Is there some light for developers at the end of the Heaney tunnel?

2 February, 2012
by: Cripps Pemberton Greenish

Ever since the decision in HKRUK ii (CHC) Limited v Marcus Alexander Heaney 2010 (“the Heaney case”) settled out of court (leaving the High Court decision unappealed) developershave been in the dark, especially those who are trying to develop in Central London.

To recap in the Heaney case, HKRUK (“the Developers”) decided to proceed with their development (of a central Leeds office block) without first resolving its neighbour’s (Marcus Heaney) right to light claim. The building works were completed at the end of March 2008 and, unusually, the judge granted Marcus Heaney a mandatory injunction (rather than damages) which required the Developer to remove two floors of the office block two years after completion of the works. This case is therefore being seen as “a severe blow for developers”.

Since this decision there has been an influx of rights to light claims with both developers and neighbours seeking advice as to their legal position. A developer contemplating a major development, must be cautious to address their neighbours’ potential claims before carrying out any work. The Heaney case has meant that neighbours can hold a developer to ransom if they can show an injunctable interference with their right to light.

Section 237 of the Town & Country Planning Act 1990 could come to a developers’ aid to minimise the impact of the Heaney case. This section allows local authorities to acquire land for planning purposes and once in their ownership enables third party rights and restrictions (including but not exclusively rights to light) to be overridden and developments to proceed without the threat of an injunction or ransom. The neighbour will have statutory entitlement to compensation for any interference but this would be assessed on compulsory purchase principles and based only the diminution in value of the land rather then ransom principles. The development’s neighbours’ hands are tied and they cannot seek or threaten an injunction to prevent the development.

The idea behind the section is to pass private land through a local authority’s hands and therefore invoke the protection of Section 237. Usually a developer would enter into an arrangement with a local authority where the local authority would acquire the developer’s interest in the site for planning purposes. This arrangement is then subject to a leaseback to the developer so that it has title under the local authority.

This is not without risk for a local authority as there is a risk of judicial review if the section is not properly used. It must be lawful in principle for the local authority to enter into the proposed Section 237 scheme and they must be satisfied that it is proper use of their planning powers.

That said, there have been recent developments in the City of London where this section has been successfully used including 1 Mitre Square, 20 Fenchurch Street and the London Wall Place office development near the Barbican.