Key points

  • Where a property owner's rights are being interfered with, the starting point has historically been that a court should award an injunction to prevent the wrongdoer from continuing to cause the nuisance.
  • The Supreme Court has now stated that, in its view, courts have been too ready to grant injunctions in recent years. The courts should now be more willing to consider an award of damages in lieu of an injunction, especially where there are wider "public policy" issues involved (eg, local employment that would be lost if a factory were shut down).

Background

This article follows on from the previous entry in this month's property update because it arises out of the same case, the Supreme Court's decision in Coventry and others v Lawrence and another. Having decided that there could be such a thing as an easement to emit noise, and that the planning history of the "dominant" site could be taken into account, the Supreme Court went on to consider what the remedy to the complainants should be. Would an injunction be ordered, requiring the speedway stadium and the motocross track to be used in a different, more limited way, or would a payment of damages to Ms Lawrence and Mr Shields suffice instead?

Discretion

As mentioned in the first article, the Supreme Court held that no right to make noise had actually arisen by prescription in this case because the unlawful element of the use had not been going on for the necessary 20 year period. Therefore there was an actionable nuisance. How should this be dealt with in terms of compensating the owners for the nuisance they had suffered, and would potentially continue to suffer?

Where a property right is being interfered with, the starting position was - and remains, despite this judgment - that the claimant is entitled to an injunction. It is not for the claimant to show why they should get an injunction; the defendant bears the burden of showing why the claimant should not get one.

However, Lord Neuberger went to some lengths to ensure that the courts, and parties to future cases, remember that an injunction is ultimately an equitable remedy, available at the discretion of the court; it is not a legal remedy, available as of right. The discretionary nature allows a court to take into account whatever matters it deems appropriate in the particular case before it.

In nuisance claims, the 1895 Court of Appeal decision in Shelfer v City of London Electric Lighting Companyis often raised in argument. It is cited (usually by the defendant) as authority for the proposition that a claimant should not be entitled to an injunction where:

  • The injury to the claimant's legal rights is small.
  • It is capable of being estimated in money.
  • It can be adequately compensated by a small money payment.
  • It would be oppressive to the developer to grant an injunction.

However, the courts do not like to be seen to sanction the wrongdoing of the defendant by awarding damages, and allowing the nuisance to continue. Even in Shelfer itself, the judge did not want the Court of Chancery to be allowing "a wrong to continue simply because the wrongdoer is able and willing to pay for the injury he may inflict. ... [This is not] a tribunal for legalising wrongful acts".

The majority of recent cases in this area of law have been in relation to rights of light claims, where a development has interfered with the light received by neighbouring properties. The trend has been to award damages instead of an injunction only in exceptional circumstances.

For example, in the 2010 case of HKRUK II (CHC) Limited v Heaney, a developer was required by the High Court to take down part of the top two storeys of a building, even though some of the space had already been let to a tenant. There was a similar outcome in the 2007 case of Regan v Paul Properties Ltd and another, which was heard by the Court of Appeal.

The decision of the Supreme Court in Coventry v Lawrence

Lord Neuberger confirmed that, where a claimant has established that the defendant's activities constitute a nuisance, the claimant is - on the face of it - entitled to an injunction to restrain the future commission of the nuisance (in addition to damages for past nuisance). The precise form of the injunction awarded in any particular case will depend on the facts.

The Supreme Court, accordingly, restored the injunction originally imposed by the High Court. The judge there had heard much evidence as to the noise pollution and had had the opportunity to cross-examine witnesses. The Supreme Court felt he was the person best placed to determine the terms of the injunction. The injunction does not prohibit all forms of activity in the stadium or on the motocross track; instead, it sets certain hours of use, the number of times race meetings may be held each year, noise levels which must be adhered to, etc.

However, the Supreme Court also allowed the defendants to seek an order of the High Court by which damages could be awarded in substitution for the injunction. This was because the defendant's request for damages to be awarded as the appropriate form of relief was only raised, for the first time, in the Supreme Court. The High Court had therefore not had the opportunity to consider awarding damages in lieu. A calculation of damages had been made in the High Court, but these were compensation for the nuisance already suffered. They did not relate to the future position of the parties.

