Jones & Anor v Ruth & Anor [2011] EWCA Civ 804

[2011] EWCA Civ 804

Case No A1/2010/1950

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

HHJ WILCOX

HT-08-35

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 12 th July 2011

Before

LADY JUSTICE ARDEN

LORD JUSTICE AIKENS

LORD JUSTICE PATTEN

Between

(1) MS SAMANTHA JONESAppellants/

(2) MS RACHEL LOVEGROVEClaimants

(1) MR LIAM PATRICK RUTHRespondents/Defendants

(2) MRS KAREN LESLEY PATRICIA RUTHRespondent

Philip Noble (instructed by Lorrells LLP) for Appellants

Terence P. Vaughan (instructed by Moroneys Solicitors) for Respondents

Hearing Hearing date : 18 th April 2011

Judgment

Introduction

[1]The claimants in these proceedings, Ms Samantha Jones and Ms Rachel Lovegrove, are the owners of a three-storey terraced house at 105 Lower Thrift Street, Nottingham (“105”) which they purchased in 2002. The defendants, Mr and Mrs Ruth, own the adjoining property at 103 Lower Thrift Street (“103”) and the next house in the terrace, number 101 (“101”). 101 and 103 were constructed as two-storey houses but between May 2002 and March 2007 extensive work was carried out by Mr Ruth to 103 as part of which the house was gutted and then rebuilt with the addition of a new third storey, a substantially enlarged kitchen at the rear and a rebuilt garage in the rear garden. 101 received similar treatment between February 2007 and March 2010.

[2]In February 2008 the claimants commenced proceedings against the defendants in the Technology and Construction Court for damages for nuisance and trespass caused to their property at 105 by the building works. They alleged that during the works to 103 they suffered from excessive and persistent noise and vibration which affected 105; that the vibration caused cracking in the walls of 105 which continued until about March 2006; that the defendants had trespassed by making holes in the gable end wall of 105 and by the insertion of purlins and had also damaged the roof; that there had been trespass on to their garden by the erection of scaffolding and the storage of building materials, particularly during the re-building of the garage at 103; that the boundary wall had been damaged and in part demolished during the works; and that there had been numerous other incidents of rubbish being thrown into their garden and of other anti-social behaviour.

[3]In addition to the claims for damage based on nuisance and trespass, the claimants also sought damages for personal injury and financial loss which they said had been caused by the negligence of the defendants and by certain aspects of their conduct which amounted to harassment contrary to s.1 of the Protection from Harassment Act 1997 (“the 1997 Act”). The claim for personal injury was made by the first claimant, Ms Jones, who it was alleged witnessed the damage to 105 and, as a consequence, suffered from severe back pain brought on by the anxiety and depression which this caused. She has not been able to work since April 2005 and requires some form of cognitive behaviour therapy as well as physiotherapy and counselling to assist her recovery. These symptoms were also, she alleged, the result of what amounted to a campaign of harassment against her and Ms Lovegrove by the defendants who acted in an aggressive and intimidatory manner towards them; refused to provide any information about the progress of their building works; and repeatedly ignored their requests to reduce the noise and to make good the damage which their works had caused.

[4]The trial took place before HH Judge Wilcox in April 2010 and he delivered a reserved judgment on 28th June 2010 in which he found the principal allegations of trespass and nuisance to be proved. He held that the gable end wall of 105 was a party wall to the extent that it was enclosed by the original structure of 103 and its chimney. Beyond that, it was at all times in the sole ownership of 105. The works carried out by Mr Ruth to raise the roof of 103 and to tie it into the gable end wall were therefore acts of trespass to which the claimants had not consented.

[5]Mr Ruth contended at the trial that he had obtained the consent of the previous owner of 105 (a Mr Pollard) to the use of the gable end wall to support the third storey and the new roof of 103. A form of party wall notice had been served in 2001 but this failed to identify the proposed works in any detail and was held to be invalid. Mr Pollard gave evidence (which the judge accepted) that Mr Ruth had never visited him to discuss the works or served him with any detailed plans indicating that a third storey was to be added to 103. The judge summed up Mr Ruth’s attitude to the works in this way:

“It is a feature of this sad case that Mr Ruth throughout has failed to be open and transparent in relation to the scope and timescale of his building activities both at 101 and 103 Lower Thrift Street. He took the view that 103 was his house and he could do whatever he liked to it, and in it, at anytime that he chose convenient to the operation of his business and his development activities. He is clearly a hardworking and industrious man who is intolerant of criticism.”

