The rights to light risk is never far from the top of a developer’s risk register. The threat of an injunction to restrain the development or, in the worst case, require partial demolition of a completed building, weighs heavily in the developer’s mind.
In practice, rights to light injunctions are very rare, but the threat is considerable. One of the main difficulties for developers and those advising them is that the grant of an injunction is entirely within the discretion of the judge at trial. There are many factors to be considered when exercising that discretion and, at the point of giving the initial advice, some of the material factors will not be known. The behaviour of the parties is often one of the most significant factors and full details of this will not emerge until after disclosure is complete and witness statements exchanged. All of this makes predicting the outcome a very difficult thing to do.
Current position
As a result, the insurance market has evolved sophisticated policies to cover the risk. Those policies include obligations to negotiate with affected parties, often within predetermined excesses, which are set out in the policy. With the emergence of “ambulance chasing” in relation to rights to light claims, the insurance market has contracted. This means less generous terms of cover being offered for higher premiums and excesses.
This all points firmly towards a significant rights to light case coming before the courts in the not too distant future. When it does, there is no doubt that all aspects of the law surrounding rights to light will be explored. This will include how light loss should be assessed, the vexed question of when an injunction should be granted and, in the event an injunction is not granted, how the court should approach damages in lieu. There is a high likelihood that the next rights to light case will proceed to the higher courts and provide much-needed clarity in all of these areas.
In the meantime, with insurance becoming less attractive, developers are left to grapple with alternative forms of mitigation; the nuclear option being to persuade the local authority to engage the provisions of section 203 of the Housing and Planning Act 2016. As with injunctions, the use of section 203 is rare and local authorities have differing attitudes to its use. In short, section 203 allows the local authority to appropriate land for planning purposes in order to override the risk of an injunction from a party suffering an actionable interference with their light. These powers can only be used where there is a compelling case in the public interest which justifies authorising the interference with a right to light.
What’s new?
On 5 March 2024, the planning and transportation committee of the City of London Corporation approved the use of section 203 to facilitate the redevelopment of Salisbury Square. The approval was unanimously endorsed by the committee at the first substantive hearing of the application.
Salisbury Square is a significant development on the south side of Fleet Street which is currently a large hole in the ground. The proposed development will house a new combined magistrates and civil court building including almost 20 hearing rooms along with separate public and judicial areas plus custodial facilities. The campus will also provide a 10-storey headquarters building for the City of London Police featuring high specification offices, laboratories, a firearms range and other facilities. The development will also provide office accommodation, shops, bars and restaurants. The project was threatened by rights to light claims from neighbouring owners, which put at risk the delivery of these facilities within the required timescales. The report to committee recorded the efforts taken to negotiate and settle a number of rights to light claims and estimated that at least seven of those claims remained outstanding on the date the application was considered.
The committee showed no hesitation in engaging the powers and it is difficult to think of a case with a more compelling argument in terms of the public interest. Importantly, the approval of the use of section 203 powers was strictly on the basis that all existing offers made in relation to rights to light were to be honoured. A key point here is that damages awarded on the compulsory purchase basis arising out of the use of section 203 are generally less attractive than traditional rights to light settlements where section 203 has not been engaged. So in this case, the committee ensured, insofar as it could, a balance between the rights of the developer and the neighbouring owners.
What does it mean?
It is good news for developers to see that section 203 powers will be used in appropriate cases, but it must be understood that they will only be used as a last resort once attempts have been made to negotiate settlements with the affected owners. The efforts made by the developer in those negotiations will almost certainly be subject to scrutiny and, if they have not exhausted those efforts in good faith, they are unlikely to receive support from the local authority.
James Souter is a partner at Charles Russell Speechlys