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In this post, Sarah Coates-Madden, Senior Associate at CMS, and Fiona Dalling, Associate at CMS, preview the decision awaited from the Supreme Court in Davies v Bridgend County Borough Council.

Introduction

9 August 1850 saw the arrival at Kew Gardens of a set of 40 new plants from Leiden, Germany. Among them, a discovery from a recent trip to Japan. Named Polygonum sieboldii (the discoverer, Herr Siebold, apparently not shy of self-promotion), this is the first record available of the appearance of Japanese knotweed in Britain.

A commercial success, knotweed was exalted by vendors for its good looks and strength. It wasn’t then, as it is now, a shrub, the mere suggestion of which conjures images of green shoots bursting through ceilings and property values plummeting through floors.

A RICS paper, published in 2012, is generally associated with a peak in knotweed hysteria. Although the institution has since diluted its original findings, reassuring the public that knotweed is not the “bogey plant” it was once thought to be, it is nonetheless an organism of formidable resilience and propagational power (even a lava flow would not successfully exterminate its rhizomes!).

Without narrating the history and management regime required for knotweed (for which, do see this excellent longread: The war on Japanese knotweed | Invasive species | The Guardian) the issue of knotweed, and its absolute resistance to conventional methods of weed-management, is a serious problem for affected property owners.

The case

Mr Marc Davies is the respondent to the Supreme Court appeal. Bridgend County Borough Council (the “Council”) is the appellant in the Supreme Court.  Mr Davies originally brought a claim against the Council  in nuisance, as knotweed on the Council’s land had encroached on his land.

First Instance and First Appeal

The timeline is important for the appeal currently before the Supreme Court. Mr Davies bought his property in 2004. Sometime prior to that, the knotweed had encroached from the Council’s land.  Underground rhizomes were present on Mr Davies’ land before 2004.

It was not until 2017 that he became aware that the knotweed might be a problem. A letter of claim was not sent until 2019.

At first instance, District Judge Fouracre decided that the date of the Council’s knowledge of the foreseeable risk of harm was 2012.  The date of knowledge was linked to the 2012 RICS information paper mentioned above.   DJ Fouracre decided that from 2013 the Council should have treated the knotweed, and that therefore the Council’s breach of duty was from 2013 to 2018, at which point they started to treat the knotweed effectively.

The Council contended that as the knotweed was already present on Mr Davies’ land (from at least 2004), any damage arose before the breach of duty, and therefore the fact the property is affected by knotweed is not due to any breach by the Council, and the claim must be fatally flawed on causation. The District Judge rejected this argument and decided it was answered by the fact that there was a continuing nuisance and breach of duty as a result of persisting encroachment. While the initial encroachment was historic, any loss suffered by Mr Davies in principle continues and will accrue by the continuation of the breach in the Council’s failing to treat the knotweed.

District Judge Fouracre went on to consider the damages arising from the breach of duty.  The judge dismissed Mr Davies’ claim for general damages for distress and inconvenience. His evidence that he was immensely distressed by the presence of the knotweed on his land was not accepted. Mr Davies had delayed in finding out who owned the neighbouring land and contacting the Council after it came to his attention that the knotweed might be problematic. 

Most elements of his claim for diminution in the value of his property also failed. The cost of treatment was not recoverable.  The Council successfully argued that this cost would always have been necessary, even before their delay in treating the knotweed, because it had spread before the Council’s breach. Mr Davies dropped his claim for disturbance and inconvenience arising from the knotweed treatment because by the time the joint expert inspected his land there was no knotweed to see, and for the same reason that the treatment would have been required regardless of the Council’s breach. Claims for the cost of neighbour cooperation and temporary loss of land were also irrecoverable.

The only element of loss remaining was what was referred to as residual diminution in value.  That is, an enduring stigma or ‘blight’ affecting the land due to its association with Japanese knotweed. The reduction in value can be around 3-7% of the value of the land, for several years after the knotweed has been treated. 

District Judge Fouracre had to consider a key principle of damages in the tort of nuisance, namely that pure economic loss is not recoverable.  The purpose of nuisance is to protect the owner or occupier of the land in their use or enjoyment of that land. The judge found that the residual diminution was pure economic loss, so was irrecoverable.

HHJ Beard upheld that decision at the first appeal.  This meant that there was no remedy for landowners whose property valuation was affected by encroaching knotweed. This modest value case has attracted considerable attention because of the implications for both landowners and local authorities.

Mr Davies pursued a second appeal to the Court of Appeal on this pure economic loss point.

Court of Appeal

The Court of Appeal was tasked with considering the point of recoverability of diminution of value, as well as two discrete points of appeal by the Council, to which we will return below.

The Council contended that Diminution of Value amounted to Pure Economic Loss, which is irrecoverable under the tort of nuisance. Their position had, as its foundation, the case of Williams v Network Rail [2018] EWCA Civ 1514, [2019] QB 601. In his lead judgment, Birss LJ spent considerable time examining this judgment – the correctness of which was not called into question – and determining its correct construction.

While the Council had proposed that economic loss was not recoverable on the basis that “the purpose of the tort of nuisance is not to protect the value of property as an investment or financial asset”, the Court of Appeal disagreed that Williams was authority for such a position.

It was not the case that the diminution of value in Mr Davies’ case was Pure Economic Loss, unrelated to actual damage and therefore too removed from the tort of nuisance to be considered recoverable. The diminution of value attributable to the encouragement of knotweed – which no party contended to be trivial or de minimis – was economic loss stemming from actual damage. As such, it was a recoverable damage and the appeal was allowed.

The Council’s two additional points were as follows: (i) The causation point which had been raised by the Council but lost in previous hearings; and (ii) a submission as to the quality of Mr Davies’ evidence of diminution of value.

The Court of Appeal dismissed each of these grounds. The Council is taking the first point on causation, to the Supreme Court.

Supreme Court

The question for the Supreme Court is: were the lower courts correct to decide that loss suffered by Mr Davies, in the form of diminution in value of his property as a result of the encroachment of Japanese knotweed from the Council’s land, was caused by the Council’s breach of duty in failing to treat the knotweed, in circumstances where the encroachment first arose before the Council’s breach?

The Court of Appeal judge noted the “attractive simplicity” of the Council’s argument (that the diminution of value cannot be attributed to a breach by the Council as the relevant encroachment occurred prior to Mr Davies’ ownership of the property). However, finding Delaware Mansions [2001] UKHL 55 to be instructive, he held that “the fact the encroachment was historic was no answer when there was a continuing breach of duty as a result of persistent encroachment”. We shall see if the Supreme Court concurs.