Severn Trent Water Ltd v Barnes

Damages for trespass by wrongful use of land may reflect the value of the owner’s lost bargaining opportunity: the reasonable price for a compulsory acquisition of the right of user. Where a statutory undertaker could have exercised its powers after notice and paid statutory compensation, that power substantially restricts the owner’s bargaining position and any nuisance value.

Having assessed the fair price for the whole continuing trespass, the court must not add a further rent or profit-based award for the same use. The trespasser’s profits may assist in fixing a notional licence price, but the landowner has no entitlement to a share of, or account of, those profits. Water Industry Act 1991

Severn Trent Water Ltd laid part of a water main beneath a corner of Mr Barnes’s grazing land without giving him the notice required before exercising its statutory pipe-laying power. The omission was accidental. A later notice could not regularise the completed trespass.

The High Court found no loss of development value or agricultural use. It awarded £110 as the agreed statutory-compensation figure, £500 for the lost opportunity to negotiate a higher amount, and £1,560 as additional so-called restitutionary damages for three years’ use of the main.

Severn Trent appealed the £500 and £1,560 elements. The central issues were the proper application of the reasonable-price or bargaining-opportunity measure for trespass, and whether an additional award based on Severn Trent’s benefit was permissible.

1. Appeal allowed in part. Potter LJ, with whom Jonathan Parker LJ and Sir Swinton Thomas agreed, upheld the £110 statutory-compensation element and the additional £500 bargaining-opportunity element. The court set aside the further £1,560 award and the interest on it.

2. For interference with property rights, damages may exceed nominal damages even where the owner proves no financial loss. They may be assessed as the reasonable price for the wrongdoer’s use of the land. That analysis treats the loss as a lost bargaining opportunity or the price of compulsory acquisition of a right. The court applied the approach described in Attorney General v Blake, [2001] 1 AC 268, and the line of authorities on notional licence damages.

3. The judge was entitled to award £500 in addition to £110. Had proper notice been served under section 159 of the Water Industry Act 1991, Severn Trent could have proceeded after the notice period without first agreeing compensation. Mr Barnes therefore had only limited bargaining or nuisance value, but the judge was entitled to value it at £500.

4. The £1,560 award was erroneous. The £610 already represented the fair price which would have been negotiated before the trespass for the entire continuing use. Severn Trent’s advantage in not paying that sum when due was the mirror image of Mr Barnes’s being kept out of money, for which interest was the appropriate remedy. A further notional annual charge duplicated the award.

5. The court also rejected the basis of the additional award. In trespass cases the defendant’s profits are not subject to an account in the landowner’s favour. They may be a useful reference when fixing a fair notional licence price, as explained in Wrotham Park and Jaggard v Sawyer, [1995] 1 WLR 269, but there was no sensible evidential basis for allocating profits from a 28-kilometre water main to its 20-metre passage beneath this land.

• Court of Appeal (Civil Division) — allowed Severn Trent’s appeal in part and removed the £1,560 additional damages award and related interest: [2004] EWCA Civ 570.
• High Court, Birmingham District Registry — HHJ D Perrett QC awarded Mr Barnes £2,170 plus interest on 12 June 2002, comprising £110 statutory compensation, £500 for a lost bargaining opportunity, and £1,560 additional damages.