Summary
A recent case where the owners of the Royal
Exchange argued that redevelopment of the old
Lloyds Bank headquarters on Cornhill in the City of
London exceeded agreed height restrictions, serves
as a useful reminder of points to bear in mind when
seeking to enforce a restrictive covenant.
The case
When the bank building was constructed in
the 1920s the parties covenanted with each other not to
build above a certain height, shown in drawings. The
question now was whether that was a restriction merely
on the façade or in a horizontal plane across the site.
Work had started and the owners of the Royal
Exchange sought an injunction. The judge held that the
developer's interpretation was correct; the restrictions
only applied to the façade and therefore there was no
question of an injunction.
Applying for an injunction
Where you believe your
rights under a covenant which restricts or prevents
building are being breached, it is important to act promptly
if you want to stop the work. If you delay then, even if the
court finds there has been a breach of covenant, it will
usually only award you damages. In particular, courts are
very reluctant to order the demolition of a completed
building. Usually, but not invariably, you need to get an
interim injunction first, rather than waiting for your case to
come to court for a full hearing. In this case, the
developer argued that the period between February
(when the Royal Exchange became aware that work had
started) and April (when it started proceedings) was too
long. The court disagreed: that time had been spent in
reasonable requests for further information which the
developers had been slow in providing.
Hardship
An injunction is a discretionary remedy and
will not be granted where to do so would cause
excessive hardship. In this case, the developer argued
that it would suffer from substantial wasted costs if it
had to change its plans at this stage, and that therefore
no injunction should be granted. Again the court
disagreed: the developer, aware of the risks, had
started work without having resolved the issues over the
covenants. There had been discussions for some
months between the parties, which had focused on how
much the developer should pay the Royal Exchange for
relaxation of the covenants (which at that point both
parties assumed applied). There had been no hint that
the Royal Exchange might want to stop the
development altogether. While the developer had
obviously felt comfortable in starting work without
having tied up the loose ends, it had been taking a risk
and any hardship it would suffer would be attributable to
that. (The judge also held that there would not be a
significant amount of wasted costs anyway.) Anyone
starting work without having sorted out the restrictions
must be aware of the risks.
Source
City of London Corporation v Intercede 1765
Ltd [2005] EWHC 1691 (Ch)
|
