When there’s more than one adjudication in a dispute, then the decision made by the first adjudicator binds the others, right? Well, it all depends what kind of decision it wasr

Developing a property in breach of a neighbour’s right to light has always been a risky strategy. Although a range of remedies is available from the courts, the liability of a developer who infringes a neighbour’s right to light has usually been limited to damages, unless the neighbouring property is residential. The decision in HKRUK Phase II (CHC) Ltd vs Heaney will therefore come as a shock to many developers.

The case involved the addition of two floors to an existing office block opposite a property owned by Marcus Heaney. Both parties accepted that the addition of two floors to the developer’s building would breach the rights of light enjoyed by Heaney’s property. The developer nonetheless proceeded with the works while negotiations regarding the rights of light issue proceeded between the parties. No agreement was ever reached. The works were completed in July 2009 and a letting of the top floor of the building was completed the following month.

To the surprise of many, the court required the developer to remove part of the two new floors

Rather unusually, it was the developer who commenced the court proceedings, requesting a declaration that it had no liability to the neighbour. Heaney, however, counterclaimed for a mandatory injunction requiring the developer to cut back the offending works or for damages.

The developer’s initial argument was that Heaney’s conduct during the course of the building works prevented him from seeking a remedy once the building had been completed. Negotiations had continued between the parties over the course of the development but Heaney had never applied for an injunction. The developer, however, withdrew this line of argument, leaving the court to determine the question of whether Heaney’s remedy should be an injunction or damages. To the surprise of many, the court granted a mandatory injunction requiring the developer to remove part of the two new floors.

The decision of the court reflects the general principle that the primary remedy for breach of a right to light is an injunction. The courts will only consider awarding damages if satisfied of the following:

  • The injury to the neighbour’s legal rights is small
  • It is capable of being measured in monetary terms
  • The neighbour would be adequately compensated by a small monetary payment
  • It would be oppressive to the developer to grant an injunction.

The judge held that the injury to Heaney’s property was not small. This would have been enough to resolve the case. But the judge went on to consider the other grounds which would need to be met if only damages were to be available. The main argument raised by the developer was that the grant of an injunction would be oppressive. In support of this, the developer argued that the cost of the works to remedy the breach would be prohibitively high (between £1-2.5m), that reducing the office space would deprive the developer of investment income and the commercial community more generally and that the tenant of the seventh floor would need to move out of the property in order for the works to be completed.

The judge had little truck with these arguments, holding that it would be “wholly wrong” for the court to sanction the developer’s actions. The judge reached this conclusion on the basis that the infringement was not trivial and was committed by the developer in full knowledge of the neighbour’s rights. The infringement of Heaney’s rights had furthermore been purely driven with a view to profit. The developer could easily have built the additional two floors without breaching Heaney’s rights, albeit less profitably.

As with all rights of light cases, the case was determined on its facts.

The decision does not mean that a neighbouring occupier will always be able to obtain an injunction requiring the removal of an offending part of a building, regardless of whether the building has been completed. The case does, however, mark a shift in the court’s approach to injunctions where the neighbouring property is used for commercial purposes. The courts will not sanction a developer’s decision to build where the breach was obvious and the infringement significant. The courts may well require a developer to incur substantial costs to remove work that infringes the rights of a neighbouring owner.

Angus Dawson is a solicitor at Macfarlanes

This article was originally published under the headline: Light casts a shadow