[6]The garden wall between 103 and 105 was held to be built on land belonging to 105. The defendants were therefore liable to make good the damage caused to part of the wall adjacent to the rear garage of 103 when it was re-built.

[7]In relation to the claim in nuisance, the judge held that the building works could and should have been completed within a year and that the continued works over a four-year period caused the claimants serious loss of amenity in their enjoyment of 105. He rejected the evidence of Mr Ruth that no mechanical vibrating tools had been used to demolish the roof of 101 and 103 or to fix the new purlins, joists, floors and staircases. Considerable force had been used in these works and, on the basis of the evidence of the claimants’ expert structural engineer, the judge was satisfied that the addition of a third storey to 103 had resulted in significant increased loads on the party wall and its foundations due to the removal of a cross wall in the basement and part of the first floor of 103 and the insertion of a beam. This had led to the cracking in 105 and movement in the door frames which necessitated the refitting of a number of doors.

[8]The works also resulted in damage to the front parapet of 105, part of which Mr Ruth dismantled and replaced with block work. The terracotta copings were removed and damage to the cement in-fill between the tiled roof of 105 and the parapet led to an ingress of water. The work carried out by Mr Ruth to make good this damage was described by the judge as inept and was carried out reluctantly and with bad grace.

The judge summed up his findings on nuisance in these terms:

[9]“76. The claimants allege that the defendants have committed nuisance. Firstly by unreasonably prolonging the carrying out of works on 103 for a period of four years whereby noise dust and some pollution was caused by burning noxious materials in the garden but also by maintaining scaffolding that came into 105 which was not properly fixed and repeatedly banged against the wall and which enabled workman using the scaffolding to see into the windows including the bathroom window whenever the scaffolding was used as work platform or for access. Such use of course also impinged upon the amenity of the claimants who were unable to use their patio and garden without privacy.77. I am satisfied that the building activity could and should have been completed within the year and that the continued works constituted a degree of nuisance that caused such a loss of amenity to the claimants that was incompatible with the reasonable enjoyment by them of their house and land.

78. I am also satisfied that Mr Ruth deliberately disregarded their comfort by causing or permitting noise from operations at weekends and by not supervising his workman such that they played noisy radios or used machinery for protracted periods without giving any sensible warnings to the occupants of 105. It is clear that Mr Ruth removed fencing in order to get access to garden of 105 when he built the garage at the foot of the garden of 103. I am satisfied that he persistently sought permission to put his scaffolding upon the land of 105 for his convenience to build a replacement garage at 103 and when it was initially refused the Defendants obtained a reluctant consent from Ms Jones and Ms Lovegrove on the basis that their privacy would be respected and some security given and that scaffolding would be removed after a month. It remained there for 10 weeks and the lower part of the garden was used as a store for some of his building materials I do not accept the evidence of Mr Fountain, Mr Ruth’s contractor, that it was for a very limited period. 79. It is evident that in digging the prescribed footings for the garage a metre deep heavy machinery was used which caused the tarmac areas at the foot of 105 garden to be ripped up. I am satisfied that this want of care epitomised the approach of Mr Ruth towards the occupants of number 105 and the integrity of their garden. I am satisfied that the plum tree was damaged when such want of care was also shown and that shrubs were uprooted in the garden for the convenience of Mr Ruth. 80. It is evident from the diaries of Ms Jones and the evidence of Ms Lovegrove that they frequently sought reassurances as to when work was going to be completed and reassurance as to when damage was to be repaired. It is evident from the diaries of Mr Ruth that he perceived Ms Jones and Ms Lovegrove as irritants who got in the way of his prolonged four year project. I accept the evidence of Ms Jones that he was persistently bullying in his manner towards her and unpleasant epitomised by his reaction to the damage caused to the roof of 105 “Your roof you fix it””.

[10]He awarded the claimants £30,000 for loss of amenity and enjoyment and a further £45,000 for what he described as:

“… the value to the Defendants of the unabated nuisance constituted by the stealing of support for their raised roof and attached 3rd storey. The value to their house is irreversibly enhanced. I would estimate this to be no less than £45000. At this stage an injunction is not the appropriate relief.”

