Mortimer & Anor v Bailey & Anor

LORD JUSTICE PETER GIBSON: This is an appeal by the defendants, Colin Bailey and Pamela Waterton-Bailey, from the order made by His Honour Judge Bowers on 12th December 2003 in the Middlesbrough County Court. By that order the judge gave judgment for the claimants, Martin and Jocelyn Mortimer, on their claim that in breach of covenant the defendants built an extension to their house. The judge granted the claimants a mandatory injunction requiring the defendants to demolish the extension or so to alter it as to prevent it affecting the free flow of light to the claimants' house at all times of the day and to prevent any loss in value of that house.

The defendants sought to appeal on a number of grounds, including in ground two that the judge should have refused a mandatory injunction because of the claimants' delay in seeking an interim injunction. The judge refused permission to appeal, as did Chadwick LJ on paper. On a renewed application for permission, this court (Waller and Arden LJJ) granted permission on the ground to which I have referred as included in ground two, and on that ground alone.

The facts can be summarised shortly. The claimants own and occupy a house called The Heugh, Ainderby Steeple, Northallerton in North Yorkshire. The defendants own and occupy The Old Barn, which adjoins The Heugh to the west. Immediately prior to the execution of a deed dated 19th August 1992, Mr Martin Mortimer's brother, Garry Mortimer, was the owner of The Old Barn. By that deed, to which he and the claimants, already owners of The Heugh, were parties, Mr Garry Mortimer conveyed on sale to the claimants a building and piece of land, and he and the claimants respectively entered into several covenants for the benefit and protection of The Old Barn and The Heugh (including the building thereby acquired) respectively, and so as to bind those properties into whosoever hands they might come. Those covenants included one not to erect any building or structure of any kind and not to carry out additions or alterations thereto without the prior written approval of the claimants, such approval not to be unreasonably withheld. The same day as that deed was executed, Mr Garry Mortimer conveyed The Old Barn on sale to the defendants, subject to and with benefit of those covenants.

The claimants and the defendants became good friends. However, early in 2000 the defendants decided that they wished to extend their house to provide another room, a garden room, on the ground floor. They took advice from an architect who drew up plans to build a single-storey extension to the rear, that is the north side, of The Old Barn.

On 6th February 2003 the defendants raised the matter with the claimants. They left with them a copy of the plan of the proposed extension.

On 10th February Mr Mortimer delivered to the claimants a letter in response. That letter made clear the claimants' view that the effect of the defendants' plan on The Heugh would be horrendous because it affected their main room, which was the kitchen, and that the extension would (as they put it) close them in. The letter was notable for its conciliatory tone and constructive suggestions as to alternatives to that which was proposed in the plan. That day there was a discussion between the parties, following which the defendants considered that the claimants were not going to approve any development to the north side of The Old Barn.

However, the judge, who heard oral evidence from the parties, preferred the claimants' evidence to that of the defendants and did not accept that the claimants refused to accept any development to the north of The Old Barn. The judge also found that the defendants in the discussions on 10th February were not purporting to request approval under the covenant.

The defendants thought that the claimants' attitude was unreasonable and on legal advice they decided to go ahead (though they reduced the height of the roof pitch for the extension), to obtain planning permission and to build the extension without reference back to the claimants for their consent. The defendants gave evidence to the judge that throughout they had the covenant well in mind.

Planning permission was sought for the amended plan and, despite the claimants' objections, planning permission was granted. The planning officer in dealing with the objections recognised that the extension would reduce direct sunlight into the kitchen, particularly during the latter part of the day. However the planning officer could not justify the refusal of planning permission on the basis of loss of amenities to neighbours.

Work on the extension commenced in early June 2003. The claimants, as the judge found, did not appreciate until after the building had commenced that the defendants were in breach of the covenant. At the oral hearing in this court for permission to appeal, the defendants were refused permission to appeal on that finding. However, in the skeleton argument put before us today by Mr Pennock, the defendants sought again to raise that matter before us. That they cannot do: see the Part 52 Practice Direction, paragraph 4.21.

