With the Law Commission's proposals for reforming rights of light showing no signs of making any speedy progress, it is no surprise that there have been grumblings from developers and those advising them about the potential for the current narrow and inflexible constraints to hinder the recovery of our property market. Fortunately, the Supreme Court appears to have heard these complaints and it recently took the opportunity in Coventry v Lawrence (2014) - a claim about noise nuisance rather than rights of light – to signal that the recent decisions of the courts on assessing whether to grant an injunction have taken a wrong turn.
Recent history
The difficulties with the law in this area started with the first Court of Appeal decision on rights of light since 1975 - Regan v Paul Properties DPF No.1 Ltd (2007). In that case, the Court confirmed that an injunction should be the primary remedy where there has been an infringement of a property right and applied the narrow tests set out in Shelfer v City of London Electric Lighting Co. (1895) for determining whether damages should be awarded instead of an injunction (see below). The potential for this decision to hinder developments – or to deter developers entirely as a result of the increasing costs of settling neighbour claims – was shown in HXRUK II (CHC) Ltd. v Heaney (2010), where the developer was ordered to adjust his building despite the projected cost of doing so sitting somewhere between £1-2million.
Direction from Supreme Court
In Coventry, Lord Neuberger confirmed that the courts should be more flexible when assessing whether damages should be awarded instead of an injunction. In particular, it was agreed by all members of the Supreme Court that any failure to meet all four of the conditions in Shelfer (see below) should not mean the automatic grant of an injunction to a complainant. Indeed, Lord Sumption said that Shelfer was "out of date", commenting that it was unfortunate that it had been followed "so recently and so slavishly".
In Lord Neuberger's view, a more balanced approach to using the Shelfer criteria should be adopted by the courts and he emphasised that the decision over the correct remedy is one of discretion according to the relevant circumstances; there should be no prior inclination towards an injunction. There was a suggestion in some of the judgments that an injunction should not be ordered where the activity has planning permission, but the Justices were not agreed on this. There was no need to decide the point in this case so this may offer an area for further argument in the future.
Indeed, there are a number of issues which remain to be explored. For example, it seems there may be room for argument as to whether the burden should lie on a wrongdoer to show why an injunction should not be granted. It also remains uncertain how far the level of damages - in particular where they go beyond a "small money payment" - will dictate the court's decision as to whether to grant an injunction. Interestingly, the judgments involved some discussion – without conclusion – as to whether damages awarded in lieu of an injunction should allow the complainant to share in the benefit to the infringing party of overriding the relevant property rights. This appears to be an area for potential debate – and probably further case-law – in the future.
The Supreme Court mentioned their view that rights of light cases are potentially a unique class, although the decision on the correct approach to the remedy of an injunction or damages should apply just as much to rights of light cases as to other wrongful interferences with property rights. However, there are indications in Coventry that distinctions might well be made between cases of domestic interference with light and adjoining owners who are commercial occupiers. In particular, two members of the Supreme Court indicated that, in the case of interference with rights of light enjoyed by a private home, the primary remedy may well be that of the injunction.
Conclusion
Following the Coventry decision, parties affected by rights of light matters will need to reassess their positions – in particular the possibly reduced prospect of a complainant obtaining an injunction and the uncertainty as to the basis on which damages will be calculated. Naturally, if the risk of the injunction is less, then any ransom fees being negotiated may well be reduced. Much will depend on the particular circumstances and it is clear that developers must still have proper regard to rights of light enjoyed by neighbours. However, the decision in this case is hopefully the first step towards a sensible adjustment of the law in this area.
Shelfer's "good working rule"If:
then damages in substitution for an injunction may be given. These criteria should now be applied more flexibly by the courts following the decision in Coventry v Lawrence, where the Supreme Court confirmed that it wished to "signal a move away from the strict criteria derived from Shelfer". |
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