The Supreme Court Judgment in Coventy v. Lawrence, delivered on 26 February 2014, has many ramifications for the law of nuisance, but for property developers, their architects and other professional advisors, a key significance of the judgment is as to the assessment of risk of injunction arising out of infringement of rights of light.
The noise nuisance in the case was caused by the Fen Tigers motorcross track and stadium. The Supreme Court held that a right to emit noise could arise by prescription and is capable of constituting an easement. It is therefore, for the purpose of remedies for breach, exactly analogous to a right of light.
The appellants argued before the Supreme Court that even if the noise was a nuisance at the original trial the judge should have awarded damages in lieu of an injunction. For many years the Courts have been guided as to which remedy should be awarded by the famous Shelfer v. City of London Electric Lighting Co. [1895] 1CH 287 "good working rule". Damages in substitution for an injunction may be awarded where four conditions are satisfied:
- The injury to the claimant's legal rights is small;
- The injury is capable of being estimated in money;
- The injury can be adequately compensated by a small money payment; and
- It would be oppressive to the defendant to grant an injunction.
Since Shelfer there have been variations in applying those principles, but there has been a strand of cases by which on application of it the Courts have said that damages in lieu of an injunction should be exceptional. Other cases have taken a less restrictive view. All of this has now changed.
Lord Neuberger favoured a more flexible approach, and said that a mechanical application of the four tests, leading to damages being awarded only in very exceptional circumstances was simply wrong in principle. He emphasised the discretionary nature of the power to award damages in lieu, and that it should not be fettered. The prima facie position should be that an injunction will be appropriate, and the legal burden remains on the defendant to show why it should not, but in the absence of circumstances pointing the other way it would normally be right to refuse an injunction if the four Shelfer tests were satisfied. Most importantly he said that the fact that those tests are not all satisfied does not mean that an injunction should be granted. In other words the discretion of the Court is to be much more wide, and all of the circumstances in the case are capable of being taken into account. In light cases that will include the size of a scheme, the nature of use of the premises suffering light loss, and the potentially disportionate cost of redesign, or worse, of demolition.
Lord Sumption went even further. He described Shelfer as out of date and said that it may well be that an injunction should as a matter of principle not be granted in a case where a use of land to which objection is taken requires and has received planning permission.
Lord Carnwath was less strident and tempered that, agreeing with Lord Neuberger's flexible approach and said that the grant of planning permission for a particular use should not give rise to a presumption against the grant of an injunction, and suggested that circumstances might make a limited injunction, combined with an order for damages, the appropriate remedy.
All of this means that the Courts have been granted freedom to decide what remedy is best in the circumstances. Certainly a scheme for which planning consent has been given is now far less likely to suffer a hugely expensive and disruptive award of injunction, preventing a build or requiring re-design with a cut-back of offending parts giving rise to a light infringement, where the proper assessment of the damages would not give rise to a particularly large award. The usual measure of damages awarded will be the diminution in value of the claimaint's property caused by the breach, but the possibility of loss of claimaint's ability to enforce rights should also be taken into account. So developer's gain as well as the claimaint's loss are to be considered and the principle at play is the notion of "hypothetical release damages"; what payment would be appropriate as a payment in return for the injured party releasing the developer from potential liability? That sum is to be calculated in part by reference to the gain enjoyed by being spared the injunction.
All of this will take time to work through in practice but developer's advisers will be comforted that injunctive relief is much more discretionary and thus less likely to ruin a properly designed and approved scheme. Conversely though a financially though manageable damages award will never be completely certain.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
