of non- pecuniary loss. Those damages, they say, were awarded for interference with the enjoyment and amenity of land, as stated by Lord Hoffman in Hunter v Canary Wharf Limited [1997] AC 655 at 706C. Thames Water submit that the damages are for the damage which is presumed to flow from the nuisance and is therefore to be contrasted with special damages. They submit that the loss compensated by general damages is not an actual monetary loss but is loss for the interference with the amenity value of the land caused by nuisance which is non-pecuniary damage, notwithstanding that it is assessed by reference to a pecuniary proxy in the form of diminution in the letting value over the relevant period.
4. Thames Water submit that, as a result, the quantum of general damages was assessed as at the date of the judgment and they rely on a passage in the speech of Lord Diplock in Wright v British Railways Board [1983] 2 AC 773 at 782 C. They say that the award of general damages in this case reflected the value of money at the date of judgment and not at any earlier point in time. They say that the awards were intended to and did reflect the compensation payable to the claimants in respect of the nuisance for the whole period of their claims. If, they say, the Claimants considered that the assessment of general damages was too low because the damages did not reflect the value of money at the date of judgment then the claimants' remedy would be to appeal that assessment and not to claim interest.
5. Thames Water rely on the practice laid down by the Court of Appeal in Jefford v Gee [1970] 2 QB 130 in relation to awarding interest on general damages for non pecuniary loss in personal damages cases. In that case the Court of Appeal held that interest ran from the date of service of proceedings to the date of judgment and was not awarded as compensation for the damage done but was awarded to a Claimant for being kept out of the money which ought to have been paid to him: see Jefford v Gee at 146A. They say that, as confirmed by the House of Lords in Wright v British Railways Board, the rate of interest on general damages for non- economic loss should be 2% per annum between service of proceedings and the date of judgment.
6. In reply, the Claimants refer to a passage in the speech of Lord Diplock in Wright v British Railways Board at 777 B-D in which he dealt with the predictability of damages for personal injuries and said this:

The principal characteristics of actions for personal injuries that militate against predictability as to the sum recoverable are, first, that the English legal system requires that any judgment for tort damages, not being continuing tort, shall be for one lump sum to compensate for all loss sustained by the plaintiff in consequence of the defendant's tortious act whether such loss be economic or non-economic, and whether it has been sustained during the period prior to the judgment or is expected to be sustained thereafter. The second characteristic is that non-economic loss constitutes a major item in the damages. Such loss is not susceptible of measurement in money. Any figure at which the assessor of damages arrives cannot be other than artificial and, if the aim is that justice meted out to all litigants should be even-handed instead of depending on idiosyncrasies of the assessor, whether jury or judge, the figure must be basically a conventional figure derived from experience and from awards in comparable cases.

Decision

7. The statutory basis for the claim for interest is section 35A of the Senior Courts Act 1981 which provides as follows:

(1) Subject to rules of court, in proceedings (whenever instituted) before the High Court for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the court thinks fit or as rules of court may provide, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and—

(a) in the case of any sum paid before judgment, the date of the payment; and

(b) in the case of the sum for which judgment is given, the date of the judgment.

8. On the face of that provision the court has a general discretion as to whether to award interest, as well as a discretion as to the rate of interest, whether interest applies to all or part of the debt and damages in respect of which judgment is given and whether interest is given, on the facts of this case, for all or part of the period between the date when the cause of action arose and the date of the judgment.
9. In the case of damages for personal injury or death the way in which the discretion is to be exercised has been considered in a number of cases, including Jefford v Gee, which are conveniently set out in the White Book 2012 at paragraph 7-022. In the absence of special circumstances the court has to follow binding authority as to the principles upon which the statutory discretion to award interest should be exercised: see Fletcher v A. Train and Sons Limited [2008] EWCA Civ 413.
10. In my judgment, the case of general damages for personal injury or death raises issues which are different and not relevant to an award of general damages for nuisance. There is no authority as to the principles upon which the statutory discretion to award interest should be exercised in the case of an award of damages for nuisance. In addition, the principles on which interest on damages for personal injury is awarded has been the subject to criticism: see McGregor on Damages (18th Edition) at paras 15-095 and 15-096 and the White Book 2012 at paragraph 7.04. In such circumstances, I consider that the Court should be reluctant to follow those principles when considering its discretion to award statutory interest for other tort damages.
11. The measure of damages for a transitory nuisance was considered in the House of Lords in Hunter v Canary Wharf Limited in which Lord Hoffman said this at 706 C-H.

