Every system of property rights must determine what the correlative duties demand of those who owe them. In contrast to the amorphous “bundle of rights” conception of property, the now-ascendant “exclusion” thesis holds that, for the most part, one’s property right correlates to an in rem duty that forbids non-owners from physically interfering with its object. 

Victoria Park Racecourse

Wikimedia Commons

A paragon example of this “look but don’t touch” approach is the venerable decision of the Australian High Court in Victoria Park Racing & Recreation Grounds v Taylor, in which the defendants erected a tower adjacent to the plaintiff’s racecourse in order to broadcast the outcome of horse races. Whilst the defendants’ behaviour was callously opportunistic and financially injurious to the plaintiff,  a slim majority of 3:2 dismissed the plaintiff’s claim that the defendants’ conduct amounted to an actionable nuisance. Latham CJ remarked that, ‘[a]ny person is entitled to look over the plaintiff’s fences … If the plaintiff desires to prevent this, the plaintiff can erect a higher fence … the law cannot by an injunction in effect erect fences which the plaintiff is not prepared to provide.’ The decision in Victoria Park Racing is but one in a long line of cases that have applied Lord Camden’s famous dictum that ‘the eye cannot by the law of England be guilty of a trespass’.

In arguing that overlooking could amount to a nuisance, the claimants in Fearn v Board of Trustees of the Tate Gallery therefore faced a daunting challenge. The claimants were leaseholders in a modern block of flats adjacent to the Tate Modern. Their complaint stemmed from the addition to the Tate of a viewing gallery that affords commanding, 360-degree views of all central London, including, unfortunately, the interior of their glass-walled flats. Voyeuristic visitors to the viewing gallery often took photos of the interior of the flats, some of which ended up on social media, and, on occasion, even peered into them with binoculars.

The claimants argued that this invasion of their privacy amounted to a nuisance and sought an injunction requiring the Tate to prevent members of the public from observing their flats from the viewing gallery. At trial, Mann J dismissed the claim in nuisance, seemingly on the ground that those who choose to live in fishbowls in central London cannot complain when their domestic lives can be viewed by visitors to adjacent properties. Nevertheless, his Honour expressly preferred the minority position in Victoria Park Racing, and held that, ‘had it been necessary to do so I would have been minded to conclude that the tort of nuisance, absent statute, would probably have been capable, as a matter of principle, of protecting privacy rights, at least in a domestic home.’

A unanimous Court of Appeal dismissed the claimants’ appeal and, in doing so, restored orthodoxy. Their Honours observed that:

despite the hundreds of years in which there has been a remedy for causing nuisance to an adjoining owner’s land and the prevalence of overlooking in all cities and towns, there has been no reported case in this country in which a claimant has been successful in a nuisance claim for overlooking by a neighbour. There have, however, been cases in which judges have decided and expressed the view that no such cause of action exists.

Their Honours noted that, given the potential of such a right to constrain the growth of cities, its non-existence is unsurprising. The Court gave three additional reasons for declining to extend the ambit of the tort. First, unlike noise and emanations such as dirt and fumes, the extremely variable nature of acts of overlooking makes it difficult to create an easily applicable legal standard. Secondly, the competing interests of the claimant and defendant are better resolved through the planning process. Thirdly, because what was complained of was really an invasion of the claimants’ privacy and not their property rights, this was a matter best left to the legislature.

Respect our neighbours' privacy

Matt Brown, Flickr

In this post, I argue that the Court of Appeal was correct to reject the claimant’s appeal, though not for the reasons articulated by the Court. Instead, in reaffirming the orthodox position, the Court created the conditions that are conducive to “welfare-increasing” trades; that is, trades that make each party better off.    

Imagine that Blackacre is owned by a cricket club and is used as its home oval and that the neighbouring property, Whiteacre, is owned by Walter and is used as a freight depot. What would happen if Whiteacre were turned into a tannery, the foul odour from which made playing cricket on Blackacre impossible? Should the emanation, though it does not amount to an act of gross boundary crossing, nevertheless amount to a wrong known as a “nuisance”?

