Rights to light – What does this mean for property developers?

21 November 2018

The complexities of rights to light highlight the risk to developers of assuming that agreements will be reached with all the owners of properties affected by their development. Uncertainty can be mitigated with more detailed assessment techniques and ultimately covered by an insurance policy.

A ‘right to light’ is an easement that can be acquired by a dominant tenement (the building which benefits from a right to light) and which carries the right to receive sufficient natural light, through a defined aperture, over a servient tenement.

One of the more unusual property rights in English law, it is most commonly protected under the tort of nuisance. The right to light can be acquired in two ways, either by legal agreement – such as an express grant or reservation – or by prescription.

If acquired by legal agreement, the level of light may be defined by the specific terms of the agreement. If acquired under prescription, a right to light is limited to light that allows the comfortable or beneficial use of the building in question.

There is no quantitatively prescribed amount of light that an owner claiming a prescriptive right is entitled to, but the most common rule of thumb is known as the 50/50 rule. This rule considers that an actionable nuisance will not arise if more than half of the subject room area remains adequately lit.

The ultimate test is whether the residual light is sufficient for the beneficial use of the premises. This is because injury to a right to light constitutes a nuisance at common law and it is therefore necessary for the dominant owner to demonstrate that the loss affects their use of the room beyond the level of a mere inconvenience.

THE SHELFER TEST

The principal remedy for a serious infringement to a right to light is an injunction. However, the courts can exercise discretion and are at liberty to award damages in lieu of an injunction. When assessing the appropriate remedy, the courts historically gave consideration to the Shelfer test, which asks:

  • Is the injury small?
  • Is it one that is capable of being estimated in money?
  • Could it be adequately compensated by a small monetary payment?
  • Would the grant of injunction be oppressive to the defendant?

The general rule was that damages should only be awarded when all of the above four questions can be answered in the affirmative. Furthermore, the conduct of the parties may also be taken into consideration, as it is thought that a defendant who acts high-handedly or tries to avoid the jurisdiction of the court may be prevented from asking the court to consider awarding damages.

The most influential recent case is Coventry v Lawrence, which was decided in the Supreme Court. While this case related to noise nuisance, the Law Lords raised a number of important points, namely that it is possible to obtain by prescription (through 20 years of use) a right to commit what would otherwise be a private nuisance

  • that there may be occasions when the grant of a planning permission could be of some relevance in a nuisance case
  • the Shelfer test was too rigid.

The conclusion was that when a judge is called upon to decide whether it is appropriate to award damages in lieu of an injunction, there should be no inclination towards injunctive relief. Conduct is key, as has been seen in subsequent legal cases.

Traditionally, insurance was structured on a wait-and-see basis, which required no dialogue between the parties.Historically, this caused difficulties when other neighbourly matters were required (such as party wall notices) or when access and over-sailing agreements were needed and could have exposed developers to greater injunction risk were matters to end up in the courts. It is now increasingly common for ‘agreed conduct’ structures to be put in place. This enables the developer to negotiate with its neighbours, but provides certainty in terms of an upper cap on exposure as well as the confidence to proceed before agreements are finalised.

In the latest development of insurance policy structures, ‘after the event’ policies have been devised to enable insurance to be used to cap exposure from rights to light claims even after a neighbour has already staked a claim. In conclusion, developers still face a degree of uncertainty when it comes to right to light, but this uncertainty can be mitigated with more detailed assessment techniques and ultimately covered by an insurance policy in virtually all cases.

CHELSEA FC V CROSTHWAITE

The issue of right to light hit the headlines last year when a family took out an injunction against Chelsea FC’s proposed new stadium at Stamford Bridge on the basis that it would block light into their home. Despite a number of other affected residents agreeing compensation with the club, the Crosthwaites rejected an offer understood to be in the region of £1 million.

Keith Conway, Partner at law firm Clyde & Co, suggests that developers should be aware at an early stage of any right to light issues that may arise in relation to their proposed development and recommends they consider commissioning a right to light report from an experienced specialist surveyor.

Ian Mckenna, Partner at rights to light surveyors Malcolm Hollis, notes that, with early consideration, design changes can be incorporated into schemes to mitigate rights to light claims. If the infringement is such that a claim could arise, developers can then create an appropriate profile for the intended development and identify a maximum envelope for development or calculate the optimum building size of the development while eliminating or minimising the risk of interference to any rights to light. A settlement was finally reached in the dispute between Chelsea FC and the Crosthwaite family, although this was expedited by the local council acquiring land around the stadium.

For further information please contact, Oliver Jackson, Head of Legal Indemnities on +44 (0)207 558 3467 or email oliver_jackson@jltgroup.com