In approaching the question of whether to replace the injunction with an award of damages, the High Court will no doubt take into account the views expressed by their Lordships in this case.

But this was another area in which the members of the Supreme Court were not entirely as one. It will be interesting to see whether, for example, the judge decides to take up Lord Sumption's suggestion that:

"[t]here is much to be said for the view that damages are ordinarily an adequate remedy for nuisance, and that an injunction should not usually be granted in a case where it is likely that conflicting interests are engaged other than the parties' interests. In particular, 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".

The other judges did not go quite so far when it came to the existence of planning permission, or the influence on a case of the public benefit of a particular use. For now, these remain merely factors for a court to consider, but it is certainly of note that public interest is a relevant factor that could be taken into account.

That said, the Supreme Court has chosen not to lay down any hard and fast rules as to what factors should or should not be taken into account, or the weight to be given to them, when considering the remedy for a nuisance. It notes that each case will be highly fact-specific, meaning that each court should be unfettered in its ability to weigh up the competing factors, and to decide on the appropriate remedy in any particular situation.

Whether or not the weight of any particular factor - including the public interest - is sufficient to justify the refusal of an injunction will be for the court to decide in the case before it. To quote again from Lord Neuberger:

"The fact that a defendant's business may have to shut down if an injunction is granted should ... obviously be a relevant fact. ... It is also right to mention planning permission in this context. In some cases, the grant of planning permission for a particular activity (whether carried on at the claimant's or the defendant's premises) may provide strong support for the contention that the activity is of benefit to the public, which would be relevant to the question of whether or not to grant an injunction".

However, even in such cases, the court dealing with the claim will have to weigh up all of the competing factors in reaching its decision.

The Supreme Court's decision has made one thing particularly clear: it is not for a court to "slavishly" follow the Shelfer principles. The power to award damages in lieu of an injunction has been available to the courts since 1858 (by the introduction of Lord Cairns' Act) and the question of whether damages will suffice should be given full consideration - whether the four Shelfer criteria are satisfied or not.

Measure of damages in lieu of an injunction

If there is going to be an award of damages in lieu of an injunction, in what amount should it be? It was on this question, more than any others raised by the case, that their Lordships' opinions differed. Ultimately, Lord Neuberger said they would leave this issue to one side, as they had not actually been asked to make a ruling on it.

He noted that the starting point, when assessing the damages to be awarded in lieu of an injunction, is normally based on the diminution in value to the claimant's property arising out of the continued nuisance. However, he went on to say that the damages might "... also include the loss of the claimant's ability to enforce her rights, which may often be assessed by reference to the benefit to the defendant of not suffering an injunction".

In other words, Lord Neuberger recognised that - in some circumstances - damages could be calculated not by reference to the claimant's losses but by reference to the defendant's gains. Such damages would perhaps be appropriate in a case where the claimant had not actually suffered any loss, but the court still felt compelled to penalise the wrongdoer. This is known as the buy-out principle, and was considered in an alert of June 2012.

Some of their Lordships went further. Perhaps this very point will be looked at when the case goes back to the lower court for consideration of whether the injunction will be replaced by damages.

Points to consider

The Supreme Court felt that "the opportunity should be taken to signal a move away from the strict criteria derived from Shelfer". It has also confirmed that public issues, beyond the private rights of the parties, may be taken into account. This has led some commentators to refer to the decision as driving the proverbial coach and horses through Shelfer. It remains to be seen whether this is an over-reaction.

However, the sheer fact that the Supreme Court has begun a shift away from a principle that has been with us for almost 120 years is indeed radical. In Lord Neuberger's words, the Supreme Court judges "are changing the practice of the courts".

As with all neighbour disputes, it is best if the parties can reach agreement without recourse to the courts. The time and costs involved often do not reflect the value of the claim, and the longer the dispute continues, the more acrimonious the relationship can become.

Complaints should be investigated promptly, with a view to mitigating potential harm. And liaison with appropriate authorities should be considered: while a statutory licence or permission will not automatically result in the nuisance-causing activity being lawful, the support of the relevant public authority to one party or the other might be a factor that the court will be willing to take into account when considering issues which go beyond the private rights of the parties.