The claimants then went to solicitors. On 5th June 2003 the solicitors wrote to the defendants, pointing out that the claimants had not given permission for the building works and they asked that the work should cease immediately. They threatened legal action if the defendants did not respond within seven days.

By letter dated 19th June, the defendants' solicitors drew attention to the provision in the covenant that approval should not be withheld unreasonably, and they said that having regard to the grant of planning permission the claimants' refusal was unreasonable. They said that they had therefore advised the defendants that they should proceed with the construction.

On 20th June 2003 the claimants' solicitors informed the defendants' solicitors that they were instructing counsel with a view to issuing proceedings at the earliest opportunity. Further exchanges of correspondence between the solicitors for the parties respectively then ensued. The claimants' solicitors on 18th July 2003 wrote to the defendants' solicitors, saying that the claimants' aim was to have the extension pulled down and removed.

Proceedings were not commenced until the end of July 2003. The claimants then applied for an interim injunction to prevent the defendants continuing the work. There was a hearing of that application before His Honour Judge Armstrong on 7th August 2003. The judge said that there was evidence that only a further seven days' work remained to be done. He said that had the application been made in June, the position might have been different. The ground on which he refused the application was that on the application of the familiar principles of American Cyanamid Co v Ethicon Ltd [1975] AC 396 damages would be an adequate remedy. But he added that, if wrong on that, the claimants had delayed too long.

The action was tried by Judge Bowers on 14th November 2003. The judge reserved his judgment, delivering it on 12th December. In his judgment he carefully considered the evidence and found the facts which I have summarised. The judge then considered whether the claimants' refusal to consent to the development was unreasonable in the light of the three reasons which the claimants had advanced in February 2003, that is to say the reduction in light, the loss of direct winter sunlight and the loss of view.

The judge considered the rival contentions. On the assertion on behalf of the defendants that the claimants had overinflated the considerations of loss of light and view, the judge said:

The judge pointed out that planning considerations were quite different from those which he had to weigh in the balance. He referred to the evidence of the joint expert, the surveyor Mr Mills, and the report of Mr Pennington, an estate agent. They both considered that the extension had had an adverse effect on the value of The Heugh. The judge said that the reasons advanced by the claimants were all valid considerations of some significance and weight.

The judge further referred to Mr Mills' evidence that he was in no doubt that the extension had affected the enjoyment of the kitchen/family room because of the loss of light generally, the loss of direct winter sunlight and the loss of view, the overall effect being described as "somewhat overpowering and claustrophobic". The judge had no hesitation in finding that the development took place without the written consent or approval of the claimants, and that the claimants were acting reasonably in refusing to approve the development that had taken place.

I have set out the judge's views in some detail because they form the background to his conclusion on what he acknowledged to be the far more difficult aspect of the case, that is to say what remedy he should grant. Again, the judge carefully considered the rival submissions. It was argued for the claimants that the judge should order the removal of the extension, whilst for the defendants it was argued that the effect of the development was measurable in damages and an award should be made to reflect what a reasonable man would have demanded from the defendants in order to obtain the claimants' consent to the extension.

The judge was satisfied that there was a direct and tangible loss or diminution in value of The Heugh, due entirely to the effect and presence of the extension built without permission. He assessed the financial loss at £20,000, but the judge noted that the claimants had lost far more than the capital value in their home. They were entitled to be recompensed, he considered, for the loss of the benefit of the covenant given to protect them from unwanted and intrusive development. The judge noted that the extension must have added value to The Old Barn, but that there was no evidence of the benefit to the defendants of, as he put it, riding roughshod over the claimants' rights.

