The decision in Shelfer v City of London Electric Lighting Co Ltd [1895] 1 Ch 287 established that a claimant is generally entitled to an injunction against a party that commits a wrongful act because the wrongdoer is not entitled to ask the court to sanction its wrongdoing by ordering it to pay damages to extinguish the claimant’s legal rights. However, the courts may award damages, instead of an injunction, if: (i) the injury to the claimant’s rights is small; (ii) its value is capable of being estimated in money; (iii) the claimant can be adequately compensated by a small monetary payment; (iv) it would be oppressive to grant an injunction.
Claimants have relied on Shelfer to good effect, most recently in rights to light cases resulting in the grant of injunctions requiring the removal of structures that have inhibited their access to light. However, the Supreme Court decision in Lawrence v Coventry (T/A RDC promotions) [2014] UKSC 13; [2014] PLSCS 65 has set the legal pendulum swinging in the opposite direction.
The court was considering a case concerning the noise emanating from a motor sports stadium. It seized the opportunity to review the authorities and said that it was unfortunate that Shelfer has been followed so slavishly in recent cases. It explained that the checklist in Shelfer is not an exhaustive statement of the circumstances in which damages may be awarded instead of an injunction and indicated that the court should take a flexible approach to such applications.
It seems, therefore, that the court’s power is not, as a matter of principle, fettered in the very constrained way suggested in recent cases. The Supreme Court emphasised that each case is fact-sensitive and that previous decisions are merely illustrations of how particular judges have exercised their discretion in particular circumstances. None of the decisions constitute binding authority on how the discretion should be exercised; they simply demonstrate that, in similar circumstances, it would not be wrong to exercise the discretion in the same way. Equally, it would not be wrong to exercise the discretion differently – and the fact that the Shelfer tests are not all satisfied does not necessarily mean that the court should refuse to award damages in lieu of an injunction.
Lord Neuberger suggested that the public interest may be another relevant factor, particularly in cases where an injunction would have serious consequences for third parties (such as employees of a business or members of the public). He also indicated that, in some cases, the grant of planning permission for a particular activity (whether carried on at the claimant’s, or the defendant’s, premises) may support arguments that the activity benefits the public, which may be relevant to the question of whether to grant or refuse an injunction.
However, the court did not set any hard and fast rules and left the courts to develop the law on this subject – and on the method of assessing damages in lieu of an injunction – on a case by case approach instead. Further litigation will surely follow, especially as the members of the Supreme Court expressed different views on some important points of principle, which did not need to be decided to dispose of the proceedings before them.
Allyson Colby is a property law consultant
