News & Insights // Time to shed light on rights of light insurance

The Heaney judgment has raised questions for developers about how to mitigate risks if their proposed scheme would block out neighbours' light 

We do insist on living on top of each other. Whether it's the allure of an inner city designer flat or the simple necessity of living where the work is, there is no escaping the fact that it is getting a bit crowded round here. 

And while construction methods now allow incredible heights to be scaled, neither the engineers nor the architects have managed to build a skyscraper that does not cast a shadow. 

It is established law that we all have a right to receive daylight through the windows of our homes and offices. A right accrues in a number of ways, either by express grant or accumulated over time. Interference with a right of light entitles the injured party to compensation or, in certain circumstances, a court injunction prohibiting (or requiring demolition of) the offending part of a building that interferes with another's right of light. 

So are the court lists full of applications for injunctions? Seemingly not, except the recent High Court decision in the dispute between Highcross subsidiary HKRUK and neighbouring property owner Marcus Heaney. 

And if you speak to the expert surveyors operating in this field, their response is typically robust: rights of light are either overlooked by neighbours or else addressed by way negotiation between developer and injured party long before building work gets underway. 

The principal remedy for interference with rights of light is an injunction or compensation. But since the first instance decision in Heaney, the perceived threat of an injunction is such that rights of light appear to be hampering ambitious and well intended regeneration schemes otherwise capable of contributing much needed accommodation and employment in the construction section. 

That said, we probably ought to take account of the fact that Heaney is only one of several recent decisions and, by and large, the courts have now distilled their position - unless a developer has acted reasonably throughout the course of their building project, they will be held accountable. It appears that developers should not assume they can ignore individuals' rights of light and expect a court to sanction interference with such rights at a later date by the award of compensation (as opposed to an injunction). 

So can insurance help? 

Much like the spectre of village greens, the threat of legal action to preserve a right of light is not a defect in title in the traditional sense. But like village greens, an application by a neighbour to prevent interference with their right of light is capable of sterilising a construction project, or rendering it uneconomical to complete. While it is a commonly held perception that title insurance shies away from risk, some insurers have worked hard to adapt their risk assessment techniques in order to be able to offer insurance for rights of light-related risks. 

The methods employed by an insurer should be considered carefully as they vary. Traditionally, title insurers will accept risks on the basis of a conclusion that the prospect of a claim is remote. Typically, this decision is heavily reliant on the planning process – if the application for planning consent is successful and does not elicit any material objection on its way through, the question of remoteness is seemingly resolved. But in the context of rights of light, this approach fails to acknowledge the fact that a potential victim is unlikely to appreciate the degree of interference until construction is underway. 

Insurance predicated on an assessment of the representations made to a planning application alone could well create issues later in a project. Absent insurance, severe interferences to neighbour's rights of light are normally addressed by developer through negotiation with the injured party before work starts on site. 

However, insurance that permits a developer push ahead on a project without due regard to the rights of light issue at the early stages of a project could store up problems for insured and insurer later down the line. When the girders are up, neighbours are far more likely to become entrenched as a point of principle and, if case law is anything to go by, so is the Court. And if a Court awards an injunction, rather than damages, the developer would recover its abortive costs under a typical policy but not the anticipated profit from the project. 

So if it is the latter that a developer wishes to protect, insurance does have a genuine role to play in helping to plot a course, but it is a role defined through collaboration between developer, surveyor, lawyer and underwriter to determine a course of action for each project that has the best chances of satisfying the court's requirements for transparent and conscionable behaviour while still protecting developers from the ransom value fast becoming attributable to rights of light. 

Jean-Claude Domaingue
Senior Underwriter and Solicitor