This is about loud and disturbing noises.

I was going to write up Coventry & Ors v Lawrence & Anor [2014] UKSC 13 when it came out in February, given that it made some significant changes to common law nuisance claims. But it was 249 paragraphs and some 68 page long, so though I read it, it went on the ‘to do sometime’ pile. Then along came Coventry & Ors v Lawrence & Anor (No 2) [2014] UKSC 46 on 23 July. And, while that ostensibly dealt with a point on a landlord’s liability in nuisance, it also contained some hugely explosive decisions on costs.

So, this post will be a thumbnail sketch of the relevant decisions on nuisance in Coventry 1 & 2 and then a brief exposition of the hand grenade that the Supreme Court has just lobbed into costs issues.

Nuisance
The case concerned noise nuisance from land which had been used as a speedway and motocross ground for many years. There was planning permission for the use and the stadium. The Claimants lived in a house about half a mile away. They moved in in 2006, but the use of the Defendants’ land for speedway and motocross had been going on since at least 1992. The claim was issued in about 2008, but in 2010, the house burnt down (dark doings were alleged but not proven) and has remained uninhabited since. In 2011, the Claimant were granted an injunction to prevent the nuisance, and the appeals have rumbled on since, up to the Supreme Court.

The keys points from the Supreme Court, which largely re-instated the first instance decision, were, from Coventry 1:

The right to commit a nuisance by noise can be acquired by prescription (20 years continuous use – or say 20 times a year for 20 years for example). But that had not arisen in this case, as the first complaints about noise nuisance had only been lodged in 1992.

Coming to a nuisance (the claimants having bought the house while the nuisance was ongoing) is not a defence, providing the Claimant uses their land for the same use as previously. Building a house on previously unoccupied land, so changing its use, may give rise to a defence of coming to a nuisance.

When considering the character of ‘the locality’, the court should take the Defendant’s activities into account, but only to the extent to which they would not cause a nuisance to the Claimant. if there was no way for the Defendant to conduct its activities without creating a nuisance (not the case here) those activities should be discounted entirely in assessing the locality. The same is true if the Defendant’s activities are in breach of planning permission.

The Defendant having planning permission for an activity (as here) does not mean that the activity is lawful. Common law nuisance is for the court to assess, not the planning authority. However, if the planning permission does set out limits to the level and/or frequency of noise, this should be considered as relevant and may assist the Claimant’s claim, if breached.

Injunction/Damages. Where a Claimant has established an ongoing nuisance, they are entitled to an injunction to prevent future nuisance as well as damages for the past. The onus is then on the Defendant to show why an injunction should not be granted. However, the Supreme Court has rather softened the presumption that an injunction should be granted, and found that the Court should assess whether an award of future damages should be granted instead – based upon the diminution in value of the Claimant’s property. When addressing this discretion, the court should consider Smith LJ’s four tests from the case of Shelfer v City of London Electric Lighting Co [1895], being that damages should be awarded:

1. where the injury to the claimant’s legal rights is small;
2. where the injury to the claimant is capable of being estimated in money;
3. where the injury to the claimant can be adequately compensated by a small money payment; and
4. where the case is one in which it would be oppressive to the defendant to grant an injunction.

The Supreme Court went further, to state that these tests should not be a fetter on the Court’s discretion but a guide, Failing one of the tests, for example, may not necessarily mean an injunction should be granted. Moreover, the Court should consider the public interest, if any (for example employees of the Defendant losing their jobs, or alternatively, other neighbours also being affected by the nuisance). The Court should also take into account whether planning permission had been granted for the nuisance causing activity. This may be a factor in deciding public interest lies in damages rather than an injunction.