I cannot therefore agree with Stephenson L.J. in Bone v. Seale [1975] 1 W.L.R. 797, 803-804 when he said that damages in an action for nuisance caused by smells from a pig farm should be fixed by analogy with damages for loss of amenity in an action for personal injury. In that case it was said that "efforts to prove diminution in the value of the property as a result of this persistent smell over the years failed." I take this to mean that it had not been shown that the property would sell for less. But diminution in capital value is not the only measure of loss. It seems to me that the value of the right to occupy a house which smells of pigs must be less than the value of the occupation of an equivalent house which does not. In the case of a transitory nuisance, the capital value of the property will seldom be reduced. But the owner or occupier is entitled to compensation for the diminution in the amenity value of the property during the period for which the nuisance persisted. To some extent this involves placing a value upon intangibles. But estates agents do this all the time. The law of damages is sufficiently flexible to be able to do justice in such a case: compare Ruxley Electronics and Construction Ltd v. Forsyth [1996] AC 344.

There may of course be cases in which, in addition to damages for injury to his land, the owner or occupier is able to recover damages for consequential loss. He will, for example, be entitled to loss of profits which are the result of inability to use the land for the purposes of his business. Or if the land is flooded, he may also be able to recover damages for chattels or livestock lost as a result. But inconvenience, annoyance or even illness suffered by persons on land as a result of smells or dust are not damage consequential upon the injury to the land. It is rather the other way about: the injury to the amenity of the land consists in the fact that the persons upon it are liable to suffer inconvenience, annoyance or illness.

It follows that damages for nuisance recoverable by the possessor or occupier may be affected by the size, commodiousness and value of his property but cannot be increased merely because more people are in occupation and therefore suffer greater collective discomfort

12. The Court of Appeal in Dobson v Thames Water Utilities Limited [2009] EWCA Civ 28 gave further consideration to the way in which damages for nuisance were to be assessed in this case. At [33] Waller LJ said this about the principle which I have subsequently applied in this case:

If the house in question was available to be let during the period of the nuisance, it may be that there would be direct market evidence of loss of rental value. Otherwise, it is perhaps inevitable that the assessment of damages for loss of amenity will involve a considerable degree of imprecision. But if estate agents are to assist in placing a value on the relevant intangibles, whether by calculating the reduction in letting value of the property for the period of the nuisance or in some other way, we would expect them in practice to take into account, for the purposes of their assessment, the actual experience of the persons in occupation of the property during the relevant period. It is difficult if not impossible to see any other way of proceeding. As Lord Hoffman observed, the measure of damages for loss of amenity will be affected by the size and commodiousness of the property. If the nature of the property is that of a family home and the property is occupied in practice by a family of the size for which it is suited, the experience of the members of that family is likely to be the best evidence available of how amenity has been affected in practical terms, upon which the financial assessment of diminution of amenity value must depend.

13. In McGregor on Damages (18th Edition), Chapter 15 deals with the award of interest on damages for torts affecting land at paras 15-026 (interest as damages) and 15-049 (statutory interest on damages). Those paragraphs, however, deal with cases of damages for the wrongful occupation of land or wrongful use of land rather than claims of the type considered in Hunter v Canary Wharf or in this case of damages for nuisance.
14. Having said that, damages for wrongful occupation or use of land are generally assessed by reference to the reasonable rental values of the occupation or user. In Whitwham v Westminster Brymbo Co [1896] 1 Ch 894 Chitty J refused interest on damages for trespass which were calculated by reference to a reasonable rent per ton in a case where colliery spoil had been placed on land. He said this at 899:

"...in regard to interest claimed, I think that all interest ought to be excluded from the computation of damage. To give interest would be to treat the plaintiffs as having invested their damages at interest in the hands of the defendants."

