Gordon, Hi, it's David Taylor here. How are you doing?

 

Yeah. Good. Thanks, David. Long time, no speak – hope all is well with you.

 

Yeah, very good, thank you. I wanted to talk to you chiefly about rights of light and get some of your thoughts on that issue in terms of potential solutions following a number of recent cases hitting the news. What is the state of play from your perspective?

 

Yes, sure. Can I give a little bit of history?  In terms of maximizing density, planning and rights of light are considered to be the two greatest challenges or opportunities. Prior to the recession, there was an evenness about how rights of light was being dealt with. Post-recession, it became a more stressful experience for developers. A lot of uncertainty has emerged in terms of whether an injunction could be granted in favour of an adjoining owner and the degree of injury which warranted that. And then also the measure and methodology of damages. i.e., looking at the gains of the developer rather than the loss to the adjoining owner. Back in 2014, this culminated in the development industry asking the Law Commission to do a review of the subject. At the same time, there was a nuisance case called Coventry versus Lawrence which looked at principles around nuisance. In this case some of the members of the Supreme Court took the opportunity to talk about rights of light. The combination of the judgment from this case and the report from the Law Commission, got things back into balance again….until now. 

 

In the last 18 months, we've been observing an increasing amount of ambulance-chasers; there have been settlements taking place which are in excess of what one might expect in terms of payments or compensation. And there's a growing uncertainty in this area of the law. It is affecting how you interpret the law, and the interpretation of damages, and whether it should be by reference to developer gain again. The most concerning element is that adjoining owners realise that they're going to get more by either being the last person standing or by litigating. In some cases, litigation is seen as an investment to increase the compensation damages. And that's what we've seen in the recent situation where cases have actually gone to court and settled on the first day - one such case is Sirosa Properties Establishment (Sirosa) v The Prudential Assurance Company Limited (PACL), 2022, , where we acted for Prudential.

 

Yeah. Sorry to interrupt, but could you just outline what the problem was there in basic terms in the Sirosa case?

 

Absolutely. So, we acted for Prudential, who were proposing a new office development, on Wells Street, just off Oxford Street. It impacted a neighbouring commercial property. As conduct is important in law, we contacted them to alert them to the fact that Prudential’s development would create some level of injury. The owner, a company called Sirosa, wasn't interested in receiving compensation at the level that we were offering, which was based on the injury to that property with a multiplier. They wanted an injunction and issued proceedings. That said, they appeared as if they were never interested in damages. Even though we made increased offers to try and address the issue effectively, we couldn't go any further because they were refusing compensation. The client made the decision that they couldn't risk a successful injunction, so the work stopped on site. We ended up in court last November and on day one, we had without prejudice meeting with the adjoining owner to try and resolve the issues. By the end of the day, we had effectively agreed additional compensation. Even though we thought our case would be successful,  we were also sure that they were going to appeal any first instance judgment, which would mean an appeal would probably take another year - another year of delay and uncertainty over what Prudential could build. So that was settled, but for more than was originally budgeted or was considered reasonable. But then compensation wasn't related to the injury; it is related to the impact to the development, and this delay. 

 

The key point that we were trying to get across in this case was that the methodology in relation to assessing rights of light is at best questionable, because it starts by looking at a very simple test that is over 100 years old. The current methodologies that have evolved over the last 10 to 15 years are much more precise. What we did agree with the surveyor acting on the other side, is that whilst the claim related initially to all the impacted rooms on that original, it's called boardroom analysis. In truth, there were only nine rooms which were actually showing a noticeable loss of light with reference to the more advanced daylight analysis that was done. However, even though this is recognised by the law as relevant and validated by the Law Commission the challenge you have is that it's more likely that the courts are going to consider that a developer's gain is the right way to go forward, even with the pressure, of more recent forms of analysis, because it is an absolute indefeasible right under the eyes of the law. If there's a noticeable change in light, then some degree of payment or compensation will have to be put in. And that payment will be related to the actual gain to the developer. 

 

At the same time, if you can join this with all of the other macro-economic elements that are increasing construction costs further and creating the proverbial perfect storm, where the uncertainty of rights of light is producing a very unclear strategy to resolve schemes where you have to increase the density to get the viability. We are seeing uncertainty on law, the uncertainty on the methodology for assessment and an awareness of what the opportunities are, by as it were, investing in litigation. If you translate that to Bankside, which is when you can see in React News that somebody's trying to make a claim against the developer, those are all the factors which seem to be playing out. In that situation, you don't see any material loss of light. But there's a play on the uncertainty, and the hope that the developer will want to buy away the uncertainty on their funding, on their timescales, on their letting all of those aspects. This makes it all the more challenging in terms of doing site appraisals and understanding the implications of rights of light. It requires there to be a deeper understanding upfront of the risks -  it affects funding, particularly in a vulnerable market. And so the implications of a situation which - bear in mind going back to history was rooted in the true need for people to have daylighting - but it should be the balance of daylighting in an urban fabric where there's an expectation of increased density and a need for it to address macro planning policies as well.

 

So… I mean, that's a very long answer about the situation! And thank you for it because it's a very complex area. But in brief, as we're running up to time already on this, what is the solution from your company's perspective? And what do you think needs to happen in terms of legislation?

 

So, I think the solution is that one needs to do the wider analysis, and it needs to be recognised in legislation, that an impact to some of these rights of light comes back to the root of nuisance, which is, that you can no longer use your premises in the way that you did previously. We can address that by looking at the modern methods of analysis and seeing how a true impact is actually taking place. I don't expect government will revisit it, particularly now the Law Commission have done their report; but we probably need a court case which clarifies where nuisance actually is occurring, and recognises the uncertainty. We also need to clarify the basis for damages as well, i.e. when damages should be given and also the basis on which it should be assessed. It needs to be appreciated that the risk from a development is actually really with the developer – the adjoining owner doesn't enter the risk. So, the proportion of the damages of the gains to the developer should be relatively small. These are some of the things that I would expect to see come forward in a court case and be acknowledged, and probably have to be cemented in appeal as well.

 

So, it's case law and precedent that we're looking for, in a future case, to iron this out?

 

Yes. Equally one could ask  local authorities to use what's called Section 203 of the Housing and Planning Act 2016 whereby they can override rights of light. It's a legal device but is very political because it could appear as if it's supporting developers and overriding people's personal rights. Nevertheless it can help to ensure the delivery of major infrastructure schemes and I feel there should be an encouragement by government for local authorities to do that, particularly the GLA. 

 

Lastly, does tech play a part here in helping this whole area?

 

GIA has produced unique technology - which we call the Phoenix App - where you can undertake the deeper appraisals that I've been discussing, and look holistically against the opportunities and constraints of planning as well. Within 60 minutes, you could actually do the analysis to give you a real sense of the risk profile for adjoining owners. So yes, technology  plays a significant role in speeding up the process and getting people understanding the opportunities and constraints more quickly.

 

Yeah, and obviously, this is coming to the fore even more, presumably, in an age of more attention being paid to wellness, the rights of light issue?

 

Absolutely right. And we discussed that in my expert witness report, where we acknowledge that daylighting and wellness are connected, which produces, for a judge, a degree of conflict. But it's the balance of recognising when there's a true issue as against one where it's seen as simply an opportunity to receive higher compensation.

 

Thank you very much. That was really fascinating; a really interesting explanation of a very complex area for me, thank you!

 

Well, David, thank you. Good to talk. And let's see how things unfold. Genuinely I think this could be quite a showstopper for development if it carries on in the vein it is.

 

Brilliant. Thank you very much Gordon!

 

Okay, cheers David. Bye!