Allyson Colby analyses a significant new decision on rights to light.
KEY POINTS
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- The High Court has declared that a landowner is entitled, as against a developer, to an injunction requiring a development to be cut back to accommodate its rights to light
- The decision confirms that every bit of light is precious when a room is poorly lit
- The tenants of the dominant and servient buildings both have interests that should never be ignored
Who can forget the decision in HXRUK II (CHC) Ltd v Heaney [2010] EWHC 2245 (Ch); [2010] 3 EGLR 15? The grant of an injunction requiring a developer to demolish two floors of a new building that had already been let, instead of paying damages to the landowner whose rights to light had been infringed, sent shockwaves through the property industry.
The Supreme Court decision in Lawrence and another v Coventry (t/a RDC Promotions) and others [2014] UKSC 13; [2014] 1 EGLR 147 (commonly known as Coventry v Lawrence) calmed nerves. Developers welcomed the suggestion that the court should not be afraid to take a flexible approach when considering whether to award damages instead of injunctions. But Beaumont Business Centres Ltd v Florala Properties Ltd [2020] EWHC 550 (Ch); [2020] PLSCS 45 reminds us that developers who infringe property rights run the risk that the court will grant an injunction.
Rights to light
The owner of a building in London, Beaumont, had granted an associated company, Beaumont Business, a 15-year lease, with an option to renew, before selling the freehold to a third party for £27m. Contemporaneously, all three parties executed a deed providing that Beaumont would receive any payment for any specified infringement of the building’s rights to light during the next 15 years (the rights to light deed).
The neighbouring landowner, Florala, sought and obtained planning permission to develop its property and was on the verge of making an offer to extinguish the rights to light when it discovered the existence of the rights to light deed. Its contents convinced Florala that the rights to light were being used as a money-spinner and were expendable. So it went ahead with its project, despite being warned that it did so at its own risk.
Beaumont Business issued proceedings for an injunction once the work began, but the development was completed and fully let to SACO before the case was heard. SACO’s existence emerged late in the day and it was not a party to the proceedings
Loss of light
A right to light does not guarantee the continuance of the level of light that the dominant owner has previously enjoyed. The issue is not the amount of light lost, but the amount that is left. Are the premises substantially less comfortable and convenient than before?
So how much of a diminution in light must there be to infringe a right to light? Florala suggested that the loss of light caused by its development was so small that it did not constitute a nuisance. The building was not well-lit and Florala claimed that a reduction in light that makes a badly lit room darker is not actionable, especially when premises are situated in a crowded urban environment like London.
But the High Court disagreed. And, after analysing the reduction in light using the “Waldram method”, supplemented by radiance studies, and considering the valuation evidence (which was complicated by the impact of another development nearby and changes in the market following the Brexit referendum) the judge concluded that the income from the Beaumont building had dropped by nearly £20,000 per annum due to the light lost as a result of Florala’s development. Overall, this translated into a capital loss of £240,000 which, in the judge’s view, sufficed to constitute a nuisance.
Injunction
Should Florala be required to cut back its building to restore the rights to light that it had infringed? Or should the court refuse an injunction because Beaumont Business was not genuinely concerned about the interference with its light?
The court decided that the proceedings had been pursued to preserve the rights to light, which were very important to the Beaumont building because it was let as high-class serviced offices. So there was nothing to prevent the court from exercising its discretion to grant an injunction, if it was satisfied that this was appropriate.
The members of the Supreme Court in Coventry v Lawrence expressed different views about the availability of injunctions where property rights have been infringed. Lord Sumption suggested that damages should, ordinarily, suffice. But, in subsequent cases, the courts had adopted Lord Neuberger’s approach that, while flexibility is important, the prima facie remedy is an injunction.
Beaumont Business had not objected to Florala’s planning application. Nor had it sought an interim injunction. But neither factor persuaded the judge to refuse a final injunction. Florala had gone ahead with the development, despite objections, in order to maximise its profits. Its behaviour was high-handed or, at the very least, unneighbourly and there was no evidence that the cost of pruning back its development by one or two rooms would make it oppressive to grant an injunction.
Beaumont Business’s loss was not small. It did not want money and was entitled, as against Florala, to an injunction. But unless it could persuade a court that SACO should be bound too, it would have to accept damages instead.
Negotiating damages
Morris-Garner and another v One Step (Support) Ltd [2018] UKSC 20; [2018] EGLR 26 confirms that the court can award negotiating damages, as opposed to diminution in value, in cases such as this. The judge decided that Florala would have paid one-third of the additional profit that it was likely to make, by developing in the way that it did, in order to forestall any claim to rights to light. The judge valued that additional profit at £1.1m. Consequently, Florala would be liable to pay £350,000 (which felt right and represented a fair deal) if damages were payable in lieu of an injunction.
Allyson Colby is a property law consultant
