In Ottercroft Ltd v. Scandia Care Ltd (1) and Rahimain (2), the court of Appeal has upheld a first instance decision to award an injunction against a developer who infringed an adjoining owner's rights of light.
Following the Supreme Court decision in Coventry v. Lawrence, it had been anticipated that the injunction high watermark of HKRUK v. Heaney had been passed and that a more commercial approach to the award of an injunction would be taken by the court. For this reason, Ottercroft is an important decision and a stark reminder as to the importance of developer behaviour.
On the facts, the developer had started works to construct a storeroom and staircase. It failed to serve party wall notices. The adjoining owner issued proceedings to protect its right of light which was infringed by the proposed development. The developer and one of its directors gave undertakings that the adjoining owner's rights would not be infringed. However, the developer continued with its scheme and erected the staircase in breach of the undertakings and in absence of planning permission.
The infringement to light was, however, minor. Despite this, the first instance court awarded an injunction against the developer. This was a cause of some concern as the key Shelfer tests (useful guidelines in the post-Coventry world) were satisfied. The infringement was minor and no significant damage was suffered by the adjoining owner. The infringement could be measured in monetary terms and could be compensated by way of a small monetary payment.
However, the court awarded the injunction based on developer behaviour. The breach of undertakings in particular fortified the court in reaching the decision that it did. The court was also critical of the defendant as it had not shared information (despite knowing that its scheme impacted on the adjoining owner's light), and had generally acted in a high-handed and bad manner throughout. The court also queried the veracity of the developer's evidence.
Balancing this against the minor infringement, the court awarded the injunction and ordered the removal or alteration of the staircase such that it no longer interfered with the adjoining owner's right of light.
Court of Appeal
The court of Appeal has now upheld this decision. Whilst damages instead of injunction could have easily compensated for the minor infringement, the developer's conduct was sufficient to merit the injunction. The breach of undertaking was akin to the breach of an interim court order and therefore sufficiently serious to merit an injunction. In considering the final Shelfer test, the award of an injunction on the facts was not oppressive to the developer as the staircase could have been altered to avoid infringing the adjoining owner's light for c. £6,000.
At face value, this case is a cause for concern. It does not help developers that the decision feels a bit déjà vu. Regan v. Paul and Heaney both hit the development world at a time of economic uncertainty and in the context of rights of light issues being generally resolvable by means of compensation as opposed to injunction.
Post-Coventry, market perception has been that rights of light beneficiaries would find it harder to obtain an injunction than previously. Coventry has been perceived to be a developer-friendly decision that ameliorates the harsh outcome in Heaney.
However, Ottercroft is actually complementary to Coventry. Coventry emphasises that damages in lieu of injunction is a balancing act that requires the assessment of a number of variables. One of these is developer behaviour. This is paramount as to whether an injunction is to be awarded or otherwise. The importance of this is evidenced by the evolution of the rights of light insurance market and the growing significance of "agreed conduct" provisions. It is now more of a risk not to constructively engage with adjoining owners than it is to engage with them.
In Ottercroft, the developer's behaviour was so poor that it was tantamount to breaching an interim injunction of the court. The court would never allow a developer to get away with such behaviour in such circumstances, so upholding the injunction was inevitable. Whether the court would have awarded an injunction in absence of breach of undertaking is a moot point, though the evidence of the developer's behaviour was such that the court may well have upheld the injunction.
Therefore, Ottercroft is not the new Heaney. However, it cannot be ignored either. The key lesson is that developers need to constructively and actively engage with adjoining owners who enjoy rights of light. Any underhand, dismissive or deceitful behaviour will likely increase the risk of injunction. Any promises made to the adjoining owners that are then broken will also likely attract an award of injunction.
Professional developers are generally very aware of the importance of good neighbourliness as a means of mitigating infringement, and indeed spend much time and money in ensuring that they are to the best extent possible good neighbours. The case is an endorsement of this strategy. Good developers should note the case and take comfort from it. Bad developers (to the extent that they are aware, or care) should be on high alert that their behaviour risks the gain that they are seeking to make being restrained by the court.
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