[11]He then went on to deal with the harassment and personal injury claims. As I mentioned earlier, the first claimant, Ms Jones, sought damages for personal injury based on negligence and harassment by the defendants. Her claim in negligence was based on the damage to 105 which she witnessed from June 2002 onwards and which the defendants should have foreseen could cause her psychiatric injury because she was so closely and directly affected by the damage which they had caused. The claim for harassment relied on the way in which the defendants had behaved during the building work and their aggressive and intimidatory conduct towards the claimant. This is said to have caused anxiety and distress to both claimants but, in the case of Ms Jones, to have caused the psychiatric symptoms already referred to.

[12]The judge found that the defendants had since 2003 conducted a campaign of harassment against Ms Jones. She and Ms Lovegrove live together in a same-sex relationship and the judge placed particular emphasis on an incident when either the defendants or their children dropped notes from an upstairs window which contained various offensive and threatening remarks about lesbians. He awarded Ms Jones £6,000 for harassment but did not in terms award any damages for the personal injury and financial loss which she alleged had been caused by the acts of harassment.

[13]Instead the judge concentrated on the claim for personal injury and associated financial loss in the context of the claims in nuisance and negligence. He rejected the argument (not repeated on this appeal) that it was open to him to award damages for personal injury based on a claim in nuisance and dismissed the claim in negligence on the basis that Ms Jones had not proved that the injuries which she suffered were attributable to her seeing the damage to her property:

“105. In my judgment the claimants’ case is not made out that the first claimant suffered psychiatric injury as a result of witnessing the damage to and destruction of her property. The first claimant became depressed by reason of the first defendants’ stubborn refusal to recognise that he had caused damage to the roof and to the internal walls and wrongfully attached his roof timbers to the claimants’ gable wall. In part that aspect of the claim is reflected in the remedy for harassment in part driven by a commercial motive. 106. The physical damage to the building was done during 2002. The mediation meeting attended by Mr Frampton occurred in 2003 and it is clear had the defendant honoured the agreement made at that meeting and matters been put right then Ms Jones would not have developed the conditions she now complains of and which both experts agree she continues to suffer from, namely a persistent somatoform pain disorder, a process by which underlying anxiety and depression are subconsciously converted into physical symptoms. In this case back pain and or a mixed anxiety and depressive disorder causing somatisation symptoms in the form of back pain. 107. Ms Jones’ medical condition derives not by reason of witnessing damage to her house but from conduct of the defendants in failing to address her reasonable requests to deal with it and by the fact that the project was unreasonably protracted.”

[14]Had it been appropriate to award them, general damages for personal injury were agreed at £28,750. But the judge went on to assess her earning capacity at £23,000 per annum (as opposed to the rate of £4,097.92 per month which she claimed) and would therefore have awarded her £115,000 in lost earnings for the five years which she claimed.

[15]Ms Jones does not challenge the judge’s rejection of her claim for damages for personal injuries and associated losses based on either nuisance or negligence. But she does appeal against his failure to award her such damages in respect of her claim for harassment. She also seeks interest on all of the general damages awarded.

[16]Mr and Mrs Ruth have a cross-appeal against the judge’s award of £45,000 based on the enhanced value of 103. They do not challenge the judge’s findings of trespass and nuisance but contend that an award based on the increase in value attributable to the trespass to 105 was not part of the claim and was unsupported by any evidence. They also challenge the judge’s order for costs on the basis that the damages awarded to the claimants (£96,000) amounted to less than 10 per cent of the sum claimed and that they were therefore substantially successful at the trial.

The appeal

[17]The judge’s finding that there was harassment from 2003 confirms that he accepted that it was not confined to the notes incident (which occurred in August 2006) but included Mr Ruth’s aggressive attitude towards the claimants throughout the works and his generally dismissive attitude towards their complaints about the nuisance which the works caused. Since the claimants had therefore established the allegations of harassment pleaded in the particulars of claim, it was incumbent on the judge to address the claim in damages and to explain why he was not making an award in respect of the matters claimed.

[18]The issue is further complicated by the fact that the judge obviously accepted that both claimants had been caused distress and anxiety by the harassment which they suffered hence the award of £6,000. He also found that the defendants’ conduct in aggressively dismissing the claimants’ complaints about the building works did cause the psychiatric injury Ms Jones complains of. This is set out in paragraph 105 of his judgment quoted earlier where he refers to the claim for harassment and in paragraph 98 of his judgment where he says this:

“In such circumstances of continuing nuisance and trespass and a refusal to abate the nuisance or ameliorate its consequences it is possible that the householder could be psychologically affected in consequence of such nuisance and refusal to abate.”

