Severn Trent Water Ltd v Barnes

JurisdictionEngland & Wales
JudgeLord Justice Potter,Lord Justice Jonathan Parker,Sir Swinton Thomas
Judgment Date13 May 2004
Neutral Citation[2004] EWCA Civ 570
Date13 May 2004
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A2/2003/1119

[2004] EWCA Civ 570

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BIRMINGHAM DISTRICT REGISTRY

(HHJ D PERRETT QC)

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

Lord Justice Potter

Lord Justice Jonathan Parker and

Sir Swinton Thomas

Case No: A2/2003/1119

Between:
Severn Trent Water Limited
Appellant
and
Barnes
Respondent

Mr David Stockill (instructed by Solicitors for Severn Trent Water Ltd) for the appellant

Mr Nicholas Yell (instructed by Hargreaves Hadcroft) for the respondent

Lord Justice Potter

Introduction

1

This is the appeal of the defendant Severn Trent Water Ltd ("Severn Trent") which is a well-known water undertaker. It has statutory powers conferred upon it to lay and maintain water mains under s.159 of the Water Industry Act 1991 ("the 1991 Act") under which there are provisions for payment of compensation either by agreement or pursuant to Schedule 12 of the 1991 Act. The appeal is against the judgment of His Honour Judge Perrett QC sitting as a judge of the High Court in the Birmingham District Registry on 12 June 2002, whereby he awarded damages for trespass to the claimant ("Mr Barnes") a private individual and landowner against Severn Trent who, without the knowledge or permission of Mr Barnes, laid part of a water main under the corner of a 2.38 acre parcel of grazing land owned by Mr Barnes and let by him under an annual grazing tenancy to a Mr Gartside who farmed the surrounding land. The sum awarded by the judge by way of damages was £2170 with interest.

2

Thus, the sum awarded was not substantial. However, the issues are issues of principle in relation to claims of this kind and Severn Trent is concerned that the judge's decision, if uncorrected, may serve as a precedent in other cases.

The background facts

3

The relevant facts can be shortly stated. As part of its statutory functions under the 1991 Act it became necessary for Severn Trent to lay a new water main from Bamford to Buxton in Derbyshire. Severn Trent enjoyed powers to lay and maintain water mains under s.159 (1) of the 1991 Act which provides:

"(1) Subject to the following provisions of this section, to section 162(9) below and to the provisions of Chapter III of this Part, every relevant undertaker shall, for the purpose of carrying out its functions, have power –

(a) to lay a relevant pipe (whether above or below the surface) in any land which is not in, under or over a street and to keep that pipe there;

(b) to inspect, maintain, adjust, repair or alter any relevant pipe which is in any such land;

(c) to carry out any works requisite for, or incidental to, the purposes of any works falling within paragraph (a) or (b) above.

(2) …

(3) …

(4) The powers conferred by this section shall be exercisable only after reasonable notice of the proposed exercise of the power has been given to the owner and to the occupier of the land where the power is to be exercised."

4

In 1991 Severn Trent served statutory notices under s.159(4) to all landowners affected along the 28 kilometres of the new main with two exceptions, namely Mr Barnes and a Mrs Baldwin. Mr Barnes was not notified because Severn Trent was unaware of his land ownership. That was because Mr Barnes' land was part of a field which has no physical boundaries or other demarcation to distinguish it from the surrounding land and it was at all material times let on a grazing licence to Mr Gartside. Neither Mr Gartside, nor a Mr Oxley who was identified and notified as the owner as the whole of the parcel of land in which Mr Barnes' land was contained, informed Severn Trent that the parcel was in fact in divided ownership and that the line of the proposed main, instead of being wholly contained within Mr Oxley's land, would cross the southernmost corner of Mr Barnes' land for a distance of about 20 metres.

5

Thus, Severn Trent's trespass upon the land of Mr Barnes in the course of laying the main was trivial, accidental and unintentional. It only came to light when, in February 1993 after the main had been constructed, solicitors representing the executors of Mrs Baldwin advised Severn Trent of her interest and Severn Trent's investigations in respect of her interest revealed the true position in relation to Mr Barnes' land. Severn Trent immediately informed Mr Barnes in order to apologise for not having previously contacted him and to make him aware (whereas he was previously unaware) of the existence of the main under the corner of his land. A statutory notice was served on Mr Barnes on 1 September 1995 in a belated attempt to regularise the situation but, in light of the terms of s.159(4) of the 1991 Act, it was ineffective in that respect.

