These impressive feats of engineering and design capture the public’s imagination like never before and have their own iconic names that help define their image even before they are built — the Shard of Glass, the Walkie-Talkie and the Cheese Grater. A quick look at the City’s skyline crammed full of cranes suggests that this trend is not a flash in the pan; many more are on the way, with the Mayor of London predicting 18 to 20 new skyscrapers by 2015.
But as these huge buildings go up, they often overshadow their older neighbours and this has pushed the issue of access to light up the agenda of the development process. Even if a developer overcomes the hurdles of daylight and sunlight presented by the planning process, it cannot underestimate the impact of private rights and how they may restrict development aspirations.
A right of light is an easement. It is the right to receive sufficient natural light through defined apertures (for instance windows, skylights and glazed doors) to allow a building to be used for its ordinary purpose. It may be expressly created for example by deed, implied by law or acquired by prescription. Surveyors calculate the degree of infringement by use of advanced computer software.
At its most basic, if the level of light falls below the ‘grumble point’, it amounts to a common-law nuisance. The test is not the amount of light removed but the amount of light that is left. The affected neighbour may seek an injunction to stop the development, to require the design to be cut back or to demolish the offending part. Alternatively, the neighbour may be awarded damages.
The surveyors’ technical calculation is not a rigid rule of law, but a helpful starting point. The courts consider the impact on existing occupiers and the social utility of the offending development. The approach is different in residential and commercial premises. The courts also look at the conduct of the parties. An injunction is an equitable remedy so behaviour is an essential factor. Did the affected party seek to protect its rights early enough? Did it seek an interim injunction? Did the developer deliberately ignore neighbours’ protests and speed up its development programme in spite of them?
The increasing importance of rights of light is reflected in the publicity generated by recent cases.
Midtown v City of
- The occupiers’ primary interest was financial. Midtown was a property development company with plans for its own site. Its interest was based on a desire to maximise the financial payment. Kendall Freeman was in a slightly different position as an owner-occupier; nevertheless, the court felt its primary interest was also financial.
- The developer had behaved reasonably and openly in highlighting the rights of light issues at the outset and suggesting meetings. By contrast the neighbours had rebuffed this approach unreasonably. Behaviour was a crucial factor.
- The development would not impact on the use of artificially-lit modern offices despite witnesses expounding the joys of natural light — evidence that counsel called “twaddle”.
Tamares (
Tamares applied for an injunction to stop the development of the former Rochester Row Magistrates Court site interfering with the access of light to its neighbouring Olson office building.
The court endorsed the principles set out in Shelfer v City of London Electric Lighting Company [1895] as “a good working rule” — if the injury to the claimant’s legal right is small; is capable of being estimated in money; can be adequately compensated by a small money payment; and the case is one in which it would be oppressive to the defendant to grant an injunction, then damages may be awarded instead.
Fairpoint had acted honestly throughout, Tamares had not applied for an interim injunction, the bulk of the new building was complete by the hearing and would require substantial demolition and the injury to the windows was trivial in the context of the whole. It would be oppressive to grant an injunction.
The court derived eight principles from previous cases when assessing the amount of damages to award instead of an injunction:
1. overall the court should seek a ‘fair’ result of a hypothetical negotiation between the parties;
2. the context including the nature and seriousness of the breach must be kept in mind;
3. the right to prevent a development (or part) gives the owner of the right a significant bargaining position;
4. this owner will normally be expected to receive part of the likely profit from the development (or relevant part);
5. if there is no evidence of the likely size of the profit, the court can do its best by awarding a suitable multiple of the damages for loss of amenity;
6. if there is, the court should normally award a sum that takes into account a fair percentage of that profit;
7. the size of the award should not be so large that the development (or relevant part) would not have taken place if such a sum has been payable; and
8. after arriving at a figure that takes into consideration all the above and any other relevant factors, the court needs to consider whether ‘the deal feels right’.
Reported cases on equitable damages are rare and so this decision is worthy of note. Until this decision I have advised developers that when the courts order profit share (as opposed to applying a multiplier to the diminution in value) they should budget for an award of 5%-15% of the profits they make from the infringement. Here a ‘modest’ infringement sat just below 30% — previously considered the high end of the scale. This may signal an increase in the damages awarded.
Finally the Court of Appeal considered Regan v Paul Properties [2006], its first rights of light decision in 20 years.
Mr Regan owned a maisonette in
Commentators have expressed concern at the apparently different approaches in Midtown, Tamares and Regan, but I do not think they are necessarily inconsistent. What they do emphasise is that an injunction remains a real risk — perhaps developers had relaxed too much after Midtown — and whether damages are awarded instead depends on many factors. A significant factor is whether the affected premises are residential or commercial.
Developers need to take care because even if they are not prevented from building — and this cannot be excluded even if building has been commenced — damages may have a significant impact on the commercial viability of their scheme.
All is not lost if a development is endorsed by the local authority. Hammerson caused a degree of excitement in 2005 in its efforts to redevelop the old Stock Exchange site that Hammerson claimed was being scuppered by its neighbours’ reluctance to negotiate releases of their rights to light. If settlement cannot be reached, a local authority may be prepared to step in and use its powers under section 237 of the Town and Country Planning Act 1990. This section gives a local authority the power to appropriate land for planning purposes. This has the effect of wiping the land clean of private rights (including rights of light) and converting them into compensation payments. The threat of an injunction is removed and the measure of compensation is the diminution in value of the affected interest. The City of
Historically, local authorities have been reluctant to use this power but increasingly they appear willing to facilitate favoured development.
The basic message remains the same when dealing with rights to light in developments — to address them from the outset. The longer they are left, the more expensive and problematic they become.
Caroline DeLaney is a partner and head of the real estate disputes team at CMS Cameron McKenna.