The price of darkness: Rights of light

Under English law, a right of light (ROL) has to be acquired before it can be enforced. Some developers assume that the ROL can always be bought off by negotiation and the payment of money. Given the risks of being faced with an injunction, this is a reckless assumption.

The ROL rules are often misunderstood and applied wrongly or confused with daylight calculations used in the planning system. Developers must understand that private rights exist, and on a high-density scheme they will need to factor in ROL from the feasibility stage.

The emphasis on redeveloping brownfield sites has made ROL a hot topic for the courts. Prospective buyers have tried to use ROL to negotiate reductions in the purchase price for land with development potential, and established neighbours have extracted big premiums from hapless new developers.

The foremost case on assessing how the loss of an ROL should be measured is Wrotham Park vs Parkside Homes (1974). It set out “buy-out” damages based on what two parties would have arrived at in a haggle deal as the price for the claimant to relax their rights, each making reasonable use of their respective bargaining positions. Such damages are designed to be compensatory, rather than punitive. The sums paid to infringed parties in ROL claims vary enormously. The High Court recently awarded damages of £50,000 to a claimant for the loss of an ROL on a staircase.

This means serious downsides for the infringer given cases such as Tamares (Vincent Square) vs Fairpoint Properties (Vincent Square) [2007] in which the court declined to grant a mandatory injunction but instead ordered the developer to pay damages in lieu which equated to one-third of the likely profit from the development. It proves getting it wrong can be very costly.

Where an infringed party seeks an injunction, the burden of proof will be upon the developer to establish why the injured party should be compensated in damages rather than be awarded an injunction.

In Regan vs Paul Properties, the Court of Appeal declared that the judicial discretion to award damages instead of an injunction should only be exercised in exceptional circumstances. Regan decided that interference with an ROL could not be compensated by a monetary payment. In other words, an injunction was the appropriate remedy. So you see the courts are stepping in in a proactive manner and not treating damages as an adequate remedy.

The High Court recently awarded damages of £50,000 to a claimant for the loss of a right to light on a staircase

The courts will generally differentiate between a claimant who is interested in protecting their property from the claimant who is merely seeking monetary gain.

Most recently in Forsyth-Grant vs Allen (2008) the Court of Appeal considered the issue of the assessment of damages for infringements of ROL. The case concerned the ROL prescriptively acquired by an adjoining hotel and the construction of two new houses. The contractor engaged a “rights of light” surveyor but the hotelier refused to co-operate. The contractor modified the plans for the houses to try to minimise any loss of light. The hotelier issued proceedings and sought an account of all the profits made by the defendant from the infringement of her ROL and, in the alternative, damages, including exemplary damages for the nuisance.

The court noted that the hotelier had refused to negotiate with the builder and concluded that it was not equitable to grant an injunction. The judge refused to award profit-based (or “buy-out”) damages, merely going for compensatory damages of £1,850.

This decision leads to the conclusion that “buy-out” damages will only be awarded on the merits of each individual case. The conduct of the parties in seeking to negotiate a settlement of an ROL claim will be relevant.

The law continues to develop. RHJ vs FT Patten (Holdings) (2008) deals with landlords attempting to prevent tenants acquiring rights of light through terms in the lease and has repercussions in respect of who can prevent developments and who is entitled to the substantial payouts that may follow.

In RHJ the lease reserved to the landlord a “full and free right” to build on the land. The tenant argued that it had acquired an ROL through prescription because it had enjoyed continuous light for 20 years. The Court of Appeal held that the lease constituted written agreement and said that the agreement did not have to refer expressly to “light” for it to exclude a claim to an ROL by prescription. The result will apply in not only the landlord/tenant situation but also where a developer sells off part only of its land and retains the rest for future development. So, developers selling off plots of land should take care with the wording in any conveyance to ensure that a purchaser cannot claim a prescriptive ROL if the developer starts to build on the adjoining land.