[19]But there is no reference in the part of the judgment dealing with the harassment claim to Ms Jones’ claim for personal injury nor any explanation as to why no award of damages for this was made.

[20]On 21st July 2010 a further hearing took place before Judge Wilcox to deal with matters arising from the judgment handed down on 28th June. The order had yet to be made and it was therefore open to the judge to deal with any matters which he had failed to consider in his reserved judgment.

[21]The transcript of that hearing records that Mr Noble (for Ms Jones) raised with

the judge his failure to deal with the personal injury claim based on harassment:

“Judge Wilcox: I find that it does not flow. Mr Noble: There was no injury as a result of –- Judge Wilcox: “Anxiety” is the expression in the Act, is it not? Mr Noble: It covers personal injury, both personal injury and anxiety are covered by the Act so that there can be two separate awards, one for personal injury and one for anxiety. Judge Wilcox: Yes, I found that it did not arise out of the harassment. The harassment is a small part of this case. My finding on harassment, Mr Noble, in the end turned upon the notes. That really crystallised the behaviour and the attitude of both of the defendants and that is why the award is as it is. The substantial award is for nuisance which is the loss of the (inaudible) and the like in relation to 105.”

Mr Noble: There was no injury as a result of –-

[22]The judge’s response that his findings of harassment were in some way confined to the notes is inconsistent with the terms of his judgment and was not the position which he and the parties reached by the end of the hearing on 21st July. By then the argument had centred on whether the personal injury caused by the pleaded acts of harassment which the judge had found proved was reasonably foreseeable. In giving Ms Jones leave to appeal on this point the judge said this:

“I now come to the second matter and that is an application for leave to appeal. This is a case that has been pleaded cautiously and in a way where various heads clearly overlap. In relation to the personal injuries they clearly cannot arise out of the nuisance as I have found and as the law is. It does not arise, as I have found, in relation to the negligence aspects of the matter but this matter is also pleaded as harassment under the statute. I have expressed the view to counsel now and it is expressed in my judgment that reasonable foreseeability of the injury is a test in harassment as it is in negligence. Mr Noble submits to me that is the wrong claim. He persuades me that it is arguable and since it is arguable in the light of this case and what rests upon it, it is right that I should give leave to appeal on that aspect of the matter only. That is, whether reasonable foreseeability of the injury would be necessary.”

[23]Mr Noble submits that the judge was wrong to import into s.3 of the 1997 Act a requirement that the loss claimed should be reasonably foreseeable. Section 3 (so far as material) provides that:

“(1) An actual or apprehended breach of section 1 may be the subject of a claim in civil proceedings by the person who is or may be the victim of the course of conduct in question. (2) On such a claim, damages may be awarded for (among other things) any anxiety caused by the harassment and any financial loss resulting from the harassment.”

[24]Understandably there is no comprehensive statutory definition of harassment. Section 1 of the 1997 Act makes it unlawful for a person to pursue a course of conduct which amounts to harassment of another and which he knows or ought to know amounts to harassment. Section 7(2) states that references to harassing a person include alarming the person or causing the person distress. Harassment means the persistent tormenting or irritation of the victim. It is therefore deliberate conduct which its perpetrator either knows or certainly ought reasonably to be aware has this effect on the complainant. It will therefore usually consist of conduct of a kind which Lord Nicholls has described as intensely personal in character between two individuals: see: Majrowski v. Guy's and St. Thomas' NHS Trust

[2006] UKHL 34

at paragraph 25. This may range from actual physical force or the threat of force to much more subtle but nonetheless intimidating conduct. In each case the defendant will be (or should be) aware of the effect which his conduct is having on the claimant.

[25]Mr Noble therefore submits that tortious conduct of this kind falls into the group of torts (such as assault) which in most cases involve the intentional infliction of harm and in respect of which issues of foreseeability are irrelevant. The tort of harassment is purely statutory and s.3 of the 1997 Act specifies no conditions for the recovery of damages beyond the requirement that the harassment should have caused the injury or loss complained of. He suggests that by analogy with cases of direct discrimination under the Race Relations Act 1976, it was not necessary to prove that injury of the kind suffered by Ms Jones was reasonable foreseeable: see Laing Limited v Yassin Essa

[2004] EWCA Civ 2

[26]The respondents contend that Ms Jones failed before the judge on both foreseeability and causation. Mr Vaughan submitted that the causes of the psychiatric injury (refusal to abate the nuisance and aggressive intransigence in recognising the damage caused) did not amount to harassment but both these were pleaded as harassment and were accepted to be so by the judge in the paragraphs of the judgment (105 and 107) referred to earlier. Foreseeability, he says, was not argued at trial and only emerged as an issue during the hearing on 21st July. In his judgment the judge did not address foreseeability at all.

