Playing Hardball Could Cost Developer Up To £2.5 Million

The moral of this case is clear. A commercial developer who proceeds with a project in the face of a neighbour’s opposition could easily be faced with an injunction or damages. At the very least, he may find himself embroiled in costly and time-consuming litigation.

The case, HKRUK II (CHC) Ltd v Heaney, illustrates the dangers of not resolving issues with neighbours who may have rights of way or rights to light. This may be in the belief that such matters always boil down to money and the court will just award damages. However, there is always the risk that the third party will obtain an injunction requiring the removal or modification of the works.

Here, H was the owner of a grade II listed former bank in the centre of Leeds. Over several years, he spent £3m refurbishing the building for use as offices and as a conference and banqueting venue, with residential accommodation on the top floor. In late 2007, HKRUK acquired the adjacent building which already had an existing planning permission for the addition of two floors. In 2008, HKRUK notified H of its plans, admitting that the addition of the two floors would interfere with H’s right to light. Things became unpleasant and H's solicitors threatened, but did not issue, injunction proceedings. No agreement was reached and in the end HKRUK went ahead and added the two floors.

HKRUK then went on the offensive. It asked the court to confirm H was not entitled to an injunction - only to damages. H counterclaimed for an injunction for the removal or modification of the extra two floors.

The High Court granted the injunction; damages were not sufficient because the infringement of H's right had not been trivial and had been committed in the knowledge that what was being done was actionable and with a view to profit.

It is quite possible the case will be appealed. HKRUK’s losses will be significant – one estimate put them as high as £2.5m - and H’s tactics in not applying for an injunction before the work was completed could leave it open to challenge.

If you would like to know more about this case, please contact Caroline Wilton or Martin Banham-Hall.

Filed: 06/12/2010 12:33:12