Supreme Court to issue landmark ruling next week on Japanese knotweed and residual diminution of value of property

The Supreme Court will next week (8 May) hand down its ruling on a Welsh council’s appeal in a dispute over whether residual diminution in value of a property in a Japanese knotweed case is pure economic loss and irrecoverable.

The issue in Davies v Bridgend County Borough Council is whether the lower courts were correct to decide that loss suffered by the respondent (Davies), in the form of diminution in value of the respondent's property as a result of the encroachment of Japanese knotweed from the appellant council's land, was caused by Bridgend's breach of duty in failing to treat the knotweed, in circumstances where the encroachment first arose before the appellant's breach.

The background to the case is that Japanese knotweed grew on Bridgend CBC’s land. It encroached onto adjacent property in Nant-y-moel, Bridgend. In 2004, Mr Davies, bought the property.

In 2012, a Royal Institute of Chartered Surveyors report on knotweed was published, describing difficulties it can cause.

The appellant council had actual notice of the presence of knotweed on its land, in relative proximity to the adjacent property, in 2014. It did not take steps to treat it until 2018.

The respondent first became aware that knotweed could pose a problem for any sale of their property in 2017. He sued Bridgend for damages in nuisance.

The District Judge found that:

1. it was very probable encroachment had occurred in 2004, if not before;
2. the appellant council had constructive knowledge of Japanese knotweed based on information available at the time in 2012/13; and
3. the appellant was in breach of its duty to the respondent, thereby committing a private nuisance, from 2013 until 2018.

The respondent's claim in relation to residual diminution failed before the District Judge and Circuit Judge but succeeded on appeal to the Court of Appeal in Davies v Bridgend County Borough Council [2023] EWCA Civ 80.

Lord Justice Birss said that reading the ruling in Williams v National Rail [2018] EWCA Civ 1514, [2019] QB 601 as a whole, “the point being made is a distinction between ‘pure economic loss’, i.e. loss without physical damage or physical interference which is not actionable, and cases in which there is physical change to the claimant's property as a result of the presence there of knotweed rhizomes.

“Once that natural hazard is present in the claimant's land (to a non-trivial extent), the claimant's quiet enjoyment or use of it, or putting it another way the land's amenity value, has been diminished. For the purposes of the elements of the tort of nuisance that amounts to damage (paragraph 56 last sentence) and it is the result of a physical interference. If consequential residual diminution in value can be proved, damages on that basis can be recovered. They are not pure economic loss because of the physical manner in which they have been caused.”

The council appealed to the Supreme Court.

A panel comprising Lord Reed, Lord Lloyd-Jones, Lord Burrows, Lord Stephens and Lady Simler heard the case over 1.5 days on 27 February 2024 and 28 February 2024.