A spotlight on rights to light

In a 2010 landmark ruling the High Court ordered an injunction requiring the demolition of the top two floors of a recently completed office building in Leeds. The reason for the decision in HKRUK II (CHC) Ltd vs Heaney [2010] was that the floors interfered with a right to light enjoyed by a neighbouring property. The implications of the decision for the development industry were grave, effectively enabling the owners of properties near development sites enjoying rights to light to hold developers to ransom. The situation was so serious that the Law Commission launched a consultation which initially included a suggestion that rights to light should be abolished altogether. The final recommendations, published at the beginning of December 2014, exclude some of the more radical suggestions, but if they reach the statute book will represent a significant change to the law.

As it stands, the law relating to rights to light is complicated not least because rights generally arise through long use (the legal doctrine of prescription) and are rarely referred to in title documents. Rights to light are quite separate from the daylight and sunlight analysis in the planning process; we are concerned here with private rights between landowners. A well advised developer will, however, consider the existence of rights to light in the context of a planning application to ensure the consented scheme can actually be built out. The developer will require advice from rights to light surveyors and lawyers to ascertain the risks faced by a proposed development. This will often include historic analysis to identify which neighbouring buildings may have enjoyed light for sufficient time to have acquired rights. The lawyers will review the affected titles to identify any terms in freehold transfers and leases that could impact on the acquisition of rights.

There are various ways for a developer to mitigate rights to light risks which include:

• Negotiating with neighbouring owners
• The use of light obstruction notices
• Indemnity insurance against potential claims
• Altering the development envelope to avoid infringements.

It is a difficult balance for developers seeking to maximise floor space and deliver an architecturally pleasing design. The ultimate threat demonstrated by Heaney is an injunction requiring them to stop building or, worse, demolish part of a completed building. The uncertainty as to whether the court would award an injunction or damages post-Heaney had a serious impact on the development industry and the need for change was widely acknowledged. As a matter of public policy, the law should not be used to prevent the regeneration of the country’s building stock. Indeed, it should actively encourage it.

In its report the Law Commission made four main recommendations:

• Simplify the doctrine of prescription
• Introduce a new statutory test for the crucial question of injunction vs damages
• Introduce a notice enabling developers to draw out any claims from adjoining owners
• New rules for bringing rights to light to an end.

The most difficult issue for developers is the threat of an injunction and so the second and third recommendations have attracted the most interest. A new statutory test would provide more certainty for developers although it would still ultimately be a question for the court based on the facts of any given case. The existence of artificial lighting in a building is included as a factor which the court should consider - a significant departure from the existing law.

The law should not be used to prevent the regeneration of the country’s building stock

The third recommendation would effectively introduce a “put up or shut up” notice - forcing any claimant to apply to court within eight months of receiving notice from the developer or else forfeit their entitlement to apply for an injunction: a very useful tool for developers. The downside would be it could alert adjoining owners to potential claims. Developers would need to weigh that up in their risk management strategy.

Interestingly, the Law Commission deliberately avoided making any suggested changes to the hotly debated area of how damages in lieu of an injunction are calculated. It also specifically avoided making any recommendations for changes to the law of compulsory purchase which can assist developers in overriding rights to light.

The recommendations are good news for developers and whether or not they reach the statute book, they demonstrate a desire on the part of the law-makers to avoid further cases like Heaney. The Supreme Court also gave an indication last year in the case of Coventry vs Lawrence that it acknowledges the need for a review of the law in this area.

All of this points towards a change in approach with the balance swinging back in favour of developers. However, until the law is actually changed either by parliament or the courts, developers must remain cautious.

James Souter is a partner in the property litigation team at Charles Russell Speechlys