Creating unsound waves?

This article was first published in the New Law Journal.

Introduction

Andrew Francis’ excellent article "Making a noise (7604, 2 May 2014)" considered the Supreme Court decision in Coventry v Lawrence [2014] UKSC 13, [2014] 2 W.L.R. 433 (“SC1”).

SC1

SC1 reversed the Court of Appeal and restored the trial judge's order based on his finding that Mr Coventry and Moto-Land UK Limited (“the respondents”) were liable in nuisance to Katherine Lawrence and Raymond Shields (“the appellants”), the owner-occupiers of a bungalow some 850 yards away from a stadium/track used for various types of noisy motor car and motorcycle racing. The respondents were ordered to pay 60% of the appellants’ costs to be subject to detailed assessment. The trial judge also found that Terence Waters and Anthony Morley and a predecessor landlord ("the Landlords") were not liable in nuisance.

Coventry revisited

This article will consider two issues that arose out of SC1 and were considered in Coventry v Lawrence (No 2) [2014] UKSC 46; [2014] 3 W.L.R. 555 (“SC2”):

• whether the Landlords were liable to the appellants in nuisance; and
• whether the order for costs against the respondents infringed article 6 of the European Convention on Human Rights (“ECHR”).

The liability of the Landlords in nuisance

Lord Neuberger, giving the majority judgement, considered that the law in terms of principle was as stated by Lord Millett in Southwark London Borough Council v Mills [2001] 1 AC 1: that "the … persons directly responsible for the activities in question are liable; but so too is anyone who authorised them". 

A landlord will not, however, become liable simply by being aware of the nuisance and taking no steps to prevent it; he must have authorised it either:

1. by participating actively or directly in the commission of the nuisance; or
2. by the letting of the property.

The second limb

Simply letting the property as a result of which a nuisance occurs will not render the landlord liable unless the nuisance is a "virtual certainty", or there is "a very high degree of probability", that a letting will result in a nuisance: Smith v Scott [1973] Ch 314.   

The Landlords were not liable under this limb. Although the intended uses were well known to them at the time of the lettings and those uses had in fact resulted in nuisance, they could be, and could have been (and on the evidence may well have been), carried on without causing a nuisance to the appellants.  

The first limb

Lord Neuberger considered that this was largely a question of fact for the trial judge. It would turn on what happened subsequent to the grant of the relevant lease, possibly coloured by the nature and circumstances of the grant and what preceded it. 

His Lordship, in dismissing liability under this limb, made the following observations:

(i) the fact that a landlord does nothing to stop or discourage a tenant from causing a nuisance cannot amount to "participating" in the nuisance;

(ii) even if a person has the power to prevent the nuisance, inaction or failure to act cannot, on its own, amount to authorising the nuisance;

(iii) the fact that a landlord takes steps to mitigate a nuisance can scarcely give rise to the inference that he has authorised it;

(iv) when a landlord sought to avoid, or else to minimise, any restriction on the emission of noise from premises – which restriction would very likely adversely affect his reversionary interest – this did not amount to him participating in or authorising the nuisance; and

(v) the fact that a landlord seeks to persuade a local authority not to take action in relation to alleged nuisance by his tenant does not involve his authorising or participating in that nuisance.

Costs

The appellants’ conditional fee agreement (“CFA”) first instance costs of £1,067,000 comprised:

• base costs £398,000;
• success fee £319,000; and
• ATE premium £350,000.

Lord Neuberger described these as “very disturbing” and “exorbitant”; the base costs alone gave “rise to grave concern”, and the figures illustrated the “malign influence” of the pre-April 2013 CFA statutory regime, since repealed.

The respondents argued 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 ECHR, save where otherwise required by primary legislation, and that secondary legislation (such as the CPR and Practice Directions) must be disapplied where it requires otherwise.

The respondents’ consequential liability, created by primary legislation, to pay the success fee and the ATE, irrespective of proportionality, however, would be inconsistent with their rights under article 6 of the ECHR and/or article 1 of the First Protocol. 

Lord Neuberger considered, however, that it would be wrong to decide the point – particularly if a declaration of incompatibility might need to be made – without the Government having had the opportunity to address the Supreme Court on the issue.

Conclusion

Although the decision on the nuisance point is a useful guide to the application of the law as regards the first limb in Lord Millet’s approach to authorisation, the costs issue is going to create waves. Ongoing cases involving pre-April 2013 CFAs may be adjourned pending a decision. And, a final determination that the provisions of the primary legislation, albeit repealed, infringed article 6 would further unsettle such proceedings and potentially create a flood of former litigants heading to Strasbourg seeking compensation against the government.