Injunction Awarded for Breach of Restrictive Covenant
If a party breaches a restrictive covenant – what will the court do? The answer is that a judge can grant either an injunction or award damages. But the ramifications of that decision can vary widely. With an injunction, a development can be stopped immediately which could have disastrous consequences for a developer. But an award of damages could simply represent a deduction in the profit to be made.
A recent High Court case provides a useful example of the principles. The Claimants had purchased a rural house from the Defendants with the Defendants retaining a number of nearby buildings on their land. However the Claimants were seeking a rural life and so they agreed a restrictive covenant with the Defendants which prevented the Defendants from erecting any buildings on their retained land without the Claimants’ consent.
The Defendants ignored the restrictive covenant and converted two barn buildings into residential properties without seeking the Claimants’ consent.
The Claimants therefore sought an injunction preventing the Defendants from selling the completed residential properties and from doing any further building works.
The judges on both the first hearing and on the appeal considered the various principles to be applied – (i) Is the injury to the Claimants’ legal rights small? (ii) Is the injury to the Claimants capable of being estimated in money? (iii) Can the injury to the Claimants be adequately compensated by a small money payment? (iv) Is this case where it would be oppressive to the Defendants to grant an injunction.
Both judges decided that as the Claimants were seeking a rural life, that as the restrictive covenant had been agreed by the parties and as the Defendants had behaved “reprehensibly”, an injunction was the appropriate order in this case.
Rogers v Humphrey