Developer behaving badly: Has the Court of Appeal seen the light?

A recent case heard by the Court of Appeal may give encouragement to developers over rights to light.

The Court of Appeal this month [6 July 2016] dealt with the long-awaited appeal in Ottercroft v Scandia & Anor, which turned on whether an injunction or damages should be awarded in rights to light cases.

Many sites that are ripe for redevelopment are nonetheless still blighted by potential rights to light claims, in view of the uncertainty around whether an injunction will be ordered by the court, restricting the development potential of the site.

The decision has been awaited with interest by the development industry as the first decision on rights to light and injunctions since the Supreme Court in Coventry v Lawrence [2014] UKSC 13 indicated that damages should be awarded in place of injunctions, if they were an adequate remedy. A decision from the court endorsing this would have given much-needed clarity in this area.

Encouraging signs for developers
The court upheld the lower court’s decision, refusing the developer’s appeal against the judge’s decision to grant an injunction in place of damages for what was a relatively minor right to light infringement that could have been adequately compensated in damages.

However, the decision very much turned on its own specific and unusual facts, with the court taking a dim view of the defendants’ conduct and exercising its discretion to order an injunction for the removal of the offending works.

Despite the Court of Appeal upholding the injunction, this may nonetheless be seen as an encouraging decision for developers.

The judge had accepted the principle that, following Coventry v Lawrence, an injunction should not be awarded if damages are an adequate remedy. However, the court always retains a wide discretion to penalise poor conduct, as in this case.

There is a clear public policy element to this decision, where the defendants had breached undertakings given and the second defendant was found to be an untruthful witness.

Conduct is key
This case gives developers a clear warning that their conduct and dealings with parties whose rights to light are affected by the scheme must be beyond reproach, if a dispute over rights to light ends up in court.

Developers must engage early with their neighbours and do everything they can to show in any later litigation that they have acted reasonably, to persuade the court to make an order for damages if terms cannot be agreed with those affected.

They should not expect to always be able to argue for damages in place of an injunction, if damages will not be adequate and certainly if their own conduct is open to criticism.

What next?
Further help to developers may come from the announcement in the Queen’s Speech to bring forward proposals to respond to the 2011 Law Commission report on easements and to progress the Law of Property Bill.

It will not be clear until the bill is published what measures it will include relating to rights to light – and in particular whether any of the recommendations in the Law Commission’s 2014 rights to light report are included.

These proposals featured a notice procedure whereby landowners could require neighbouring owners to notify within a specified time if they intended to seek an injunction to protect their right to light, or to lose the potential for that remedy to be granted.

Such a process could bring some much-needed certainty for developers, particularly in the challenging times that may well lie ahead for the development industry.

In view of the wide-ranging implications of the Brexit vote, it remains to be seen whether there will be any parliamentary time to deal with this.

Larger schemes where there is a public benefit may also be able to enlist the support of the relevant local authority to take advantage of section 237 of the Town & Country Planning Act.

The effect of this in certain circumstances is in essence to override private rights to light, which still need to be compensated but at a level likely to be below a private claim.

Developers in these circumstances still need to show that they have properly engaged with adjoining owners.

These powers will, however, be exercised only in limited circumstances, so most developers are still in the position of waiting for further guidance from the court or new legislation – and in the meantime ensuring their own houses are in order in terms of general conduct.

By Helen Wheddon, Partner
First published in Construction News, July 2016

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