[27]I accept that this was raised almost as an afterthought by the judge on 21st July but that does not assist the respondents. The lateness of its introduction and the absence of any reasoned judgment as to why psychiatric injury was not the foreseeable consequence of the acts of harassment complained of provides Ms Jones with a further ground for challenging the judge’s refusal to award her damages for personal injury. But that issue only arises if the judge was correct to regard foreseeability of such injury as a necessary ingredient of the tort. Unsatisfactory as it may be, I propose to treat the discussions and the short judgment delivered on 21st July as amounting to an addendum to the judgment for these purposes.

[28]Mr Vaughan referred to a number of judicial observations which it is said support the judge’s view that foreseeability of the injury was required. In Majrowski (where the issue under consideration was whether an employer was vicariously liable for harassment committed by an employee) Lord Nicholls said:

“22. … The effect of section 3(1) is to render a breach of section 1 a wrong giving rise to the ordinary remedies the law provides for civil wrongs. This includes an entitlement to damages for any loss or damage sustained by a victim by reason of the wrong. Ordinary principles of causation and mitigation and the like apply. Subsection (2) is consistent with this understanding of the section. The phrase 'among other things' assumes that damages are recoverable. The enabling language ('may be awarded') is apt simply to extend or clarify the heads of damage or loss for which damages are recoverable.”

[29]In Thomas v News Group Newspapers Ltd [2002] EMLR 78, where the publication of articles in a newspaper describing how a “black clerk” had complained about the allegedly racist comments of two policemen was said to have caused the claimant to receive racist hate mail, the Court of Appeal had to consider the type of conduct which had to be proved to bring the case within the statute. At paragraphs 29 and 30 Lord Phillips of Worth Matravers MR said that:

“29. Section 7 of the 1997 Act does not purport to provide a comprehensive definition of harassment. There are many actions that foreseeably alarm or cause a person distress that could not possibly be described as harassment. It seems to me that section 7 is dealing with that element of the offence which is constituted by the effect of the conduct rather than with the types of conduct that produce that effect. The Act does not attempt to define the type of conduct that is capable of constituting harassment. "Harassment" is, however, a word which has a meaning which is generally understood. It describes conduct targeted at an individual which is calculated to produce the consequences described in section 7 and which is oppressive and unreasonable. The practice of stalking is a prime example of such conduct.”

[30]None of this really assists Mr and Mrs Ruth to establish foreseeability as a requirement of the statutory tort. In neither case was the point in issue. In Majrowski Lord Nicholls was simply concerned to demonstrate that ordinary principles such as that of causation were in operation and there was nothing to exclude the doctrine of vicarious liability which, as he went on to point out, can exist in cases of intentional torts such as assault. In Thomas the issue was what was included within the concept of harassment and the reference to actions which foreseeably alarm has to be read in that context.

[31]Of perhaps more assistance, although undoubtedly obiter, is what Pill LJ said in Laing Ltd v Essa at paragraph 31 in response to counsel’s reference to s.3 of the 1997 Act as an example of a statutory tort which excluded or omitted any requirement to prove foreseeability of loss:

“31. Miss Moor seeks to rely on the provisions of the Protection from Harassment Act 1997 which provides, in section 3, that a victim of harassment may recover damages for any anxiety caused by the harassment and any financial loss resulting from it. The mischief from which protection is required is similar, it is submitted, to that in the present case and the civil claim does not require proof of foreseeability of the relevant damage. The statute does demonstrate that it is possible to create a statutory tort which does not incorporate the reasonable foreseeability test but I am not much influenced by that in construing the 1976 Act. As appears from section 1, the ingredients of the tort created by the 1997 Act are distinctly different from those under the 1976 Act, which was in any event enacted over twenty years earlier.”

