This is an appeal by the claimant Mrs Marcia Forsyth-Grant against the judgment of HHJ Harvey-Clark QC, given in the Southampton County Court on 30 March 2007 in an action for trespass and nuisance, arising out of the construction by the defendants of a pair of semi-detached houses on land adjoining the Hotel Picardie at Ventnor on the Isle of Wight, which is owned by the claimant.

The judge awarded the claimant damages of £5 for trespass and £1,848.63 in respect of the claim for nuisance, which concerned the infringement of rights of light enjoyed by the hotel. He rejected a claim for an account of profits. In her grounds of appeal the claimant challenges the judge’s refusal to order an account of profits and, if successful on the first ground of appeal, also challenges the judge’s calculation of the profits made by the defendants as a result of the infringement of the claimant’s rights of light. The third ground of appeal challenges the jurisdiction of the judge to grant an injunction restraining the claimant from removing some steps, partly constructed on her land during the course of the development.

Rimer LJ granted permission to appeal on these grounds but refused it on two other grounds, one of which is no longer pursued. The remaining ground relates to the judge’s order for costs. The judge ordered the claimant to bear the greater part of the costs of the action on an indemnity basis. This is said in the Notice of Appeal to be Wednesbury unreasonable. The claimant has renewed her application in this court for permission to appeal on this ground but, like Rimer LJ, I am not satisfied that the judge erred in principle in making the order for costs which he did, and I would refuse permission to appeal on that ground.

Before I come to the detail of the grounds of appeal where permission has been granted and in order to explain the issues they raise, I need to summarise the history and nature of the dispute and the way in which the judge dealt with the issues in the litigation.

The judge found that, when the claimant purchased the hotel in 1998, the area of land now developed by the defendants which lies to the west of the hotel was an open site which was used by the Hotel Picardie as a car park in return for the payment of a nominal rent. It had previously been the site of another hotel -- the Montrose Hotel -- which was demolished in 1961 and, for the next forty years, it remained a cleared site. In 2001 the first defendant, Mr Lawrence Allen, purchased the site with a view to obtaining planning permission for the construction on it of a family house. Ownership of the site was subsequently transferred, probably for tax reasons, to his son the second defendant, but the first defendant remained in charge of the project and was treated in the proceedings as the effective defendant.

In 2002 or 2003, Mr Allen obtained planning permission for the erection on the site of two semi-detached houses which were built in 2006. They have been named Sunrise and Sunset -- Sunrise being the house closest to the claimant’s hotel. The judge described the overall building in his judgment as an attractive contemporary design with a pitched roof, balconies, decking and open plan rooms all overlooking the sea.

The claimant, however, was bitterly opposed to the development and, on the judge’s findings, did everything she could to prevent it. This included maintaining that her boundary with the development site extended some six feet from the hotel. In 2003 she wrote to the Land Registry seeking its confirmation of this. The Land Registry replied on 14 January 2004, declining to rectify the register so as to show the boundary in this place. The views of the Land Registry were that her title did not include a six foot strip to the west of the hotel and was effectively on the line of the western wall of the building. At the trial the experts were agreed that the boundary line should follow the line of the eaves of the roof of the hotel, subject to making an allowance for the fact that the west wall of the hotel had bowed out towards the defendant’s land. This meant that the boundary line was no more than eighteen inches to two feet from the foot of the western wall of the hotel.

In the Particulars of Claim the claimant had pleaded that she owned a strip four feet three inches wide, immediately to the west of the wall of the hotel but, in the light of the expert’s agreement, this contention was of course abandoned.

Apart from the boundary issue, the other matter of concern was the effect which the development would have on rights of light acquired by prescription in favour of the hotel. This was first raised not by the claimant but by Mr Michael Ney, a building surveyor specialising in rights of light who had been instructed by the architect supervising the development. He was of the opinion that it could have an adverse effect on any rights of light enjoyed by the hotel. On his advice the plans were amended to set back the three-storey part of the new building, but even then Mr Ney remained concerned and, in September 2002, he therefore wrote to the claimant offering, on behalf of the defendants, to pay reasonable compensation for any loss of light. He asked the claimant to contact him and explained that in order to calculate the loss of light that might be involved and the amount of any compensation, he needed to visit the hotel and to measure the affected rooms. The claimant did not reply to Mr Ney nor to a series of letters written to her throughout 2003. In fact she refused to allow Mr Ney to visit the hotel until ordered to provide access by a district judge in January 2007, following the commencement of the proceedings.

