The Supreme Court has changed the way in which the Courts are to determine whether to grant an injunction in cases relating to infringement of private property rights, or whether to award damages in lieu of an injunction. This is a major shift and is likely to be music to developers’ ears, as the Court must in future adopt a more flexible approach in these matters rather than being compelled to apply with rigidity a set of rules created in the nineteenth century. The impact on negotiations between developers and adjoining owners is likely to be significant as, after a period of heavy expectation of the right to injunctive relief (see Regan v Paul Properties Ltd and others  All ER (D) 327 (Oct) and HK RUK II (CHC) v Heaney  All ER (D) 101 (Sep)), financial compensation has again become a realistic result of litigation.
The judgment also deals with a number of interesting questions regarding the tort of nuisance, in this case, caused by noise.
Summary of facts
This case concerned noise from a speedway stadium and motocross track near Mildenhall in Suffolk which had been in use since the 1970s and which was some 500-800 meters from a bungalow called Fenland, built in the 1950s. The nearest residential property to Fenland is about half a mile away and the nearest village one and a half miles away. After Ms Lawrence and her partner moved into Fenland in 2006, they became concerned at the noise from the motocross events held at the track.
The activities at the stadium and track, which included speedway, stock car racing and motocross, had been the subject of a noise abatement notice in 1995. Ms Lawrence’s complaints to the council resulted in further noise abatement notices being served and noise attenuation works being carried out. She and her partner subsequently issued proceedings in 2008 for an injunction to restrain what they believed was a nuisance. By the time the case was heard in 2011, there had been a serious fire at Fenland and it has yet to be rebuilt.
At first instance the judge granted an injunction although it was suspended pending such time as Fenland was occupied once more. The Court of Appeal overturned that decision and decided that the Respondents’ activities did not amount to a nuisance. Ms Lawrence and her partner (the Appellants) then took the case to the Supreme Court.
The issues before the Court
- If the activities complained of were found to be a nuisance, should the Respondents be restrained by an injunction, or should damages be awarded in lieu?
- What is the effect of existing planning permission for the activities complained of in a nuisance claim?
- Can a defendant rely on his own activities when asking the Court to assess the character of the locality for the purposes of defending a nuisance claim?
- Is it a defence to a nuisance claim that the claimant ‘came to the nuisance’?
- Can a right to make noise which would otherwise be a nuisance be acquired by prescription?
As the matters covered various aspects of nuisance the Supreme Court took the opportunity to revisit the whole area of law, which it felt had developed rather unsatisfactorily. Of particular concern was the approach taken by the Courts when deciding whether to grant injunctive relief or damages in lieu.
Damages in lieu of an injunction – Shelfer revisited
The leading case on awarding damages in lieu of an injunction in a case of noise nuisance was the Court of Appeal decision in Shelfer v City of London Electric Lighting Co  1Ch 287. The position was held to be that in cases where the activities complained of constitute a nuisance, the claimant is entitled to an injunction. However, AL Smith LJ considered that there would be exceptional circumstances when this rule could be relaxed and suggested a four-stage test as a guide to when damages in lieu could be awarded:
- Where injury to the claimant’s rights is small; and
- The injury is capable of being estimated in money; and
- The injury is one which can adequately be compensated by a small money payment; and
- Where it would be oppressive to the defendant to grant an injunction.
The law has developed such that in recent times, the Courts have considered that unless all four of the Shelfer tests were satisfied, there was no jurisdiction to refuse an injunction.
In Coventry, Lord Neuberger’s view was that ‘an almost mechanical application of AL Smith’s four tests’ and an approach where damages are awarded only in exceptional circumstances were ‘simply wrong in principle and give rise to a serious risk of going wrong in practice’. He considered that a more flexible approach should be adopted with the Court exercising its discretion on the facts in each case. The four Shelfer tests could still be a useful guide in cases where the evidence did not support the granting of an injunction, although it did not mean that if all four were not satisfied then an injunction should be granted.
As to the basis upon which damages would be awarded, Lord Neuberger considered that there was an argument that those damages should not always be limited to a diminution in value of the claimant’s property but that they may be assessed by reference to the benefit to a defendant in the injunction being refused. Nevertheless, all the Lords agreed that this was not an issue to be decided by the Court in this case.
From a procedural point of view, the question of whether damages should have been awarded in lieu of an injunction was raised for the first time only when the matter came before the Supreme Court and consequently the lower Courts had not heard arguments on it. As such, permission to raise it at that stage was refused. It was held that the Respondents should have at least reserved their position on that point. The Supreme Court restored the first instance decision but gave the Respondents permission to raise the argument that the injunction should be discharged. As such, this case may well continue for many years if the litigants want to pursue it.
The effect of planning permission
The Supreme Court upheld the general principle that the existence of planning permission does not of itself supply a defence to a nuisance. However, planning permission may be a factor when looking at the remedies.
Lord Neuberger considered that planning permission for a particular activity may support the contention that it is of benefit to the public, which would be relevant when deciding whether or not to grant an injunction. Lord Sumption went further, coming to the conclusion that the ‘obvious solution’ where planning permission had been granted was to allow the activity to continue and award damages in lieu.
The effect of a defendant’s activities
The character of the locality is a major factor when assessing whether a particular activity constitutes a nuisance. Lord Neuberger considered that a Defendant’s activities on the premises in question could be taken into account in that assessment, but only to the extent that they do not cause a nuisance. In Coventry, the activities at the stadium and track were relevant to the character of the locality but only to the extent they did not cause a nuisance.
Coming to the nuisance
As the stadium and track were well-established by the time the Appellants moved into Fenland, the Supreme Court considered whether it was a defence to the nuisance claim that they had ‘come to the nuisance’ and should therefore accept the situation as it was when they arrived? The Court confirmed the long-established principle that ‘coming to the nuisance’ is no defence. This was the case as long as the claimants did not alter their activity on the land which would result in the defendant’s activity becoming a nuisance.
Right to make noise acquired by prescription
The Court held that it was possible to obtain a prescriptive right to commit what would otherwise be nuisance by noise. In this case, that right had not been acquired as it could not be shown that the nuisance had been continuing for 20 years.
Developers will no doubt be delighted that the Courts are able to take a more flexible and case-by-case approach to awarding damages in lieu of an injunction as this will enable them better to prepare their arguments against injunctive relief. Time will tell how willing the Courts are to exercise that discretion in favour of developers, but in the meantime the judgment presents an opportunity for the negotiating table. The obtaining of planning permission for the activity may well be persuasive in certain cases where the public interest is such that damages in lieu of an injunction are an adequate remedy. Landowners complaining of nuisance will not feel quite so comfortable and although the position remains that injunctive relief is the prima facie remedy, they are likely to have to work much harder to persuade a Court that damages are not an adequate alternative.
For further information, please contact Helena Davies or Kathy Harris, in our Real Estate Litigation team.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.