The Court of Appeal upheld the decision of His Honour Judge Grubb in the Cardiff County Court to the extent that Network Rail was liable in nuisance for the spread of the plant; however, it strongly disagreed with much of the reasoning applied by the lower court. The decision raises some important doctrinal issues in the tort of nuisance which shall be dealt with in turn.
The encroachment cases
The County Court held that the encroachment cases (which mainly concern tree roots and overhanging branches) constituted a distinct branch (pun not intended!) of nuisance. The case of Delaware Mansions v Westminster City Council  1 AC 321,  UKHL 55 was used as authority for the proposition that physical damage to property is a necessary ingredient of the tort in this context. The County Court was fortified in its conclusions by some scholarly arguments to the effect that this type of claim would originally have been brought under a medieval form of action known as action on the case which necessitated the existence of tangible harm. This ingredient was lacking in the case at hand in that, although the rhizomes had infiltrated the foundations of the property they had not done any damage.
The Court of Appeal concluded that the analysis of the County Court was wrong on this point. Firstly, it was held that it was unwise to fetter the development of the common law by adhering to medieval categories in an overly dogmatic manner. Damage should be regarded as an elastic concept in nuisance and the encroachment cases should not be interpreted as precluding harm which fell short of actual injury to the fabric of the property. Nuisance is about the protection of property rights and, in particular, the use and enjoyment of the land. The presence of such an invasive weed and the knowledge of the harm which it may cause must clearly have a detrimental effect on the use and enjoyment of the property. In any case, there were clear grounds for arguing that the presence of the rhizomes did in fact amount to physical damage in that they placed a burden on the claimants and required them to take remedial measures. There was authority for the proposition that the dirtying or contamination of property can be regarded as physical damage, even though the fabric of the property is not affected in the long term, as it has to be cleaned in order to render it fully usable once more. See Court of Appeal judgment in Hunter v Canary Wharf  2 W.L.R. 348 concerning the deposit of dust requiring professional cleaning and Blue Circle Industries v Ministry of Defence  3 All ER 385 concerning low level nuclear contamination requiring removal at considerable expense.
Depreciation in market value
Although the County Court rejected the notion that the harm in this case fell within the encroachment category, it accepted the argument that the proximity of the Knotweed constituted a nuisance in that it had a detrimental effect on the value of the property. Although the Court of Appeal agreed with the outcome on this point it disagreed with the reasoning. In short, it was held that the County Court had failed to properly link the financial loss with any interference with property rights. Instead, the CC had reached the conclusion that the mere presence of an undesirable element, which has a detrimental effect on the value of property, is actionable. The Court of Appeal, on the other hand, held that this would be a type of pure economic loss which is not grounded in any interference with property rights. The financial loss must flow from some interference with the use and enjoyment of property. For the aforementioned reasons, the presence of the Knotweed clearly interfered with the use and enjoyment of the properties and was thus not pure economic loss in that sense.
The purpose of the tort of nuisance is not to protect the value of property as an investment or a financial asset. Its purpose is to protect the owner of land (or a person entitled to exclusive possession) in their use and enjoyment of the land as such as a facet of the right of ownership or right to exclusive possession. The decision of the Recorder in the present case extends the tort of nuisance to a claim for pure economic loss. Counsel for the claimants did not identify any case in which a similar decision was reached or, more generally, where the amenity of a property has been held, for the purposes of actionable private nuisance, to include the right to realise or otherwise deploy the value of the property in the financial interests of the owner. Contrary to the view of the Recorder, that would not be an incremental development of the common law by way of analogy but a radical reformulation of the purpose and scope of the tort. (per Etherton MR at .
This aspect of the decision serves to clarify what is meant by the term pure economic loss in this context. A loss is purely economic loss if the claimant only has a financial interest in the affected property. Ones interest in the home is not purely a financial interest in that one depends upon it for shelter and general wellbeing. This raises the interesting issue of whether claims brought by property developers and speculators would be dismissed on the grounds that their interest in the matter was purely economic.
From a doctrinal perspective the decision is important in that it seeks to break down some of the categories that have arisen between various types of nuisance. The Court of Appeal clearly felt that this was an area where the medieval ghosts were being allowed to rattle their chains. It also seeks to clarify what is meant by harm in nuisance and underscores the need to adopt a flexible approach. Harm in nuisance is inextricably connected with the protection of certain types of interest in land and it can be misleading to import concepts from other branches of tort such as the concept of pure economic loss. This has a specific meaning in negligence which may not equate with the concept of harm in nuisance.
In any event, it has now been clearly established that the presence of Japanese knotweed may give rise to a claim in damages for diminution in market value and the costs of treatment irrespective of any damage to the actual fabric of the property. This has serious ramifications for Network Rail and all other major property owners.