Injunctive relief? Don’t bank on it

The recent High Court decision in Cooper & Others -v- Ludgate House Ltd concerned a claim by Mr Cooper and Mrs & Mrs Powell, residents of Bankside Lofts, for injunctive relief to restore rights of light infringed by developer Native Land’s 18-storey Arbor building, above Bankside Yards’ historic railway arches on London‘s South Bank.  The Claimants sought damages of approximately £3m each, in the alternative.  The distinctive yellow Bankside Lofts is shown pictured to the right of the Tate Modern, with Arbor behind it and to its right.

The first issue the Court grappled with was the effect of Section 203 of the Housing and Planning Act 2016.  Section 203 allows a local authority to override certain easements and other private rights (like rights of way, and rights of light) when developing land that has been appropriated for planning purposes.  The statutory power is intended to facilitate development projects that might otherwise be thwarted by third party claims.  Arbor forms part of a much larger proposed scheme which is subject to Section 203, although Arbor itself is not.  The Claimants argued that any infringement of their rights of light which would be caused by the eventual construction of the remainder of the development should not be taken into account, and the Court agreed: the Claimants could not enforce their rights over the Section 203 part of the development, and any light enjoyed over it was not therefore to be taken into account in a technical assessment.

As to that technical assessment, there was a ”lively dispute” over whether the century-old and industry-standard Percy Waldram analysis remained the favoured methodology for assessing interference with light, or whether the modern “Radiance” approach was to be preferred.  The Waldram analysis measures the visibility of a proportion of the sky through an aperture in a particular room and compares it with the reduction in that light caused by the infringement.  If the infringement reduces the amount of adequate light below 50% then it gives rise to an actionable interference.  Native Land argued that the Waldram analysis was outmoded and susceptible to inaccuracy, and should be rejected in favour of the more modern technological “Radiance” approach encompassed in the 2018 British Standard for measuring daylight.  Mr Justice Fancourt held that the alternative methodology favoured by Native Land did not contradict the results of a Waldram analysis, and considered that both approaches gave rise to an actionable loss of light.  The question then for the Court was whether the interference with the residents’ rights of light should be reversed by injunctive relief, requiring the partial demolition of Arbor, or whether damages would provide an adequate alternative remedy.  If damages were found to be sufficient, how were they to be calculated?

In balancing the injunction / damages alternatives the Court has a wide discretion, and is not confined to a rigid application of the “working rule” set out in Shelfer v City of London Electric Lighting Co [1895].  Shelfer suggests that an award of damages in lieu of an injunction should only be made if:

• The injury to the claimant’s legal rights is small;
• The injury is one which is capable of being estimated in money;
• The injury is one which can be adequately compensated by a small money payment; and
• The case is one where it would be oppressive to grant an injunction against the defendant.

The narrowness of this approach has been disapproved in powerful obiter statements in the Supreme Court in Coventry v Lawrence [2014].  Damages in lieu should be granted more readily and by reference to a wider range of factors than those contemplated in Shelfer.  In the present case, the Court took into account the fact that Arbor was already constructed and occupied.  Joining the tenants into the proceedings would therefore lead to a significant delay.  Perhaps more importantly, the demolition of the infringing part(s) of Arbor would require substantial expenditure, and would result in a loss of valuable office space, which could not be justified economically or environmentally.  Damages would therefore be a sufficient alternative remedy to an injunction.  But how were those damages to be calculated?

The Claimants sought a significant share of the increased value of Arbor attributable to its infringing part(s).  Native Land argued for damages to be assessed by reference to the diminution in value caused to the residents’ flats.  The Court rejected both proposals, preferring to calculate damages on the “Wrotham Park” basis (also known as “negotiating damages”) which assumes that the parties would have negotiated compensation for the release of the Claimants’ rights of light before the infringing building was constructed.  The Court determined that the Claimants would have been willing to release their rights at an appropriate price, but that Native Land would not have been prepared to have its development held to ransom.  Mr Justice Fancourt found that Native Land’s profit attributable to that part of the Arbor which interfered with the Claimants’ rights was in the order of £30m-£40m, and that Native Land would have earmarked 10%-15% of that profit to settle rights of light claims (£3.75m).  A third of that sum (£1.25m) would settle the Claimants’ claims, and the remainder would be allocated to settle other claims for Arbor’s interference with rights of light.  However, and following the principle established in Tamares (Vincent Square) Ltd -v- Fairpoint Properties (Vincent Square) Ltd [2006] the damages also had to “feel right”.  Mr Cooper’s damages were therefore reduced from £525,000 to £350,000, and Mrs Powell’s damages were reduced from £725,000 to £500,000.

FSP commentary

Whilst an infringement of property rights is prima facie remediable by injunction, this decision demonstrates a more balanced and holistic approach, and a move away from injunctive relief towards an award of damages in lieu where buildings have already been constructed, and where a developer has not sought to ride roughshod over those private rights.