6

Mr Barnes having issued proceedings claiming damages, the parties agreed prior to trial upon the precise line of the water main across the corner of Mr Barnes' land, and that the length of run of the main which constituted a trespass was 20 metres long with an agreed 10 metre-wide easement of access on either side.

7

Mr Barnes' claim, as set out in his statement of claim served on 26 November 1997, was for "loss and damage through a diminution in the value of the land". Particulars were pleaded under heads (i) to (iii) based on the development value of the land, it being claimed that the presence of the water main had reduced from 10 to 8 the number of residential building plots capable of being created and developed on the land, such plots being valued at approximately £50,000 each with additional increased development costs. It was also pleaded under (iv) that the value of the land as agricultural land was diminished by the removal of earth, the presence of the main beneath the surface and Mr Barnes' alleged "inability to carry out normal acts of husbandry in its vicinity".

8

In the alternative Mr Barnes claimed "restitutionary damages representing the value to [Severn Trent] of the water main", claimed on the basis of "a fair price for the benefit obtained by the defendant from its wrongful use" of the main, namely 5% of £210,527 which was the annual charging rate of Severn Trent for a full year in respect of the water flowing through the mains.

9

By their defence, Severn Trent denied the damage alleged and pleaded that the appropriate measure of damages payable was that which Severn Trent would have had to pay under the statutory compensation scheme laid down by s.180 of the 1991 Act and Schedule 12, thereto. The relevant provisions of Schedule 12 are contained in paragraphs 2 and 3 which provide:

"2-(1) If the value of any interest in any relevant land is depreciated by virtue of the exercise, by any relevant undertaker, of any power to carry out pipe-laying works on private land, the person entitled to that interest shall be entitled to compensation from the undertaker of an amount equal to the amount of the depreciation.

3-(1) Any question of disputed compensation under paragraph 2 above shall be referred to and determined by the Lands Tribunal; and in relation to the determination of any such compensation the provisions of sections 2 and 4 of the Land Compensation Act 1961 shall apply, subject to any necessary modifications."

10

The claim for restitutionary damages was denied by Severn Trent as being inappropriate.

11

By trial, the parties were agreed that the usual measure for compensation under Schedule 12 to the 1991 Act, as it would be assessed by the Lands Tribunal, was one half of the agricultural value of the land under which the main was laid, together with the easement strip 10 metres wide for maintenance purposes. It was agreed that damages assessed on this basis would yield a figure of £110 by way of compensation.

The judgment below

12

The judge found that Mr Barnes had failed to prove any loss based upon the development value of his land. On the expert evidence before him, he found that Mr Barnes' chances, or those of his successors in title, of obtaining planning permission were so remote as to be valueless and that, in any event, if by some remote chance such permission were obtained, the development value of the land had been in no way proved to have been diminished by the minimal trespass. He found that Mr Barnes' land had no present value over and above its agricultural value and that the land was just as useful agriculturally now as it was prior to the laying of the main.

13

Nonetheless the judge made a total award of £2170. It was made up of three elements as follows. (a) £110 being the sum agreed between the parties as the appropriate measure on the supposition that, had notice been properly served and the matter proceeded to the Lands Tribunal, that is what Mr Barnes would have obtained as compensation; (b) an additional sum of £500 by way of further compensatory damages for loss of Mr Barnes' opportunity to negotiate with Severn Trent for an amount over and above that figure. He awarded that sum because he said that (i) Mr Barnes, and his father before him, believed that there was development potential in the land, albeit without foundation, (ii) Severn Trent, on the basis of 'commercial expediency' would have been prepared to treat the claim of Mr Barnes as a nuisance claim in respect of which it would have offered a moderate sum by way of enhanced compensation in order to avoid the necessity to resort to the Lands Tribunal; (c) finally, the judge awarded a further £1560 by way of 'restitutionary damages' upon the following basis.

14

In respect of what he called the compensatory award of £500 the judge stated:

"… if a trespassee's damages are to be compensatory (i.e. over and above 'nominal') then they have, in common sense, to reflect the...

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