What’s the damage?

20 December, 2017
by: Cripps Pemberton Greenish

Humphreys v Rogers (High Court QB – unreported)

Background

As the one most powerful remedy granted by the civil courts, injunctions have always enjoyed something of a special status.  Rarely, for example, do you find the word “super” used to describe a court order.  Damages, on the other hand, are unremarkable by comparison.  After all, most successful claims result in an order for the payment of money.  So if the circumstances of any given dispute are serious enough to merit one party applying to the court for an injunction order, there would have to be an exceptional reason for the court to make an award of damages instead.

This was the position following the decision of the Court of Appeal in Shelfer v City of London Electric Lighting Co (No.1).  Heard in 1894, this was an authority that withstood the test of time.  But the rigid way in which the courts applied the Shelfer principles over the years began to attract criticism and, in 2014, the judgment was reviewed by the Supreme Court in Coventry (t/a RDC Promotions) v Lawrence.

The Supreme Court opted to hit the reset button.  Instead of treating damages as an exceptional remedy, it held that judges should instead exercise full discretion and consider whether it would be appropriate to compensate the claimant in money (even if they have been able to make the case for an injunction order otherwise).  But as the recent High Court decision of Humphrey v Rogers shows, it is still risky to assume that damages will be the more likely outcome of any application for an injunction order.

Decision

The claimants purchased a rural house and land from the defendants, who retained part of the adjoining land as their own.  They were in search of quiet isolation.  Specifically, they stipulated that the defendants should not be allowed to use their retained land to construct any new buildings.  The defendants agreed to this and the retained land was made subject to a restrictive covenant to that effect.

Therefore, the claimants must have been decidedly unimpressed to discover that the defendants were converting a couple of barns on the retained land into residential properties.  The conversions amounted to a clear breach of the restrictive covenant, which the defendants admitted.  The claimants reacted by issuing proceedings for injunctive relief.  They asked the court to make an injunction order restraining the defendants from carrying out any further development on their land.  But after Coventry v Lawrence, was an injunction really the appropriate remedy?  Or should the defendants simply be ordered to pay financial compensation instead?

At trial, the judge made an assessment of the amount of damages he thought the claimants were entitled to:  £195,000.  However, he went on to find that even an award in that substantial sum would not be an appropriate remedy, given the circumstances of the case.  Instead, he granted the claimants the injunction order they wanted.  No further building work would be permitted on the retained land.  That news would have been bad enough for the defendants.  But the decision had a further sting in the tail.  The court also ordered that they would not be allowed to sell their newly constructed properties either.  Unhappy with this outcome, the defendants lodged an appeal at the High Court.

The defendants argued that the trial judge had (a) applied the Shelfer principles without regard to the moderating effect of Coventry v Lawrence.  They also argued that he had also (b) given too much weight to the fact that the claimants were already wealthy individuals, and (c) failed to make an order for damages despite having assessed that the claimants could be compensated in that way.  The defendants also challenged the finding that (d) no further work should be undertaken to the barns.  

Not one of those grounds of appeal succeeded.  The High Court found that the trial judge had applied a suitably modified version of the Shelfer principles, using them only as a starting point for his assessment.  He had considered the effect that both remedies would have on the parties and concluded that an injunction order was more appropriate.  He had been correct to recognise that the priority for the claimants was a quiet and undisturbed rural existence.  That was more important to them than money and it was the reason why they purchased their property from the defendants in the first place.

Although the trial judge had found that damages would be an alternative remedy, that did not bar him from ultimately deciding that an injunction order was more appropriate.  Nor had he been wrong to take the claimants’ wealth into account when reaching that decision.  The defendants’ conduct, described as “reprehensible” by the trial judge, did them no favours either.  In Coventry v Lawrence, the Supreme Court indicated that reprehensible/unneighbourly conduct was a factor that could sway the court’s assessment in favour of an injunction order over damages.

The High Court did conclude that wording of the injunction order should be re-worded, so as to better reflect the terms of the restrictive covenant.  But apart from that, the decision of the lower court was upheld.

Summary

This decision is a helpful review of the law on this subject.  It confirms that, within the context of an injunction application, the award of damages is no longer limited to exceptional circumstances.  But that does not mean the circumstances must be exceptional for an injunction order to be made.  The court will carry out an assessment of the relevant circumstances and make its decision accordingly.  It will attach weight to factors that either party can show it considers more important than money and it will take a dim view of unneighbourly/reprehensible conduct.  These issues are perhaps more likely to arise within the context of residential property than commercial property, but every case will turn on its specific facts.