The Law Commission has finally published its long-awaited report on the reform of the law relating to rights of light. The report runs to some 243 pages and although the proposals are watered down from what was originally put forward, it proposes some meaningful changes, including the way the courts are required to deal with injunctions in rights of light disputes.
Rights of light claims have long caused problems for developers; however, they seem to be getting worse. Rights to light are easements and although they have some peculiar qualities, they are dealt with in the same way as the infringement of any easement – by way of an application to the court based on a claim in nuisance. The court has the discretion to grant an injunction or the court can award damages instead.
In broadest terms, “glazed apertures” (meaning windows, doors and skylights) that have been there for 20 years or more are entitled to the access of light. If a development interferes with that right sufficiently, the building owner can take action to stop the interference. In the worst-case scenario, it can prevent a developer from constructing the building at all or it can force a cut back to the scheme. Damages may be awarded instead, but they may be significant.
Part of the problem is that developers are building larger, more intrusive schemes which are inevitable where space is at a premium. Part of the problem is that neighbours are better advised and know that if they get their tactics right, particularly in the larger schemes, compensation can be significant. Although planning applications involve consideration of the daylight and sunlight impact of a development, developers are left to address separately private rights of light.
Dealing with rights of light disputes can be like game theory and a well-advised neighbour can make or break a scheme. This impacts negatively on the profitability of the scheme and creates delay and uncertainty. That said, a developer has historically been able to negotiate itself out of rights of light claim, albeit having to compensate its neighbour, sometimes handsomely. In 2010, however, the decision in HKRUK II (CHC) Limited v Heaney [2010] EWHC 2245 rattled the development industry. The court ordered an injunction requiring the demolition of two additional floors of a building when the expectation (at least of the developer) was that damages only would be awarded. This has made the position more uncertain. It has been exacerbated by the decision of funders following Heaney to refused to allow drawdown on any funding unless all rights of light issues are first resolved.
The pressure of developers and lobbying groups such as the BPF (British Property Federation) together with the political imperative to promote development in England and Wales prompted the Law Commission to look at the law relating to rights to light.
The Law Commission’s report published on 4 December 2014 seeks to balance the competing interests of the developer and its neighbours.
The report makes four recommendations:
1. About the way in which rights to light are created;
2. About the way in which the Courts enforce a right to light by injunction or by damages;
3. About how to impose a time limit on negotiations; and
4. About the way in which rights to light can be brought to an end.
1. About the way in which rights to light are created:
In 2011 the Law Commission produced a report “Making Land Work” in which it proposed streamlining the law relating to the acquisition of all easements, however that is yet to be acted upon. The report does not recommend any special treatment for rights of light. It does, however, propose the repeal of the Rights of Light Act 1959 which allows a landowner to prevent the acquisition of an easement by the registration of a local land charge which has the same effect as building a notional structure in front of a land owner’s window. The process is cumbersome and relatively costly, but I consider it to be a useful tool, badly used by most. When used properly it can reduce or eliminate potential claims. The Commission proposes a streamlined procedure.
2. About the way in which the Courts decide whether to enforce a right to light by injunction or by damages:
A right to light is infringed where the amount of light entering a window is obstructed to such an extent that what is left is less than is required for the normal purposes for which a building can be used. Specialist rights of light surveyors use 3D computer models to translate this into technical analysis of the interference.
The Law Commission decided not to alter the long-established law which allows the court some degree of subjectivity in assessing the impact of an infringement of light and the remedy it can award. The case of Shelfer v City of London Light Company [1895] 1 Ch 287 has long been the test as to when damages may be awarded instead of an injunction. The Law Commission was concerned however that the Shelfer test was being applied by the courts in a way that was too restrictive and that the tactics of well-advised landowners to prolong negotiations were putting developers into a ransom situation.
The recent decision in Coventry v Lawrence [2014] UKSC 13 (about which I wrote in my opinion piece – add link] has gone some way to restoring the balance by allowing the court to take into account the public interest when deciding whether to award an injunction or damages. The case did not satisfy the Law Commission enough, however, and it has still decided to introduce a new test specific to rights of light by the introduction of the key concept of “proportionality”.
The recommendation is that a court must not grant an injunction to restrain the infringement of a right to light if, in doing so, it would be a disproportionate means of enforcing the rights to light based on the following factors:
1. The claimant’s interest in the dominant land;
2. The lost of amenity attributable to the infringement taking into account the extent to which artificial light is relied upon;
3. Whether damages would be adequate compensation;
4. The conduct of the claimant;
5. Whether the claimant delayed unreasonably in claiming an injunction;
6. The conduct of the defendant;
7. Impact of an injunction on the defendant; and
8. The public interest.
To me, this simply looks like opening up another area of uncertainty whilst the opposing parties test the new factors.
The Law Commission has stopped short of reforming the law relating to the assessment of damages – which is another complex area – although it has indicated that it is going to keep this element under review.
3. About how to impose a time limit on negotiations:
This is a new procedure aimed at providing certainty to developers. The problem with the law as it stands is that the court has discretion when assessing whether to grant an injunction. Delay is one factor that a court takes into account; however, there is no point in time when a developer can be certain that an injunction will not be awarded. The impact of this is that by delaying action a well-advised landowner can put pressure on a developer and so agree a higher financial settlement in exchange for the release of the right and the certainty to be able to undertake its development.
The Law Commission recommends a new procedure requiring a building owner to claim an injunction within a certain period (with the developer paying the costs that the neighbour incurs in taking legal and surveying advice) or lose the right to claim an injunction. A claim for damages would remain. This procedure provides certainty. The Notice of Proposed Objection Procedure requires that proceedings must be issued and served within 8 months of the notice being served. It is anticipated that the notice procedure will make negotiation more effective and keep costs down for all concerned.
4. About the way in which rights to light can be brought to an end:
The Law Commission recommends a minor amendment so that if a window has been bricked up or a building demolished, a claim to an easement of light would be abandoned after 5 years. In addition, it recommends that all easements including rights to light may be the subject of an application to the Lands Chamber of the Upper Tribunal to discharge or modify them. Up until now, only restrictive covenants can be dealt with in this way.
So where now? An interim response is expected from the Department for Communities and Local Government within 6 months and a final response within a year. The report depends in part on the implementation of the proposals made in 2011 on easements, covenants and profits a prendre and the passing of the Easements Bill. With an election looming, it would be optimistic to think that reform is imminent. Even if the reforms are introduced, the area will remain an extremely complex one.
This bulletin should not be taken as definitive legal advice on any of the subjects covered.
