Compensation for damage to land: The limits of Wrotham Park

In the 40 years since the seminal decision in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, the common law has shown itself to be both flexible and pragmatic in circumstances where the application of its principles would otherwise lead to unjust under-compensation.

However, in a relatively recent decision in the Technology and Construction Court, Mr Justice Stuart-Smith has held that 'Wrotham Park' damages are unavailable where their purpose is to overcome a procedural defect in the pleading (Arroyo & Ors v Equion Energia Ltd [2013] EWHC 3150 (TCC)). In so doing, he has acknowledged a previously unidentified limitation on the recovery of such damages.

Land damage

This decision arose out of ongoing litigation relating to the alleged land damage caused by the construction of the OSCENSA pipeline, part of which passes through Columbia. The claimants, all resident in Columbia, had initially advanced claims for the economic losses flowing from the alleged damage to their land, largely based on a loss of productivity.

However, some four years after issue, the claimants served revised schedules of loss, which included claims for the costs of reinstatement, no such claim having been previously intimated. In December 2012, the senior master refused the claimants permission to advance such a claim, largely on the basis that such amendment would cause irremediable prejudice to the defendant, having been brought too late to be accommodated. That decision was not appealed.

The claimants subsequently served further and better particulars of the claims for general damages. The claimant contended that, in the present case, there was a risk of under-compensation, particularly in circumstances where the costs of reinstatement had been excluded by the court. The claimants therefore contended that the court could address the potential deficit in any compensation with an award of general damages, calculated by reference to the availability of damages on a Wrotham Park basis, as one example. The defendants objected.

Wrotham Park

Traditionally, a claim for damages to compensate physical damage to land is assessed either by reference to a diminution in the value of the land or by reference to the costs of reinstatement. In addition, a claimant is entitled to claim consequential losses in accordance with general principles.

However, in the Wrotham Park case, the court had awarded damages for a breach of covenant, in circumstances where the claimants, having suffered no identifiable financial loss, would, on the application of traditional principles, have been left without compensation. In Arroyo, Mr Justice Stuart-Smith considered the long line of authorities in which that decision had been both considered and applied, concluding that 'the fundamental requirements of justice are at the heart of awards of this kind'.

With this in mind, where the deficit in the claimants' damages was attributable to their own failure to pursue a conventional claim based on established principles, Mr Justice Stuart-Smith considered there was nothing in the authorities to suggest it would be appropriate to award Wrotham Park damages in substitution for a conventional award which would or should have been available to the claimant.

The claimants had also relied in part on the cases of Scutt v Lomax [2000] 79 P & CR D31 (CA) and Bryant v Macklin [2005] EWCA Civ 762, where the court had awarded general damages for loss of amenity in addition to damages for partial reinstatement.

In distinguishing this line of authority, Mr Justice Stuart-Smith pointed out that in both cases the claimants had claimed, and been awarded, damages on the conventional bases, and in each case damages for loss of amenity had been awarded merely as a top-up and not in substitution of a traditional award.

Practical implications

Mr Justice Stuart-Smith's judgment must be viewed in its proper context. It is perhaps unlikely that the facts of this case will again come together in such a way to provide quite such a clear answer to the question of the availability of 'Wrotham Park' damages.

However, the judgment is significant for its re-emphasis of the general principle that an opposing party must be able to identify the case he has to meet in order that he can take appropriate steps to meet it. Therefore, in this case, it was held that describing a claim as one for general damages, should not and did not determine the level of particularisation required.

Furthermore, whilst placing a limit on the recovery of such damages, Mr Justice Stuart-Smith conceded that, in theory, a claim for Wrotham Park damages could be advanced alongside a claim for diminution of value or reinstatement costs, thus highlighting the potentially wide scope for claiming damages on a Wrotham Park basis. The key is to ensure that such a claim is pleaded at the earliest opportunity.