The judge heard expert evidence from Mr Ney and, from Mr Keith Sanger on behalf of the claimant, about whether the infringement of the claimant’s rights of light could have been prevented by the construction of a lightwell on the first floor of Sunrise. The experts were agreed that this would have been effective to prevent any infringement, and Mr Ney therefore considered that it was what Sunrise would have had (as he put it) to lose in order to prevent any actionable damage. Mr Allen’s evidence was that, had this possibility been raised with him in 2004, he would have incorporated the lightwell into the design of the house. He said, and the judge accepted, that this could have been done by incorporating the lightwell into the open plan kitchen-dining room. His evidence was that it would not have necessitated the loss of a bedroom. The defendant’s view was that the incorporation of the lightwell would not have reduced the value of Sunrise.

A surveyor called by the claimant, Mr Anthony Flower, expressed the view that the lightwell might decrease the value of Sunrise by about £2,500 per square metre of the area which it covered. This was 8.46 square metres. This would be a reduction of about £20,000, but the judge rejected his evidence as speculative and unsupported by any valuation evidence such as comparables. He accepted Mr Ney’s calculation of the incremental profit which the defendants had gained by being able to build on the area that would have been occupied by the lightwell. In his second report Mr Ney calculated this as £4,855. It was based on figures contained in the fifth witness statement of Mr Allen. The evidence in this witness statement was that Sunrise was worth about £395,000 in 2006, based on an offer in March of that year of £390,000. This valuation was agreed by Mr Flower. Mr Allen estimated that the cost of developing Sunrise, including the cost of the land and interest on loans, was £326,415. On the basis of these figures he calculated that the value of the house as built equated to £3,237 per square metre, compared to a cost of development of £2,675 per square metre. The profit earned by being able to build on the 8.46 square metres was therefore £4,855, ie £3,237 times 8.46 minus £2,675 times 8.46. During the hearing Mr Ney amended his calculations to exclude from the calculation of net profit the cost of the land. This increased the net incremental profit to £6,767. The judge accepted this evidence.

In the action, the claimants sought damages and injunctive relief, both in respect of alleged trespasses and the alleged nuisance caused by the infringement of the rights of light. The alleged acts of trespass were 1) the affixing of the flight of stairs against the west wall of the hotel and on the claimant’s land to the west of that wall; 2) the erection of a fence at the western side of the hotel obstructing access to the four-foot three-inch strip claimed by the claimant, and 3) the digging up of pipes and drains within the four-foot three-inch strip. The judge found that the steps built along the boundary were built with the consent of the claimant who accepted at the time that they reinforced the wall of her garden. The judge held that, having agreed to this and having encouraged the defendants to spend time and money constructing the steps, she was now estopped from seeking their removal, so far as they were built on her land. He therefore refused her any relief on this ground.

The abandonment of the claim to the four-foot three-inch strip undermined the rest of the claimant’s case on trespass, but in relation to various additional temporary acts of trespass carried out during the construction work -- which the judge considered to have been inadvertent and trivial -- he awarded the claimant damages of £5. There was also an award of £5 damages for trespass on the defendant’s counterclaim.

That left the claim for infringement of the claimant’s rights of light. In the Particulars of Claim the claimant originally sought damages for this, but the pleading was then amended to substitute for damages a claim for an account of all the profits which the defendants had made from the infringement of the claimant’s rights of light and, in the alternative, damages including exemplary damages for the nuisance, calculated again by reference to the profit made by the defendants. There was also a claim for an injunction to prevent the nuisance.

The judge was referred to various authorities on the court’s power to award damages, calculated by reference to the profit made by a defendant from his tortious conduct and the relationship of such awards to an account of profits. These included the leading case of Attorney General v Blake [2001] 1 AC 268. The judge also had cited to him authorities on awards of damages in lieu of an injunction, where the court has also, in a number of cases, made profit-based awards. A recent such example involving an action for nuisance in respect of rights of light is the decision of Mr Gabriel Moss QC in Tamaras (Vincent Square Ltd) v Fairpoint Properties (Vincent Square Ltd) [2007] EWHC 212 decided on 8 February 2007, in which the judge awarded damages equal to 30% of the net profit from the development.