In the spirit of Denning LJ in Miller v Jackson, we could decide that, for aesthetic reasons, we prefer the playing of cricket to the tanning of hides and restrain any further use of Whiteacre as a tannery. Another way would be to view the dispute with complete indifference and decide the “liberty to/duty not to” question with the toss of a fair coin.

The latter is the preferred approach in Coase’s (avowedly) fictional zero transaction costs world in which, irrespective of their initial allocation, the final allocation of rights will be “efficient”, meaning that they will be held by those who value them most. Imagine that, by switching from freight logistics to leather tanning, Walter gains £1m, but the cricket club loses £100,000. The odour could be eliminated by an industrial air purifier that costs £50,000. If Walter has a liberty to discharge foul odours, then the cricket club will pay for the installation of the air purifiers. If Walter is under a duty not to discharge foul odours, then he will pay for the purifiers. Irrespective of whether the discharge of the odours constitutes a nuisance, the efficient outcome is that Whiteacre is used as a tannery. This simple example demonstrates that, contrary to the musings of the Court of Appeal, it is not true that a right not to be overlooked would necessarily prevent the growth of a sprawling metropolis such as London. Because, in the absence of high transaction costs, parties can trade, the only thing that turns on the choice of legal starting point is who must pay whom in the event that the initial allocation is not also the efficient allocation.     

Tate Modern
There are many objections to this economic analysis. Perhaps we should care about the distributive effects of different starting points, or object that this approach invites moral relativism or fails when the rights in question are fundamental and ought not to be bargained away. Importantly, none of these objections apply to a dispute such as Fearn. The developer maximised the use of glass to ensure that the apartments had ample natural light and impressive views. The trustees of the Tate, on the other hand, wanted a viewing deck that afforded its many visitors sweeping views over one of the world’s great cities. These objectives were incompatible because, in addition to desiring natural light and extensive views, the residents of the apartment complex also wanted privacy from those in the viewing gallery. Given these competing priorities, the best approach would simply be to leave the parties to bargain amongst themselves. Because the development of the apartment building and the viewing gallery were near-contemporaneous, a bargain between the developer and the trustees of the gallery was certainly possible.

As Tom Merrill has argued, positive-sum bargains are not only thwarted by “transaction costs” (the cost of negotiating and enforcing bargains) but also by what he calls “entitlement-determination costs” (the cost of determining who has the right/liberty, and who the duty/no-right, in respect to some actual or threatened conduct). Where, as in Fearn, purely bilateral negotiations mean that transaction costs are likely to be small, low entitlement-determination costs make welfare-increasing trades more likely. Herein lies the great benefit of the exclusion strategy. The “look but don’t touch” norm of trespass allows the parties to cheaply determine the baseline of entitlements against which a proposed rearrangement of those rights is to be assessed. This is because each party knows that anything that is not a physical encroachment is not wrongful. Nuisance, by contrast, relies on indeterminate standards such as “reasonable user”, notions of “give and take” and an assessment of whether the locus of the dispute more closely resembles Belgrave Square or Bermondsey. Determining whether some conduct amounts to a nuisance is fact-sensitive, unpredictable and expensive. The money expended by parties in making this determination is a transfer of wealth from them to their legal advisers. If that transfer is greater than the surplus created by any trade between them, no welfare-increasing bargain will be struck. 

The virtue of the traditional common law position is not that people ought to be able to overlook their neighbours. It is instead that, as a clear rule, it promotes welfare-increasing bargains by allowing the parties to cheaply determine the baseline against which any agreement is to be measured. Lord Camden’s dictum is thus evidence of Posner’s thesis that the common law is efficient. Although the Court of Appeal may not have appreciated this, its decision in Fearn should nevertheless be welcomed on this basis.   

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How to cite this blog post (Harvard style) 

Crawford, M. (2020). Fearn v Board of Trustees of the Tate Gallery: What did Ronald Coase know about modern art?. Available at: https://www.law.ox.ac.uk/research-and-subject-groups/property-law/blog/2020/06/fearn-v-board-trustees-tate-gallery-what-did (Accessed [date]).