[32]I am not persuaded that foreseeability of the injury or loss sustained by a claimant in a case of harassment is an essential element in the cause of action. The obvious starting point is the 1997 Act itself. Conduct of the kind described in s.1 is actionable under s.3 in respect of anxiety or injury caused by the harassment and any financial loss resulting from the harassment. There is nothing in the statutory language to import an additional requirement of foreseeability. Nor is the foreseeability of damage the gist of the tort. Section 1 is concerned with deliberate conduct of a kind which the defendant knows or ought to know will amount to harassment of the claimant. Once that is proved the defendant is responsible in damages for the injury and loss which flow from that conduct. There is nothing in the nature of the cause of action which calls for further qualification in order to give effect to the obvious policy objectives of the statute.

[33]The judge was therefore wrong to exclude an award of damages for personal injury based on an absence of foreseeability and it must follow that Ms Jones is entitled to general damages in the agreed sum of £28,750.

[34]More controversial is her claim for other financial loss. As indicated earlier, the judge assessed damages for loss of earnings at £115,000 which is not challenged on this appeal. But the schedule of loss and damage relied on by Ms Jones contained significant other claims for medical expenses and future loss of earnings which were not adjudicated upon. If Ms Jones wishes to restore a claim for those items in addition to the £28,750 and the £115,000 which the judge would have awarded her for personal injury then the case will have to be remitted to a Master of the Queen’s Bench Division for an inquiry into those alleged losses. The costs of that exercise will depend on the outcome of the inquiry. This Court should, in my judgment, simply allow Ms Jones’ appeal and order Mr and Mrs Ruth to pay the sums of £115,000 and £28,750 by way of damages for personal injury.

[35]That leaves the question of interest on damages. Ms Jones seeks interest on all the awards of general damages. At the hearing on 21st July the judge declined to award interest up to judgment on the damages for harassment and nuisance on the basis that the level of his awards took account of the position up to the date of judgment and I would not disturb that part of his decision. But I can see no reason not to award interest on damages for personal injury including damages for lost earnings. The award of £28,750 will bear interest from the date of issue of proceedings until the date of our order. It should be paid at the rate of 2% per annum for the relevant period. The award of £115,000 for lost earnings will bear interest from 1st April 2005. To avoid complications and to take account of the fact that the loss occurred over the entire period since then, interest will be paid on the entire sum of £115,000 from 1st April 2005 but at half of the prevailing special account rate from time to time. The parties should provide a calculation of this as part of an agreed order.

The cross appeal

[36]The first issue on the cross appeal is the judge’s award of £45,000 which represented the value to the defendants of being able to add a third storey to 103 through the acts of trespass and nuisance complained of. In his skeleton argument Mr Vaughan criticises the award as having been made without jurisdiction or alternatively as amounting to double recovery given the award of £30,000 that was made for loss of amenity.

[37]There is nothing in either of these points. The £30,000 was awarded to compensate the claimants for the loss of their reasonable enjoyment of 105 as a result of the nuisance caused by the defendants during the building works. But that left the claim in trespass for the unauthorised works to the gable end wall of 105 carried out in order to add the third storey to 103. The particulars of claim sought an injunction compelling the defendants to remove the offending parts of their property and to make good the damage. But the Court has jurisdiction under s.50 of the Senior Courts Act 1981 to award damages in lieu of an injunction and can do so on a basis which compensates the claimant for the loss of his property rights by awarding him damages in a sum equal to the amount which he could reasonably have demanded for a licence: see e.g. Jaggard v Sawyer

[1995] 1 WLR 269

. A similar basis can be adopted for an award of damages at common law for trespass: see Whitwham v Westminster Brymbo Coal & Coke Co

[1896] 2 Ch 538

. Damages are calculated by reference to what the defendant would have paid for being able to carry out the works.

[38]In deciding to award damages in lieu of an injunction in respect of the continuing trespass to 105 the judge was therefore entitled to take into account the value to the defendants of being able to complete and maintain in place the works to 103. But where I think he fell into error was in awarding the claimants as much as £45,000. Mr Vaughan submits that the £45,000 was not supported by any expert evidence about the increase in value and this has prompted the claimants to apply for permission to adduce new valuation evidence to support the judge’s figures. This evidence suggests that the judge may even have underestimated the value added to 103 by the acts of trespass. But the current value of 105 was agreed at £154,000 and the judge did have evidence that Mr and Mrs Ruth had paid £60,000 for 103. Following the works it was, I think, reasonable for him to assume that 103 was worth at least £150,000, although the increase in value (£90,000) was not, of course, solely attributable to the addition of the third floor. The defendants have added the new kitchen and garage which do not involve any continuing trespass to 105 but undoubtedly increased the value of their property.

