Party walls, injunctions and exemplary damages

News - 25/10/2010

Two recent decisions of the High Court send a salutary message to developers who recklessly infringe the property rights of others, and confirms that flagrant disregard for those rights will usually result in an injunction being issued.

In HKRUK II (CHC) Ltd v Heaney [2010] EWHC 2245 (Ch) The developer, a subsidiary of commercial property fund Highcross, undertook a development which included refurbishment of Toronto Square (pictured), a five storey building in the centre of Leeds, together with the addition of new sixth and seventh storeys.

Mr Heaney owned the former headquarters of Yorkshire Penny Bank, a five storey building across the road from Toronto Square. Highcross admitted that Mr Heaney’s building had the benefit of an easement of light over Toronto Square, and that the addition of the new sixth and seventh storeys would interfere with that right.

Mr Heaney’s solicitors made it clear to Highcross that Mr Heaney did not agree to the development. On more than one occasion they threatened to apply for an injunction to stop the works, but did not in fact do so.

Undeterred, Highcross pressed on and completed the development. In the face of continued opposition from Mr Heaney, Highcross applied to the High Court. It sought an order declaring that, given Mr Heaney’s lack of action, he would not be entitled to an injunction, and would have to settle for damages instead. The High Court disagreed.

The Court referred to the decision in Shelfer v City of London Electric Lighting Co Ltd [1895] 1 ChD 287; that, unless there were “very exceptional circumstances”, a person whose legal property rights had been infringed was entitled to an injunction to stop the infringement.

The Court went on to set out a “good working rule” as to when the Court would award damages instead of an injunction:-

  • If the injury to the injured party’s legal rights is small;
  • If the injury is capable of being estimated in money;
  • If the injury can be adequately compensated by a small money payment; and
  • If it would be oppressive to the infringing party to grant an injunction.

In Mr Heaney’s case the Court found that the “working rule” in Shelfer was not met, and issued an injunction ordering Highcross to remove the sixth and seventh floors of Toronto Square at an estimated cost of up to £2.5 million.

The Court has estimated that damages that Mr Heaney would have been entitled to at £225,000, less than 10% of the cost of the remedial works.

Exemplary Damages

In another case, Ramzan v Brookwide Limited [2010] EWHC Civ 2453 (Ch), the developer, Brookwide, wanted to convert its property in Birmingham into flats.

As part of the works Brookwide, “with reckless disregard of the interests of the true owner”, knocked through the first floor wall dividing its property from the next-door curry house, the “Jewel in the Crown”. Brookwide then misappropriated the storeroom on the other side of the wall as part of its development, without which “there would probably have been insufficient space to create a viable flat”.

The High Court, sitting at the Birmingham District Registry, found that Brookwide had committed

outright and cynical expropriation of someone else’s property and its amalgamation with the wrongdoer’s own property in order that the wrongdoer could make a profit out of the use of the combined land”.

In order to “teach Brookwide the necessary lesson that conduct of this type will not be tolerated” the Court awarded exemplary damages of £60,000, bringing the total award to £560,000.

Conclusion

Although neither of these cases directly concern party walls, they are good examples of the attitude of the Courts to developers who recklessly interfere with the property rights of others.

In particular, the Heaney case shows that the Courts are prepared to grant injunctions even where the development is complete or substantially complete. This could result in injunctions ordering the demolition of a raised party wall, or the filling-in of excavations undertaken without the protection of an award under the 1996 Act.

So the moral of the story is this; developers should spend a little money on a surevyor before starting works to resolve potential issues, instead of spending a lot of money on a lawyer later.

*** UPDATE ***

It is unsurprising that the Heaney case was appealed to the Court of Appeal. However, in March 2011 the appeal was settled between the parties, with the terms remaining confidential.

However, the moral remains the same: anyone undertaking development should spend a little time and money addressing important issues such as rights to light or notices under the Party Wall etc. Act 1996 before the works start, otherwise they may end up spending a lot of time and money later.

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