A licensee is being sued for £50,000 damages by neighbours who claim a pub's smoking area has reduced the value of their home.
The couple living next door to the Silverton Inn, Silverton, Exeter, say their flat has become unsaleable because of noise and nuisance caused by smokers using the pub's converted rear yard.
Host Shane Radmore denies the smoking area is causing problems but is resigned to defending the damages claim when the case comes to court.
Radmore converted the former skittle alley into a smoking area before last July's smoking ban came into effect.
Neighbours Neil and Rachel Mutter bought the Old Lodge, situated behind the pub, for £170,500 in August 2004.
The yard is the only access to the flat and the couple claim they have to run the gauntlet of smoking customers to reach their home.
The couple put the flat on the market for £185,000 last November but claim noise, rubbish and the "eyesore" of the smoking area has prevented a sale.
The yard was used by licensee Radmore and his partner Amanda Tucker before last July as an occasional outside barbecue and eating area.
Radmore says the yard is fully licensed for use and denies it is his fault the Mutters are unable to sell their flat.
"They paid a lot of money for the flat in 2004 and its not my fault if they are finding it difficult to sell for what they are asking," he said.
"It is absolute madness."
Hornet's nest
The case could open a hornet's nest for other licensees with outside smoking areas if the Silverton Inn neigbours win their case, said Morning Advertiser legal editor Peter Coulson.
But he held out only a slim chance of the couple being successful as they were mounting an action which was difficult to sustain.
"They would have to show conclusively that they had failed to attract buyers who had been put off directly because of the smoking area.
"They would have to prove this had resulted in a financial loss," he said.
"Noise and nuisance from outside smoking shelters has already become a key issue for the trade and should this couple win it would be a major worry for other licensees and licence holders," Coulson added.