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Rights of Light Mark Davies - Associate Director of UK Underwriting 17 th June 2015

Rights of Light - Topics What is a Right of Light? How is a Right of Light created or defeated? Why are Rights of Light so important? What is interference with a Right of Light? Remedies for interfering with Rights of Light

What is a Right of Light? Is the right to enjoy natural light over someone else’s land through defined apertures (windows etc) to allow room to be used for its ordinary purpose – enough for comfortable use – Colls v Home & Colonial Stores 1904 A Right of Light allows A to stop B from interfering with its light by showing that B is causing a nuisance to A. Nothing to do with Sunlight or Daylight or view from a building No legal measure of enough light exists – caselaw has evolved - 0. 2% sky factor as at 850 mm above floor level

How is a Right of Light created? By Deed Noted on Title By Implied Grant/ Reservation S 62 LPA 1925 – exception & reservation for retained land By Prescription More than 20 years of legal enjoyment by an aperture (eg a window)

How is a Right of Light defeated? By Unity of ownership – Suspends right of light By physical impediment unchallenged for a year PA 1832 sec 4 By Light Obstruction Notice – Rights of Light Act 1959 By Agreement between parties By change in the position of benefitting window By Statutory powers – CPO or Appropriation T+CP 1990 sec 237

Why are Rights of Light so important? Developing Town/City Sites Blocking natural light out to neighbours More light in building – increased value Increased Capital/rental returns ROL affects all types of development Loss of light - less Property value

What is interference with Rights of Light? Substantial interference with adequate light – reduction of adequate light to below 50% of area of room – actionable Factors to be taken into account Rooms already badly lit – every bit of light precious Residential - Courts more inclined to require 50 – 55% of room well lit – less means interference substantial – less so with commercial uses – changing to same for both > % area of loss of usable floor area > actionable interference

Interrelationship – Liability/injunction/damages

Remedies for Interference Injunction – stop threatened interference or pull down structure causing interference Damages – Compensate loss due to interference or lost value of right to get injunction – book valuation or % of loss of Developer’s profits Declaration of Court - status of rights claimed – meaning of deeds + validity or effect of Light Obstruction Notice Rectification of Registers – Claims for Indemnity against Land Registry - costs

Remedies - Indemnity Policies Cover – diminution in value of Property Documents of title for site and affected Properties ROL Surveyors Report Copies of any correspondence with affected parties Copy Planning + letters of objection Photos of site and Surrounds – age of buildings and apertures

Questions re underwriting policies Any connection between Insured and owners/occupiers of affected properties? Have there been any adverse approaches made by any third party claiming rights of light? Amount of cover required? Does it reflect the GDV or an amount to cover compensation - No correlation between GDV and the damages awarded by Courts Have there been any complaints from neighbours? Copy Planning to be implemented - history for site and surrounds? What was previous use?

Questions re underwriting policies Is there anything known about potential rights of light claims by any third parties? Have the terms and conditions of any previous right of light deeds been complied with and will the Developer be able to comply with them? Legal report as to Rights of Light by lawyers acting for Insured Is there the possibility of a Light Obstruction Notice being served on any owners/occupiers of affected buildings? Objection may equal claim

Thank you Mark Davies Mark. davies@stewart. com

Rights of Light -Current Case Law and Future Reform Robert Kelly – Commercial Business Development Manager 17 th June 2015

Injunctions after Regan v Paul and Heaney: • Pre Regan − Overall principle to find “fair result” • Regan v Paul Properties (2007) − High Court awarded damages − Court of Appeal granted injunction − Behaviour of parties?

• HKRUK II (CHC) v Heaney (2010) − High Court put onus on developer to show why injunction should not be granted − “Shelfer Test” − Shelfer v City of London Electrical Lighting Company (1895) − (i) Injury to plaintiff rights small (ii) capable of being estimated in money (iii) can be adequately compensated by money payment (iv) would be oppressive to dependant to grant injunction − Injury to Mr Heaney’s light was less than 1% − Cost of removing offending floors £ 1, 000+ − Settled before Court of Appeal hearing

• Coventry and others v Lawrence and another (2014) − Noise not light − “discretion…. should not…be fettered” − “each case is…. fact sensitive” • Scott v Aimiuwu (2015) − Central London Court case − First reported Light case since Coventry − Court held that damages were sufficient as: − Interference was to secondary accommodation − Injunction to knock down would be “oppressive” and “punitive” − No hard and fast 50/50 rule − Damages were compensatory - £ 12, 000 loss x 2. 5

Reform: • Rights to Light (Law Com No 356) − Government Response by December 2015 • Prescription − Statutory 20 years of qualifying use • Abandonment − No use for 5 years would constitute abandonment • Modification − All rights of light ( whether before or after reform) are open to modification

• Notice of Proposed Obstruction (NPO) − Developer can serve notice that it expects to obstruct − Owner must commence proceedings for injunction within 8 months or lose the right to get an injunction − Not intended to replace negotiation but can be used to stimulate negotiations • Statutory Test for damages or injunction − Proportionality − Conduct of parties − Public interest − Impact of injunction • No statutory test for infringement of right − Law Commission think flexibility is good

What to do: • Right of Light Report − Identification − Calculation − Compensation • Negotiate − Courts take account of “bad behaviour” − Law Commission seem to agree − Agreement • Insurance − “bad behaviour”? − Cover − − Damages and compensation including costs and expenses Alteration or demolition Diminution of market value Costs incurred and rendered abortive

• Level of Cover − Value of light lost − Percentage of developers profit • Disclosure − Read policy carefully. Restrictions on Part Wall Act applications • Agreed Conduct Clauses

Thank you Robert Kelly Mobile: 07415240703 robert. kelly@stewart. com

Kay Evans Director kay. evans@haroldbenjamin. com