We look below at Handstone Investments Ltd v Abri Group Ltd [2024] in which the High Court declined to grant an interim injunction to a property investor that sought to prevent a neighbouring developer from progressing building works that threatened to interfere with its rights of light.
The decision provides important guidance for property developers and owners alike.
WolfBite - the key takeaways
· A building owner with a right of light can seek an interim injunction to prevent a substantial interference by a neighbouring development pending a final hearing.· When deciding whether to grant an interim injunction the court will apply established criteria including whether there is a serious issue to be tried, whether compensation would be an adequate remedy and the balance of convenience.
· In Handstone the court refused to grant an interim injunction deciding that compensation would be an adequate remedy.
· There was no evidence that the claimant would suffer any loss if a final injunction was granted at trial and there was a good prospect that, as a property investor, it could be compensated for any reduction in value of its building by an award of money.
· The balance of convenience would have come down against granting an interim injunction anyway, largely due to the stage the construction works had reached and because the claimant had not tried to resolve matters before the works had started.
· The case highlights some important themes that are emerging from recent rights of light cases that both developers and landowners should be aware of.
Rights of light
A right of light is a right to enjoy the natural light that passes over someone’s land that enters a neighbour’s building through defined apertures (such as windows, skylights and glass roofs).A right of light gives the neighbour the right to receive sufficient natural light through the aperture to allow the room or space behind to be used for its ordinary purpose.
Rights of light can be acquired by an express grant in a deed; a reservation in a property transfer when someone sells part of a larger plot; statute; implied grant; or, most commonly, through long use (“prescription”).
Constructing a new building, or adding storeys to an existing one, could obstruct the passage of light to neighbouring properties.
If the obstruction would cause a reduction in light that would make the neighbour’s property substantially less comfortable and convenient than before, and that neighbour has a right of light, this might amount to an actionable nuisance.
If a right of light has been or is going to be infringed, the owner of the right is entitled to apply to court for an injunction. An injunction might prevent a proposed development from proceeding (a “prohibitory injunction”), or require any building already constructed to be demolished or cut-back (a “mandatory injunction”).
The court has a discretion to award compensation (damages) instead of an injunction. Where the developer can persuade the court to award damages instead of an injunction, the amount of compensation can be substantial.
The risks to a developer in proceeding with its building works where a neighbour has acquired rights of light can therefore be considerable.
Injunctions – interim and final
In urgent cases, it may be necessary for the neighbour seeking to protect their rights of light to move quickly to prevent building works starting or continuing.In such urgent cases, where there is an immediate threat, the court proceedings will be dealt with in two-stages.
The claimant will seek an “interim” injunction at the first stage. If granted, this will be a temporary injunction that will maintain the status quo until the second stage, being the full trial.
The court will, at the second stage, decide whether to grant a permanent, “final”, injunction.
The court has discretion as to whether to grant an interim or a final injunction, and whether to grant compensation instead of an injunction.
Additional considerations apply in relation to interim injunctions.
In deciding whether to grant an interim injunction in a rights of light case the court will apply the criteria set out in particular case known as American Cyanimid. The court will consider whether: (i) there is a serious issue to be tried, (ii) compensation (rather than an injunction) would be an adequate remedy, and (iii) the balance of convenience favours the grant of an interim injunction, which usually involves weighing-up which party would be least prejudiced if the wrong decision was made at the interim stage.
Handstone Investments Ltd v Abri Group Ltd
Handstone Investments had owned Arrowsmith Court in Broadstone, Dorset, since 1992 which it rented out to commercial tenants. It had acquired rights of light by long use, having enjoyed the uninterrupted passage of light over the adjoining land for over 20 years.Abri Group, a large not-for-profit housing association that owns and manages over 50,000 homes, purchased the adjoining land in 2023. It had bought the land with the benefit of planning permission for the construction of a four-storey block containing 33 flats to be used for affordable housing.
Abri started building work on site in January 2024 with an anticipated date for practical completion of November 2025.
Before the construction work started, Abri sought to enter into negotiations with Handstone about the payment of compensation for the loss of light. Discussions subsequently took place between the parties in which Handstone tried, unsuccessfully, to persuade Abri to amend the design of the new building to make cut-backs to avoid infringing its rights of light.
Handstone served draft legal proceedings on Abri in June 2024. Court proceedings were then formally issued in September 2024 in which Handstone sought an interim injunction.
The hearing of the application for the interim injunction took place in October 2024, but the written judgment has only just become available.
By the date of the hearing, the construction work had reached first floor level meaning that it may not have infringed Handstone’s rights of light at that time, but was coming close to the point where it would.
