Property Focus | Seeing clearly: greater transparency in rights to light

The poet John Lydgate once famously wrote, "You can please some of the people some of the time, all of the people some of the time, some of the people all of the time, but you can never please all of the people all of the time."

This often paraphrased quote holds true in most walks of life and yet, on inspection of their consultation paper on rights to light, you can't help but sense that "pleasing all of the people all of the time" is exactly what the Law Commission has set out to achieve.

Rights to light are hardly a new issue; the common law principle has been around since before the Prescription Act of 1832, and the definition of rights of light was first formulated in the case of Colls v Home & Colonial Stores [1904] A. C. 179.

Where there has been a shift in recent years is the increasing trend of the courts to reinforce the position that injunctions are the primary remedy for infringements of rights to light and that developers should not assume that damages alone provide an adequate remedy.

Cases such as Regan v Paul Properties (2006) and HKRUK II v Heaney (2011) (Heaney) have shown that the courts are not afraid to award mandatory injunctions if they consider the injury significant. Indeed it has been argued that the Heaney case in particular has had a damaging effect on the way in which disputes involving rights to light are approached, taking into consideration the proactive behaviour of the developer throughout.

The need for a greater level of certainty and transparency concerning the application of the law is clear for all to see. With an economy narrowly avoiding an unprecedented triple-dip recession, the construction industry on its knees and finance in short supply, the last thing needed is further constraints on development.

The interjection of the commission and its consultation paper on rights to light is therefore welcomed. Fresh from publication of the easements report in 2011, the latest paper offers an uncomplicated yet thorough overview of the current law, while seeking to address the imbalance that the law now creates and at the same time retaining the amenity value of rights to light.

The commission sets out three objectives which form the basis of each of their recommendations:

1. to introduce greater certainty and transparency into the law as it relates to rights to light, making disputes simpler, easier and quicker to resolve.

2. to ensure that rights to light do not act as an unnecessary constraint on development; and

3. to make sure that the important amenity value of rights to light remains protected under the law.

But herein lies a problem from the start; is there not a conflict of interest within a set of objectives that attempt to satisfy all concerned? Is it possible to put forward a set of recommendations that will leave both the dominant owner and the developer happy? On one side you have a landowner who is not keen to have their rights to light removed and on the other you have a developer who does not want to be held to ransom when trying to build new schemes. Surely it is impossible to try and keep everyone happy?

Prescriptive rights

So how does the commission fair with its proposals? The first question that the paper poses is 'should prescription be abolished for rights to light?' The argument here is that prescription can be seen as giving the dominant owner 'something for nothing', allowing them a significant degree of power despite there being a lack of understanding of the law of prescription from most landowners. The commission also cites Australia, New Zealand and US as examples of jurisdictions where rights to light have never been capable of acquisition by prescription, or have been phased out successfully over time.

Equally, the commission also points out that "prescription keeps the legal entitlement to use land aligned with its actual use" and that "many rely on them (prescriptive rights) for the amenity of their homes and businesses". Interestingly, the Law Commission raises the suggestion that perhaps the planning system should play a greater role in protecting amenity on a more consistent basis; over to you on that one ?Mr Boles.

There is a not-so-subtle undertone throughout the consultation paper that the Law Commission is concerned that prescriptive rights are abused by the dominant owner, and used as "a tool to extract money from a neighbour who proposes to develop his or her (the servient owner's) land".

In questioning the complete abolition of rights to light by prescription, the commission had the chance to demonstrate a commitment towards both the short and long term success of development in modern town and city centres. However, in proposing that the abolition of prescription would only have a prospective effect, the commission has opted for a middle ground that is in danger of pleasing no-one.

Developers will not be completely happy. While eventually all prescriptive rights will cease to exist, it is not something that is going to happen overnight, and will not put an end to dominant owners' ability to frustrate new development proposals.

