Deconstructing the law on negotiating damages for a breach of a right of light

The case of Cooper v Ludgate House Limited is particularly interesting on three points: what light should be included, or not; what test should be applied; and finally, what remedy should be awarded.

It feels like a very long time since our comment on the issue of a claim in the High Court concerning the Bankside Yards development – but finally, we have the important guidance we were looking for, on when an injunction will be granted in a rights of light case.

The case is particularly interesting on three points: what light should be included, or not; what test should be applied; and finally, what remedy should be awarded.

Background

The claimants were leaseholders of flats in Bankside Lofts, near the development site owned by the defendants and which included a 19-storey office building (Arbor).

After construction of Arbor had started, the developer wrote to the owners of neighbouring properties to make offers of compensation for the injury to their light caused by the development. Instead, the claimants sought an injunction to demolish Arbor, damages in lieu of injunctive relief assessed on a negotiating damages basis, or damages for the diminution in value of their flats (in the alternative).

The developer requested, and Southwark Borough Council put in place, protection of the site under s.203 of the Housing and Planning Act 2016, meaning that the developer was able to carry out the development (subject to payment of compensation) even though legally, the works interfered with the claimants’ rights of light.

However, the protection didn’t extend to Arbor because construction was already substantially complete. This distinction became the basis for many of the technical arguments in the case.

Decision

Rights of light can be a notoriously technical area of law – here, the lengthy judgment discusses the appropriate basis for compensation and the methods for measuring light loss, particularly where only one of the eight buildings forming the development had been constructed.

• The s.203 protection 

The claimants argued that even though they currently had a right to light passing over the wider development site, they had no right to enforce or protect that right due to the s.203 protection. On that basis, they argued that only the loss of light attributable to Arbor should be considered, and any loss of light caused by the rest of the development should not be factored into the “before and after” assessment.

The developer’s position was that the claimants still had rights (albeit unenforceable) and would be entitled to statutory compensation on a diminution of value basis. It therefore argued that the appropriate comparison included the light from the development site.

The judge held in favour of the claimants, finding that other light that the claimants enjoyed should not be taken into account “if the owner has no effective means of protecting it – regardless of when the light may be obstructed” [para.90]. What mattered therefore was the practical ability to protect the right.

Whilst novel, this falls in line with previous caselaw where non-protectable light has been treated as irrelevant to the sufficiency assessment.

• The methodology

The defendant then sought to rely on the basis of computer-modelled calculations in order to measure the alleged interference with the claimants’ light, based on standards for the design of new buildings (the “Radiance method”). However, the judge preferred the traditional “Waldram method”, concluding that the light in parts of the claimants’ flats would be insufficient for ordinary use. Ultimately, to a greater or lesser degree, both the Waldram and Radiance methods came out with consistent results, meaning that the judge did not feel it necessary to move away from the established test.

This is an interesting decision and it is worth surveyors reading this part of the judgment in full given that it is the first time that detailed evidence and argument on the respective merits of the different methods of assessment have been presented to a court. That said and whilst the limitations of the Waldram method were considered, it was common ground between the parties that the Waldram method remains industry standard – as the judge noted, it “is used by everyone” [para.231].

• The remedy

Once an interference has been established, the natural remedy where a nuisance is continuing is an injunction to restrain it – meaning it was for the developer to show why an injunction should not be granted.

Here, an injunction would have required replanning of the development site in full (which the developer would not agree to), or demolition of Arbor in whole or part.

Ultimately, the court decided not to grant an injunction due to the disproportionate harm it would cause to the defendants, the commercial tenants already in occupation of Arbor, and the public interest.

In particular, the court noted that demolishing Arbor would be “futile”, as the developer could simply seek planning permission to rebuild it, or an equally large building – which would be protected by the existing s.203 resolution. Whilst the grant of planning permission and the s.203 resolution were not definitive, the judge did note that during these two processes, the Council had already been required to consider the adverse impact on all persons affected and decided that these were “strongly outweighed by the public benefits delivered” [para.308].

Instead, the claimants were awarded both negotiating damages (in lieu of an injunction, recognising the economic value of the right infringed) and damages for diminution in value. This is particularly interesting given that it confirms that negotiating damages are available for the loss of a right to enforce an easement.

In fact, the judge found that, if the defendant had been correct and negotiating damages had not been available, then there would have been a strong argument in favour of granting injunctive relief, because otherwise damages would not have been an adequate remedy.

Implications

It is fascinating to see the detailed reasoning behind the balancing the requirements of the claimants, developer and the public – and particularly when it takes such a common sense approach.

The decision not to require demolition of Arbor will come as a relief to developers, but it is important to note that here, the developer had not behaved “unfairly, exploitatively or covertly” – which could have led to an injunction being ordered. They had consulted with local residents before construction, and sought to negotiate and settle claims in relation to the whole development.

The key message then is to seek to sort out the rights of light position before you have spades in the ground. Whilst the tenants only received damages of around 1/6th of the pleaded claim, it has been reported that this is the highest sum ever awarded in a rights of light case.