The problem with applying for an interim injunction is that the applicant may well have to give an undertaking for damages to the court – so, if he eventually loses at the full trial, then he will be liable to pay damages to the developer for any loss (eg bank interest because of delay, increased building costs, and possibly reduced sale proceeds in a weakening market). In practice, many private individuals simply cannot take that risk when faced with a legal battle against a well-financed development company.

What the CA has done now is to say that failure to apply for an interim injunction is merely one of the factors to be taken into account by the court at the full hearing. The important factor, however, is that the covenant holder must not merely ‘stand by’. As such, the legal principle remains unchanged, and was summarised in Gafford [1998]:

‘As a general rule, someone who, with the knowledge that he had clearly enforceable rights and the ability to enforce them, stands by whilst a permanent and substantial structure is unlawfully erected, ought not to be granted an injunction to have it pulled down.’

In Mortimer [2004] the dispute was between neighbours and involved a proposed extension. The covenant holders had objected to the plans, objected to planning permission, written solicitors letters, and threatened legal action. However, no proceedings were commenced until the extension was virtually completed and the trial judge therefore refused an interim injunction. However, that was overturned by the CA who said that a full mandatory injunction could be granted. This was because, on the facts, the covenant holders had not stood by while the extension was being built. Whilst failure ‘to seek an interim injunction is a factor which can be taken into account in weighing the balance whether a final injunction should be granted’ that is merely one factor that can be outweighed by other factors. The key point here was that the covenant holders had not ‘stood by’. And, there had been no suggestion by them that they would be willing to receive money compensation (damages) rather than an injunction – they had always made it clear that they did not want the building erected.

From a practical point of view this is an important decision in that it moves some element of risk away from the covenant holder and onto the developer. A developer who now goes ahead in the face of clear and unequivocal opposition cannot be sure that completing the erection of the building will mean that he is safe from an injunction. Indeed, it should not be forgotten that if there is any uncertainty as to the position, then a developer can apply to the court to say whether or not injunctive relief can be ruled out. For further commentary on Mortimer v Bailey [2004] All ER (D) 436 in [2005] 142 Property Law Journal 17. © Practical Lawyer