And then, in Coventry 2

Landlord liability for tenant nuisance. The Supreme Court upheld the strict position that a landlord is not liable for their tenant’s nuisance absent ‘active’ and ‘direct’ participation in the nuisance. Failure to enforce a lease covenant prohibiting nuisance is not nearly enough. In this case, the claimants argued that the landlord had actively participated because he

(i) did nothing as landlord to try to persuade his tenant to reduce the noise, (ii) erected a hay-bale wall around [the Claimants’ property] to discourage complaints and to keep down the noise, (iii) co-ordinated all dealings with the local authority on noise issues, leading for the respondents in discussions, (iv) appealed against the noise abatement notice served by the local authority in respect of the noise emanating from the Stadium and the Track, and (v) co-ordinated the response to the appellants’ complaints about the noise, and often responded himself.

The Supreme Court found that these were the steps of a landlord seeking to “avoid, or else to minimise, any restriction on the emission of noise from the premises, whether by the local authority or by the court” as these would affect his reversionary interest. They did not amount to active, direct participation in the nuisance. (Lords Carnwath and Mance dissent on this point on the specific facts and on lack of argument at first instance by the landlords that they were distinct from the tenant on the nuisance).

So much for the nuisance case per se. Then, in Coventry 2 comes another kind of bombshell.

Costs and CFAs

The High Court at first instance had awarded the Claimants 60% of their costs. Once the Supreme Court overturned the Court of Appeal, that issue became live again. The Claimants were funded under a pre April 2013 Conditional Fee Agreement with success fee and After the Event insurance, all recoverable from the Defendant (in proportion – 60%). The Defendant appealed against this on the basis that their grievance with having to pay success fee and ATE premium was one

which can be accorded legal recognition through article 6 of the European Convention on Human Rights and/or article 1 of the First Protocol to the Convention (“A1P1”). [D’s] argument is that, by virtue of section 6 of the Human Rights Act 1998 the court, as a public body, must exercise its discretion when awarding costs in accordance with the Convention, save where otherwise required by primary legislation (such as the 1990 and 1999 Acts), and that secondary legislation (such as the CPR and Practice Directions) must be disapplied where it requires otherwise.

The Claimant’s costs to first instance trial in the High Court were (a fairly eye watering) £398,000, with a 100% success fee on profit costs of £319,000 and an ATE premium of a jaw dropping £350,000. Now, while this was undoubtedly an extremely hard fought and messy case, with the Defendants’ conduct (apparent in the first instance judgment), certainly not helping matters, these are not great figures (to first instance trial only) to lay before the Supreme Court. Even at 60% the Defendants were looking at £640,000. The claim, in terms of damages, had turned out to be worth about £20,000 and the value of the Claimants’ home was about £300,000 (possibly less ongoing damages of £74,000 in lieu of injunction if Defs made that application).

Heaven knows what the costs for the Court of Appeal and Supreme Court hearings would be.

The Supreme Court entertained the idea of an Art 6 and Art 1 Protocol 1 breach. This would make the relevant part of the Courts and Legal Services Act 1990 as amended by sections 27–31 in Part II of the Access to Justice Act 1999 subject to a declaration of incompatibility. (The Court further expressed its grave concerns about the level of base costs in this case).

41 In the light of the facts of this case and the Strasbourg court judgments relied on by Mr McCracken, it may be that the respondents are right in their contention that their liability for costs under the 1990 Act, as amended by Part II of the 1999 Act, and in accordance with the CPR, would be inconsistent with their Convention rights. However, it would be wrong for this Court to decide the point without the Government having had the opportunity to address the Court on the issue.

42 This concern is based on the proposition that a declaration of incompatibility ought not be made by a court without the Government having the opportunity of addressing the court. It appears to me that there is a substantial argument to the effect that it is not merely secondary legislation, namely CPR 44 and CPR44 PD, but also Part II of the 1999 Act, which had the effect of requiring defendants who have been ordered to pay a claimant’s costs to pay the uplift and ATE premium in full, subject to the uplift and premium having been reasonable, but irrespective of proportionality. Section 58A(6) of the 1990 Act (added by section 27 of the 1999 Act) provides that an order for costs “may, subject … to rules of court, include provision requiring the payment of any fees payable under a conditional fee agreement which provides for a success fee”, and section 29 of the 1999 Act has a similar provision in relation to an ATE premium. It is true that these provisions are not on their face mandatory, but it seems to me to be arguable that the costs charging and recovery system introduced by Part II of the 1999 Act simply would not work unless a claimant’s success fee and ATE premium were recoverable in full, irrespective of proportionality, from a defendant who had been ordered to pay the claimant’s costs.

