A dispute relating to the proposed new UK headquarters of Goldman Sachs has focused attention on the obstacle to development that can arise if a new structure will interfere with the light enjoyed by neighbouring properties.
The US investment bank’s plans to build an 850,000 sq ft building in Central London are potentially being frustrated by two of the UK’s largest pension fund managers, Aberdeen Asset Management and Royal London Asset Management, the landlords of nearby properties. The parties have been unable to agree on the compensation that should be paid to release the rights of light – a sum that it is anticipated will extend to seven figures.
Rights to light are a type of easement (other easements include rights of way and drainage), which give owners of buildings the right to receive natural right through defined apertures, such as windows, or glass roofs. It should be noted that a right to light does not protect the right to direct sunlight or the right to a view. The right is to receive sufficient natural light through the aperture to allow the relevant room to be used for its ordinary purpose. As a result, a complaint cannot simply be raised because the light has decreased – it must be shown that it has gone below a point that can accommodate the normal activities of the occupiers. The detailed calculation of the loss of light is carried out by specialist surveyors using computer software.
While a right to light can be expressly granted, it is much more commonly acquired by the enjoyment of the light over time. Under the Prescription Act 1932, the right can be acquired if the light has been enjoyed without interruption for a period of at least 20 years. This raises the risk that, without an owner of a building positively doing anything, neighbouring properties could be acquiring rights, which they can subsequently employ to either restrict what the owner can do with his property or extract a potentially significant amount of money from him in order to release their rights.
The potential of an objecting neighbouring landowner to stop a developer in its tracks was encouraged by the decision of the High Court in 2010 in a case called Heaney, where the judge awarded an injunction requiring a developer to demolish a part of a new office building that infringed its neighbour’s rights of light. The decision surprised some commentators as it appeared to reverse a trend in relation to commercial property for judges to award damages rather than an injunction. In March 2014, in the case of Lawrence v Coventry, however, the Supreme Court expressed its views on when a court should award damages rather than an injunction. Although this case did not concern rights of light, it was clear that the Supreme Court had in mind cases such as Heaney when it commented that the courts should take a more flexible approach to considering whether damages should be awarded rather than an injunction. This case should be seen as a major boost to developers.
Developers can also take encouragement from two other factors. Firstly, the Law Commission has been looking into the reform of the law in relation to rights to light and produced a detailed report in 2013. Their proposals include the introduction of a new statutory test to clarify when the court would award damages (rather than an injunction) and a new statutory notice procedure which would require affected landowners to confirm whether they intend to apply for an injunction (thereby avoiding the situation that arose in Heaney). Secondly, there are signs that local authorities are more inclined to rely on powers that they enjoy under section 237 of the Town and Country Planning Act 1990. These allow them to acquire an interest in the development site in order to override interests, which preclude development. Indeed, the City of London Corporation may intervene in the Goldman Sachs case by relying on such powers.
The key advice for developers is to consider rights of light issues at an early stage, which will include obtaining appropriate surveying and legal advice and exploring the potential for obtaining insurance to cover off the risk of any potential claims.
About the author
Jon Mowbray is a partner in the Real Estate Dispute Resolution team at IBB Solicitors.
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