The law regarding rights of light is a mess. With the Law Commission’s consultation due shortly, Nick Lloyd and Timothy Fancourt QC consider the options
Developers are horrified by rights of light. It is incredible to them that a neighbour who sits back and does nothing can acquire a permanent right to the access of light over a development site, which a court is going to protect by way of an injunction unless there are exceptional reasons not to.
The fact is that rights of light are inhibiting development and arguably they have become a method of extracting a share of profits from developers, rather than of protecting valuable light.
What’s more, a developer cannot necessarily be comforted by his rights of light surveyor’s view that a reduction in light to a neighbouring building is so small it is not actionable or, if it is actionable, that a court is unlikely to grant an injunction. These are the two most important questions a developer is going to want answered, but these are the two very questions that the courts have made it clear are for them, and not the rights of light surveyor, to decide. A developer cannot count on a court agreeing that a room that remains 50% well lit is not suffering an injury.
That uncertainty is compounded by the fact that rights of light are ridiculously complicated, with lawyers bamboozling clients with tales of lost modern grant, common law prescription, section 3 consents, section 62 of the Law of Property Act 1925, the custom of London and endless other arcane concepts. Despite rights of light being ancient, so much remains unclear regarding what the law is and how it works in practice.
The bottom line is that rights of light law is a mess and some consolidation and codification is needed. In the process, should the law be changed to make it easier for developers to build? Not everyone agrees that it should.
A right of light is a proprietary right over other land and in that respect it is no different from a right of way, which can also be acquired by 20 years’ use (prescription). A developer subject to a prescriptive right of way through its development site may not like it, but will treat it as a development constraint that it will either have to build around, over, or get released. A right of light is no different.
Why should the law be changed to allow a developer to downgrade its neighbour’s property interest in the development site? Arguably, it is naïve to complain that rights of light only relate to extracting premiums. Property professionals are in the business of dealing with and selling property interests. Rights of light are no different.
Past endeavours
The Law Commission has already reviewed easements generally in its 2008 consultation paper, which resulted in the 1.5 inch-thick report and draft Bill that was presented to the Lord Chancellor and secretary of state for justice on 8 June 2011 (the report). Among other things, the report recommended simplifying the law on the acquisition of easements (including rights of light) so as to create a single statutory scheme for future acquisition of rights after 20 years, in place of the existing plethora of ways of acquiring prescriptive rights.
If that recommendation is adopted (and there is still no word on whether the Law Commission’s recommendations are going to be enacted and, if so, when), then that will go some way to simplifying the acquisition of all easements, including rights of light. However, the Law Commission deliberately did not look in detail at rights of light, on the basis that it wanted to deal with the general law first, without looking at the specific issues relating to rights of light. Was this a missed opportunity?
The report acknowledged that more work on rights of light was needed and a further consultation was promised in early 2013. The consultation will be available on 21 February, following a series of meetings last year with the Law Commission, the British Property Federation and industry figures to gather industry perspectives. So what should the Law Commission do?
Abolition of rights of light?
The consultation may canvass views on the abolition such that rights of light could not be acquired by prescription in the future (leaving accrued rights untouched). However, the report did not recommend abolition of prescription generally because it still serves a function in regularising long use and bringing the legal position into line with practical reality. It would be odd then if the Law Commission is persuaded to recommend abolition of prescriptive rights of light; a suggestion that these writers do not support.
Striking a balance
The recommendations are more likely to seek to strike a balance between landowners’ rights of light and the need to facilitate development. That balance has been upset by the strong leaning towards an injunction to stop or remove an actionable interference with light and the consequential uncertainty for developers, who may face a legitimate claim for an injunction from a neighbour once the development has started or been completed (see HXRUK II (CHC) Ltd v Heaney [2010] EWHC 2245 (Ch); [2010] 3 EGLR 15). As a consequence, neighbouring landowners are in a powerful position to force nervous developers to throw money at them to avoid these uncertainties. In our view, that is inequitable.
One way of addressing that is to introduce a notice requirement not too dissimilar to the party wall legislation, whereby the developer can serve notice on a neighbour including technical detail of the likely infringement. There would then be a time limit within which the neighbour must apply for an injunction (and not just write a lazy letter saying that it does not consent to the interference with light), otherwise the neighbour’s remedy is limited to damages. That way a developer is not forced into a ransom position by a neighbour who complains about infringement late and the neighbour is provided with early and full information in order to decide whether it wants to protect its light or would be happy with compensation.
