Counting the cost of nuisance: challenging conclusions in Coventry v Lawrence Part 2

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Summary: On 24 July the second part of what is now likely to be a trilogy of judgments from the Supreme Court, was handed down in the case of Coventry v Lawrence. Two principle issues were covered in the leading judgment from Lord Neuberger; the extent to which a landlord can be held liable for the nuisance of his tenant and the potential impact of Article 6 of the European Convention on Human Rights on the liability of a losing party to pay costs.

On 24 July the second part of what is now likely to be a trilogy of judgments from the Supreme Court, was handed down in the case of Coventry v Lawrence.  Two principle issues were covered in the leading judgment from Lord Neuberger; the extent to which a landlord can be held liable for the nuisance of his tenant and the potential impact of Article 6 of the European Convention on Human Rights on the liability of a losing party to pay costs.

Nuisance


The appellants in the case, local businesses who claimed to have suffered loss as a result of noise from a local motorcycle track, sought damages not only from the tenants of the track who ran various events, but also from the landlord owner of the site, claiming they had adopted the tenant’s nuisance.

In his judgment on the issue Lord Neuberger, who did not enjoy the full support of his fellow judges on the panel, decided that the landlords were not liable for the tenant’s nuisance.  Lord Neuberger held, relying on previous case law, that in order to be liable a landlord must be actively and directly participating in the nuisance; or it must be inevitable or close to inevitable at the date of the grant of the lease that the permitted use would lead to nuisance.

Lord Neuberger held that the landlords were not liable under either test, despite the fact that the landlords had been instrumental in dealing with the complaints regarding the nuisance at the site, in fighting a noise abatement notice, in taking steps (even aggressive steps) to combat complaints of nuisance and making representations in the local council to keep the track open.

These acts were all explainable as the acts any person who had an economic interest in the land would take and did not, in Lord Neuberger’s view, amount to active or direct participation in the nuisance.

Lord Carnwath, dissenting, expressed deep misgivings with these findings considering that the acts of the landlords had “gone far beyond the ordinary role of a landlord protecting and enforcing his interests under a lease”.

Nevertheless, Lord Neuberger’s views carried the day and victims of nuisance are now left with having to clear a very high evidential hurdle of demonstrating a landlord’s active and direct participation in the nuisance in order to make them jointly liable with their tenant.

Landlords are likely to welcome the decision as it will afford them a measure of further protection in being drawn into disputes between tenants and their neighbours over nuisance. It is likely to be relatively easy for a landlord to show that it has not actively and directly participated in the nuisance.

Third parties who suffer nuisance at the hands of tenants may, however, have lost a weapon from their arsenal.  It is common, in such situations, to threaten the landlord with being joined in any proceedings against a tenant, particularly where the covenant strength of the tenant is questionable. The chances of successfully establishing a claim against a landlord having seemingly lengthened in the light of this decision, tenants may now find it harder to persuade a landlord to get involved in a nuisance dispute, where the risks of a landlord being found liable are low.

Costs


Following much of the public commentary given by Lord Neuberger in recent months, it is clear that the costs of litigation and impact on access to justice for the individual are a real concern for the President of the Supreme Court.

This concern reared its head again as Lord Neuberger adjourned the hearing of the appeal of the costs award made in Coventry v Lawrence so that the Government, the Court of Appeal and other stake holders in the issue of costs could be consulted.

The appellants, who were required to pay 60% of the landlord’s costs (including success fee under the landlord’s CFA and ATE Insurance premium) face a bill of costs of many hundreds of pounds and challenged the liability to pay, indisputable under the CPR as it applied to the case, on the basis of Article 6 of the European Convention on Human Rights.

Giving his judgment, Lord Neuberger showed his clear dislike of the costs regime predating the recent Jackson reforms (which he called “a far less unsatisfactory system”, which may be damning with faint praise) describing the figures claimed in the case as “very disturbing”.

However, he acknowledged that the previous costs regime stands or falls as a whole and any challenge to the operation of the regime, by reference to the European Convention on Human Rights, would have an impact on the Government, the lawyers who had been paid or had entered into fee arrangements under the old rules, as well as the paying parties in the litigation.

Whether the court is to get the opportunity to consider the point remains to be seen, but it is clear that the costs of litigation, as an issue of access to justice is not going away. As Lord Neuberger said “it would be wrong for this Court not to express its grave concern about the base costs in this case, and express the hope that those responsible for civil justice in England and Wales are considering what further steps can be taken to ensure better access to justice.”

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