Factual and Procedural Background
This appeal arises from a judgment delivered by Judge Harvey-Clark QC at the Southampton County Court concerning a dispute between the Plaintiff and the Defendants regarding the construction of two semi-detached houses on land adjoining the Plaintiff's hotel on the Isle of Wight. The Plaintiff owned the hotel and claimed trespass and nuisance, specifically alleging infringement of rights of light. The judge awarded the Plaintiff nominal damages for trespass and a sum for nuisance damages related to the infringement of rights of light but refused an account of profits. The Plaintiff appealed against the refusal of an account of profits, the calculation of profits by the judge, and the judge's jurisdiction to grant an injunction restraining the Plaintiff from removing steps partly constructed on her land. The judge also ordered the Plaintiff to bear most of the costs on an indemnity basis, which was challenged but permission to appeal on this ground was refused.
The dispute originated after the Defendants acquired an open site adjacent to the Plaintiff's hotel, previously used as a car park and formerly the site of a demolished hotel. The Defendants obtained planning permission and built two houses named Sunrise and Sunset. The Plaintiff opposed the development, including disputing the boundary line with the Defendants' land. Experts agreed the boundary was close to the hotel’s western wall, narrowing the Plaintiff’s original claim to a smaller strip of land.
Concerns were raised about the development's impact on the Plaintiff's rights of light, initially by the Defendants' building surveyor. Despite offers by the Defendants to compensate for any loss of light and requests to inspect the hotel, the Plaintiff refused access until ordered by the court. Expert evidence confirmed that a lightwell could have prevented infringement, and that the Defendants would have incorporated it if requested. The judge accepted the Defendants' valuation of the profit gained by not building the lightwell.
The Plaintiff's trespass claims included the erection of steps on her land, a fence obstructing access, and digging up pipes. The judge found the Plaintiff consented to the steps and was estopped from seeking their removal. The trespass damages awarded were nominal and the claim to the disputed land strip was abandoned.
The Plaintiff sought damages and injunctive relief for trespass and nuisance. The nuisance claim was amended to seek an account of profits or damages calculated by reference to profits, plus an injunction. The judge rejected the account of profits claim but awarded damages for nuisance based on the actual financial loss suffered. The judge also considered but rejected a profits-based damages award on the basis that an injunction would not have been granted due to the Plaintiff’s unreasonable conduct.
Legal Issues Presented
- Whether the judge erred in law by holding that an account of profits is only available in exceptional circumstances in a nuisance claim involving infringement of rights of light.
- If an account of profits is available, whether the judge erred in his calculation of the profits attributable to the Defendants' failure to build a lightwell.
- Whether the judge had jurisdiction to grant an injunction restraining the Plaintiff from removing steps partly constructed on her land.
- Whether the judge’s order for costs was Wednesbury unreasonable.
Arguments of the Parties
Appellant's Arguments
- The judge was wrong to restrict the availability of an account of profits to exceptional cases, relying on the precedent set in breach of contract cases and arguing that tort law should allow such remedies more broadly, citing authority on waiver of tort and restitutionary claims.
- The judge erred in calculating the Defendants' profit from not building the lightwell, and sought to introduce new evidence on this point.
- The judge lacked jurisdiction to grant an injunction preventing the Plaintiff from removing the steps constructed on her land.
- The judge’s costs order was unreasonable and should be appealed.
Respondent's Arguments
- The judge correctly applied the law in restricting account of profits claims in nuisance cases, consistent with binding precedent and established legal principles.
- The calculation of profits was appropriate and supported by evidence.
- The judge did not grant an injunction against the Plaintiff regarding the steps, only made findings of estoppel, and thus there was no injunction order to appeal.
