The recent Supreme Court case of Coventry and others v Lawrence and another (2014) UKSC 13 should be welcomed by developers, as it heralds a shift in the Court's approach to the exercise of its discretion to award damages instead of an injunction.
Following a number of recent cases developers have been negotiating in the knowledge that an injunction is likely to be granted in almost every case where the development would cause a significant interference with the access of light to a neighbouring property that enjoys a right of light.
The basic finding of Lord Neuberger in Coventry v Lawrence was that the Courts had been applying the classic test as to whether damages should be granted instead of an injunction too strictly. The test was formulated in the landmark case of Shelfer v City of London Electric Lighting Co (1895) and states that the Court should consider awarding damages instead of an injunction if all the following criteria are met:
- the injury to the plaintiff's legal rights is small
- it is one which is capable of being estimated in money
- it is one which can be adequately compensated by a small money payment
- the case is one in which it would be oppressive to the defendant to grant an injunction
Recently the Courts have been applying the above test in such a way that an injunction is granted if any one of the four criteria is not met. Lord Neuberger felt such an approach was too mechanistic. He also called into question the prevailing view that damages should be awarded only in exceptional circumstances.
Lord Neuberger did recognise that the starting point is that an injunction should be granted so that the legal burden is on a developer to show why it should not be so. However, in reaching a decision, the Shelfer test should not be applied rigidly or act as a fetter on the exercise of the Court's discretion.
Of course, there can be no sure way of predicting the outcome of any particular case, but adjoining owners can no longer assume that an injunction will automatically be granted save in exceptional circumstances. This decision should provide developers with ammunition when dealing with unreasonable demands from neighbours or a refusal to engage in negotiations.
Developers should not view this case as a green light to begin construction without the agreement of neighbouring owners or a declaration from the Court that damages will be awarded instead of an injunction. Lord Neuberger approved an observation from an earlier case that an injunction is necessary in some cases if the defendant has acted in a high-handed manner, endeavoured to steal a march upon the plaintiff or to evade the jurisdiction of the Court.
Therefore, a developer should be open and honest in his dealings with his neighbours and, if agreement cannot be reached, a claim for a declaration should be made to the Court.