The High Court has recently considered whether an injunction should be granted for an infringement of a right to light in the case of Beaumont Business Centres Ltd v Florala Properties Ltd [2020] EWHC 550 (Ch). The result is that part of a development in Moorgate may have to be cut back to remove interference with light to a neighbouring building.
The facts of the case were unusual and the background complex, but in essence a developer had built into the lightwell separating its buildings from a neighbour's building. That had been done despite rights to light objections from the neighbour, and in circumstances where there had been negotiations between the parties which the developer had unilaterally aborted on the basis of misconceived legal arguments.
No new legal principle arises from the case, which is therefore of limited value as a precedent. However, as reported rights to light cases are relatively rare, practitioners, developers and claimants are likely to study it carefully. Several key points arose in the judgment:
- If a building is already badly lit, that does not mean a further reduction cannot give rise to a claim. Whilst the 50/50 rule is a useful starting point to assess whether a loss of light in any given case amounts to a legal nuisance (and therefore a potential claim) it is not a definitive guide.
- The Court held that whilst the technical test (the Waldram method) for assessing reduction in levels of light has stood the test of time and was a useful starting point for helping to establish whether a nuisance has been caused, it is possible to bring in other standards and evidence.
- Despite only a small loss in value to the claimant's building in this case (a reduction in rental/capital value of just 1% or 2%), this did not mean there was no claim. To establish a claim, the claimant needed to show the interference with its right to light was permanent and its financial loss was more than trifling. A key consideration is whether enjoyment of the property becomes less comfortable and convenient than before.
- The prima facie remedy for a right to light claim (or an interference with any property right such as a restrictive covenant or any other easement) is an injunction.
- The developer's behaviour, which was considered to be high handed and unneighbourly, was a key consideration when deciding whether to award an injunction. Not only had the developer refused to make any amendments to the design and went ahead in spite of objections, but it had withdrawn a financial offer of settlement which may well otherwise have been accepted, and had then taken an aggressive and hostile stance.
- The mechanistic practice of valuing light lost at a rate of £5 per square foot before applying a yield in order to achieve a capital valuation of the damage suffered by the injured building was not adopted. This case demonstrates that in the event of a Court determination, proof of damage to a building's value requires clear and accurate valuation evidence. The Court spent some time hearing from valuers as to the likely impact caused by the reduction in light in order to assess damages based upon the loss suffered to the Claimant.
- The Court will alternatively award damages based upon a proportion of the benefit that the developer is able to realise if an injunction is not awarded (so called "negotiating damages"). The judgment contains a detailed account of how that benefit was analysed and how the Judge decided upon the appropriate proportion to award.
The case was complicated by the fact the developer's tenant was not a party to the proceedings. As such, the Court gave a declaration that the Claimant is entitled to an injunction as against the developer, but that if it wants to pursue an order for one, it must first join the tenant to the proceedings and allow the tenant an opportunity to comment. This could result in no injunction ultimately being awarded.
Alternatively, if no injunction is now sought or granted, the Court held the developer should instead pay the Claimant £350,000 by way of negotiating damages, this being just under a third of the profit that the Court held the developer was likely to realise from being allowed to infringe the right to light. This level of award was partly justified on the basis that it was not out of all proportion to the loss in capital value to the Claimant's building (assessed by the Court at around £240,000), and also as Counsel for the developer did not advance any argument in favour of a lower "share" of the profit. Whilst it is clear that the Court will potentially award negotiating damages in a case where it has jurisdiction to award an injunction, the amount of those damages (and the proportion of the developer's profit they represent) will be assessed on a case by case basis and guided by the principle that they must "feel right".
Although a mandatory injunction was said to be appropriate as against the developer, it is also important to note that the developer did not argue it would oppressive to have to cut back its development. Oppression is likely to be a key factor militating against injunctive relief in other cases, particularly where the developer has acted reasonably and the effect of an injunction on the developer would be disproportionate to the injury caused.
Developers should note the importance of dealing pro-actively with likely rights to light injuries to surrounding buildings, and, whilst this does not mean writing claimants blank cheques, to mitigate injunction risk they should ensure that they adopt a reasonable stance.
