In what is likely to become the leading rights of light case for years, the High Court has this week found that the construction of the Arbor office building at Bankside Yards, London, for which Native Land is the appointed development manager, interfered with rights of light belonging to two flat owners in the neighbouring Bankside Lofts.
However, Mr Justice Fancourt declined to grant an injunction requiring the developer to partially demolish and cut-back/alter the building so as not to interfere with the rights of light, as such relief would be impractical, disproportionate and ultimately futile. Instead, he awarded damages to the flat owners of £500,000 and £350,000 respectively – believed to be the highest negotiating damages awarded in a rights of light case, but amounting to only 1/6 of the amount sought by the flat owners.
Bankside Yards
The Arbor building is the first of eight large buildings constructed in accordance with the planning permission first granted by Southwark Council in 2014 for the Bankside Yards regeneration project. It provides office space over 19 levels, operates at net zero carbon and has an 'Excellent' BREEAM rating. It was completed in December 2022. Owners of neighbouring flats experienced a temporary light increase due to the demolition of former buildings at the site to which they had not acquired any legal rights and it was common ground that the greatest impact on their light would occur when the other seven buildings are completed – although this could take another 15 years.
Will a neighbouring owner secure an injunction to prevent a development/order demolition if it breaches their rights of light?
Whilst each case turns on its own facts and developers must obtain legal/specialist surveyor advice, in this case the court was asked to grapple with unanswered legal and technical issues which have been brewing for rights of light specialists for the last few years, including:
- How should light be measured to assess whether an interference has occurred? Is the century-old method of Mr Percy Waldram, which assesses the visibility of a proportion of the sky at table height around the affected room, still appropriate in modern buildings? Or should newer Radiance models, based on computerised data and calculations to measure actual light, take precedence?
- If there is an actionable interference with rights of light,
should an injunction be granted? What weight should the court give
to factors such as:
- the waste of resources when demolishing a completed building;
- the impact on the occupiers of neighbouring buildings;
- the public benefit in retaining a completed building; and
- any delay by a claimant in bringing the claim?
- If an injunction is refused, how should damages be calculated? Should they be based on the diminution in value of the flats caused by the nuisance or should it be a release fee based on hypothetical negotiations before the rights of light were infringed?
Over the past few years, we have seen an increase in rights of light litigation on these issues, but commercial settlements before trial/judgment have deprived us of judicial guidance. It is therefore no surprise that many eyes have been on this important case and it has attracted the attention of lawyers, surveyors and developers alike.
There was also a new and unusual interplay for the court to consider – how does land acquisition under section 203 of the Housing and Planning Act 2016 affect the established principles of rights of light? We have seen an increase in local authorities using their powers under section 203 to acquire development land and transfer it back to the developer to complete the project notwithstanding that the development interferes with third party rights over the land, such as rights of light. When these statutory powers are engaged, the neighbouring owners lose the ability to enforce their rights by means of an injunction to prevent the development, but instead become entitled to statutory compensation for the interference. In this case, Southwark Council had already acquired an interest in the Bankside Yard development in January 2022, but section 203 protection did not extend to the Arbor building which was already substantially completed at the time of the acquisition. So the important question facing the court was how to treat the light currently enjoyed by the flat owners, but which would be reduced in due course once the remainder of the site was built out with the benefit of section 203?
Measuring interference
As Mr Justice Fancourt said in his judgment: "it is not every interference with use and occupation that is actionable." The developer argued that as the effect of section 203 is not to extinguish the owners' rights of light, it simply changes the remedy to which they are entitled, the light currently received over the section 203 land should be included in the assessment of light in the flats. They relied on the fact that any interference by the section 203 buildings would be compensated in due course. If the court had adopted this approach, there would have been no actionable interference by the Arbor building to light for one flat owner, whilst the loss caused to the other owner by the Arbor building was disputed between the parties' experts.
However, Mr Justice Fancourt found that the correct approach was to compare the amount of protectable light going into the flats before Arbor was built with the light available after the construction. Any light over the section 203 land which would be blocked by those buildings in due course was not protectable and so could not be considered as part of this analysis.
Turning to the method of measuring interference, Mr Justice Fancourt held that: "Waldram remains used and broadly respected by the whole light surveying industry. It has stood the test of time and has the confidence of the industry. It is not really plausible to suggest that the calibration is hopelessly awry in all cases."
Injunction refused
In his detailed judgment, Mr Justice Fancourt applied the guidance in the case of Lawrence v Fen Tigerstobalance the interests of the flat owners against those of the developer, current tenants, and the wider public. The Court found that enforcement of any injunction would be problematic due to the non-joinder in these proceedings of Arbor's tenants, and likely futile, because – according to the evidence put forward by the developer's planning consultant and accepted by the judge – the developer could secure a new planning permission from Southwark Council to re-build the Arbor (if it was ordered to be cut-back/demolished), which would then benefit from the existing section 203 protection in place over the Bankside Yards site. The judge also emphasised that the public benefit in retaining Arbor, including economic and environmental advantages in not wasting construction materials used for a substantial office building, outweighed the private loss suffered by the flat owners and that the developer's actions by seeking to engage with the Claimants did not merit the drastic step of demolition. The fact that all other affected residents had already settled their claims with the developer by payment of money further undermined the case for injunctive relief being the appropriate remedy.
Negotiation damages prevail
Whilst the hypothetical negotiation, which would have taken place before Arbor was constructed, was not on the basis that the flat owners held the developer to ransom, the additional development value that the developer would gain through a release of the rights of light was relevant to reach the reasonable fee it would have agreed to pay the flat owners.
In this case, the increase in the development value to the developer, by not having to implement cut-backs in the design at the pre-construction phase of the Arbor building, was found to be around £30m. Mr Justice Fancourt decided that the parties would have settled at a release fee in the region of 10-15% of that increased development value. When apportioned between any neighbouring owners who suffered infringements to their rights of light, this resulted in damages of £725,000 and £525,000. However, these figures felt too high to the court when considered in the round. Other factors, such as the market value of the flats and the compensation that would become payable pursuant to the section 203 development in due course, were considered to assist the court to arrive at the adjusted damages of £500,000 and £350,000 to the respective flat owners.
Comment
We are seeing a trend in the modern judicial approach of granting damages – rather than an injunction – in scenarios where enforcement of an injunction would be complex, disproportionate, or contrary to the public interest. In February, we blogged about the court's refusal to grant an interim injunction to stop construction of affordable housing in Dorset where the neighbouring owner would suffer an infringement of their rights of light.
Whilst this case does not mean that damages will always (or likely) be payable in place of an injunction (which always remains a possibility), it is an encouraging judgment for developers in the rights of light context and for practitioners (including judges) who will be looking very carefully at the comments raised in this case in any future applications. The facts of this case were very specific, meaning it was always going to be hard for the flat-owners to obtain an injunction to cut-back the Arbor in circumstances where they didn't even want the building to be demolished, but it is nevertheless a helpful reminder of the types of issues that the court will bear in mind when looking at any future applications for injunctions.
This judgment is a welcome outcome for developers across the UK and sends a clear and encouraging message for the UK development market: in appropriate cases, public and commercial interests can tip the scales over individual property rights when the balance of harm from demolishing the building would be overwhelmingly disproportionate against a developer.
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