WORKING IT OUT
When a party claims that its rights are being infringed, the court can step in and grant an interim injunction to maintain the status quo while the rights and wrongs are sorted out, writes Sue Lindsey.
There are various circumstances in which interim injunctions may be used to halt building works, including, for example, a claim for an infringement of a right to light, or a local authority temporarily stopping works alleged to be in breach of some statutory provision.
Stopping work on a site will almost inevitably lead to financial loss for the developer.
If it is ultimately found to be in the wrong, any delay loss can properly be laid at its door.
But what if the developer is vindicated? It will, not surprisingly, want the failed claimant to pay up.
The mechanism used to achieve this is that the party wanting to stop the work usually gives an undertaking in damages to the court, so that in the event that their claim fails, damages can be ordered against them. The court cannot force someone to give an undertaking in damages, but if they don't, the court may be reluctant to grant the injunction.
The exception to the rule is when it is a local authority seeking the injunction. It is then unusual for the court to require an undertaking in damages, not least because the local authority is simply trying to act in the best interests of the public, rather than protecting a private right.
The usual position when a claim has failed is that the undertaking in damages will be enforced, but the court can refuse enforcement if there are special circumstances.
A case in point was Regan v Paul, a right-to-light case previously discussed in this column (AJ 14.09.06). The judge concluded that although Mr Regan's right to light was infringed, he was not entitled to a mandatory injunction, and damages were ordered instead.
While the dispute was continuing, the developer's work on site had been restricted for four months. Mr Regan had given an undertaking in damages, so after the mandatory injunction was refused, the developer went back to court to try to recover its delay loss from him.
Happily for Mr Regan, the judge decided that he did not have to pay the damages to the developer. The reasons included the fact that the developer had acted unlawfully. There was an infringement, even though it did not merit a permanent injunction, but for a long time the developer had argued that there was no infringement.
Further, Mr Regan was already going to face financial hardship as a result of the costs order made in the main action, and the judge concluded that it would be unjust for him to have to pay more.
Lastly, and importantly from the view of developers, it seems that where there are doubts about restrictions on development, the court expects a prudent developer to sort out the problems before they start work. The court will not want to give a developer the benefit of an undertaking in damages that was only given because the developer pressed ahead without first checking its neighbour's rights.
The Court of Appeal has now granted Mr Regan an injunction, which will be discussed in a future column.
However, the ruling on enforcement, although no longer relevant to Mr Regan, remains a helpful example of the workings of undertakings.