Landowners who turn a blind eye to the unauthorised occupation of their land could find themselves facing damages claims from the owners of neighbouring land in the light of a new appeal court ruling.

The case of Lippiatt & anor v South Gloucestershire Council is one which throws important new light on the rights of neighbours if their property is "invaded" by the occupants of adjoining land, authorised or otherwise.

Tenant farmers Peter Lippiatt and Richard Febry complained that travellers who had moved onto council owned land next to the farms they occupy caused considerable nuisance and in the light of that they sought to sue the council.

Their claim was originally struck out by Judge Weekes QC at the High Court in Bristol last June, mainly on the basis of the Court of Appeal decision in Hussain v Lancashire County Council.

The judge held as a preliminary point that in the light of the Hussain ruling – in which it was held that Lancashire County Council could not be sued in respect of the activities of tenants – the complaints of Lippiatt and Febry disclosed no cause of action.

Now, though, Lords Justices Evans and Mummery and Sir Christopher Staughton have held that the judge was wrong and have reinstated the claim. That decision, says veteran property lawyer and counsel for Lippiatt and Febry, Barry Payton, instructed by Moger & Sparrow of Bath, is of major importance.

He says that the decision in Hussain left many property owners with the impression that they could not be held responsible for what any occupiers of their property did off the land. This is still largely true as far as official tenants are concerned.

But the new judgment creates an important distinction. The appeal court distinguished between the activities of tenants and of licensees. Lord Justice Evans said it may be that where the owner/occupier of land faced allegations that he was liable for the activities of his licensees, he was liable. On such a basis, the owner of the property – in this case the council – could be vulnerable to a damages claim.

Travellers moved onto the land in question, off the A46 between Bath and Stroud, in 1991 without consent. Ultimately they were evicted in 1994. But in the interim the council was said to have "tolerated" unauthorised encampment on the land, to the extent that it even provided toilet, water and other facilities.

Barry Payton comments: "They were licensees in that the council had allowed them to stay on the land and had made facilities available for them."

Lippiatt and Febry complained of, among other things, rubbish and excreta dumped on their land; goats, ponies and horses tethered on their land; theft and damage; attacks on staff; and of the travellers' dogs chasing their sheep.

Payton reflects: "I think that this judgment makes it clear that the Hussain case did no more than confirm that a landlord is not responsible for the activities of legal tenants who hold a 'term of years in possession'.

"On the other hand, the decision shows that a landowner may well be responsible for the actions of licensees if the presence of the licensees on the land gives rise to nuisance.

"The court has effectively said that a person can 'emanate' from land as much as noise or dust. In other words, for the purpose of the law of nuisance a person can be a 'thing'."

Payton feels that people got "too excited" after the Hussain ruling: "They seemed to think that landowners could never be held responsible for what occupiers of land did off site. In the light of the recent decision, though, that now seems likely to be strictly limited to a landlord/tenant situation, where the landlord is merely the freeholder in reversion and it is the tenant who is responsible for what goes on and any nuisance caused.

"In a case such as this recent one the travellers were not tenants. They were licensees in that the council had allowed them to stay on the land and had made facilities available. Now the court has said that council's and other landowners could be held liable in such circumstances."