A Ray of Light for Developers - High Court provides some comfort in recent injunction case

In a decision that will no doubt be welcomed by developers everywhere; in October 2024 the High Court dismissed an application for an interim injunction to restrain a developer from continuing to build on the basis that the development would interfere with the light enjoyed by a neighbouring building.  

The developer in Handstone Investments Ltd v Abri Group Ltd (2024), was a not-for-profit housing association, which began construction of 33 affordable housing flats in Broadstone, Dorset after acquiring the site with planning permission already in place. Despite various attempts, the neighbour and developer could not agree on modifications to the development to mitigate the reduction of light and so the neighbour issued a claim for an injunction.  Interestingly and in contrast to more recent cases the neighbour also sought an interim injunction rather than simply seeking a final injunction at trial. Prior to Beaumont Business Centres Limited v. Florala Properties Limited [2020] EWHC 550 (Ch) it was thought that failing to apply for an interim injunction in a rights of light case would count against the neighbouring owner at the trial of the final injunction. However, since then that thinking has shifted and so the decision to apply for an interim injunction in this case was an interesting one.

The parties agreed and the Court acknowledged that there was a serious issue to be tried regarding the potential interference with light. However, there was disagreement between the parties’ surveyors as to the correct basis of modelling the extent of the potential loss of light. The Judge noted the developer’s position that the actual loss based on rental value would be just short of £16,000.  

The main question was whether damages rather than an injunction would be an adequate remedy. The Claimant sought to argue that damages would not be adequate because it was attempting to protect a property right. It also argued that there was an enhanced risk of long-term interference if an injunction were refused at the interim stage because the development would be much further advanced by the time of trial and it was less likely that a Court would order that the development needed to be taken down or redesigned.  

However, the Judge found that there should not be a presumption either way before deciding whether or not to grant an injunction in light of the Supreme Court’s decision in Lawrence v Fen Tigers Ltd (2014).  

With regard to the adequacy of damages, the Judge found that it was of significant relevance that the neighbouring property was tenanted and the tenant had not made any complaints other than objecting to the planning application several years earlier. The Judge also found that the Claimant would continue to receive the rent from the tenant notwithstanding the interference. In addition, another relevant consideration was whether the Claimant was able to successfully argue that it was less likely to obtain a permanent injunction at trial than would be the case if the work was stopped at this stage.

That then led the Court to consider whether damages would be an adequate remedy. The Judge decided that they would for the following reasons.

• As the property was an investment property, the Claimant was “only interested in the building from a money-making point of view”. The diminution in value of the building was compensable in damages.
• There would be an order for expedition of the trial which was due to be heard in January. Therefore, it was unlikely that the development would be much further advanced by then. The developer also offered an undertaking that it would not argue this point as a relevant factor at trial.

Given the Judge’s determination that damages would be an adequate remedy he did not need to go on to consider the balance of convenience. Nevertheless, he went on to mention the following factors which he considered would come down against the grant of an injunction:

• Planning permission was granted in 2020 and proceedings were not issued until September 2024. Matters therefore came to a head at a relatively late stage, after development had commenced.
• The development was in the public interest in the form of allocating housing to those in housing need.
• There had been no material complaint by the tenant of the neighbouring building (save for the objection to the planning application).

The Court found that damages were indeed adequate, considering the Claimant's interest in the property was primarily financial. Furthermore, the public interest in providing affordable housing and the absence of complaints from the building's tenant weighed against granting an injunction.

Those factors were set against the fact that the neighbour was just asking for a cutback, the status quo pointed to the grant of an injunction and there had been a “cynical breach” in the sense that the developer had proceeded with its development knowing full well it would infringe the Claimant’s rights. Notwithstanding those points the Judge declined to grant an injunction.

This decision is perhaps most interesting for what it doesn’t say, in particular the length of the tenant’s interest and whether rights were reserved to the landlord in the lease.  In addition, the Judgment provides no detail as to the different models for assessing the potential loss of light. The main point appears to relate to timing, and one wonders if the decision would have been different if proceedings had been issued more swiftly. Developers and others involved in rights to light matters would no doubt have been interested in the trial Judge’s decision in respect of a final injunction. Unfortunately, as is so often the case in rights of light disputes and perhaps unsurprisingly given the outcome of the interim injunction application, the parties have now reached a settlement. Therefore, any further clarity in the law of rights to light shall have to wait another day and another dispute.  In the meantime, whilst this is certainly good news for developers, given the significant unanswered questions in this very short judgment, this is far from a silver bullet for all rights of light concerns.