Injunctions apart, the remedy for the tort of trespass or that of nuisance is an award of common law damages. The general rule is that this is calculated by reference to the amount of money which will put the injured party in the position they would have been in had the tort not been committed. But as explained by Lord Nicholls in Attorney General v Blake [2000] UKHL 45 awards of damages of certain types of tort, such as trespass or the wrongful detention of goods, have, in a number of cases, been calculated by reference to the benefit received by the trespasser, or what he would have paid for the use of the claimant’s rights where the financial loss actually suffered by the claimant would have been minimal or non existent.

So, in the context of the tort of trespass, the Court of Appeal in The Ministry of Defence v Ashman [1993] 66 P&CR 195 held that, where a trespasser has made use of the claimant’s land, the measure of damages is the value to the trespasser of the use of that land. That particular case concerned the unlawful occupation of a house owned by the Ministry of Defence, which sought as damages the open market letting value of the property. Kennedy LJ said at page 119 that assistance as to the proper value to Mrs Ashman of the use of the property might be gained by looking at what she would have had to pay for suitable local authority accommodation elsewhere. The court was seeking to establish the value of the benefit which the defendant had received.

There is discussion in the judgments in Ashman as to the correct jurisprudential basis for awarding damages by reference to the benefits accruing to the tortfeasor. Hoffman LJ described an award of this kind in that case as “restitutionary”. Lloyd LJ took a different view and expressed doubts as to whether damages could be assessed other than on a purely compensatory basis. These issues were, however, resolved by the decision of the House of Lords in Attorney General v Blake. In his speech, Lord Nicholls dealt with the common law approach to cases of trespass in the following passage at page 279, where he said this:

In relation, however, to claims in nuisance, it is, I think, significant that the possibility of an award of damages on a restitutionary basis has been limited by the decision of this court in Stoke on Trent City Council v W and J Wass Ltd [1988] 3 AER 394 which is, of course, binding on us. At page 401 Nourse LJ said this:

Whatever the basis of calculation of such awards in these cases, they remain, of course, awards of damages. An account of profits is a distinct and different remedy. It was historically one of the standard remedies of Court of Chancery, the other being an injunction. The original jurisdiction of the courts of equity did not include the power to award damages, but in cases involving interference with property rights the court would require the defendant to account for the profits he had made from his appropriation of the plaintiff’s rights.

In some of these cases involving the misuse, for example, of confidential information, the defendant will be in a fiduciary position in relation to the claimant and, as such, accountable by virtue of that relationship for the entirety of any unauthorised profit made at the claimant’s expense. But this jurisdiction to require the defendant to account for and to disgorge all of his profits has also been applied as a measure of liability to cases of interference with certain types of property rights, even where there is no pre-existing duty to account. These include actions for the infringement of trademarks, copyright and patents, where to this day a successful claimant can elect between an award of damages and an account of profits.

The other relevant line of authority concerns the court’s power to award damages in lieu of an injunction. In Wrotham Park Estates Ltd v Parkside Homes Ltd (1974) 1 WLR 798, Brightman J, in exercising the jurisdiction under what was then section 2 of the Chancery Amendment Act 1858, held that, in a case of breach of a restricted covenant, where no real financial loss had been proved, it was, nonetheless, open to the court to calculate an award of damages in lieu of an injunction by reference to the amount which would reasonably have been agreed with the developer for the relaxation of the covenant. The judge set this in that case at 5% of the developer’s anticipated profit.

In paragraph 22 of his judgment in the Tamaris (Vincent Square) case the judge summarised the relevant principles derived from the cases on damages in lieu of injunctions as follows:

The last point is a quotation from the judgment of Mr Anthony Mann QC, as he then was, in Amec Developments Ltd v Jury’s Hotel Management (UK) Ltd [2001] 1 EGLR 81. He also held that the hypothetical negotiations will ordinarily be deemed to have taken place before the transgression occurs, but with the parties being assumed to know the relevant figures on the basis of which the likely profit was calculated.

