Supreme Court provides clarity on the recoverability of diminution in value caused by the encroachment of Japanese Knotweed from neighbouring land

The Supreme Court’s judgment also provides wider insight into the application of the “but for test” in nuisance claims for property damage generally.

Background

The respondent, Mr Davies, alleged damage had been caused to his property by the encroachment of Japanese Knotweed from neighbouring land owned by the appellant, Bridgend County Borough Council. The respondent had purchased the property in 2004, at which date, it was accepted that the encroachment of the Japanese Knotweed would have already occurred. The respondent alleged that between 2013 and 2018, the appellant was in breach of duty in allowing Japanese Knotweed to encroach onto the respondent’s land. In 2012, the RICS had first published guidance as to the potential risk posed by the presence of Japanese Knotweed in close proximity to property. An actionable nuisance therefore arose from 2013, as knowledge of Japanese Knotweed was publicly available at this time. Despite this, the appellant had failed to put in place a reasonable and effective Japanese Knotweed treatment programme until 2018.

The respondent pursued a claim for residual diminution in value (DMV) calculated at £4,900 on the basis that the treatment process could not guarantee complete eradication of the Japanese Knotweed. Consequently, his property would be adversely affected by stigma on the property market.

The respondent’s claim was dismissed at first instance, on the basis that the claim was essentially intended to protect the value of land as an investment or a financial asset. This therefore constituted an irrecoverable claim for pure economic loss.

The matter was brought before the Court of Appeal in 2023. The Court of Appeal relied on the case of Delaware Mansions Limited v City of Westminster [2001], reasoning that there was a continuing breach of duty between 2013 and 2018 and that the residual DMV as at the end of the period of continuing nuisance in 2018 was harm caused by the breach of duty. The appeal was allowed and judgment awarded in the sum of £4,900.

The appellant submitted that the Court of Appeal were wrong in making an analogy with Delaware Mansions and awarding damages for the alleged DMV, which loss pre-dated the appellant’s breach. The case was brought before the Supreme Court, to determine whether the respondent’s residual DMV claim was caused by the Appellant’s breach of duty in private nuisance.

Supreme Court decision

Lord Stephens, who delivered the Judgment, stated that “the narrow and main issue before the Court is one of causation”.

The Supreme Court’s application of the law on causation may be summarised as follows:-

1. Delaware Mansions is not authority to assert that DMV is recoverable, irrespective of whether it occurred prior to a defendant’s breach of duty
2. Application of the “but for test” - It had not been proven that the appellant’s breach of duty between 2013 and 2018 caused a DMV in the value of the land, as the DMV had occurred long before any breach by the appellant. Applying the “but for” test eliminated the causative impact of the appellant’s subsequent breach of duty, as the DMV would have occurred in any event.

The Law Lords presiding all agreed that there was no causal link between the residual DMV claimed and the appellant’s breach of duty. The appeal therefore succeeded and no damages were awarded.

Comment

This judgement provides timely clarification on the assessment of claims made for residual DMV caused by the encroachment of Japanese Knotweed. Greater emphasis will be placed on establishing the date of the encroachment and applying the “but for” test, to confirm whether the residual DMV claimed occurred prior to the alleged breach of duty.

The judgment also confirms that, when bringing a claim in private nuisance and to succeed, a claimant must prove that the defendant’s breach has caused a loss of amenity and/or interference with the use and enjoyment of the claimant’s land - not just the encroachment of Japanese Knotweed alone.

This decision will be welcomed by local and public authority landowners and other organisations when faced with claims involving the alleged encroachment of Japanese Knotweed and should serve to knock out a significant element of damages routinely claimed. 

It will be less welcome to those solicitors and claims companies bringing such claims.

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