IHKRUK II (CHC) Limited v Marcus Alexander Heaney.
The Real Estate industry has been awaiting the Court of Appeal's comment on a High Court decision that ordered the removal of a building already constructed in breach of a right to light. In the original Heaney judgment the Court ordered a mandatory injunction, requiring the developer (HKRUK II (CHC) Limited) to remove part of the top two floors of a recently completed office block building, as they interfered with a right to light enjoyed by a neighbouring building. The appeal of that decision was due to be heard tomorrow (Wednesday 30 March). An out of court settlement now means that the Court of Appeal will not give judgment and the original result of the Heaney case will stand.
Heaney did not create new law in itself, but it is an important example of how the court can apply what is known as the Shelfer test to determine whether an injunction, or damages in lieu of an injunction, is the appropriate remedy for infringement of a party's right to light.
Outcome of the High Court case
In March 2007, planning permission for redevelopment of Cloth Hall Court in Leeds was granted, including the construction of a new sixth and seventh floor for the building. Although there were various letters and discussions between the developer and Mr Heaney, the owner of a neighbouring building, both on an open and without prejudice basis, and various threats of court proceedings by Mr Heaney, the work on the redevelopment commenced in June 2008. In November 2008, a letter before action was sent by Mr Heaney, which contained a threat that if the redevelopment was carried out in a way which interfered with his right to light, proceedings would be issued for an injunction.
The developer accepted that its extension caused an actionable loss of light to Mr Heaney's building but queried whether he would obtain an injunction on the basis that (1) he had known about the development for over a year and had done nothing and (2) there was a vast discrepancy between the damages that would be awarded for the loss of light and the value of the redevelopment to the developer.
The works were completed in July 2009. The developer then applied to court for a declaration that it was free from liability to the neighbouring owner. Mr Heaney counterclaimed for an injunction.
The High Court concluded that an injunction should be granted. The court made it clear that the basic remedy for infringement of rights of light is an injunction. The judge went back to principles in Shelfer v City of London Electric Lighting Company  1 Ch 287 and accepted that the judicial discretion to award damages in lieu should not be exercised to deprive a claimant of his prima facie right "except under very special circumstances".
In Shelfer, four "working rules" set down when damages may be awarded:
- If the injury to the legal rights of the party seeking the injunction is small,
- And it is one which is capable of being estimated in money;
- And is one which can be adequately compensated by a small money payment;
- And the case is one in which it would be oppressive to the infringing party to grant an injunction.
Importantly, if just one of those rules is not met, an injunction should be granted.
In reaching the conclusion that an injunction should be awarded in this case, the court looked closely at these rules and applied them in turn to the facts. There are a few interesting points to draw from the judgment:
- The character of Mr Heaney's building (a fine period building) and the fact that Mr Heaney had invested heavily in renovating his building were important in leading the court to the view that the injury to his rights was not small.
- The court concluded that, although good light is relatively more important in a home (as in the case of Regan v Paul) than it is in industrial or commercial premises, good light can still be seen as extremely important in commercial premises. The fact that the affected premises are used for commercial purposes will not, therefore, prevent an injunction being granted.
- In respect of the second Shelfer rule, the court took the view that, in losing light Mr Heaney "has not lost … something so intangible as not to be susceptible of calculation in terms of money". That would seem to suggest that it will be a rare occasion when a loss of light is not considered to be compensatable by money rather than an injunction if the other Shelfer principles are met.
- The conduct of the parties and, in particular, of the developer, was looked at very closely and this is where the developer fell down. The key point that swung the court in favour of the injunction were the facts that the infringement was not inadvertent but was committed in the knowledge that what was done was actionable and that it was committed with a view to profit. The court concluded that "it would be wholly wrong for the court effectively to sanction what has been done by compelling the defendant to take monetary compensation which he does not want".
Lessons now that the case has settled
Heaney was a firm reminder to all developers that they must consider early in their plans whether neighbours have rights of light. If developers fail to deal with any rights prior to commencing development: as with Heaney, the court may take a dim view of anyone who ploughs on regardless, in the knowledge that he is infringing rights of light in a way which would be actionable. Every case will be decided on its own particular facts, and the Courts have a wide discretion, but the Heaney case was a useful example of how that discretion can be exercised.