How will the courts assess damages in “rights to light” cases if they decide to allow the infringement to remain? The decision in Tamares (Vincent Square) Ltd v Fairpoint Properties (Vincent Square) Ltd [2007] PLSCS 29, concerning a relatively modest infringement of rights to light to a staircase, offers up-to-date guidance on the principles to be applied if the courts decide to award damages, instead of an injunction requiring the infringement to be removed.
In Carr-Saunders v Dick McNeil Associates Ltd [1986] 2 EGLR 181; (1986) 279 EG 1359, the only previous authority on damages in rights to light cases, the award was based upon a multiple of damages for loss of amenity. By contrast, damages in other cases have been assessed by reference to the value – in terms of a share of the potential profits – of the objector’s bargaining position. The judge reviewed the authorities and decided that the claimant in Carr-Saunders was awarded damages based only upon loss of amenity because there were no estimates of profit upon which to base an award. He adopted the following principles for assessing damages for infringements of rights to light in cases where the courts refuse to grant injunctions.
The court must determine the “fair” result of a hypothetical negotiation between the parties before any infringement of the right to light has occurred. The context, nature and seriousness of the infringement must be considered and, as the right to prevent a development puts the objector in a strong bargaining position, the objector will normally expect to receive part of the likely profit from the development as compensation for the loss of the right. In the absence of any evidence of the likely profit from a development, the court should award a suitable multiple of the damages for loss of amenity. However,, in cases where there is evidence of the likely profit, damages should normally be assessed by reference to a fair percentage of that profit. The court should not award a sum that would deter development. Finally, the “deal” must “feel right”.
The judge settled on a figure of one third of the developer’s likely profit as the starting point for assessing damages in this case. This was more reasonable than splitting the potential profits more evenly between the parties, because the developer had taken all the risk and would have to make the payment, even if the eventual profits were less than anticipated. The percentage was also in line with the decision in Stokes v Cambridge Corporation (1961) 180 EG 839. Awarding the claimant one third of the developer’s likely profits would have resulted in an award of £58,000, but the judge eventually ordered damages in the sum of £50,000. He believed that this was both fair and right in terms of the price of avoiding an injunction. The amount took account of the limited nature of the infringement, but it was substantially more than any sum available for loss of amenity, which had been valued at no more than £3,000.
Allyson Colby is a property law consultant
