Legal - Don’t be in the dark on rights of light

Usually, the project developer will gain the support and understanding of neighbouring landowners and tenants, but the parties or their agendas can quickly change, and no developer wants to find its project stopped, or the cost greatly increased, because not all of the legal bases have been covered.

Neighbouring buildings

For those involved in urban regeneration, this means there are important legal aspects that need to be borne in mind. One of the major issues is the possibility that buildings near to a proposed regeneration project will enjoy rights of light. Those owners and occupiers whose rights of light would be interfered with by a proposed project will be entitled to compensation.

Neighbouring owners and occupiers may try to strengthen their bargaining position by seeking an injunction to prevent interference with their rights of light, in the hope that this will give them a veto over the proposed development. This may allow them to extract a greater slice of the project developer’s profit in return for allowing the development to proceed.

Clearly a developer’s first step is to take specialist legal advice as to whether an adjoining landowner or tenant has the benefit of a right to light. These rights can be obtained by long user status (that is, through consistent use for a long period of time), so remember that title will not tell the whole story.

Injunction cases

The next step is to consider whether an injunction is possible, or whether compensation will be more appropriate in the circumstances. The recent joined cases of Midtown vs City of London Real Property Company and Joseph and others vs CLRPC (2005), decided in the High Court earlier this year, demonstrate that an injunction will not always be granted.

CLRPC owned a development site in London EC4. Midtown was the freeholder of an adjoining building. A firm of solicitors, in which Mr Joseph and his fellow claimants were partners, occupied that building as tenants. Both Midtown and the solicitors sought an injunction.

The High Court was satisfied that the windows in Midtown’s building had the benefit of rights of light and that the CLRPC’s proposed development would interfere with them. However, neither Midtown nor its tenants were granted injunctions against the development for which they had applied. The decision was that they would be entitled to damages for the interference with their rights of light, which would be decided at a later trial, but CLRPC could go ahead with its development.

Grounds for refusing Midtown

The main reason given by the judge for refusing the injunctions was that “it would be oppressive to the defendants to be prevented from pursuing a worthwhile and beneficial development for that area”. Most developers would surely argue the same.

The other reasons why Midtown was refused an injunction were:

• Its interest in the building was financial, and it could be compensated financially for any loss in value
• Its income from the lease would be unaffected by interference with light to the windows in the building
• It had redevelopment proposals of its own
• CLRPC had made reasonable proposals – in open correspondence – to meet and discuss matters, and these had been ignored.

The first two of these points would surely apply to most, if not all, owners of let investment properties.

Grounds for refusing the solicitors

The main reasons why the tenant’s solicitors were refused an injunction were:

• They had no capital interest in the building, which would be diminished in value – surely the same could be said about any tenant paying a full market rent
• On the evidence, the proposed development would not affect their use of the building or any proposed future use of it. The solicitors had said that they regarded the natural light as valuable, but in practice they always worked with the lights on.

The judge noted that, in reality, modern offices do use artificial light to maintain a constant light. This was a relevant factor in refusing them an injunction, and surely would be relevant to most cases where a property benefiting from rights to light is used as offices in a built up area.

Attitude of the courts

This case sets out a useful guide to the issues that a court will look at in deciding whether an injunction is an appropriate remedy in a particular situation. Generally the courts are reluctant to grant an injunction where a developer has made strenuous efforts to tackle the issue, and the landowner or tenant is simply using injunctive action as a bargaining tool.

The lesson must therefore be: get specialist advice, don’t ignore the issue, tackle it up front, factor the compensation into your appraisal and lastly, make sure you keep a paper trail of your efforts to resolve it, in case you end up in court.

By Robin Grove, property partner with Manches