Rights of light: CIP Property Ltd vs Transport for London

Right of light - background

In the 2010 case of HKRUK II (CHC) Ltd vs Marcus Heaney, the court ordered that the top two floors of a new development had to be pulled down as they interfered with Mr Heaney’s right of light. This case did not create new law, as injunctive relief has always been available in such situations, however the shock for developers was that an injunction was granted despite the delays by Mr Heaney in objecting to the development.

Planning permission was obtained in March 2007 and work on the top floors began in October 2008. While Mr Heaney, around this time, objected and threatened to issue proceedings, the threat was never carried through. By August 2009, and after prolonged silence from Mr Heaney, the building was finished and a tenant secured for the new floors. The developer then sought declaratory relief. However, this resulted in Mr Heaney obtaining the injunction despite his delays. This outcome was surprising because a delay in seeking relief had always been perceived as potentially fatal to such a claim.

The position adopted by the court was that there had to be an immediate threat and as such, an injunction should not be granted prematurely

Developers were left with uncertainty; a neighbouring landowner could watch a building be completed, only then to object and seek an order that it be cut back. The message was there was a clear need to debate issues at an early stage.

Two years on and timing still preoccupies the Courts

Two years later, timing issues continue to preoccupy the courts. After Heaney, developers appreciated that matters regarding rights of light needed to be resolved before developments started. However, the recent case of CIP Property (AIPT) Ltd v Transport for London [2012] EWHC 259, heard by the High Court in January 2012, saw the issue taken to the other extreme. In this case, the parties were debating the opposite point: when is it too early for a landowner to seek injunctive relief?

Transport for London owns land, which is due to be developed as part of the Crossrail project, on the south-west corner of Oxford Street, which includes Tottenham Court Road Underground Station. An adjacent property is owned by CIP. There is a pre-emption agreement pursuant to which a potential developer, Derwent Valley Central Ltd, can acquire certain parts of the site from TFL if certain pre-conditions are met. However, Derwent will only be able to commence any development after 2017, when the Crossrail project is completed.

CIP issued court proceedings seeking a declaration that it enjoyed rights of light over the development site and sought an injunction to restrain any development. TFL and Derwent applied to strike out the claim on the basis that it was misconceived and premature.

For developers, the risk of an injunction continues to exist from the pre-construction stage through to post-completion

It was held that as the development could not commence until 2017 and then only if certain preconditions were met, there was no immediate threat to CIP’s rights and the claim was struck out. The position adopted by the court was that there had to be an immediate threat and as such, an injunction should not be granted prematurely. It was also noted that TFL was unlikely to develop and Derwent did not yet own the site.

CIP’s motivation for the application was presumably based on the fear that if it did nothing then it would be deemed to have acquiesced to the scheme and so precluded, come 2017, from asserting its rights.

While the decision is perhaps not surprising, it adds further complexities to the issue of timing.

What does this case mean for developers and landowners?

For landowners, a message has been given that early litigation will be disapproved of by the courts. They will have to ensure that their concerns are aired in correspondence to the developers so that there is no risk of having acquiesced to the developer’s plans. However, it means that the certainty of a Court Order is not available until later. For a declaration to be given, the court has to be satisfied that the defendant has done or intends to do something which it was not entitled to do. The question that remains unresolved is when that intention crystallises.

For developers, the risk of an injunction continues to exist from the pre-construction stage through to post-completion. The new case has not provided any comfort. It seems likely, following the CIP case, that unless the developer owns the land and the development’s commencement is imminent, they will be unable to seek declaratory relief at an early stage, meaning that security regarding the development cannot be obtained through the courts.

There is no “one size fits all” approach for this difficult area of law. There have been suggestions that a pre-action protocol that deals with disputes between developers and landowners be created. This would assist in bringing certainty to the timing of such disputes and their resolution. In the meantime, developers and neighbouring landowners should seek advice at an early stage.

Joe Copping is a senior associate in the real estate disputes team at Taylor Wessing