It is, however, important to emphasise that an award of damages on this basis, just as in the cases of trespass and other torts I mentioned earlier, is not the same as an account of profits. In the latter case the court will order the defendant to pay over the entirety of the profit he has earned from his unlawful conduct. In the case of damages, the common law, as explained by Lord Nicholls, requires the defendant to pay only a reasonable sum for the use of the claimant’s land or property, and it will be for the court to decide what percentage of the profit ought to be reflected in the award which it makes.

In Blake, the House of Lords accepted that it might be appropriate in some cases of breach of contract to order an account of profits. The claim made in that case was for all the profits from Blake’s book. At page 284 Lord Nicholls said this:

The judge held that, in view of her unreasonable conduct, the court would have refused to grant the claimant an injunction in respect of the infringement of her rights of light, and that an award of damages calculated on the Carr-Saunders or Wrotham Park basis was therefore inappropriate. The correctness of this finding is not challenged as part of this appeal and it is not necessary for me to express any view about it.

The judge therefore awarded damages in the sum of £1,848.63, mentioned above. However, he then went on to do the calculation of profit resulting from the defendants being able to build on the site of the lightwell, which would have been relevant to any account of profits or profit-based award of damages. As mentioned earlier, he assessed the profit in the sum of £6,767. He then reduced this figure by a further 85% so as to produce the percentage of the profit, which he held and would have allowed on a Wrotham Park basis. This amounts to £1,050.05 which was, of course, less than the award of damages calculated by reference to the financial loss suffered by the claimant. On the judge’s findings this is therefore a case where the claimant has suffered a real and calculable financial loss and where a profits-based award, at the levels set by the judge, would not have increased the amount of damages even if, contrary to the judge’s view, it had been an available option. The claimant’s prospect of recovering a larger sum depends upon the defendant’s being required to account for the entirety of the £6,767 profit which they made by not having to construct the lightwell.

The first ground of appeal advanced by Mr Ley on behalf of the claimant is therefore that the judge was wrong to hold that he could only order an account of profits in exceptional circumstances. Lord Nicholls in Blake confined himself in terms to cases of breach of contract. The law relating to tort, Mr Ley says, is set out in Chesworth v Farrar [1967] 1 QB 417, in which Edmund-Davies J, in an action for damages against a bailee, refers at page 417 to a person against whom a tort is committed, being able to sue for damages for the tort or to waive the tort and sue in quasi-contract to recover the benefits received by the wrongdoer.

In Blake, Lord Nicholls at page 281 referred to this as an example of the common law affording the wrong party a choice of remedies.

Although interesting in itself, it is not clear to me what this has to do with an account of profits. The cases relied on in which the claimant has been able to waive the tort and seek a restitutionary remedy are cases of conversion in which the defendant has misappropriated the claimant’s property. So far as I am aware, there is no decided case in which an account of profits has been ordered as an alternative to damages in an action for nuisance, and it is difficult to see why such a jurisdiction, if established, would not also be subject to the same requirement to show exceptional circumstances as the House of Lords has held applies in cases of breach of contract.

An actionable nuisance does not involve the misappropriation of the claimant’s rights in the same way, even as in a case of trespass, let alone as in a case of conversion or copyright or trademark infringement. The essence of the tort is that the claimant’s rights to the reasonable enjoyment of her property have been infringed by the use which the defendant makes of his own land. On the face of it, this should not entitle the claimant, in my judgment, to more than compensation for the loss which she has actually suffered; but the highest that it could be put on the authorities is that the claimant can, in appropriate cases, obtain an award calculated by reference to the price, which the defendant might reasonably be required to pay for a relaxation of the claimant’s rights so as to avoid an injunction. This, as already explained, falls a long way short of being awarded the whole profit for the development, which is far in excess and completely unrelated to the measure of loss suffered by the claimant. The decision in the Stoke on Trent case supports this approach.

Mr Ley referred us to a passage in Lord Keith’s speech in Attorney General v Guardian Newspapers Ltd [1990] 1 AC 109, but that was also an action for breach of confidence where equity has always asserted a jurisdiction to order an account of profits; it is not authority for the making of such an order in a case of nuisance. It seems to me that the judge would have been entitled to reject the claim for an account of profits outright, simply on the basis that it was not an available remedy in an action for nuisance; but even if that is wrong, his acceptance that one needs to show exceptional circumstances is not, in my judgment, open to criticism.

