Scott v Aimiuwu [2015] (unreported) (Central London County Court)

Who put the lights out

Summary

  1. This is the first known rights of light case to reach the Courts since the potentially "game changing" decision of the Supreme Court in Coventry v Lawrence [2014] UKSC 13.   
  2. Coventry v Lawrence suggested that the "Shelfer" test used by the Courts when considering whether or not to award damages instead of an injunction should not be rigidly applied.  This led to developers being more positive about their developments going ahead despite potential claims from parties claiming rights of light.   
  3. In this case, the injured party was refused an injunction requiring their neighbour's property to be demolished even though they had objected to the extension before it was built and throughout.  Instead they were awarded damages.   

Background

Statute has for a long time allowed Courts to make an award of damages in lieu of an injunction – firstly by the Chancery Amendment Act 1858 and now by section 50 of the Senior Courts Act 1981.

However, no guidance is offered by the statute – it is a matter of discretion.

This question is an important one as it often enables a party to "get away" with simply making a payment to an injured party for their own greater commercial or personal benefit.  The injured parties in such circumstances think that is unfair as they are being forced by the Courts to compromise their legal rights.

On the other hand, those who seek to pay damages instead argue that their conduct and/or infringement is trivial in nature and often stifles development.

The reality is, of course, that the injured party may be seeking to establish a ransom position in order to extract more money from the developer. It is in their interests, therefore, to obtain an injunction to stop the development happening and to stop the infringement of their rights being valued in terms of money. Once that happens, it is open to the parties to negotiate outside the courtroom.

In Shelfer v City of London Electric Lighting Co [1895], the Court of Appeal set out four tests saying that damages should be awarded:

  1. Where the injury to the claimant's legal rights is small;   
  2. Where the injury to the claimant is capable of being estimated in money;   
  3. Where the injury to the claimant can be adequately compensated by a small monetary payment; and   
  4. Where the case is one in which it would be oppressive to the defendant to grant an injunction.

It was also said that damages ought to be awarded in only exceptional circumstances.

How was this applied in subsequent cases?

In Kine v Jolly [1905] 1 Ch 480, the Court of Appeal awarded damages in respect of an interference to a right to light saying  that "as a general rule the Court ought to be less free in granting mandatory injunctions than it was in years gone by".

The same approach was adopted in Fishenden v Higgs & Hill Ltd (1935) 153 LT 128, another rights of light case, in which the judge said "we ought to incline against an injunction if possible" and that the Shelfer tests "were not intended to be a fetter on the exercise of the Court's discretion".

So a line of cases leant towards awarding damages rather than an injunction.  However, in more recent times, the Court of Appeal has taken a more strict  "Shelfer" approach so that unless all four tests were satisfied, there was no jurisdiction to grant an injunction. For example in Regan v Paul Properties Limited  [2007] Ch 135,  the Court of Appeal granted an injunction where the potential damages to Regan was estimated at around £5000-£5500 which was not considered to be "small." 

 Again in HKRUK ll (CHC) Ltd v Marcus Alexander Heaney [2010], Mr Heaney was granted an injunction which required the developer to cut back its development which had already been built – not considered to be oppressive even though Mr Heaney did not apply for an injunction at the outset.

For that reason the law has not been very clear and there have been some obvious inconsistent decisions. Then came Coventry v Lawrence [2014] UKSC 13.  In that case, Lord Neuberger commented that there was a "tension" between the decided cases or, at worst, an inconsistency.

And so the Supreme Court reviewed the authorities and decided that there should be more flexibility than that suggested in recent cases.

It stated that strictly applying the Shelfer tests and an approach which involves damages being awarded "in very exceptional circumstances" was wrong. The Courts' power to award damages involves a classic exercise of discretion which should not as a matter of principle be fettered.  Although this is said to be an exercise of discretion, Lord Neuberger made pains to suggest that it is appropriate to "give as much guidance as possible so that the manner of this exercise is predictable".  The prima facie position is that injunctions should be granted and that the legal burden is on the developer to show why they should not.

Following Coventry v Lawrence, it was less certain that an injunction would be granted in all cases – this appeared to be good news for developers and this has been borne out by this recent case.

Scott v Aimiuwu

In Scott v Aimiuwu [2015], the Judge, Edward Cole of Falcon Chambers, had to decide whether or not to grant an injunction in a rights of light case or award damages instead.

The case concerned two residential properties in Potters Bar. The Defendants, Mr and Mrs Aimiuwu, extended their property with the effect that it infringed Mr and Mrs Scott's enjoyment of light. There had been discussions between the two parties but nothing was really agreed.   There had also been two planning permissions (the latest one being granted in May 2013).   When the extension was almost complete, Mr and Mrs Scott issued proceedings for an injunction requiring the extension to be demolished.

The Defendants argued that the discussions they had had raised a form of "estoppel" which now prevented them from claiming an injunction. The Judge disagreed, saying that Mr and Mrs Scott had never encouraged Mr and Mrs Aimiuwu to carry out the extension.

Having established there was an infringement and that no estoppel arose, the next question was whether or not an injunction should be granted or damages awarded instead.  Unfortunately, the case is not reported and so the precise reasoning cannot be examined.  Nevertheless, some sources have suggested that the Judge referred to Coventry v Lawrence in addition to the Shelfer test and then concluded that the grant of an injunction would be oppressive bearing in mind the level of infringement.

This is particularly interesting, as previously the Courts had taken the view that they would grant an injunction where a party proceeded with a development with the full knowledge of and ignoring an injured party's rights.

Damages

Calculating damages is always quite contentious in these cases.   The developer will advocate the book value of the loss (plus a multiplier) whereas the injured party will seek a share in the development profit – usually one-third. 

The courts approach is to review both bases, the impact of the infringement and then award what it considers "feels right."   

In this case, the book loss was approximately £12,000.    One third of the profit was calculated at £65,000.  The Judge felt the infringement was minimal and so applied a multiplier of 2.5  to the book value and  awarded £30,000.

Our Views

This case represents good news for developers. However, all cases are decided on their own facts and specialist advice should always be sought.