The judge assessed the total sum reasonably required to permit the development to be about twice the direct financial loss, that is to say £40,000. However, the judge did not consider that damages of that level would represent adequate compensation, because such awards could not take account of injured feelings. The judge said that the only just and proper approach was to restore the situation to the status quo, by which I understand him to mean the status quo ante. He said:

On this appeal Mr Pennock submits, as he did at the hearing for permission to appeal, that the judge ought to have refused an injunction on the ground of the claimants' delay in seeking an interim injunction. He says that the claimants stood by whilst the defendants built their extension and did not apply for interim relief until the extension was substantially complete. He says that a person who, knowing that he has clearly enforceable rights and having the ability to enforce them, stands by while a permanent and substantial structure is unlawfully erected, ought not to be granted an injunction to have it pulled down. He relies on the statement by Nourse LJ (with whom Pill and Thorpe LJJ agreed) in Gafford v Graham [1999] 3 EGLR 75 at page 79, where the judge said:

That was a case in which the claimant, the owner of the dominant tenement, did not seek an interim injunction to restrain a breach of covenant requiring the defendants, the owners of the servient tenement, to submit plans for the approval in writing of the claimant before building on the servient tenement, although the claimant knew of his rights before the building was commenced and of the threat of such works. By the time of the trial the building had stood for over seven years. The trial judge refused a mandatory injunction, awarded £250 damages for the breach and granted an injunction restraining the operation of a riding school on the servient tenement in the building. That user was in breach of covenant.

This court allowed an appeal by the claimant and increased the award of damages to £25,000, but it refused to interfere with the refusal of the mandatory injunction. Nourse LJ emphasised that the principles applicable to the grant of an injunction or an award of damages in lieu under Lord Cairns' Act are principles of discretion and must always remain adaptable to the facts of individual cases. He expressly adopted what Millett LJ had said in this court in Jaggard v Sawyer [1995] 1 WLR 269, at page 288:

Nourse LJ drew attention to the fact that in the circumstances of the Gafford case the claimant would have been prepared to settle the dispute on payment of a cash sum. Nourse LJ (at page 79L) posed this question:

The Lord Justice then noted the argument that had been presented to this court, that such an award could not be made because of the observations made in Shelfer v City of London Electric Lighting Co Ltd [1895] 1 ChD 287. Lindley LJ at page 315 had said that:

At pages 322 and 323 AL Smith LJ stated as a good working rule that:

AL Smith LJ also went on to say at page 323 that there may also be cases in which, though his four requirements existed, the defendant by his conduct, as for instance hurrying up his building so as if possible to avoid an injunction or otherwise acting with a reckless disregard to the claimant's rights, had disentitled himself from asking that damages be assessed in substitution for an injunction.

However, Nourse LJ in effect distinguished Shelfer on the particular facts in the Gafford case. He noted that the criticism that could be made of the claimant was that he had made no application for interlocutory relief. The Lord Justice said at page 79L that the point which tipped the balance against the grant of a mandatory injunction was the fact that the claimant was willing to accept damages in settlement of the dispute. Nourse LJ said at page 80D that the claimant's willingness to settle the dispute on payment of a cash sum could properly be reflected by an award of damages. He summarised the position as follows:

For my part, I own to some doubt as to whether it is appropriate to say that a person who does not proceed for an interlocutory injunction when he knows that a building is being erected in breach of covenant, but who has made clear his intention to object to the breach and to bring proceedings for that breach, should generally be debarred from obtaining a final injunction to pull down the building. There may be many circumstances in which a claimant would not be able to take the risk of seeking an interim injunction. He would need to satisfy the American Cyanamid test, and would have to provide an undertaking in damages. It may be entirely reasonable for the claimant, having put the defendant on notice, to proceed to trial, rather than take the risk of expending money wastefully by seeking interim relief. However, I accept that not to seek an interim injunction is a factor which can be taken into account in weighing in the balance whether a final injunction should be granted.

In the present case, the position is not like that in Gafford. There has been no suggestion on the claimants' part that they would be willing to receive damages in lieu of an injunction. The judge (as Chadwick LJ pointed out when refusing permission to appeal) gave careful consideration to the question whether damages would be an adequate remedy. The judge did not consider that the injury to the claimants' rights was small, nor that it was capable of being estimated fully in money terms, nor that it was one that could be adequately compensated by a small or any money payment, nor that the case was one in which it would be oppressive to the defendants to grant an injunction, choosing, as they did, to proceed in full knowledge of the covenant and of the claimants' objection and intention to commence proceedings.

