Background

In HXRUK II (CHC) Ltd v Heaney [2010] 3 EGLR 15, the developer, HXRUK II (CHC) Ltd had bought a five storey commercial property in the centre of Leeds for £18.75M. It was purchased with the benefit of planning permission for redevelopment and extension, including the construction of two additional floors at the sixth and seventh-floor levels. The property was subject to a right of light easement benefiting the defendant (Heaney)’s, Grade II-listed Victorian office building. The developer (having had professional advice) foresaw the breach of the right of light so had negotiated a price reduction of £350,000.00 from the vendor as potential compensation to Heaney.

The developer entered into negotiations and correspondence with Heaney but this did not result in agreement to waive the right of light easement in return for some compensation. The developer went ahead with the redevelopment and extension works, which began in November 2008. Heaney threatened litigation against the developer seeking to stop the works but then never followed through on his threat. The redevelopment works were completed in July 2009.

The Court Proceedings

Curiously, in August 2009, the developer started litigation against Heaney, primarily to obtain a Court order for ‘declaratory relief’ so that a small award of compensation was the appropriate remedy for the admitted breach of Heaney’s right to light. 

Heaney, in his defence filed in the litigation proceedings included a counterclaim seeking a Court order for a mandatory injunction. If Heaney’s counterclaim was successful, the developer would have to demolish the parts of the redevelopment works that breached the right to light easement. 

The developer in response argued to the Court that a monetary award was sufficient and an order for mandatory injunction was inappropriate. In making this argument, particularly that granting the mandatory injunction would be oppressive, the developer told the Court that Heaney’s conduct in failing to issue the claim form and that the developer having to commence litigation proceedings in order to have some certainty, should be considered.

The developer set out for the Court their calculation of the monetary award based on it’s view that the loss of adequately lit space in Heaney’s building was merely 1% of its net lettable area and the conventional ‘book value’ compensation for the loss of light would be £80,000.00, i.e. only 2% of the £4M value of the building.

The Court’s Decision

The Court was persuaded by Heaney’s points of argument rather than the developer so ruled that a monetary compensation was insufficient in this instance and that mandatory injunction should be granted. This would mean the developer would have to demolish the part of the redevelopment that breached Heaney’s right to light. 

Key Learnings

The Court’s analysis, in determining whether monetary compensation or mandatory injunction is the appropriate remedy, included whether:

1. the breach of the right of light is small;

2. the effect on the right of light is capable of being estimated in money terms;

3. the breach can adequately be compensated by a small money payment;

4. it would be oppressive on the developer for the mandatory injunction to be granted.

In order to avoid the mandatory injunction, a developer must satisfy all 4 criteria above.

Reading through the Court’s decision, I found the Court’s thinking/analysis illuminating:

• The figures/calculation advanced by the developer should be taken into account as should the fact that good light was relatively more important in a person’s home than an industrial or commercial property;

• However, other relevant factors include the character of Heaney’s building, the commitment and investment that Heaney had put into its restoration and also the fact that he operated several businesses within the building;

• The developer’s breach of the right of light easement was neither inadvertent nor necessary but instead was intentionally committed, in full knowledge of the easement, with a view to profit;

• The developer could have, although less profitably, reduced the dimensions of the sixth and seventh floors;

• The Court should not sanction the developer’s actions by ordering monetary compensation, which, Heaney did not want.

My View

The risks to a developer in getting this wrong is high so the best practice is first to obtain clarity and resolution through negotiating with the beneficiary of the right to light or, failing that, obtaining a Court order prior to commencing redevelopment works.