Last edited 06 Dec 2020

Dawson v Great Northern and City Railway Co

Dawson's case was concerned with a claim of a right to statutory compensation. The head note to the case states that it concerns a claim of a right to compensation and not a claim for damages for a wrongful act. This headnote is somewhat misleading.

The Railway Company constructed under statutory powers a tunnel under or near certain houses in which D was interested and in which she carried on business and she claimed to be entitled to compensation on the ground that her interest in the houses had been injuriously affected by structural damage to the houses and by damage to trade stock. The structural damage had occurred prior to the acquisition of her freeholder interest and also the acquisition of her leasehold interest, though both transactions purported to assign rights to recover compensation from the railway company in respect of the structural damage, these rights being statutory rights under the Land Clauses Consolidation Act 1845. The court held that whilst an assignment of a mere right of litigation is bad, an assignment of property is valid even though that property may be incapable of being recovered without litigation.

Sterling LJ stated:

‘Even if the assignment be regarded apart from the conveyance or the lands and buildings... it appears to us that it is good; but we think that great weight must be given to the circumstances that this assignment is incidental and subsidiary to that conveyance and is part of a bona fide transaction the object of which was to transfer to the plaintiff the property of [the vendor] with all the incidents which attach to it in his hands. Such a transaction appears to be very far removed from being a transfer of a mere right of litigation.'

The Court of Appeal was troubled by the principle of law that a bare cause of action was not assignable and it is suggested that this was the reason for the court's emphasis on the right of statutory compensation and that their comments on the issue of damages are still helpful to formulating an answer to the question as to whether an assignee has any right to recover damages against an original debtor if the assignor has not incurred any expenditure on repair or building costs or has sold the property for its full market value.

In Dawson both the freehold and leasehold interests were sold to D for market value and the vendor did not appear to have suffered any loss. However, the court held that the assignments of the benefit of the right of compensation which were made at the same time as the conveyance of the freehold and the transfer of the leasehold, entitled D the assignee to recover in respect of the assignor's rights of compensation against the original debtor, the railway company.

Sterling LJ stated:

‘It appears to us that the intention of this deed was to place the plaintiff precisely in the same position as regards the defendants with respect to the lands conveyed as was previously occupied by [the assignor] and in particular to transfer to the plaintiff the compensation for structural damage to the conveyed property.'