Supreme Court ruling heralds a fresh approach to the remedy available for interference with property rights
The 20-second summary
The Supreme Court, in a noise nuisance claim brought by residential house owners against owners of a neighbouring motor cross race track, took the opportunity to offer guidance on when it is appropriate to award an injunction or damages in lieu when property rights are interfered with, and also commented on the appropriate measure of damages in nuisance claims (including therefore rights of light). The case offers these rays of hope to developers:
- There is no longer a presumption (at least in cases of impact to commercial properties) that any interference with property rights (no matter how small) is to be prevented by an injunction. Rather, the Shelfer test should be applied more flexibly in future, with everything taken into account including the wider public interest and the grant of planning permission.
- There are some helpful dicta about the basis of calculation of damages so that we may now see a shift back to damages based on diminution in value rather than profit share. This will take some time to play out but will be helpful where extortionate sums are being demanded for a relaxation or release of rights.
Private nuisance arises where a private property owner carries out a legitimate activity on his own property which interferes with the reasonable use and enjoyment of a neighbouring owner.
Where nuisance is established, the neighbouring owner is entitled to claim an injunction to prevent the nuisance and/or damages. The nuisance claimed here was nuisance in the form of nuisance by noise, rather than actual injury to the neighbouring property, such as removal of support, loss of light, or discharge of noxious material, but the principles enunciated by the Supreme Court apply across the full range of private property nuisance claims, and indeed wider property interference claims.
In examining the defences to be applied in establishing whether an activity amounts to a nuisance, the Supreme Court concluded that:
- It is not a defence to show that the claimant acquired or started to occupy his property after the nuisance activity had started. A nuisance claim runs with the land if the claimant’s use and enjoyment of the property remains the same as that of the previous owners.
- In assessing the established pattern of uses in the locality, so as to measure whether the activity amounts to a nuisance (“what would be a nuisance in Belgrave Square would not necessarily be so in Bermondsey” Thesiger LJ in the 1879 case of Sturges v Bridgman), the defendant is entitled to bring into account his own activities in establishing those patterns of uses but only to the extent that his activities are not unlawful or otherwise give rise to an actionable nuisance; but if they do so, they must be discounted.
- It is not a defence to show that the activity in question has the benefit of planning permission; planning permission for an activity does not cut down private law rights. Nevertheless, the terms of a planning permission regulating the conditions for an activity may be relevant evidentially in assessing the pattern of uses in the locality or on the question of what the appropriate remedy may be.
- It is possible to acquire a prescriptive right to create a nuisance, in the same way as it is possible to acquire other prescriptive rights (e.g. rights of way or rights of light). So, in principle, it is possible for a property owner creating a nuisance to legitimise that activity as a prescriptive easement if the activity is carried on and positively asserted, against the neighbouring property owner ‘as of right’ for over 20 years.
These conclusions will be welcome in those private nuisance cases where establishing whether a nuisance has arisen is in question. Even more significantly, however, the Supreme Court went on to review the background law relating to the remedies available to a claimant once a private nuisance is established.
The Supreme Court confirmed that in principle where an activity is found to be a nuisance then an injunction restraining the nuisance in future is appropriate with additional damages for past nuisance.
However, the court’s ability in any such case to award damages instead of an injunction is a fundamental element of judicial discretion. It is the Supreme Court’s review of this ‘injunction discretion’ which is of most widespread significance.
Before this case, up to Court of Appeal level, it had been accepted that if there was an interference with a property right then the starting point was that an injunction would be granted unless there were exceptional circumstances. Therefore even if only one person was impacted and a hugely beneficial development was potentially compromised, an injunction would still be the starting point. The only recognised exception would be if the person impacted stated in open correspondence that they were really after money, not an injunction.
In the light of the views expressed, that now might begin to change. The Supreme Court emphasised that instead of a presumption of an injunction, there should be a very broad discretion to grant damages in lieu. In relation to this discretion, the Law Lords made the following specific comments:
- Judges need to be far more flexible;
- the legal burden of proof is though still on the defendant to show why an injunction should not be granted;
- that does not mean however that there is a presumption either in favour of, or against, an injunction. Lord Neuberger said: “when a judge is called on to decide whether to award damages in lieu of an injunction, I do not think that there should be any inclination either way (subject to the legal burden discussed above): the outcome should depend on all the evidence and arguments”
- the Shelfer test is “out of date” (the phrase was specifically use by both Lords Sumption and Clarke) and:
- it would normally be right to refuse an injunction if those four tests were satisfied; but
- the fact that those tests were not all satisfied does not mean that an injunction should be granted;
- in the case of impact to residential properties, however, the balance is still very much in favour of the grant of an injunction; as Lord Mance said “the right to enjoy one’s home without disturbance is one which I would believe that many, indeed most, people value for reasons largely if not entirely independent of money”.
The Shelfer Test
- if the injury to the claimant’s legal rights is small;
- is one capable of being estimated in money;
- and is one which can be adequately compensated by a small money payment;
- and is one in which it would be oppressive to the defendant to grant an injunction;
then damages in substitution for an injunction may be given.
Shelfer v City of London Electric Lighting Co  1 Ch 287.
The “public interest” in the exercise of discretion is very relevant; public interest factors quoted by Lord Neuberger are:
- the fact that a defendant’s business may have to shut down;
- that employees would lose their livelihood;
- that there would be a loss to the public of facilities or services;
- that there would be a waste of resources “on account of what may be a single claimant”. This factor seems particularly relevant in the rights of light context where there may be one last intransigent neighbour;
- the financial implications of an injunction;
- whether the loss to the defendant would be disproportionate to the damage done to a claimant.
Finally, the Supreme Court gave a number of indications that where damages rather than an injunction is determined to be the appropriate remedy in a nuisance claim, those damages should be assessed by reference to loss of amenity and diminution in value; it would seem now, arguably in consequence, that profit share should not inevitably be the starting point in such an assessment.
Most certainly the case reflects a major conceptual change of emphasis. Until better established, it is probably advisable to proceed with caution whilst drawing some confidence that the case will help to tip the balance in borderline cases.
Coventry and others v Lawrence and another  UKSC 13.