With Japanese knotweed claims against surveyors on the rise, the outcome of Network Rail's appeal against the first instance decision in the case brought by two homeowners, Mr Williams and Mr Waistell, has been awaited with interest.
Disappointingly, there is nothing in the Judgment recently handed down which offers any crumbs of comfort for property professionals and their PI insurers. Rather, some of their Lordship's observations about the menace of this invasive perennial may actually fan the flames for those wishing to bring claims wherever this plant rears its head. Both estate agents and surveyors should take heed and ensure proper systems are in place to minimise the risk of exposure to these types of claim.
For a more detailed look at the Court of Appeals decision in Network Rail Infrastructure v Williams & Waistell [2018] EWCA Civ 1514 please click here.
Facts
The Claimants, Mr Williams and Mr Waistell, are the owners of two adjacent bungalows in Maesteg, South Wales, which back onto a railway cutting owned by Network Rail Infrastructure ("NRI"). Japanese knotweed from the cutting encroached on their properties and after unsuccessful attempts to eradicate the problem the Claimants brought a private nuisance action against NRI.
First instance
The Claimants applied for an injunction to require NRI to treat and eliminate the knotweed on their land plus damages under various heads of loss.
The claim in nuisance was brought on two alternative bases:
Encroachment – arguing that NRI was liable as occupier of the land where the knotweed was present, for its encroachment onto the Claimants' land;
Quiet Enjoyment / Loss of Amenity – arguing that the presence of knotweed on NRI's land in close proximity to the Claimants' land was a sufficiently serious interference with the quiet enjoyment and amenity value of their properties to constitute an actionable nuisance as its presence affected the ability to sell the properties at market value.
At first instance the encroachment claim was dismissed on the basis that to be an actionable nuisance there had to be actual physical damage, and none was established. However, the quiet enjoyment/loss of amenity claim succeeded on the basis that loss of amenity could include diminution as a result of the Claimants inability to dispose of their properties at a proper value.
Therefore the Court found that NRI had breached this duty which had caused a continuing nuisance and damage. Whilst it considered that it was not appropriate to grant an injunction compelling NRI to treat the knotweed it did award the following damages:
- £4,320 to each Claimant to cover an insurance backed treatment package;
- £300 to Mr Waistell for the costs of a knotweed survey;
- £350 general damages per year (total £1,400 for loss of amenity and interference with quiet enjoyment;
- £10,500 to Mr Williams and £10,000 to Mr Waistell for residual diminution in value once the treatment was completed.
Appeal
NRI appealed on two grounds:
- Challenging the Court's conclusion that the mere presence of knotweed on land adjoining the Claimants' properties was an actionable nuisance simply because it diminished the market value of the respective properties; and
- Challenging the Court's finding that there was a causal link between any breach of duty on NRI's part and the residual diminution in value of the properties.
The Court of Appeal clarified that the purpose of the tort of nuisance is not to protect the value of property as a financial asset but to protect the landowner in their use and enjoyment of the land. The County Court's decision was wrong in so far as it effectively extended the tort of nuisance to a claim for pure economic loss, i.e. diminution.
However, while allowing that part of the appeal, the Court of Appeal went on to find that the first instance outcome, i.e. the award of all heads of damages, was nevertheless justified albeit for different reasons than originally given.
NRI had actual knowledge of the presence of knotweed on its land behind the Claimants' properties in 2013, it was (or ought to have been) aware of the risk of damage and loss of amenity to adjoining properties caused by the proximity of the knotweed no later than some time in 2012[1]; and it failed to reasonably prevent the interference with the Claimants' enjoyment of their properties.
As a consequence that was sufficient to give rise to a cause of action in circumstances where, in addition to the risk of future physical damage to the buildings, the presence of the knotweed imposed an immediate burden on the Claimants. As such burden clearly affected the Claimants' ability to fully use and enjoy their properties, this was a classic example of interference with the amenity value of the land.
This outcome meant that the second appeal ground fell away and their Lordship's were not prepared to admit fresh evidence as to the precise impact on value that was not adduced during the first instance hearing.
Overview
On one hand the diminution in value claim was essentially dismissed, but only because that was not a recognised head of loss in the tort of nuisance. However, the very same award was allowed to stand on the basis that it fairly compensated the Claimants for their loss of quiet enjoyment and amenity.
Of course, very different principles apply to professional negligence claims where diminution will be an entirely valid head of loss. In consequence, this case does nothing to alter the ability of Claimants to go after their professional advisers for diminution in value and, arguably, enhances that prospect as a result of the Court of Appeal's tacit acceptance that knotweed is a serious issue for homeowners and landowners alike.
The Master of the Rolls referred to the "pernicious ramifications of the presence of" knotweed which "imposes an immediate burden on the owner of land" and is a "natural hazard" which adversely affects the owners' ability to fully use and enjoy the land; "a classic example of an interference with the amenity value of the land".
As there is now appellate judicial recognition that knotweed is a serious issue which is detrimental to the enjoyment of property, the path is clearly open for the courts to be receptive to accepting evidence that the presence of this plant will diminish value.
That is, however, a contentious issue in itself. There is simply no transactional evidence to support claims that market values are in any way diminished once insurance-backed treatments have been carried out and those claimant-retained surveyors who seek to suggest otherwise currently appear to be applying nothing more than subjective guesswork which can, and should, be challenged.
Estate agents and surveyors need to be ever more vigilant to the potential presence of this perennial and to ensure, given the ease with which its existence can be concealed absence very detailed inspection, all marketing literature and advice must be appropriately caveated
Recommending specialist investigation regardless of tell-tale signs, particularly as knotweed shares its appearance with a number of other plants, might prove the only fail-safe protection but will add potentially unnecessary costs onto the buyer. Unless and until this issue becomes a mandatory requirement of any property passport system that might be introduced as part of the housing reforms being considered, or the risk is protected by insurance at the point of sale, that seemingly over-cautious approach might be worthwhile.
Footnote:
Academic research is also likely to play a developing role in cases of this type. In April 2018 it was reported that Swansea University research concluded that knotweed could not be eradicated by conventional herbicide treatments offered by many so-called specialist treatment companies. Whilst headline grabbing, this research had also resulted in the university patenting its own "4-Stage Model" treatment solution which applies a far more scientific approach, linking "herbicide selection and application with the seasonal surface-rhizome flows in the knotweed plant". In short, there is no one size fits all and each outbreak merits individual treatment programme over a three to five year period.
Earlier this month Leeds University released its own research which found that there was little evidence of knotweed causing significant structural damage. In a fairly extensive piece of research involving liaison with specialist contractors and surveyors and case studying 149 properties/sites where the plant was known to exist, the resounding conclusions were that whilst knotweed is capable of damaging buildings, this only tends to occur due to "an existing weakness or defect that has been exacerbated" and the plant in fact "poses less of a risk to buildings and other structures than many woody species, particularly trees".
So much of the media hysteria about the menace of knotweed – which in part clearly played on judicial minds in the NRI case – will hopefully be moderated, therefore, by academic research.
[1] Following the publication of the Environment Agency code of practice and the RICS paper