The second ground of appeal turns on the way in which the judge calculated the profit attributable to not having to build the lightwell. Given my decision on the first ground of appeal, this point does not arise. The third ground of appeal is that the judge had no jurisdiction to grant an injunction to prevent the claimant from exercising what is said to be her right to remove any part of the steps constructed on her land. As mentioned earlier, the judge held that she was estopped from seeking to remove them. I have to say that I am puzzled by this ground of appeal. Although the judge said in paragraph 24 of his judgment that:

There are two points to make about that. The first is that he did not grant an injunction; the second is that the doctrine of proprietary estoppel can be used to establish such rights as are necessary to give effect to what the person estopped has agreed or encouraged the other party to do. The equity can be satisfied by the grant of an irrevocable licence or some other proprietary right. I do not therefore accept that on those principles the judge would have had no jurisdiction to grant an injunction preventing the removal of the steps.

For these reasons I would dismiss the appeal on the grounds set out in the Notice of Appeal. But after this matter had been considered by Rimer LJ on paper, the claimant issued a further application seeking to amend the Notice of Appeal by adding a challenge to the judge’s findings about the profit made by the defendant on the construction of Sunrise. This application is supported by evidence derived from subsequent proceedings in the County Court between the defendant and his contractors. A finding that the profit was in excess of the £6,750 assessed by the judge would of course be relevant both to damages calculated on a Wrotham Park basis and to an account of profits. But by the end of the trial the claimant was not seeking Wrotham Park damages. If, on the other hand, this court had ordered an account of profits, then the new evidence would fall to be considered as part of that process. Although the judge was not told that there was a dispute between the defendant and the contractors about the sums payable in respect of the construction of the building, this evidence does not go to any other issue which, so far as I can see, would have affected the outcome of the case, including the judgment on the issue of trespass.

Given my decision on the first ground of appeal, none of this material is therefore relevant to the issues on this appeal, and for my part I would therefore dismiss the application to adduce the additional evidence and to amend the Notice of Appeal.

I agree that this appeal should be dismissed. Infringement of a right to light is part of the law of nuisance. For nuisance, as for tort generally, the standard pecuniary remedy is damages, and the measure of damages is the amount required to place the injured party in the same position as if he had not sustained the wrong. Depending on the circumstances, this would usually be assessed either by the diminution in the value of the land or, where this can reasonably be achieved, by the cost of work to remedy the nuisance. On the facts of this case the latter alternative does not arise. But damages may, in an appropriate case, be calculated by what the claimant could reasonably have bargained for, adopting what has been referred to in the authorities as the “user principle” (see Carr-Saunders v Dick McNeil Associates [1985] 4310, cited with approval in Stoke City Council v W and J Wass Limited).

In the present case there was every reason not to give the appellant compensation on the basis of what she could have bargained for, because the respondent had been willing to bargain but she refused his invitation to do so. Since she refused that opportunity I cannot see, as a matter of justice, why she should be entitled to any greater remedy for the infringement of her rights to light than damages for loss which she actually suffered as a result of the infringement and which the judge assessed.

The appellant seeks a novel pecuniary remedy for this type of case, variously expressed in argument as an account of profits and a restitutionary claim. Under a fully coherent system of law, it might be thought that there should be no difference between the two, and that an account of profits is merely a mechanism for giving effect to a restitutionary claim; but as Lord Nicholls explained in Blake, the common law courts and courts of equity have not followed identical paths in the remedies which they have developed. The courts of equity have developed an account of profits as a flexible remedy which is discretionary but which in some circumstances will be granted almost as a matter of course. Typically, it is appropriate in cases where there is a fiduciary relationship between the parties because equity has always taken a very strict approach against personal gain made by fiduciaries without the wholly informed consent of the beneficiary.

The rationale is that a fiduciary ought to be acting for his beneficiary and therefore the beneficiary is to be put in the same position as if the fiduciary had done so, and accordingly the fiduciary must disgorge any profits obtained from use of his position. An account of profits may also be given where the parties are in a quasi-fiduciary relationship, such as a relationship of confidence. The Spycatcher Case [1990] 1 AC 109 and Blake are both cases where the wrongdoer abused his position of trust as a member of the security services by acting as a traitor, and thereby obtained a profit for which he was judged accountable to the state. In the Spycatcher case there was no direct claim to account against the former agent, but his legal position formed a necessary part of the reasoning of the court in considering the liability of the newspapers against whom an account of profits was claimed.