What if the neighbour applies for an injunction? The court’s current approach is to protect the right of light and grant an injunction unless there are exceptional reasons not to. The courts generally apply the Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 principles in carrying out this analysis, namely: whether the light loss is small, is capable of being compensated by a small money payment, and whether it would be oppressive to the developer in all the circumstances to grant an injunction.
The problem in Heaney was that the court applied these principles rigidly and cumulatively, such that as soon as the court had concluded the infringement was not small, nothing else had to be considered. Even if the loss is small, it is often going to be difficult for a developer to show oppression: unless the neighbour has led it to believe that it is not concerned about its light, the developer will have made a calculated decision to build despite infringing a right, rather than designing out the infringement. Therefore, it did so at its own risk.
It must be right to take into account the level of light loss and the behaviour of the developer. Another Heaney case, where the Shelfer principles are applied rigidly, should, however, be avoided by eliminating the Shelfer test and restating the courts’ discretion to determine whether or not in the circumstances it is just to limit the neighbour to compensation for diminution in value or to damages in lieu of an injunction.
That still leaves the outcome uncertain, but at least a developer will know that the courts will not only take into account the level of light loss but will also consider all other relevant factors.
The approach to damages
Currently, the assessment of damages for infringement is based on a hypothetical discussion between the parties for the release of the rights of light, which assumes that they will agree that a share of the development profit will be handed over.
The Law Commission is likely to consult on whether the approach to damages should be codified to bring it into line with the compulsory purchase and other planning legislation, which limit compensation to the diminution in the value of the neighbour’s property. This would be sensible if it enabled the courts to avoid damages being awarded that far outweigh the actual loss suffered by the neighbour.
Interrelationship with the planning system
The planning system takes no account of rights of light and therefore planning legislation can be obtained even though rights of light might prevent development.
One option for reform is to bring the consideration of private rights of light into the planning authority’s consideration, such that a development can proceed if it satisfies the planning standards as to sunlight and daylight. This seems to be the wrong approach, as it would be akin to abolition of prescriptive rights of light and could lead to the planning system being clogged up with neighbours forced to protect their rights of light through objecting to planning applications and judicially reviewing planning decisions, rather than protecting their private rights outside of the planning process.
Section 237 of the Town and Country Planning Act 1990 (which allows local authorities to appropriate land for planning purposes, thereby converting a right of light into a compensation claim) is sufficient planning control to aid regeneration where rights of light issues cannot be resolved by agreement and local authorities are increasingly willing to use it.
Jurisdiction of the Lands Chamber
The 2011 report also recommended extending the jurisdiction of the Lands Chamber to allow it to make orders modifying or discharging easements (as it currently does with restrictive covenants). This would allow a developer to seek a modification or discharge of a right of light over this land on one of a number of grounds, the most likely being because the right of light impedes some reasonable use and either does not give the neighbour a practical benefit of substantial value or advantage or is contrary to the public interest.
If this recommendation is adopted, then, arguably, no change to deal with the law on rights of light is required (and therefore no further consultation is needed). The power of the Lands Tribunal would give a developer an opportunity to argue that a right of light that inhibits development should be discharged, knowing that such considerations as the reasonable user of its land and public utility will be taken into account (as well as the benefit the neighbour derives from the right of light).
It is uncertain how the Lands Chamber would exercise this power (for example, as to when a right of light has substantial value or advantage) and developers will be nervous that it will act no differently to the courts when considering whether or not to grant an injunction.
Since this is such an unknown quantity, it is right that developers still lobby for the additional changes set out above. In addition, if the Lands Chamber jurisdiction is extended, it will apply to rights of light acquired after any new legislation and not before, so developers will still want change to deal with how previously acquired rights of light are enforced.
Time to forge ahead
Current procedures need to change and the Law Commission seems to be pushing ahead with consultation that will allow for a full debate about the future of rights of light and for long overdue change.
The law commission’s consultation will be available on 21 February at http://lawcommission.justice.gov.uk
Nick Lloyd is a partner in the real estate dispute resolution team at Nabarro LLP and Timothy Fancourt QC is a barrister at Falcon Chambers
