Dobson & Ors v Thames Water Utilities Ltd (No. 3)

Interest on general damages for nuisance is governed by the statutory discretion under section 35A of the Senior Courts Act 1981. Personal-injury authorities do not automatically govern that discretion because nuisance damages compensate for loss of amenity in land and raise different issues. Where damages are assessed by reference to identifiable annual losses, interest may run from the midpoint of each year or part-year to judgment. The appropriate rate should reflect the claimant being kept out of money, rather than replicate the conventional rate used for personal-injury damages. On the facts, the special account rate was appropriate.

The claimants had previously obtained general damages for nuisance arising from odour. In the second judgment, [2011] EWHC 3253 (TCC), the damages were assessed by reference to the nuisance suffered in each year of the relevant periods. The claimants sought interest under section 35A of the Senior Courts Act 1981 from the end of each relevant year at the special account rate. Thames Water contended that the damages were non-pecuniary, assessed at judgment, and subject to the approach used in personal-injury cases. The issues were whether interest should be awarded, the period for which it should run, and the appropriate rate.

1. Discretion to award interest. Section 35A of the Senior Courts Act 1981 gives the court discretion whether to award interest, on what amount, for what period, and at what rate. Authorities concerning interest on general damages for personal injury do not determine the exercise of that discretion in nuisance cases. The issues are materially different, and the court should be reluctant to transfer those principles without special justification.
2. Nature and assessment of nuisance damages. Following the approach described in Hunter v Canary Wharf Ltd [1997] AC 655, damages for transitory nuisance compensate for diminution in the amenity value of land. They may be assessed by using rental value or another pecuniary proxy, although the underlying loss is the interference with amenity. The assessment may take account of the size, commodiousness and value of the property and the actual experience of its occupants.
3. Period of interest. Because the damages had been assessed as separate annual sums, an ascertainable amount was attributable to each year. Applying the principle stated in London, Chatham and Dover Railway Co v South Eastern Railway Co [1893] AC 429, interest compensated the claimants for being kept out of money which ought to have been paid. Interest should therefore run on each annual sum from the midpoint of the relevant year or part-year until judgment.
4. Rate. The conventional 2 per cent rate used for personal-injury general damages had no proper application. The special account rate reflected the period for which the claimants were kept out of their money and was neither excessive nor insufficient. The claimants were entitled to interest at that rate, and the parties were directed to provide an agreed calculation.

The judgment itself records that general damages for nuisance had been awarded in the second judgment, [2011] EWHC 3253 (TCC). This judgment determined the consequential issue of statutory interest.