‘Nuisance-proof’ – avoiding and defending claims
Many commercial operations, regardless of their size, are capable of generating a range of potential issues, including offensive odours, noise, vibration and even fly infestations. These can be caused by a wide range of activities: from waste recycling, disposal, manufacturing processes and construction sites right through to less obvious culprits such as wind farms, restaurants, bars and nightclubs. Not all of these can give rise to civil ‘nuisance’ claims against the businesses, but if the boundaries set by the ‘good neighbour’ principle of ‘give and take’ are breached, this leaves the door open for claimants to seek compensation and injunctions to stop or at least reduce the problem. This is a particular risk when residential properties are located nearby, or within a potentially affected zone which can sometimes be fairly remote from the site – a kilometre or so where the prevailing wind is in that direction. The ‘character of the locality’ is also an important factor.
Damages awards are compensation for any inconvenience or ‘loss of amenity’ suffered by claimants, with the length of time covered typically being the six-year period running up to when the court claim was issued. The total period involved can however often be more than eight years when allowing time for the action to run its course, including a trial if necessary. This quickly multiplies out and large claims are possible when multiple claimants are involved, even if the individual damages awards (on a per-property basis) are in themselves only quite modest, and where the total compensation payment needs to be made within a matter of weeks following the court’s decision.
However, many nuisance claims are entirely avoidable and businesses can often protect themselves from expensive claims:
- Listen to your neighbours: claims are nearly always preceded by complaints. Therefore, to avoid a potentially costly legal dispute, it is essential that complaints are taken seriously and attempts made to resolve the issues before lawyers become involved. ‘Putting your head in the sand’ is not always the most advisable strategy. Operate responsibly, and if there is an inevitable nuisance element from your operations, ensure that appropriate abatement and improvement measures are put in place to minimise nuisance, and that this is properly documented.
- Respecting the ‘rules’: avoiding a claim in the first instance is the best course of action. Respect the conditions contained in any environmental permits or planning permissions. These are often imposed for public benefit – including ‘odour boundary conditions’ for certain operations – and are useful evidence to support civil claims when breached.
- Insurance: some claims might be covered by insurance, so check whether your policy does so. Your insurer needs to be informed quickly to avoid late-notification avoidance of cover, and liability should not be admitted by the operator. This is essential to avoid the insurer escaping its indemnity cover under the policy. Also, remember to involve your insurance provider in any communications with prospective or current claimants.
- Cooperation: if a claim has been intimated or issued, then one needs to cooperate relatively fully to avoid criticism by the court (which can also be inflicted through adverse costs orders). Claimants will always want to be as well prepared as possible and will often request ammunition in the shape of documents or data at an early stage. If however the operator is not prepared to volunteer it, claimants can apply to court for an order requiring compulsory disclosure of often commercially-sensitive documents.
- Disclosure obligations: ‘documents’ can take the form of management notes, board minutes, emails, electronically-recorded data held on SCADA systems, daily worksheets, delivery details, supplier/customer profiles and other highly confidential or price-sensitive information. They can even include ‘deleted’ files where secondary evidence is available in hard copy or back-up data tapes.
- Do not underestimate claims: if the nuisance is significant, it is quite possible that your business will be forced to stop or significantly reduce its operations, which can be disastrous as suppliers as well as customers could be lost in favour of competitors.
- Injunctions: these are now slightly more difficult for claimants to obtain, following a ground-breaking decision of the Supreme Court in Coventry v Lawrence, a case involving noise nuisance from a car-racing track in a rural area. This is the modern benchmark ruling meaning that fewer injunctions can be expected nowadays to remedy infringements, even of longstanding property rights. The case strongly criticises the previous tendency of the courts to mechanically apply rigid principles, which led them to often award injunctions rather than damages. In fact, the tendency previously was to award an injunction even if the loss suffered by the claimant was minimal but the impact on the guilty operator severe. Things have in that regard therefore moved one step closer to ‘judicial CPO’, with rights being lost in favour of damages in lieu.
- Criminal consequences: nuisance claims not only have the potential to financially cripple but can also ultimately result in large or even unlimited fines and imprisonment for operators or directors in some cases. In civil claims previously private internal information can become public in court hearings (subject to some exceptions) and this can subsequently be used, even if only indirectly, to launch a criminal prosecution, for breaches of environmental permits for example. Directors might then be faced with prison sentences, especially where breaches are deliberate, cynical, flagrant or repeated and cause damage to people or the environment.
- Proceeds of Crime Act 2002: this statute has been increasingly brought into play, where ‘confiscation orders’ can be made against the operator. These attach to all ‘illegal’ income generated as a result of the offence, namely the total gross amounts, not just the profit element. This is a valuable and correspondingly attractive cash incentive for the government/Environment Agency and also local regulators/councils. Examples seen in decided court cases include matters such as breaches of planning permission (where revenue such as rental income can be confiscated) although the principle is equally applicable to other regulated operations, where the gross revenue figures would be assessed, and then forfeited, significant sums in some cases. There is generally a six-year limitation period for civil damages claims, but there is no time limit for prosecutions brought on indictment. The proceeds confiscated could therefore relate back to many previous years of business, particularly given the availability of computerised and ‘backed-up’ electronic records for the prosecution to work from. This could therefore represent a substantial commercial exposure for businesses, particularly those operating irresponsibly.
In conclusion, complaints should be taken seriously as they can quickly escalate into significant nuisance claims. Those can not only be costly but in some instances result in injunctions preventing the business from operating – or only being able to do so at a reduced level – and even in some cases, prison sentences for directors found guilty of criminal offences, which include breaches of environmental permit conditions or a failure to comply with civil court orders.
In order to prevent claims from arising in the first place, one needs to respect the ‘good neighbour’ reasonable ‘give-and-take’ principle and not abuse it. An environmental permit or planning permission having been granted is not a defence, something made clear in the Coventry v Lawrence case mentioned above. The business as well as its staff still need to operate responsibly, within the conditions set by any permits or any planning permissions. If nuisance is however inevitable, improvements should be made to minimise disruption to others (and reduce the chances of injunctions or damages), together with prompt and full liaison with any regulatory body and also a degree of cooperation with the claimants, something that needs to be handled particularly carefully.
It is also vital that liability is not admitted unless absolutely necessary, and acute care needs to be taken in the distribution and ‘legal marking’ of any documents or communications – internal or otherwise – to minimise the risk of compulsory disclosure in any civil, regulatory or criminal proceedings, since their merely being ‘commercially confidential’ or ‘sensitive’ is not enough to protect them.
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Neil Ham is a partner in Clarke Willmott solicitors' Cardiff & Bristol Property Litigation team specialising in service charge, rent review & arbitration.View profile >