London,
19
July
2018
|
14:37
Europe/Amsterdam

Court of Appeal rules that Network Rail are liable for Japanese Knotweed

Decision of Court of Appeal

Last year the County Court decision caused a stir in the property industry as Network Rail ("NR") was found liable in the tort of private nuisance for the mere presence of Japanese knotweed in close proximity to the boundary of the claimants’ properties. The knotweed was said to interfere with the quiet enjoyment of the claimants' land and resulted in a loss of amenity due to the reduction in market value of the properties attributable to the presence of the Japanese knotweed.

NR appealed against this ground breaking decision.

Permission to appeal was granted on two grounds:

  1. where a residential homeowner suffers a diminution in the value of their property by virtue of the presence of knotweed, the pure economic loss which is suffered constitutes an actionable nuisance on the basis that it interferes with the quiet enjoyment of their property; OR
  2. the judge was wrong to find that there was a causal link between NR's breach of duty and the residual diminution in value of the claimants' properties.

The Court of Appeal was unanimous in dismissing NR’s appeal but upheld the claimants' claim on slightly different grounds.

Claim for pure economic loss could not be sustained

The claimants could not claim in private nuisance simply because of the reduction in the properties’ market value as this would extend the tort of private nuisance to pure economic loss. The loss arises not as a result of physical damage but essentially because of the "stigma" attached to this "pernicious weed". There is evidence that, even when treated with a treatment-backed guarantee, there remains a residual reduction in the value of the property.

The Court of Appeal was unwilling to allow the private nuisance claim to extend to economic loss as the purpose of the tort of nuisance is not to protect the value of property as an investment or a financial asset, but to protect the owner of land in its use and enjoyment of the land.

Basis of Court of Appeal rationale

Instead, the Court held that a nuisance was committed when the encroachment of the Japanese knotweed rhizomes diminished the utility and amenity of the claimants’ properties. This was due to the risk of future physical damage to buildings, structures and installations on the land and the fact that the mere presence of rhizomes imposes an immediate burden on the owner of the land in terms of an increased difficulty in the ability to develop, and in the cost of developing, the land, should the owner wish to do so. It was recognised that Japanese knotweed is designated as "controlled waste" under the Environmental protection Act 1990 so that any removal can only be done by licensed operators. Consequently, any future improvement or alteration of the property requiring the removal of contaminated soil would require disposal of the soil either on site or, more likely, off site by special (and expensive) procedures. The Court also noted the policies of most banks to exercise additional caution in situations where Japanese knotweed has been identified within 7 metres of the property.

For these reasons, Japanese knotweed and its rhizomes affect the owner’s ability fully to use and enjoy the land and they are a “classic” example of an interference with the amenity value of the land.

Outlook

The decision means that potentially thousands of property owners across the UK will now have an actionable claim for compensation against neighbours who fail to deal with Japanese knotweed originating on their land. Admittedly, there may be difficulties in establishing when encroachment occurs or is likely to occur (as statutory limitation periods may kick in). It remains to be seen whether NR will appeal.

If you think you may be affected by the issues raised in this article then please do contact Amy O'Gorman to discuss your options.

For further information on this case, please see the previous article written by Amy O'Gorman here.