Rights of Light Not For Sale Commercial Developers Should Not Assume That Rights of Light Can Be Bought Off

In June 08, Tim Foley explained the important decision of RHJ Ltd v FT Patten (Holdings) Ltd (1) and FT Patten Properties (Liverpool) Ltd (2) [2008] EWCA Civ 151. The decision assisted developers as the Court of Appeal took a wide interpretation of provisions in leases which were aimed at securing a landlord's rights to develop retained land and be unrestrained from claims by neighbouring tenants in respect of infringements of rights of light that might otherwise be acquired under the Prescription Act 1832.

This commercial developer-friendly position was also apparent in two previous important cases: Midtown v City of London Real Property Co [2005] EWHC 33 (Ch); and Tamares (Vincent Square) Ltd v Fairpoint Properties (Vincent Square) Ltd, [2007] EWHC 212 (Ch).

In Midtown v City of London Real Property Co, the judge refused to grant an injunction, notwithstanding that he accepted that there would be a substantial interference with the neighbouring commercial property owner's rights of light. The decision was made on the basis that to grant an injunction would put the neighbouring owner in a disproportionately advantageous position to the significant detriment of the developer. As the neighbouring owner's interest in the affected property was purely financial (by way of an investment property) any diminution could be adequately compensated by damages. The Court therefore awarded damages instead of an injunction, although the damages payable were still substantial.

In Tamares v Fairpoint Properties, the Court held that the developers had infringed the neighbouring commercial property owner's rights of light but again declined to grant an injunction and awarded the neighbouring owner damages. However, based on principles such as finding a "fair" result from a hypothetical negotiation between the parties considering the nature and seriousness of the breach, the Court held that the owner of the infringed right of light should normally expect to receive a share of the likely profit from the development (or relevant part of it). The Court therefore awarded the neighbouring owner one third of the likely development profit, reduced to reflect the minor nature of the breach.

In light of the above, rights of light practitioners again settled into their view that injunctions would tend to only be granted in either very obvious cases or ones where a party was seeking to protect the rights of light of a residential user, rather than a commercial one...