Conversely, landowners and homeowners who have not benefited from 20 years of continuous enjoyment of their land will feel powerless to prevent large developments near their homes in the future. As other commentators have pointed out, this is very likely to have an adverse effect on the value and the appeal of a property that has benefited from light, without any recourse available to them.

Shelfer?

So where does this leave existing users who have acquired a prescriptive right over a piece of land? The second proposal of the commission is for a reform of the Shelfer criteria when considering whether to award damages in substitution for an injunction.

The Shelfer criteria refer to the four tests laid down by the court of appeal in the case of Shelfer v City of London Electric Lighting Company [1895] 1 Ch 287. These four tests must be satisfied if a developer is to avoid an injunction:

1. Is the injury to the claimant's legal right small?

2. Is it capable of being estimated in money?

3. Can it be adequately compensated by a small money payment?

4. Would it be oppressive to grant to an injunction?

The concerns highlighted in both the consultation paper, and by many commentators previously, is the inconsistency with which this test is applied by the courts and also a lack of clarity as to how to measure each of the tests. "It is difficult to predict whether a court will award an injunction or damages in substitution for an injunction, particularly because the courts can be inconsistent in their approach to the Shelfer criteria".

The Law Commission also considers the position of an injunction as the primary remedy for infringements of rights to light, arguing that "the concept of proportionality captures the key factor that the courts should take into account better than oppression".

The proposal is to introduce a new statutory test, or a set of elements "to be taken into account by the court in deciding whether granting an injunction would be disproportionate", adding that "no item on the list should be viewed as definitive" and "it will be up to the courts to determine the weight to be afforded to each factor".

This is good news for developers as this proposal would mean that awarding damages rather than an injunction would become the default position. However, the new statutory test is still open to interpretation, and gives judges a wide discretion. It is difficult to see how this fits with the intention to bring greater certainty to rights to light cases, as it arguably will not make outcomes any more predictable.

One area that the commission does not believe requires reform is the calculation of damages. The commission mentions that 'under the general principles of tort law the damages that a claimant may recover must be equivalent to the losses that he or she has actually suffered.' The main concern for developers is the award of damages in substitution for an injunction, also known as equitable damages.

Equitable damages afford the dominant owner bargaining power, as without negotiating an agreement a development could not proceed. These damages often include an element of profit share and are likely to equate to much more than the losses that have actually been suffered. The lack of reform in this area is something that will disappoint developers.

The third proposal is the introduction of a 'Notice of Proposed Obstruction (NPO) Procedure'. The main concern driving this proposal is the view that "the ability of the dominant owner to refuse or commit either way can be problematic because it can result in months or years of delay".

The idea would be that the developer would serve on the dominant owner a NPO which would place the onus on the dominant owner to respond within a time limit making it clear whether they want an injunction. The time limit proposed is eight months in total, taking into account the time for the dominant owner to consider its position and the time to negotiate a settlement.

In light of the Heaney case and as a standalone proposal, this is a good idea. However, if the proposal for the default position and primary remedy is to award damages rather than an injunction, it is difficult to see how a potential eight month delay makes a dispute quicker to resolve or indeed how four months is an adequate amount of time for the dominant owner to investigate its rights.

Lands Chamber?The final proposal of the Law Commission is that the jurisdiction of the Lands Chamber has the ability to extinguish or modify rights to light if they are obsolete or offer no practical benefit. This is arguably the least contentious of the proposals as it brings rights to light and easements in general, in line with Lands Chambers current ability to extinguish or modify restrictive covenants, and will almost certainly be welcomed by most.

Overall, the commission should be commended on tackling such a difficult subject heads on. A lack of consistency in the application of law and the high profile case of Heaney meant that clarity or reform was needed.

The proposals have already sparked fierce but healthy debates across the property sector, campaigners and the mainstream press alike. It is therefore unlikely that the consultation paper will "please all of the people, all of the time". However, John Lydgate is also credited with the first known usage of the adage "needs must", and when it comes to rights to light reform, this is something that really could not have been avoided.