- The costs order was made in accordance with principle and not open to challenge.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Attorney General v Blake [2001] 1 AC 268 |
Availability of account of profits as a discretionary remedy in breach of contract and tort cases; distinction between damages and account of profits. |
Used to explain exceptional circumstances required for account of profits and distinction between common law damages and equitable remedies. |
| Ministry of Defence v Ashman [1993] 66 P&CR 195 |
Measure of damages for trespass as value to tortfeasor rather than claimant’s loss; discussion of restitutionary damages. |
Confirmed principles regarding valuation of benefit to wrongdoer in trespass cases and jurisprudential debates on restitutionary damages. |
| Stoke on Trent City Council v W and J Wass Ltd [1988] 3 AER 394 |
Limitation on restitutionary damages in nuisance claims; damages require proof of loss. |
Supported court's view that account of profits is not generally available in nuisance and damages must reflect actual loss. |
| Wrotham Park Estates Ltd v Parkside Homes Ltd (1974) 1 WLR 798 |
Damages in lieu of injunction calculated by reference to hypothetical negotiation and reasonable sum for relaxation of rights. |
Applied to assess damages in lieu of injunction based on fair percentage of developer’s profit. |
| Amec Developments Ltd v Jury's Hotel Management (UK) Ltd [2001] 1 EGLR 81 |
Principles for calculating damages in lieu of injunction, including fairness of hypothetical negotiation and profit sharing. |
Guided the court’s approach to damages assessment on a Wrotham Park basis. |
| United Australia Ltd v Barclays Bank Ltd [1941] AC 1 |
Illustration of waiver of tort allowing election between damages and recovery of profits in conversion cases. |
Referenced to discuss availability of restitutionary remedies and waiver of tort doctrine. |
| Attorney General v Guardian Newspapers Ltd [1990] 1 AC 109 |
Equitable jurisdiction to order account of profits in breach of confidence cases involving fiduciary or quasi-fiduciary relationships. |
Distinguished as not authority for account of profits in nuisance; used to explain scope of equitable remedies. |
| Carr-Saunders v Dick McNeil Associates [1986] 2 EGLR 181 |
Damages calculation in nuisance claims based on hypothetical negotiation and user principle. |
Accepted as correct approach for damages in nuisance, guiding judge’s assessment. |
Court's Reasoning and Analysis
The court carefully analyzed the distinction between damages and account of profits, emphasizing that the latter is an equitable, discretionary remedy historically reserved for cases involving fiduciary relationships or proprietary rights infringements such as intellectual property. The court noted that nuisance, including infringement of rights of light, does not involve misappropriation of property but rather interference with enjoyment of property, which traditionally attracts compensatory damages rather than restitutionary remedies.
The court accepted the judge's reasoning that an account of profits is only appropriate in exceptional circumstances, consistent with the House of Lords’ decision in Attorney General v Blake and binding precedent. It found no precedent supporting account of profits in nuisance claims and highlighted the policy concerns and practical difficulties in awarding restitutionary damages generally in nuisance cases.
The court also addressed the calculation of profits, noting that the judge’s valuation was supported by evidence and that new evidence presented on appeal was irrelevant given the rejection of the account of profits claim. Regarding the injunction over the steps, the court clarified that no injunction had been granted, only a finding of estoppel preventing removal, and thus there was no appealable injunction order.
Lord Justice Toulson further emphasized that damages in nuisance aim to compensate actual loss, rejecting the Plaintiff's refusal to negotiate compensation as a reason to award greater damages. The court reaffirmed that damages calculated by reference to the loss suffered were appropriate and that the Plaintiff’s claim for a novel restitutionary remedy was unpersuasive.
Overall, the court upheld the judge’s approach and findings, dismissing the appeal on all grounds.
Holding and Implications
The court DISMISSED THE APPEAL in its entirety, affirming the lower court’s judgment.
The holding confirms that in nuisance claims involving rights of light, an account of profits is not generally available and damages are to be assessed on the basis of actual loss or a reasonable sum reflecting the use of the claimant’s rights. The decision reinforces the distinction between compensatory damages and equitable remedies, limiting restitutionary claims in nuisance and trespass contexts absent exceptional circumstances. No injunction had been granted against the Plaintiff regarding the steps, and the costs order made by the judge was upheld. This ruling maintains existing legal principles without extending restitutionary remedies in nuisance law.