In Coventry and Others v. Lawrence and Another (2014) UKSC 13 (2014) 2 WLR 433, the Supreme Court rewrote the rules on the circumstances in which a court will award damages rather than grant an injunction in cases of nuisance. The case involved noise nuisance from a stock car racing circuit.

In Shelfer v. City of London Electric Lighting Company (1895) 1 Ch. 287, A.L. Smith LJ set out the oft cited “good working rule” as to when a court, in such circumstances, might award damages rather than grant an injunction. He stated that where the injury to the plaintiff’s legal rights was small, was one which was capable of being estimated in money, was one which could be adequately compensated by a small money payment and one where it would be oppressive to the defendant to grant an injunction, then damages in substitution for an injunction might be given. He emphasised, however, that “a person by committing a wrongful act … is not thereby entitled to ask the court to sanction his doing by purchasing his neighbours rights” and in the same case, Lindley LJ made it clear that the award of damages instead of the grant of an injunction was reserved for “very exceptional circumstances”.

In the Coventry case all judges agreed that “slavish” following of Shelfer was no longer appropriate. There agreement more or less ended.

Lord Neuberger at paragraph 120 held that the court’s power to award damages in lieu of an injunction involves a classic exercise of discretion which should not, as a matter of principle, be fettered.

At paragraph 121, Lord Neuberger went on to say, however, that the prima facie position was that an injunction should be granted so that the legal burden was on the defendant to show why it should not.

So far as the Shelfer test is concerned, at paragraph 123 he said that the four tests should not fetter the court’s discretion, that in the absence of additional relevant circumstances pointing the other way, if the four tests were satisfied it might well be right to refuse an injunction, but the converse is not necessarily true, namely that the mere fact that all four tests were not satisfied does not necessarily mean that an injunction should be granted.

He then emphasised that the public interest was a relevant factor and that planning permission was a factor that could be in favour of refusing an injunction. It would be a factor of real force where it was clear that the planning authority had reasonably and fairly been influenced by the public benefit of the activity.

Lastly, he dealt with damages in lieu and held that where appropriate the damages could include the loss of the claimant’s ability to enforce his rights which might often be assessed by reference to the benefit to the defendant of not suffering injunctions.

Lord Mance agreed that the appeal should be allowed for the reasons given by Lord Neuberger save that (at paragraph 167), he stated that he did not consider that the grant of planning permission could give rise to any presumption that there should be no injunction.

Lord Carnwath agreed with Lord Neuberger that the court should take the opportunity to signal a move away from the strict criteria derived from Shelfer. At paragraph 245, he stated that he generally agreed with the observations of Lord Neuberger and Lord Sumption, but with some reservations. In particular, he stated his reluctance to open up the possibility of an assessment of damages on the basis of a share of the benefit to the defendants.

Lord Clarke agreed with the conclusions and reasoning of Lord Neuberger subject to some qualifications. He agreed that planning permission

was relevant. He stated, however, that the issues of burdens of proof and how the discretion should be exercised should be reserved pending fuller argument. He seemed, at paragraph 171, to be lending some support to Lord Sumption’s view that where damages is an adequate remedy, it would be inappropriate to grant equitable relief. Lastly at paragraph 173, he appeared keener on the principle of extending damages measured by a reasonable price for a licence to cases of nuisance by noise (and by inference to nuisance by interference with rights to light etc.).

Lastly, Lord Sumption, at paragraph 161, expressed his view that there was much to be said that damages would ordinarily be an adequate remedy for nuisance and that an injunction should not usually be granted in a case where it was likely that conflicting interests were engaged other than the parties’ interests. In particular, he said, it might well be that an injunction should as a matter of principle not be granted in a case where the use of land to which objection was taken, requires and has received planning permission.

This case leaves the law in an unfortunate state of flux and uncertainty. Good news for lawyers, perhaps, bad for clients. The “slavish” following of the Shelfer rule did, at least, mean that parties knew where they were. It also upheld the, perfectly reasonable in this writer’s view, principle that a wrongdoer ought not to be able to come to court to buy off his wrongdoing. That is akin to the courts developing, without statutory approval, a de facto private compulsory purchase system. The point does not appear to have been argued, but, in particular in relation to trespass, Protocol 1, Article 1 of the European Convention on Human Rights would appear to be engaged.