Louise Bowmaker and James Souter answer challenging rights to light queries
Question
Two years ago, my client was given notice by a football club that it intended to build a new stadium on his doorstep.
Negotiations as to rights to light have been ongoing and most neighbours have settled with the club.
My client is heartened by my advice that he has a very good case for obtaining an injunction and could thereby extract a substantial payment from the club.
Now that planning permission has been granted, how should I advise him?
Answer
Proceed with caution and do not hold out for an excessive payout. Should the club follow the example recently set by Chelsea in relation to its proposed stadium redevelopment (now put on hold by owner Roman Abramovich), the client could be at risk of receiving a significantly reduced payment.
Explanation
The approach of the courts has historically been to favour injunctions to restrain the infringement of rights of light rather than awarding damages in lieu. However, a degree of doubt has been cast on this by the decision of the Supreme Court in Lawrence v Coventry (t/a RDC Promotions) [2014] UKSC 13; [2014] 1 EGLR 147. Having said that, until a rights of light case reaches the Supreme Court, the initial robust advice given to the client makes sense.
In calculating the amount payable for an infringement to a neighbour’s light, surveyors typically begin by calculating the value of the projected area of lost light, but matters do not stop there. Any settlement can also take into account the likely profit to the club from its proposed new stadium and/or release fee damages.
The approach adopted by Chelsea in relation to its stadium redevelopment plan, however, should give the client pause for thought. In January, the London Borough of Hammersmith and Fulham (LBHF) resolved to use powers under section 203 of the Housing and Planning Act 2016 (the 2016 Act) (which replaced section 237 of the Town and Country Planning Act 1990 (the 1990 Act)) to override the rights to light of a family holding out against the club. This followed two years of negotiations including several offers, a failed mediation, and an interim injunction to cease works. It was reported in March that the parties had settled days before the deadline for judicial review proceedings.
Crucially, where section 203 is used to override rights to light, the measure of compensation is the diminution in value of the property affected (section 204 of the 2016 Act). This can result in the payment of significantly reduced damages, and possibly only nominal damages if the likely beneficial impact of the new stadium on the value of the flat is taken into account.
The grant of planning permission puts the club in a stronger position, and it is likely that it has already considered the section 203 option. Homeowners holding out for more at this time can risk pushing the club into pursuing this route. There is, therefore, a fine balance to be struck at this point in the negotiations. The risk of over-playing your client’s hand is real and could lead to him losing out significantly.
Question
I am advising a developer in relation to a housing project.
We have managed to settle with most of those whose rights to light will be affected, but a few problem parties remain.
Planning permission was recently obtained but my client is worried about the risk of injunctions and substantial settlement payments. I am not overly troubled by this; am I right to be unconcerned?
Answer
Section 203 of the Housing and Planning Act 2016 offers a potential option, as it enables the local authority to override rights to light.
However, developers should not underestimate what is required for this to succeed.
The cooperation of the authority will be crucial and it should be approached as soon as possible; section 203 may prove a decisive negotiating card but there are no guarantees it will succeed.
Explanation
Chelsea secured the cooperation of LBHF to exercise its powers to override rights to light under section 203 of the 2006 Act, but this depended on a number of factors coming together and it is by no means guaranteed in all cases.
Four criteria must be met before the power can be exercised: (i) the land must have become vested in or acquired by a specified authority; (ii) there must be planning consent for the work; (iii) it must be the case that the specified authority could acquire the land compulsorily for the purposes of the work; and (iv) the work must be related to the purposes for which the land was vested in or acquired by the authority.
The first criterion is likely to be the most problematic in this case. Chelsea was able to secure the agreement of LBHF to a purchase and leaseback of the land, which required LBHF to conclude that the scheme was likely to promote or improve the economic, social or environmental wellbeing of the area (sections 226-227 of the 1990 Act). For the housing developer, this means that the local authority’s cooperation may turn on housing policy in its area.
The authority must also conclude that the acquisition of the land is “required” for development (section 227). For Chelsea, the chronology of failed negotiations, offers and mediation enabled it to argue that the redevelopment could not proceed as things stood. The housing developer must therefore dedicate time and resources to settlement before the local authority may accept this criterion is met.
The third criterion may also prove difficult. Chelsea and LBHF interpreted this as a very low bar but the family argued that a higher merits test would have to be met. Because the parties settled, this has not been tested and remains an area of risk for the developer.
Developers would be well advised to explore at an early stage the possibility of securing a local authority’s cooperation to use its powers under section 203; a positive response may be an extremely useful tool in negotiations with those whose rights to light will be affected. Do not fall into the trap, however, of thinking that this offers a silver bullet in all cases.
Louise Bowmaker is a barrister at Enterprise Chambers and James Souter is a partner in the property litigation team at Charles Russell Speechlys LLP
