Guest Article: Don’t get left in the dark; Problems arising from rights of light

Ian Rowson, Partner Head of Real Estate, Freeths LLP London

In many respects, rights of light are something of a legal oddity.  Rights of light subsist as easements but whereas most easements are expressly granted pursuant to the terms of legal deeds, that is comparatively rare in the context of a property owner’s right to light.
A right to light normally arises as a result of some of the historic and archaic legal rules being prescription at common law, lost grant and prescription arising under s3 of the Prescription Act 1832, generally regarded as one of the worst pieces of legislation ever enacted.
Under the terms of s3, where a right of light has been enjoyed for a full period of 20 years without interruption, the right is deemed to be absolute and indefeasible unless it appears the right was enjoyed by virtue of consent or agreement expressly made or given for that purpose.  
It will often be the case in practice that many town centre and city centre redevelopments will be adversely affected by potential rights of light claims.
Legal redress for infringement of rights of light
The basic principles governing the legal redress of a property owner whose right to light is infringed by another party are set out in the case of Shelfer v City of London Electric Lighting Company.  The basic principle established in the Shelfer case is that a party whose rights are injuriously affected is entitled to an injunction against a person committing the wrongful act such as a continuing nuisance. 
The wrongdoer is not entitled to ask the court to sanction his wrongdoing by purchasing the claimant’s rights on payment of damages assessed by the court.  Whilst the court has a discretion to award damages in lieu of granting an injunction, it is not obliged to do so.  
Typically, the court will take account of the following factors in deciding whether to grant an injunction or whether to award damages:
•   whether any injury to the claimant’s legal rights are small;
•   whether it could be adequately compensated by a small money payment;
•   whether it would be an oppressive to grant an injunction;
•   whether the claimant had shown they only wanted money;
•   whether there were circumstances that justified the refusal of an injunction.

Heaney and the Current Law
The problems associated with rights of light claims perhaps came to great prominence for developers and those involved in the development industry in the case of HKRUK (ii) (HCAC) Limited v Heaney (“the Heaney Case”).
In simple terms, the developer owned a large office block in Leeds to which they were proposing to add two additional floors, 6 and 7.  Marcus Heaney owned the iconic Yorkshire Penny Bank building in the centre of Leeds. 
It was acknowledged that the development would adversely impact on rights of light to the Yorkshire Penny Bank building. There were discussions between the parties whilst the development proceeded and after practical completion had occurred the developer sought a declaration to the effect that Marcus Heaney did not have rights or alternatively his rights sounded only in damages. 
To the consternation of virtually the whole of the industry, a mandatory injunction was granted and, whilst a settlement was ultimately reached, it is known that the decision cost the developer a very great deal of money. 
It was previously thought that mandatory injunction would not be granted where a party had delayed in enforcing its legal rights and the development had been completed. 
The Heaney Case was more recently considered by the Supreme Court in the case of Lawrence v Coventry (T/A RDC Promotions) (“the Lawrence Case”).  
The Lawrence Case did not concern rights of light, but private nuisance, and the facts were complex. 
However, in the light of the decision in the Lawrence case it is considered a strict application of the Shelfer rule in the Heaney Case may no longer be good law.  In the Lawrence Case, Lord Sumpter offered his view that the decision in Shelfer was out of date and that it was regrettable it had been followed so recently and so slavishly, as in the Heaney Case. He commented it was devised at a time when England was less crowded, with fewer people and conservation was only beginning to be a public issue and generally there was no system of statutory development control. He went on to comment that in many instances, damages would probably be an adequate remedy, particularly in circumstances where a use which caused a nuisance was authorised by planning permission, as in the Lawrence Case. However, he made the point that, as Shelfer was not being fully considered in the Lawrence Case, he could only call for the law on this subject to be reconsidered at some future date.
 Possible Solutions
The problem is that the current state of the law still leaves many uncertainties and causes difficulties for developers and their funders in bringing about large-scale redevelopment projects, particularly in town centres and built up areas. One mechanism that can be used in the context of schemes which involve joint ventures with local authorities is the utilisation of an authority’s powers under s237 of the Town & Country Planning Act 1990. 
In very simple terms, s237 provides that where a local authority acquires or appropriates land for planning purposes a building constructed in accordance with planning permission will be authorised notwithstanding interference with the right of a neighbour. Effectively the mechanism removes the threat of a party whose rights have been infringed from applying for an injunction.
Any party whose rights are injuriously affected would be entitled to compensation but the compensation would be based on Compensation Act principles rather than a ransom and critically the threat of the injunction is removed. 
The developer, Land Securities and Canary Wharf, identified at an early stage that the number of potential rights of light claimed would effectively prohibit the redevelopment.  They persuaded the City of London Corporation to take a transfer of the freehold of the land from themselves and the City of London Corporation appropriated the land for planning purposes pursuant to s237. 
The City of London Corporation then granted a 999 year lease back to the developers, which enabled a £200 million development, creating both jobs and economic prosperity for the City, to go ahead in circumstances where otherwise the project would have been stalled.
An authority has to properly consider a number of issues including the potential benefit of a particular scheme and its economic benefits and the power cannot just be used as a whitewash to enable development to take place without proper consideration of its merits. However, the utilisation of such positive planning powers can be a useful tool to help bring about large-scale development schemes as is illustrated by the Walkie Talkie development.
Until the law is reformed, rights of light are still a topic that need to be treated with extreme care in the context of large-scale development and regeneration schemes in built up areas.  Whilst the Law Commission has put forward certain proposals to significantly reform the law and one of the Judges in the Supreme Court called for reform in the Lawrence Case, a great deal of uncertainty still exists.  In practice, because of the Heaney Case, rights of light are very difficult to obtain title insurance cover for. 
For the time being on large schemes involving public sector bodies, the safest and most practical option appears to be to persuade the local authority to utilise its powers under s237 of the Town & Country Planning Act.  

About Freeths LLP
Freeths are an expanding national law firm with a network of offices in the UK including major regional centres such as Manchester, Leeds, Birmingham and Oxford.  The firm is a full service firm and has a major practice in Real Estate and Real Estate Finance.  Under the guidance of its London Managing Partner, Philippa Dempster, the firm has recently opened its new flagship London Office at One Vine Street.

To download the full Discovery Report click here