[39]The judge’s assessment of £45,000 as representing the increase in value attributable to the third storey, although not based on expert evidence, was, I think, a reasonably cautious one which has not been demonstrated to be obviously wrong. We declined to admit the new valuation evidence. It would have required a possible adjournment of the appeal to allow it to be answered and it is unnecessary so far as it supports the judge’s conclusions. If the appellants had wished to do so they could (and should) have applied to adduce it at the trial. It is not appropriate to re-open the issue of valuation as part of this appeal. But the net increase in value which the trespasser will obtain from his actions is only the starting point in any calculation of damages on the wayleave basis. The issue for the Court is to determine what the parties, acting reasonably, are likely to have agreed as payment for the necessary licence. As part of that hypothesis one has to assume that the parties would have acted as willing grantors and willing grantees. Consistently with this, the defendants would not have either withdrawn from the negotiations or been willing to give up the entirety of any value attributable to the planned works. Similarly the claimants would not have refused permission except upon payment of the lion’s share of any increase in the value of 103.

[40]Where issues of this kind arise in relation to a commercial development the complexity of the financing and other factors relevant to the calculation of the developer’s profit mean that the Court is unlikely to be able to perform this exercise without expert assistance and evidence from the parties as to how they would have perceived their respective strengths and weaknesses in any negotiations. An example of such a case is Amec Developments Ltd v Jury’s Hotel Management (UK) Ltd

[2001] 1 EGLR 81

. But in the present case we are dealing with a dispute between neighbours about what should have been a relatively straightforward extension in the size of 103. The costs of this litigation are already considerable and neither party was, I think, keen that we should add to those costs by unnecessary further hearings before a new judge.

[41]I think that we should therefore attempt to resolve this issue ourselves. As between willing parties in the present context, I do not believe that the licence fee is likely to have exceeded one-third of the prospective increase in value. This is more generous to the claimants than the 5% of anticipated profit awarded by Brightman J in Wrotham Park Estate Co Ltd v Parkside Homes Ltd

[1974] 1 WLR 798

but it takes account the claimants’ sensitivity about interference with their property and the defendants’ undoubted keenness to tie the development of 103 in with the works to 101. I would therefore allow the cross-appeal on damages and substitute the figure of £15,000 for the judge’s award of £45,000.

[42]That leaves the appeal on costs. The judge ordered the defendants to pay the costs of the claim on an indemnity basis with the exception of the costs of the personal injury claim, in respect of which he made no order. The order for costs to be assessed on an indemnity basis is not challenged on this appeal but Mr Vaughan submitted to the judge (and repeats as part of his argument on the cross appeal) that there should have been some reduction in the proportion of costs awarded to the claimants to take account of the fact that a claim for damages of around £1 million had been reduced to an award of only £96,800.

[43]There is no doubt that the defendants were successful in defeating significant parts of the claim for damages but

the judge explained the reasons for his order in these terms:

“I made mention in my judgment to the intervention of Giles Frampton and the attitude particularly of the first defendant in relation to that. Belligerence; unwillingness; total non co-operation. This case eventually arrived in the Technology and Construction Court and eight days were occupied by the evidence that was adduced and the testing of that evidence in support of the claimants’ case. The bulk of the time was spent in examining the nuisance; trespass and harassment aspects of the matter. In short, the conduct of the defendants, and basic evidential matters in relation to the house at 103 and the effect upon the works at 103 upon 105. No quarter was given by the defendants from start to finish. Everything was in issue. What was a relatively straightforward minor claim that originally should have been in the County Court, because of their attitude to the litigation and dispute, occupied eight days, save the time, of course, that was used to meet the arguments as to whether or not the medical condition of the first claimant was reasonably foreseeable by the defendants. I am driven to the conclusion that this litigation was sadly driven by the relentless unwillingness of the defendants to face up to incontrovertible facts. In a detailed judgment I have dealt with the unwillingness to give information as to time and to assist the claimant in their planning. Mr Vaughan submits to me that this was a claim that venturously quantified at just under £1 million. He is right, that was an optimistic view that the claimants would succeed for the first defendant in particular as to the personal injury claim. Large though that claim was there was as an element for claim damages, it occupied a very small part of this trial. This is not a case where I am inclined to accede to Mr Vaughan’s persuasive submissions that I should look at the issues on a numerical basis or on the basis that a large part of the money claim has not succeeded but ignore the fact that the costs flow from an eight day trial essentially about nuisance, trespass and harassment. The cost of the trial will be paid by the defendants save that in relation to the medical claim I make an order of no order for costs. I now consider what basis the costs should be upon. In my judgment I make specific reference to the conduct of both defendants throughout. This is a trial that results from their intransigence. Their conduct is conduct that I defined in the small neighbourhood like that which I visited could be reprehensible and they are paying the costs that I have ordered on an indemnity, that is, compensatory basis.”

