Protecting rights to light

Rights to light continue to have a major impact on property development. Legal uncertainties highlighted by well-known cases adversely impact on the economy through preventing developments.

Governmental concerns led to the Law Commission’s consultation and proposals on injunctions and rights to light. Into the mix came the Supreme Court’s decision at the end of February in Coventry v Lawrence [2014] UKSC 13, which some have suggested has changed the position on whether an injunction or just damages should be awarded for infringement of rights to light. The question is whether, despite the Supreme Court’s helpful comments, new legislation is still required.

Test case

The Shelfer case from 1895 set down four tests which have played a central role in the analysis of when the court should exercise its jurisdiction to award damages instead of an injunction: “It may be stated as a good working rule that: (1) if the injury to the plaintiff’s legal rights is small; (2) is one which is capable of being estimated in money; (3) is one which can be adequately compensated by a small money payment; and, (4) the case 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.”

The view held by some that an injunction would not be awarded where a development, infringing the light to a commercial property, was well-progressed, was undermined by Heaney. This showed that it was not necessarily the case that there was a point at which a court would refuse to grant an injunction due to delay.

The Law Commission responded with proposals to introduce a new statutory test re-stating Shelfer with modifications. A court may award damages in substitution for an injunction if the grant of the injunction would be disproportionate, considering:

(1) the size of the injury in terms of loss of amenity;

(2) whether a monetary payment will be adequate compensation;

(3) the claimant’s conduct;

(4) whether the claimant delayed unreasonably in bringing proceedings; and

(5) the conduct of the defendant.

No item should be viewed as definitive: it will be
up to the courts to determine the weight to be afforded to each factor in any given case; nor is the list exhaustive.

Noise nuisance

Coventry v Lawrence was a noise nuisance case, but the justices devoted much of their judgments to the injunction/damages issue. Lord Neuberger stated that the prima facie position is that an injunction should be granted, so the legal burden is on the defendant (for example, the developer) to show why it should not.

Subject to that burden, when a judge is called on to decide whether to award damages in lieu of an injunction, there should not be any inclination either way: the outcome should depend on all the evidence and arguments. The application of the Shelfer tests must not be such as “to be a fetter on the exercise of the court’s discretion”.

An approach which involves damages being awarded only in “very exceptional circumstances” is simply wrong in principle and some judicial applications of Shelfer have been too mechanical (for example, in Regan).

So, following Coventry, are the Law Commission’s proposals still needed?

While some commentators have stridently asserted that developers need not be so concerned about injunctions where the claimant’s property is commercial, the position is more nuanced. A number of the justices were cautious about making too direct a comparison between noise nuisance and rights to light cases.

Lord Carnwath highlighted that their comments on injunctions could be no more than guidance, since the issue did not strictly arise on the way the case had been argued in the lower courts. Lord Neuberger acknowledged that there were differences between the justices, likely to be ones of emphasis and detail rather than of principle, but with the risk of introducing some uncertainty into the law.

It was inevitable that, in so far as there can be clearer or more precise principles, they will have to be worked out on a case-by-case basis. While Lord Sumption remarked that there is much to be said for the view that damages are ordinarily an adequate remedy for nuisance, Lords Mance and Carnwath emphasised that damages may not be enough in a residential context.

The need for a court to be more flexible in its application of Shelfer is a key point from Coventry. However, this is not the end of the story and legislation clarifying when damages should
be awarded in place of an injunction would
be welcomed. SJ

Warren Gordon is the head of real estate know-how at Olswang