The Modern Approach to Damages in Lieu of Injunctions: Cooper v Ludgate House Ltd [2025] – James Reckitt

In this article Trinity Business & Property barrister James Reckitt explores in more depth one of the cases to which he referred in the course of his contribution to Trinity’s Business & Property Conference 2025 - the decision of Fancourt J in Cooper v Ludgate House Ltd [2025] EWHC 1724 (Ch). James described this case as an excellent example of the modern approach to damages in lieu of injunctions, following the landmark decision of the Supreme Court in Lawrence v Fen Tigers Ltd [2014] UKSC 13 (also known as Coventry v Lawrence).

For those who are not familiar with Lawrence, this decision signalled a move away from a strict application of the principles set out over a century earlier by the Court of Appeal in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 which had been applied by Courts up and down the country ever since.  Those principles are framed in familiar terms:

“…it may be stated as a good working rule that

(1) If the injury to the plaintiff’s legal rights is small,

(2) And is one which is capable of being estimated in money,

(3) And is one which can be adequately compensated by a small money payment,

(4) And the case is one in which it would be oppressive to the defendant to grant an injunction:

then damages in substitution for an injunction may be given.”

Prior to Lawrence, there had been a tendency to regard the so-called “Shelfer criteria” as a series of mandatory threshold hurdles that had to be overcome if an award of damages in lieu of an injunction was to be considered. Even if the criteria were met, whether to award damages in lieu remained a discretionary exercise, making such awards relatively unusual.

In Cooper, Fancourt J reflected on the transformative effect of Lawrence at paragraph 267 in the following terms “…Fen Tigers is to be taken as establishing a new approach, in which the Court has a broad discretion whether to grant an injunction or award damages for nuisance, taking account of all relevant factors, but with the legal burden of persuasion to award damages lying on a defendant.”

Gone was the mechanical approach to Shelfer of the past (“mechanical” is Lord Neuberger’s word, not mine – see paragraph 119 of Lawrence), as was the notion that damages in lieu should only be awarded in very exceptional circumstances.

Lord Neuberger accepted that moving away from a clear, strict test would introduce “a degree of uncertainty” into the law, and that more defined principles will need to be worked out on a case by case basis (paragraph 132 of Lawrence). I discussed the key cases which followed Lawrence at Trinity’s Civil Litigation Conference 2025, and I would suggest that watching the recording of my contribution (available here) would be helpful if this is of interest.

We then come to the case of Cooper, in which judgment was handed down by Fancourt J in July 2025.  This was a case concerning a 19 storey office building known as “Arbor” which had been constructed next to the Claimant’s flats (as part of a wider development scheme) in such a way that it interfered with the Claimants’ easements of light. The Claimants sought an injunction requiring the Defendant to demolish parts of Arbor, and Fancourt J was required to decide whether to grant an injunction, or award damages in lieu.

Fancourt J ultimately made an award of damages in lieu (assessed as negotiating damages, being the amount that would have been agreed for a licence to commit the nuisance had a hypothetical negotiation taken place between the claimants and the defendant) in the sum of £350,000 to Mr Cooper, and £500,000 to his co-claimants, the Powells.

Whereas many of the other reported cases following Lawrence use Shelfer as the framework for the judgment, this was not the approach taken by Fancourt J in Cooper, who instead undertook a detailed analysis of the competing factors relied upon by the parties in support of (and in opposition to) an award of damages in lieu, free from the constraints of the typical Shelfer structure.

What is interesting about Cooper is that it is a case where damages in lieu of an injunction would probably not have been awarded on a pre-Lawrence strict application of Shelfer.

Firstly, there was an express finding at paragraph 303 that the level of harm caused to the claimants by Arbor was “substantial” in the case of the Powells and “moderate” in the case of Mr Cooper in that their enjoyment of their flats was impaired by the loss of natural light.  This was not therefore a case where the injury to the claimants’ legal rights can be described as “small”.

On the second stage of Shelfer (the issue of whether the damage can be estimated in money) the parties produced expert evidence as to the diminution in value of the flats occasioned by the loss of light which enabled Fancourt J to find that the diminution in value of Mr Cooper’s flat was £20,000 and the Powells was £60,000. This aspect of Shelfer would not have been problematic.

The third stage is, however, where things get particularly interesting. This is the requirement for the damage to be “adequately compensated by a small money payment”.  Whilst “small” is clearly a subjective term, it cannot be realistically argued that £350,000 and £500,000 are “small” money payments.  Such an argument could have been possible if the diminution in value figures were used instead, but Fancourt J held at paragraph 323 that damages of that level would not have been an adequate remedy. This is therefore an excellent example of how, on the modern approach, the principles in Shelfer can be considered, but are not strict requirements that have to be met. The argument in favour of damages in lieu would have fallen foul of Shelfer regardless of which measure of damages was adopted, either because the award was not “small”, or because the award (whilst “small”) would not be adequate compensation.

The fourth stage of Shelfer (oppression) is essentially the crux of the modern approach to damages in lieu and whilst it is clear that issue of oppression would not have been decided any differently under the old approach in light of Fancourt J’s careful balancing of the parties’ competing interests throughout the course of his judgment, that alone would not have been enough to warrant an award of damages in lieu. On the old approach, the failure to fulfil the first and third stages of Shelfer would likely have been regarded as fatal to the argument.

Indeed, there is one significant feature lurking in the background of Cooper which is as good an advertisement for the modern approach as any. A resolution pursuant to section 203 Housing and Planning Act 2016 had been passed in respect of the wider development site of which Arbor formed part, which allows development to take place even if it violates property rights, and limits remedies for interference to damages only. Arbor was not covered by this resolution, and so the position was that if the demolition of Arbor was ordered at a cost of £15-20m, subject to planning permission (for which a grant was considered likely) the developer could have simply rebuilt it and they would have only been liable to pay damages as a consequence, rendering an injunction “futile” (see paragraph 282). Against this background, the Shelfer criteria (which would have prevented an award of damages in lieu) seem somewhat artificial and archaic.

So whilst the principles in Shelfer remain relevant considerations following Lawrence, Cooper is an excellent example of a case where a failure to “tick off” all four criteria was not considered fatal to the grant of an award of damages in lieu of an injunction.