15. Although the decision in British Coal Corporation v Gwent County Council (1996) 71 P&CR 482 is cited in McGregor as showing that no statutory interest was awarded on damages for damage to land, that case concerned a claim in the Lands Tribunal under the Coal Industry Act 1975 and the Court of Appeal held that there was no statutory power for that Tribunal to award interest. In his judgment Glidewell LJ at 493 suggested that the Tribunal should be given a statutory power to award interest and it seems that, if there had been such a power, interest would have been allowed.
16. In the Second Supplement to McGregor on Damages (18th Edition), reference is now made at paragraph 34-020A to the decision in the Court of Appeal in this case and the principles on which damages for nuisance are to be assessed. This shows that the basis of assessment of damages is different to the basis of assessment of damages for wrongful occupation or user or damage to land. In those circumstances I do not consider that the references to statutory interest in relation to torts affecting land at para 15-049 can be taken as applicable to the assessment of damages for nuisance as considered in this case by the Court of Appeal and as awarded in the second judgment. In any event, as stated in para 15-049, an award of statutory interest may, in some circumstances be needed, and the decision in British Coal v Gwent cited in para 15-026 supports an award of statutory interest.
17. The question of whether to award interest is a matter for the court's discretion and I do not consider that there is anything in the cases I have cited that limits the exercise of that discretion. The approach which I took to the assessment of damages was to assess damages to which each of the Schedule A Claimants were entitled for a particular year. In some years they suffered more nuisance because of odour than in other years. The total sum I awarded by way of general damages was therefore made up of a number of sums awarded each year. That reflected the relevant sum to be awarded by way of damages in respect of each year. Taking that approach to the assessment of damages means that for each year there is an ascertainable amount of damages to which a claimant was entitled in each year for the nuisance caused by Thames Water. In this context I consider that the governing principle was that set out by Lord Herschell LC in London, Chatham and Dover Railway Company v South Eastern Railway Company [1893] AC 429 at 437. Any award of interest is not being awarded as compensation for the damage done but as compensation for the particular Claimant being kept out of the money which ought to have been paid to them. That governing principle, in my judgement is unaffected by the decision of the House of Lords in Sempra Metals Limited v Inland Revenue Commissioners [2008] 1 AC 561.
18. In those circumstances, I consider that this is a case where I should exercise my discretion and award interest under section 35A of the Senior Courts Act 1981 on each annual sum awarded as damages. That damage should be calculated to run from the mid-point of the year (or part year) until the date of judgment.
19. The Claimants seek interest at the special account rate which the parties have agreed as the basis for the payment of interest on special damages. Thames Water, on the other hand, relies on the rate of 2% which is applied in personal injury cases for general damages for pain and suffering and loss of amenity. In my judgment there is no basis for applying the rate used in the context of damages for personal injury. The special account rate which varies from time to time reflects the fact that a party has been kept out of the money for a particular period. Whilst it is not generally used as a rate of interest applied to debt and damages outside personal injury claims, the rate has reflected a margin of some 0% to 2.75% above the Bank of England Base Rate over the relevant period. On that basis I do not consider that it would either under-compensate or over-compensate the Claimants and therefore I adopt it as the appropriate rate.

Summary

20. Accordingly, the Schedule A Claimants are entitled to interest under Section 35A of the Senior Courts Act 1981 on the general damages awarded for nuisance for each year from the mid-point of that year or part year up to the date of judgment, at the special account rate.
21. On that basis I would ask the parties to provide an agreed calculation for that interest.