In deciding whether to grant an interim injunction the court applied the criteria set out in American Cyanimid.
Was there a serious issue to be tried?
Abri accepted that there was a serious issue to be tried, so this was not in issue.Handstone’s building benefited from rights of light, the new building on the adjoining land would give rise to a likely and lasting infringement, and it was possible that a permanent, final, injunction might be granted at the final hearing.
The focus of the hearing was on the second question - whether compensation would be an adequate remedy.
Would compensation be an adequate remedy?
Handstone argued that it was attempting to protect a property right, and that, where property rights are involved, if the infringement is established an injunction should normally follow.It also said that there would be an increased risk of a long-term interference if a prohibitory injunction was refused at the interim stage because the court would be less likely to order a mandatory injunction at the final hearing (the argument being that courts are more reluctant to grant mandatory injunctions requiring something to be undone, than prohibitory injunctions that prevent that thing from being done to start with). In other words, allowing the new building to continue to be built would weaken its claim for a final injunction.
Following earlier authorities, the court did not consider that there should be an expectation that an injunction would ordinarily be granted in this type of case. There should not be an inclination either way whether to grant an injunction or compensation. The court was free to decide which remedy was most appropriate.
Turning to the adequacy of damages, the court did not consider that Handstone would suffer any loss if it successfully obtained a final injunction at trial that either prohibited the building work from continuing or required Abri to demolish part of the building to remove any infringement. There was no evidence that Handstone’s tenant objected to the interference (although it had objected to the original planning application) or, therefore, that Handstone would suffer any loss of rental income.
The more difficult question was whether Handstone would be less likely to obtain a permanent injunction at trial if the construction work was allowed to proceed and, therefore, whether compensation would ultimately be an adequate remedy at the final hearing.
The court found that there were good prospects that compensation would be an adequate remedy.
One significant factor the court took into account was that Handstone was a property investor. It was interested in the building from a money-making point of view. It could therefore be compensated for any reduction in the value of its property as a result of the interference with its rights of light by an award of money.
It was also relevant that Abri had given an undertaking that it would not at trial use the fact that further construction work had been carried out between the interim and final hearing to argue that the court should not grant a mandatory injunction.
The court had also ordered the final hearing to take place very quickly such that only a limited amount of additional work would be carried out in the meantime anyway.
The court decided that compensation would be an adequate remedy and accordingly refused to grant an interim injunction.
It went on to consider the balance of convenience in any event.
Did the balance of convenience favour the grant of an interim injunction?
The court considered that the balance of convenience would have come down against granting an injunction anyway, largely because of the stage the development had reached and the fact that Handstone had made no attempt to try and resolve the issues before the works had started.There was also a public interest consideration in that the new building was allocated for housing to those in housing need.
There had also been no material complaint from Handstone’s tenant since its objection to the original planning application.
Lessons for developers and landowners
This decision highlights some key themes that are emerging from recent rights of lights cases.Firstly, there are some indications that the courts may be more ready to find that compensation is an adequate remedy in rights of light cases than when dealing with other property disputes such as trespass.
Secondly, the identity of the claimant, and the purpose for which they use and hold their property may be very relevant in the context of applications for injunctions concerning rights of light. It may be harder for a commercial investor that has let offices to business tenants to overcome an argument that compensation would be an adequate remedy than it might be for, say, a residential homeowner.
Thirdly, the case highlights a difficult dilemma for prospective claimants about when to start proceedings. The delay in starting the claim counted against the claimant in this case, and yet if it had started too early it may not have been able to demonstrate that there was an immediate threat that justified the grant of an injunction either. When should it have made its application? When the adjoining site was being cleared; when the foundations were being poured; when the first brick was laid; or could it have sought a declaration that the proposed works would infringe its rights (rather than an injunction) at an earlier point? Each case will turn on its own facts.
Fourthly, pre-action conduct will often be very important. Unreasonably failing to engage in attempts to resolve matters may very well prejudice your case. Conversely, taking a pro-active approach to negotiating changes to the design of the scheme, or a financial settlement, may very well strengthen your position. There is a voluntary Rights of Light Protocol that can, and should, be followed which encourages alternative dispute resolution at an early stage, such as mediation.
Fifthly, whilst continuing with construction works in the face of the threat of an injunction might be viewed by the courts as a cynical breach that points in favour of the grant of an injunction, this case suggests that developers may be able to lessen that risk through a combination of offers to negotiate and undertakings not to rely on additional works carried out between the interim and final hearing.
