UK rights of light: The Battle of Bankside: Revolution or Evolution?

The Facts

Mr Cooper and Mrs Powell owned flats in a building known as Bankside Lofts, opposite the developer’s new development known as Bankside Yards. They complained that the development interfered with their rights of light and sought an injunction to require the offending parts of the development to be demolished. Alternatively, they sought damages in the region of £3million each. The case was complicated to some extent by the fact that part (but not all) of the development benefited from rights of lights having been extinguished under section 203 of the Housing and Planning Act 2016. The case turned on the impact caused by one particular building, Arbor, which did benefit from a section 203 appropriation.

1. How should loss of light be assessed

The developer argued that the traditional Waldram methodology for assessing loss of light was flawed and unreliable and should be supplanted by more modern methods, including medium daylight illuminance (“MDI”) and medium daylight factor (“MDF”), both of which feature in the 2018 British Standard for measuring daylight in buildings and are often referenced to as the Radiance method. Applying these methods and taking a holistic approach, which also took account of 2022 BRE Guidance, the developer argued that the loss of light would not interfere with the beneficial use and enjoyment of the flats and so should not be treated as actionable.

In contrast, the claimants relied upon the Waldram methodology. Applying these well-established principles they said that there was clearly a substantial and actionable infringement.

The court was not prepared to disregard Waldram altogether, holding that it did have a useful role to play and was clearly understood and well established. That said, the alternative methods put forward by the developer were also relevant to the overall consideration. Ultimately, the court decided that there was an actionable loss of light. In particular, the court was not persuaded that the alternative methods relied on by the developer contradicted the conclusions of the Waldram analysis. The court also took a real-world approach, considering how the impacted rooms would be used in practice. For example, the court recognised that a bedroom in a central London flat might be used for working or reading during the day and therefore needed more natural light than would be the case if it were purely used for sleeping in at night.

2. When should an injunction be granted?

Having decided that the loss of light was actionable, the court went on to consider whether an injunction ought to be granted. The court confirmed that, as per the Supreme Court decision in Lawrence v Fen Tigers, the court has a broad discretion and should take account of all relevant factors. In this case, the court was particularly swayed by the fact that Arbor had already been constructed (and indeed occupied) and would need to be demolished at great expense, leading to a loss of valuable office space. At first blush, this looks like the developer is being rewarded for having gone ahead and built in breach of the claimant’s rights of light. However, the court was at pains to stress that this was not the case. In particular, on the facts of the case (and taking account of the wider section 203 context), the court was satisfied that the developer’s decision to build without having first resolved rights of light claims was not “high-handed” or “opportunistic” and was based on a reasonable strategy. In that context, the costs and losses which the developer would incur in having to demolish were disproportionate to the losses which the claimants would suffer if an injunction was not granted.

3. How should damages be assessed?

The developer argued that the Supreme Court’s decision in One-Step v Morris Garner marked a sea-change in how damages should be approached and, in light of that case, the claimants should only be awarded the diminution in value of their flats by reason of the loss of light. The court disagreed. Although Morris Garner marked a change of approach, it did not preclude the court from awarding damages on the so-called “negotiating basis” in a case like this.

Negotiating damages are based on assuming a hypothetical negotiation between the parties before the infringement takes place. This is usually premised on an assumption that the developer will be prepared to pay by way of settlement a share of the additional profit which it is able to generate by reason of the infringement of the claimant’s rights. If the claimants’ rights were respected, the loss of value to Arbor would have been substantial: £30m - £40m. The claimants argued (based on previous case law) that the developer would have been prepared to pay 1/3rd of that value to settle rights of light claims. This would lead to a payment to the claimants of between £6m - £9m each. However, the claimants acknowledged that the sum awarded needed to “feel right” and that those figures did not feel right. They therefore argued that, instead, damages should be based on the costs to the claimants of moving out and acquiring comparable flats elsewhere. Once taxes and fees were taken into account, this led to a figure of around £3m each.

The court was not persuaded by these figures. In particular, given the very high development profits figure, it felt that 1/3rd was much too high a starting point. The court’s starting point is that a reasonable developer would have agreed to put aside 10% - 15% of the increase in value as a settlement fund for rights of light claims (i.e. £3m - £4.5m). Meeting in the middle, this would come out at £3.75m. The developer would then have allocated 1/3rd of this figure to settlements with the claimants, with the remaining 2/3rd being allocated to other neighbours with whom it would need to (and ultimately did) settle. As the hypothetical negotiation is deemed to have taken place before development commenced, the fact that the developer was ultimately able to settle the other claims more cheaply was not taken into account. The 1/3rd pot allocated to the claimants was therefore £1.25m, which would split at £725,000 for Mrs Powell and £525,000 for Mr Cooper. However, the court was still not satisfied that these sums “felt right”. In particular, they were out of proportion to the overall value of the flats at c£1m each. Taking all of these factors into account, the court landed on a figure of £500,000 for Mrs Powell and £350,000 for Mr Cooper.

Talking points

In many respects, the case is quite fact specific given the unusual circumstances of the partial section 203 appropriation. However, the following points can be drawn out:

• Waldram lives to fight another day. However, it should be considered alongside other more modern methodologies and is not an arbitrary guide. A real world and common sense approach should be taken to assessing whether a loss of light is actionable;
• The court has a very broad discretion over whether to grant an injunction. In this case the developer was arguably saved by the fact that the building had already been built, but only because its conduct had not been unreasonable. Those who deliberately try to “steal a march” are unlikely to be treated as favourably.
• Although damages should be awarded on the negotiating basis, it is essential that the figures feel right. In particular, a 1/3rd share of profit is not a benchmark and is unlikely to be appropriate in cases where very large sums are involved.

So all in all? Evolution, most definitely, but revolution? Probably not.

Authored by Paul Tonkin.