An account of profits may also be given in cases of passing off or various other forms of intellectual property case. Lord Nicholls in Blake explained this as a pragmatic development of the law because, in many cases of that kind, it is easier to assess profit to the wrongdoer than loss to the party whose incorporeal property rights has been infringed.

Mr Ley has not cited any case where an equitable account of profits has been ordered other than cases where there has been a fiduciary or quasi-fiduciary relationship or a usurpation of the claimant’s proprietary rights. He seeks to draw an analogy between rights to enjoyment of property protected by the law of nuisance and intellectual property rights. I am unpersuaded that the analogy is a sound one.

Turning to the common law, the common law courts in a number of cases, notably conversion, allowed a claim for profits through a quasi-contractual action for indebitatus assumpsit, which the claimant could invoke by “waiving the tort”. The theory was that the claimant, whose property was wrongly taken from him and sold by the wrongdoer, was entitled to proceed on the fiction that he had consented to the defendant dealing with the property as he had, but that the defendant had impliedly promised to account to him for the proceeds, hence indebitatus assumpsit. As the House of Lords pointed out in the landmark case of United Australia v Barclays Bank Ltd [1940] 1 AC 1, this was a fiction, because the wrong party was not in truth waiving the wrong -- he was electing between alternative remedies. As Goff and Jones observe in the Law of Restitution 7^th Edition 2007 at paragraph 36 005:

The law in this area is still in the state of development. The modern tendency has been to eschew resort to legal fictions and to consider, as a matter of principle, whether a claim in restitution should lie. In the current edition of Clarke and Lindsell on Torts, 19^th Edition 2006, at paragraph 29 151-152 edited by Professor Andrew Burrows, it is observed that there are cases in which restitutionary claims have been allowed in tort, but the extent to which this remedy is available remains controversial, as is the question of the extent to which it should be available. He is correct in those observations.

Mr Ley has not cited any authority to show that common law courts have developed the waiver of tort doctrine so as to extend to claims in nuisance. There is no precedent for a claim for restitutionary damages on facts directly comparable to the present case. I would reject the argument that this remedy is, or should be, generally available as a matter of course in cases of nuisance. As already mentioned, there is a volume of academic writing on the subject. This is not an appropriate case for seeking to analyse the arguments in depth, but it is perhaps worth noting that Goff and Jones, who are themselves in general terms supporters of the development of restitution in this area, do not suggest that it should be generally available in cases of nuisance. They give an illustration why the subject needs to be approached with caution. They take the case of a factory which belches out smoke and fumes over an area covering thousands of neighbouring households. Suppose that the owner had previously rejected a proposal to install an anti-pollution device on the ground of expense, and is later held liable in nuisance. If there were a generally available restitutionary remedy to those affected, this would give rise, as the authors point out, to a legion of questions. What is the factory owner’s benefit gained at each household’s expense? Is it the sum which the factory owner would have had to pay each owner for the privilege of polluting his property? Or is it a proportion of the owner’s profits, or a proportion of the sum which he has saved from not installing the anti-pollution device? Does the owner of a nearby mansion recover more than the owner of a nearby terraced house? They observe that the difficulties confronting a court in measuring and valuing the benefit are powerful reasons for not recognising the existence of some general restitutionary claim. Moreover, legal problems apart, any judicial enquiry with complex attendant evidence could well be inefficient in economic terms.

Having rejected Mr Ley’s general proposition that such a remedy is available as a course on facts such as the present, I would leave open the question whether a restitutionary award may be available on the facts of a particular case of nuisance, given the developing state of the law, because it seems to me better that any such question should be addressed in the light of the particular features said to justify that remedy in the particular case. If it be that the law does develop in such a way as to make such relief available in an appropriate case, I am satisfied that this is not such a case. On the judge’s findings, if the claimant had been cooperative the respondent would in all probability have built his property in a way which did not infringe her right to light. Her unreasonable failure to cooperate did not destroy her right of light, but for the infringement of that right I see no justice, as I have already said, in her being awarded anything more than a fair valuation of the loss that she has suffered.

I agree that this appeal should be dismissed for the reasons given by Patten J.