[44]The defendants do not contend for an issue-based costs order but say that the judge failed to give credit for the time which was spent dealing with various items in the damages claim on which the claimants failed.

[45]The starting point is, of course, the general rule that the unsuccessful party should pay the costs of the successful party: i.e. that costs should follow the event: see CPR 44.3(2)(a). There is no doubt that the claimants were the successful party in this case. The Court has a discretion to make a different order and, in exercising that discretion, must consider all the circumstances including the conduct of the parties; levels of success on various issues; and any payment into court or offer to settle.

[46]The defendants are not able to challenge the judge’s view that the bulk of the time was spent dealing with the allegations of nuisance, trespass and harassment, most (if not all) of which the judge found to be proved. He was critical of the way in which the defendants had unnecessarily and unrealistically sought to challenge very many of those allegations and he was entitled to take this into account in deciding whether to depart from the general rule.

[47]For a costs appeal to succeed it must be established that the judge has exceeded the limits of his proper discretion by the order which he has made. The principles are summarised by Auld LJ in Islam v Ali

[2003] EWCA Civ 612

at paragraphs 18-20 as follows:

“18. The general rule is that an unsuccessful party should pay the successful party's costs; see Civil Procedure Rules Part 44.3(2)(a). The trial judge, however, has a wide discretion in furtherance of the overriding objective of justice and fairness to make a different order; see Civil Procedure Rules Part 44.3(2)(b). In exercise of that discretion the judge should have regard to all the circumstances, including the conduct of the parties, for example, how they have respectively pitched and pursued their cases and whether a party has succeeded on part, if not all, of his case and to any payment in or offer made. I take that, with the examples I have added, from CPR Part 44.3(5). 19. It is, as both counsel have acknowledged, a wide discretion, and the Court of Appeal should only interfere with the judge's exercise of it if he has "exceeded the generous ambit within which reasonable disagreement is possible", a familiar passage taken now from the judgment of Brooke LJ in Tanfern v Cameron McDonald (Practice Note), 1 WLR 13, 11, at paragraph 32, citing Lord Fraser in G v G (Minors) CA [1985] 1 WLR 647, 652. 20. Another way of putting it, with a more direct focus on costs, is that the Court should only intervene where " ... the judge has either erred in principle in his approach, or has left out of account, or taken into account, some feature that he should, or should not, have considered, or that [the exercise of] his discretion is wholly wrong because the court is forced to the conclusion that he has not balanced the various factors fairly in the scale."” " ... the judge has either erred in principle in his approach, or has left out of account, or taken into account, some feature that he should, or should not, have considered, or that [the exercise of] his discretion is wholly wrong because the court is forced to the conclusion that he has not balanced the various factors fairly in the scale."”

[48]I am unpersuaded that Judge Wilcox made any error of that kind. He took into account the points made by Mr Noble about the low level of damages relative to the total claim but considered that the relatively small amount of time spent on the rejected items of damage was outweighed by the time that had to be spent dealing with the defendants’ unjustified opposition to the issues of liability. It seems to me that he was entitled in these circumstances to decline to deprive the claimants of part of their costs. The defendants could have protected themselves against an exaggerated damages claim by making a Part 36 offer but did not do so. I would therefore dismiss this part of the cross-appeal.

Conclusion

[49]For these reasons, I would allow the appeal and order the defendants to pay the sums of £28,750 and £115,000 to Ms Jones by way of damages for personal injury. Any further claims by her for medical expenses and future loss of earnings will be remitted to an inquiry before a Master of the Queen’s Bench Division. The awards of £28,750 and £115,000 will carry interest at 2% per annum from the date of issue of proceedings until the date of this order.

[50]I would allow the cross-appeal against the judge’s award of £45,000 and substitute an award of £15,000. I would dismiss the defendant’s cross-appeal against the judge’s order for costs.

[51]I agree.

[52]I also agree.