TITLE NEWS

Rights to light – injunction or damages?

The case of HKRUK II (CHC) Limited v Heaney [2010] EWHC 2245 (Ch) is a recent case where some property developers maybe sleeping a little less easily following the outcome of this dispute. Leave to appeal to the Court of Appeal has been sought.

In this case, the High Court awarded the defendant, Mr. Heaney, a mandatory injunction in respect of an actionable interference with a right to light enjoyed by his adjacent building. The building is a Grade II listed Victorian building, a former banking hall, which is now used for banqueting, conferencing, office accommodation and intended residential accommodation. Next door, a new office building has been constructed (Toronto Square, Leeds) the upper parts of which block light to certain windows in Mr. Heaney’s building.  The offending building is already fully constructed and is partly let, the top floors having been let to a tenant who is in occupation. However, the court has awarded an injunction requiring the developer to restore light to Mr. Heaney’s property. This will involve substantial works in order to part-demolish and reconfigure the upper floors. The tenant will need to be relocated.

Contrary to the normal run of affairs, it was actually the developer who instituted proceedings, and whose own action therefore resulted in the injunction. The developer had issued proceedings for a declaration that Heaney had lost any rights to light through having acquiesced in the interference. The developer dropped its claim of acquiescence when it became apparent that this was not a strong argument. However, when asked to rule whether a mandatory injunction, or damages in lieu, should be awarded, the judge chose the injunction, and required a reconfiguration of the upper floors of the building to restore light to Heaney.

Whilst this decision will come as a shock to many property developers, it should always be borne in mind that the starting point for claims relating to the infringement of property rights, such as a right to light, is the protection of the right. Where a claimant enjoys the benefit of property rights such as restrictive covenants, or rights to light, rights of way or services, a court will, if requested, endeavour to protect those rights by awarding an injunction when the rights are infringed. The injunction may be prohibitive, thereby preventing the property right from being infringed, or mandatory, thereby requiring interfering development that has already taken place to be altered or removed. However, the grant of an injunction involves the award of an equitable remedy, and therefore the court will always consider whether, in the exercise of its equitable jurisdiction, an injunction ought to be awarded.

If the court is not persuaded to exercise its discretion in favour of the claimant, it may award damages in lieu of the injunction. No claimant has a right to an injunction. Where considering the possibility of awarding an injunction, the court will apply the principles laid down in Shelfer v City of London Electric Lighting Co. [1895] 1 Ch 287. The “working rule” adopted by the courts is that, if the injury to the claimant's legal rights is small, and is one that is capable of being estimated in money, and that can adequately be compensated by a small money payment, and the case is one in which it would be oppressive to the defendant to grant an injunction, then damages in substitution are likely to be given.

Examples of what developers may feel are “surprising” injunctions can be seen from other cases in the recent past. In Regan v Paul Properties DPF No.1 Ltd [2006] EWCA Civ 1391 (another rights to light case), the Court of Appeal, applying the Shelfer principles, emphasised as a starting point that a claimant is prima facie entitled to an injunction against a person committing a wrongful act that infringes his legal rights, and that the courts should not exercise their discretion to award damages in lieu to deprive a claimant of that right, except in very exceptional circumstances. Developers must be advised of the risks of willfully ignoring established property rights.

In relation to covenants, the case of Mortimer v Bailey [2004] EWCA Civ 1514 (analysed in the August newsletter) provides another example. Here, covenants prevented the Baileys from building a residential property extension without Mortimer’s consent (such consent not to be unreasonably withheld). The Baileys had sought consent, but had been refused, yet proceeded with their application for planning permission (subject to objections) and commenced construction. The court ordered that the extension, which was seven days away from practical completion, should be removed within four months as it had been built in breach of covenant. On appeal to the Court of Appeal, the Baileys argued that equitable relief in the form of an injunction should be denied, on account of the delay in pursuing a claim, and that an award of damages should have been made instead. The Court of Appeal disagreed. At all times, it is for the court to exercise its discretion when deciding whether to award or refuse the grant of an injunction. Although, as in the Heaney case, the claimant had not obtained an interim injunction to stop the building works as they commenced, this was no bar to the court granting final relief.

In commercial development developers rested a little more easily as a result of cases such as Midtown Ltd v City of London Real Property Co. Ltd [2005] EWHC 33 (Ch). Here, the court felt that an award of an injunction to restrain commercial development in New Fetter Lane, London, would be oppressive, and awarded damages instead. However, in the Heaney case, the judge did not feel that the injury to Heaney could be described as “small”, and the developer’s suggestions that an injunction would be oppressive (the cost of remedial works would amount to £1 million to £2.5 million, valuable office space already let to a tenant would be lost, and the occupying tenant would face the inconvenience of relocation), were ignored.

In case of a successful appeal, the trial judge went through the process of assessing what level of compensation would be payable should an injunction later be deemed to be oppressive. The correct approach in the assessment would be to determine the figure which Heaney, as the party entitled to the right interfered with, could reasonably have demanded for relaxing it. Having regard, among other things, to the amount which the developer had budgeted for as the price of settling rights to light issues, and the evidence placed before the court, the judge held that an appropriate award of damages would have been £225,000. However, given the facts of the case, including the profit motives of the developer, the court thought that it would be wholly wrong for it effectively to sanction what had been done by compelling Heaney to take monetary compensation.

Alan Riley
Property Law Consultant
www.propertypsl.co.uk