The High Court has declared in Beaumont Business Centres Limited v Florala Properties Limited  that a property owner is entitled to an injunction against a City developer who breached its rights of light. In stark terms, this could mean that the developer must cut back part of its Moorgate building to respect its neighbour’s light.
It has been ten years since Mr Heaney was awarded an injunction in his notorious claim against property developer HKRUK, and it would be easy for developers, tenants, insurers, and rights of light professionals to panic like they did then. But this case is very different and serves as an overdue reminder of some fundamental principles. Here are the 7 things you need to know:
- An injunction has always been the Court’s primary remedy – this is not breaking news, and even during the ten years of judicial softening since Heaney, the Court has always made this clear. What is often lost in commentary on the seminal ruling in Coventry v Lawrence is that the Supreme Court upheld an injunction, rather than reversing it. Damages are a discretionary remedy, so the question should always be: why should the Court refuse a property owner’s entitlement to an injunction?
- Don’t ignore tenants! – the successful claimant in the case was a tenant. It is easy to ignore tenants on the assumption that they don’t have rights, or have such a short-term interest that there will not be the time or desire to take action. But that isn’t always the case. Equally, the existence of a tenant in the developer’s property could be what saves it. The High Court injunction declaration is subject to representations from the tenant of the hotel development.
- The Waldram analysis is just the starting point, but should not be ignored – a quirk of rights of light law is that many reported cases and traditional practice are preoccupied with the much trusted but oft maligned analysis established by Percy Waldram a century ago. The rights of light world has been waiting to see how a modern court would treat it, and we now have some clarity. The Court said that Waldram analysis should not be ignored, but is just a starting point. Other more modern analysis may be relevant, including radiance analysis.
- Just because a building is already poorly lit, that doesn’t mean you can make it worse with impunity – a line of argument put forward by the developer was that the claimant’s building was already dark on a Waldram analysis, and therefore that any further losses were not actionable. That was firmly rejected by the Court.
- If negotiating damages are accepted instead of an injunction, it could be a third (33%) of the profits associated with the additional massing in the development - applying the Wrotham Park line of case law, the Court held that an appropriate portion of the developers £1.1M profits gained from its breach was just under a third (totalling £350,000). The claimant may choose to accept this sum rather than pursue the injunction.
- Historic agreements are rarely a magic bullet to defeat a rights of light claim – the developer relied on a deed between the claimant and its landlord to assert that light was a commercial lever being exploited. On this basis, it did not think the claimant was entitled to an injunction. However, that position gave insufficient weight to the background and purpose of the deed. In such a complex area of law, it must be with great caution that any third-party agreement is treated as a panacea to a rights of light claim.
- Good conduct still wears the crown – although there was initially a neighbourly dialogue between the parties, that soon broke down on discovery of the deed between claimant and landlord (see point 6 above). Despite being warned by the claimant’s solicitor, the developer proceeded at risk. The judge said that the developer acted in a “high handed, or at least unfair and unneighbourly, manner” – this has never been advisable, even if your neighbour doesn’t have any relevant rights. (See our previous article on this point by clicking here). Was a compromise possible rather than an expensive court case resulting in an injunction declaration? Looking at the duration of the case, and the number of experts involved, it is conceivable that the costs of this litigation are greater than the damages sums awarded by the Court (see point 5 above).
Final words and what next?
The developer has sought leave to appeal, but irrespective of the outcome of that process and any appeal case, we now have an overdue reminder of some fundamental rights of light principles. The case should not cause panic because it does no more than restate certain risks which are inherent in any development project.
Robin Biela, Nick Lloyd and Julie Gattegno are property lawyers, specialising in rights of light and development work.