Although much is made by Mr Pennock of the delay in applying for an interim injunction, it is to be noted that this was not a point which featured before the judge. There was no reference to it in the defendants' defence, which did not suggest a defence of laches or acquiescence. It was not a point on which oral evidence was heard. No argument on delay was addressed to the judge; we are told by Mr Pennock that this was because he did not consider that it was a live issue as to whether an injunction should be granted in view of the decision of Judge Armstrong. Further, Mr Pennock has told us that he had in effect been misled by the judge's apparent acceptance of his submission that this was a plain case for the award of damages. Mr Pennock detected a nodding of the head by the judge, who had appeared to assent to that proposition.

Furthermore, Mr Pennock wishes to advance a new argument that at the handing down of the judgment on 12th December, when the judge's attention was drawn to the Gafford case, the judge erred in failing to reconsider his decision in the light of that authority.

For my part, I am wholly unable to accept the submissions now made. The Gafford case seems to me readily distinguishable for the reasons which I have given, and in particular that the claimants in the present case, unlike the claimant in the Gafford case, had not indicated that damages would be a sufficient remedy. In any event, as is made clear in that case, the principles on which the discretion to grant an injunction should be exercised must always remain adaptable to the facts of the particular case.

I would not characterise what occurred in this case as the claimants standing by while the extension was built. I accept that the claimants were slow to seek an interim injunction and left it far too late, and, as I have said, such delay is a relevant consideration in the exercise of discretion whether to grant a final injunction. But very shortly after work commenced, and with the completion of the extension still two months away, the defendants had been warned by the claimants that if the construction continued proceedings would be brought against them. They knew when buying The Old Barn that they were doing so with the burden of the covenant. They chose to rely on the advice of their legal advisers and to proceed with the construction. In so doing they took a gamble that it was unreasonable for the claimants to have refused consent. They lost that gamble.

The decision of Judge Armstrong had little bearing on the question which the judge had to decide. In any event, Judge Armstrong's comments on delay were obiter. It was extraordinary for Mr Pennock to have assumed that the judge was in his favour on damages being the appropriate remedy and to have taken the view that it was unnecessary to deal with delay on the footing that Judge Armstrong's decision not to grant an interim injunction governed the grant of a final injunction. The considerations applicable to an interim injunction are quite different from those which are to be taken into account in granting a final injunction.

The conduct of the claimants cannot in my judgment be said to have been unconscionable, having promptly put the defendants on notice, as they did, of their intention to take proceedings. That conduct in no way disentitled them from obtaining the equitable relief of a mandatory injunction to enforce their rights.

In the circumstances, it seems to me that there is no justification whatever for interfering with the judge's exercise of discretion. He was entitled to form the view that he did that an injunction was just and proper and he certainly was not obliged to revise his judgment because of the late reference, after he had handed down judgment, to the case of Gafford which, as I have said, is distinguishable.

I, for my part, have no hesitation in dismissing this appeal.

LORD JUSTICE JACOB: I agree. This was a hopeless appeal.

I would only add this. Where there is doubt as to whether a restrictive covenant applies or whether consent under a restrictive covenant is being unreasonably withheld, the prudent party will get the matter sorted out before starting building, as could have been done in this case. If he takes a chance, then it will require very strong circumstances where, if the chance having been taken and lost, an injunction will be withheld.

LORD JUSTICE PETER GIBSON: We are now asked to assess costs summarily.

Objection is taken to the amount that is sought on behalf of the winning claimants. Objection is being taken to the number of hours that have been spent on attendances on the claimants and on others, and also because the rate is above that which is recommended for a solicitor in the particular area in which the solicitor practices.

We think there is some merit in the objections which are taken. We would reduce the costs from £8,926.18 to £8,000.