43 Accordingly, if the respondents’ argument based on article 6 or A1P1 is correct, it may well be that the proper outcome would not be to disregard paras 11.7–11.10 of CPR44 PD, but to grant a declaration of incompatibility, although that would be questionable as the relevant provisions of the 1990 and 1999 Acts have been repealed and replaced by a far less unsatisfactory system in Part 2 of the 2012 Act. Nonetheless, the system enacted in the 1999 Act remains in force in relation to litigation brought pursuant to conditional fee agreements made before April 2013 (see Simmonds v Castle (Practice Note) [2013] 1 WLR 1239). Quite apart from that, a determination by a United Kingdom court that the provisions of the 1999 Act infringed article 6 could have very serious consequences for the Government. Although the Strasbourg court would not be bound by the determination, it would, I suspect, be likely to agree or accept that conclusion, so that those litigants who had been “victims” of those provisions could well have a claim for compensation against the government for infringement of their article 6 rights.

The Supreme Court, having lobbed this huge smoking bomb into the whole pre April 2013 Conditional Fee Agreement rules, then put the matter off:

45 Accordingly, quite how far this Court should go at this subsequent hearing will have to be considered at the time. At one extreme, it may be right simply to decide that all the various points are arguable but should be remitted to the Court of Appeal or a first instance judge. At the other extreme, if we thought it appropriate to do so (particularly if all parties were agreed on that course) we could determine all the issues. And there are clearly a number of intermediate possibilities. Once the interveners are identified, it would be appropriate to consider how the matter is to proceed – either at a short hearing or by way of written submissions. I would expect all those involved (including the Attorney-General and the Secretary of State for Justice, and any other intervener sanctioned by the Court) to try and seek an agreed procedure, and then to contact the Court Registrar in writing explaining what had been agreed and what had not been agreed, so far as the identification of the issues and proposed procedure was concerned. We could then consider that written material, and give appropriate directions.

The relevant part of the order made was

Consideration of the respondents’ contention that the Judge’s order that the respondents’ liability for costs extends to the success fee and the ATE insurance premium infringes their rights under article 6 of the Convention is adjourned for further hearing after notice being given to the Attorney-General and the Secretary of State for Justice, following which the parties (including any authorised interveners) must seek to agree issues and proposed procedure, and the Court will then give directions.

Comment

The nuisance part aside, which is partly clear and partly amounts to saying ‘injunctions? If you feel like it’, the costs part is earth shaking.

What does this mean?! What on earth does this mean? The prospect is of a declaration of incompatibility that would affect every single CFA funded case under the AJA 1999 arrangements. Possibly hundreds of thousands of them, over a decade of PI claims, for example.

For cases already done and dusted, it shouldn’t affect payments made by the defendants (or insurers) to claimants. Those costs, success fees and ATE premiums were lawfully demanded. However, a declaration of incompatibility would, as mentioned in para 43, open the door for the losing defendants (or insurers) to put in claims in the ECtHR for compensation for the success fees and ATE premiums that they have had to pay to the claimants.

For cases still underway on pre April 2013 CFAs (and there are plenty of those, even I still have a handful) the position is less clear. While a declaration of incompatibility, should one be made, would not (I think) affect the lawfulness of demanding success fees and ATE premium from the losing party, as far as I can see, the prospect of such a declaration – and possible urgent legislation resulting from the prospect of insurers putting in bulk claims to the European Court of Human Rights – makes the immediate future utterly murky. I’d expect losing parties to seek to stay costs proceedings in droves.

Dear Senior Judiciary. Frankly LASPO, Jackson, and Mitchell were enough to deal with in a year. Please stop it now. We really don’t need another 6 months to a year of total uncertainty.