Background
The case centres around the award-winning Arbor Tower on London’s South Bank, a 19-storey office tower completed in 2022 as part of a larger £1 billion scheme (comprising eight towers, with seven still to be built) to regenerate Bankside Yards.
Bankside Lofts, an iconic residential complex of loft-style apartments, is located adjacent to Arbor. Leaseholders who own apartments on the 6th and 7th floors claimed that Arbor is infringing upon their natural light and sought an injunction to require Arbor’s developer to either demolish the building or alter the Bankside Yards development to restore their light.

Headline Points

1. 1. The claim for an injunction was refused. Mr Justice Fancourt decided that the harm of granting an injunction was oppressive as it could result in demolition costs of £15-20 million. Particularly in circumstances where it was considered plausible that the developer could obtain planning permission to rebuild the office block and obtain statutory protection from the local authority under s.203 of the Housing and Planning Act 2016 (“s.203 protection”) (which would prevent the Claimants from obtaining an injunction and limit their only remedy to statutory compensation which is calculated based on diminution in value).

2. The Claimants were awarded damages on a negotiating basis. The awards were £500k and £350k respectively. Had the Court awarded damages based on diminution in value, the Claimants would have been awarded £60k and £20k respectively.

3. The Waldram method for measuring the loss of light is alive and well. The Judge noted it has “stood the test of time and has the confidence of the industry”.

4. When assessing whether Arbor caused a nuisance to the Claimants, the loss of light caused by two additional unbuilt buildings which the developer intends to build (known as BY5 and BY6) which will benefit from s.203 protection was excluded from the Court’s assessment.

The Court’s Refusal to Grant the Injunction
An injunction was the primary remedy which the Claimants were seeking and it was the Claimants’ position that damages would not be an adequate remedy because they “…have a particular and strong attraction to the benefits of natural light directly from the sky, and are unwilling to see that light taken away from them, as a fait accompli.” The Claimants also argued that the developer’s conduct by commencing construction despite infringing the Claimants’ rights warranted an injunction. However, the Court disagreed. The Court’s reasons included:

1. The enforcement of an injunction would be problematic because Arbor was occupied by commercial tenants who were not parties to the litigation;

2. The injunction would likely be futile because the developer had a good prospect of obtaining planning permission to re-build Arbor and obtain s.203 Protection which would also infringe on the Claimants’ rights to light;

3. The harm caused to the developer (demolition costs of £15-20 million), the tenants and the public (by the removal of a useful resource) outweighed the harm caused to the Claimants;

4. The public benefit of retaining Arbor was a strong factor;

5. Damages would be an adequate remedy for the Claimants. This was supported by the fact that the other flat owners all agreed settlements with the developer.

Damages Awarded on a Negotiating Basis
The Defendant attempted to persuade the Court that any damages awarded to the Claimants should be based on diminution in value (which the Judge valued at £60k and £20k respectively). The Claimants argued that any damages award should be based on a hypothetical negotiation that would have taken place prior to construction commencing in August 2019. Whilst the Court agreed with the Claimants’ argument in principle, they strongly disagreed with the amount of damages which the Claimants were seeking (£3.37million and £3 million respectively).
The Court ultimately carried out an analysis of what was the added value in monetary terms to the developer by proceeding with the development as planned as compared to proceeding with the development cut back so Arbor did not interfere with the Claimants’ light. This added value was calculated at £30 million. It was determined that if a reasonable negotiation had taken place in 2019, the developer would have been willing to pay 12.5% of this amount to proceed with the planned development (£3.75 million). This payment would need to be split across eight different flat owners who were in a position (in theory) to prevent Arbor from being built. However, a third of this would be attributable to the Claimants (due to the increased impact on their properties) which would amount to awards of £725k and £525k respectively. The judge considered damages of that size were disproportionate to the value of their properties so lowered the awards to £500k and £350k respectively.

The Waldram Method is Alive
Interestingly in this case, the experts relied on different methods of analysis to measure the interference with the Claimants’ light; the Claimants’ expert relied on the traditional Waldram methods whereas the Defendant’s expert relied on the more modern “radiance” methods. The Defendant’s expert argued that the Waldram method was inaccurate and outmoded.
The Waldram method is not a measurement of light as such, but a measurement of the degree of exposure of a room to the sky. It takes exposure to at least 2% of the notionally unobstructed sky dome in half of the internal area of the room at a working plane (85 cm) as a proxy for sufficiency of light within the room as a whole. If 50% or more of the room is on the window side of the line (in a simple case where one wall has windows), the room is sufficiently lit. If less than 50%, it is insufficiently lit.
Although the judge accepted that the radiance methods provide more useful information about the nature of the impact of light on obstructions, however, the Waldram method remains used and broadly respected by the industry. It has stood the test of time and has the confidence of the industry. This conclusion was undoubtedly assisted in this case by the fact that the radiance results largely corroborated the results of the Waldram method. However, if the results were marginal it appears likely that the Court would have placed more reliance on the radiance methods.

Light Obstructions Caused by s.203 Protected Buildings are Disregarded
The first issue the Court had to determine was whether the light which will be lost to the Claimants in due course by the construction of BY5 & BY6 should be taken into account by the Court when assessing whether Arbor caused a substantial interference to the Claimants’ light. This was a novel point of law which had not been decided by the Court before. Ultimately the judge sided with the Claimants; whilst the Claimants’ light will be substantially interfered with even further once buildings BY5 and BY6 are constructed by the developer, the fact that those buildings benefit from s.203 protection, means the Claimants are unable to protect the light which will be obstructed by these additional buildings in due course. Accordingly, because that light cannot be protected by the Claimants in the future, it should not be taken into account now.

Key Takeaways

1. Developers will take confidence that an injunction was not just refused but also that the developer’s conduct of commencing construction without agreeing releases with dominant landowners was not criticised. Whilst the granting of an injunction will always turn on the facts of each case, in cases like this where there is substantial public benefit to the retention of the obstructing building, an injunction appears the unlikely remedy.

2. A clear direction was made that negotiating damages is the correct assessment of damages in right to light cases. This is likely to prevent developers from being able to successfully agree blanket settlements with groups of impacted dominant landowners using nominal book value assessments. The starting point for negotiations is likely to be higher. The impact of this will be interesting to see: we may see an increase in developers relying on light obstruction notices and seeking s.203 protection. This could also lead to more determined dominant landowners and claims being brought by a higher number of claimants than we have seen previously.

3. The Waldram method is the correct form of analysis to be used as a starting point in right to light cases by surveyors. Only in marginal cases will the more modern radiance methods be taken into account and even then, these methods are not to “supplant” the Waldram Method.

4. We now have authority that if a dominant landowner benefits from a right to light over a different part of the developer’s site, that light cannot be taken into account if that light will in due course be obstructed and the new building benefits from s.203 protection. This is a reminder to developers to consider whether s.203 protection is suitable at the earliest stage possible.

If you have any queries or require any advice on right to light issues please do not hesitate to contact Charles Grossman, Senior Associate in the firm’s Real Estate Litigation Department who specialises in this area