This case considered whether a compensation payment to release a right to light should be paid to the freeholder or long leaseholder.

The Facts

RMC was the freeholder and Metropolitan was the lessee of a block of 20 flats at Royal Mint Street, London E1. The north elevation of the block had a number of windows which benefited from light which passed over land to the north of Royal Mint Street and across the street itself. On the north side of Royal Mint Street and directly opposite the block of flats was a development site. The owners of that site obtained planning permission for the construction of a substantial mixed-use development, comprising 354 residential units, a 236-room hotel with 33 serviced apartments and various other uses including retail, leisure and community uses. The owners of the development site commenced the development of the site.

Both RMC and Metropolitan took the view that they each enjoyed the benefit of a right to light to the windows in the north elevation of the block over the development site. RMC and Metropolitan each took the view that the development would when completed give rise to an actionable interference with the use and enjoyment of light to the block.

Metropolitan brought proceedings seeking a declaration that it was entitled to release the right to light in exchange for compensation to be paid by the developer. RMC contended that Metropolitan would commit a breach of the headlease if it were to agree to a release of the right to light.

In the headlease RMC had agreed as follows:

"Encroachment

Not to give permission for any new window light opening doorway path passage drain or other encroachment to be made nor to permit any easement to be acquired upon or against the demised premises which might be or grow to the damage annoyance or inconvenience of the landlord and in case any such encroachment or easement shall be made or attempted to be made or acquired or attempted to be acquired to give immediate notice in writing to the Landlord and at the request and cost of the Landlord to adopt such means as may be reasonably required or deemed proper for preventing the making of such encroachment or the acquisition of such easement”.

Submissions

RMC contended:

  1. The right to light was part of “the demised premises”;
  2. An interference with the right to light by the developer would be “an encroachment” upon or against the demised premises;
  3. Such an encroachment by the developer “might be or grow to the damage annoyance or inconvenience” of RMC;
  4. Metropolitan had covenanted not to permit such an encroachment;
  5. Metropolitan's intended release of its right to light would amount to a permission of such an encroachment contrary to the terms of the lease; and
  6. Metropolitan was obliged by the terms of the lease, at the request and cost of RMC, to adopt such means as may be reasonably required or deemed proper for preventing the making of such encroachment and that could include Metropolitan being reasonably required to bring proceedings to restrain the actionable interference with its right to light.

Metropolitan contended:

  1. The right to light was not part of “the demised premises”;
  2. An interference with the right to light by the developer would not be “an encroachment” upon or against the demised premises;
  3. In any event, any such encroachment by the developer would not “be or grow to the damage annoyance or inconvenience” of RMC;
  4. Accordingly, the intended release of Metropolitan's right to light was not contrary to the terms of the lease; and
  5. Metropolitan was not obliged by the terms of the lease to take any action.

Judgment

The Court did not grant the declaration.

Part of the demised premises

It was common ground that the right to light did not exist at the date of the lease but came into existence some 20 years after the opening of the windows in the north elevation of the block.

The Court held that where a dominant tenement is subject to a lease, then the acts of user by the lessee which are relied upon to support a claim to an easement acquired by prescription are treated as acts of user by the freehold reversioner and will lead to the acquisition of an easement appurtenant to the freehold. The easement which was thereby acquired as appurtenant to the freehold was treated as being the subject of the demise to the lessee, even though the actual demise had been made prior to the easement being acquired. It is similar to when a lessee, after the date of the lease, takes adverse possession of land belonging to a third party which adjoins the demised premises. In such a case, it is well established that the lessee is normally treated as having taken possession of the land of the third party for the benefit of the lessor so that the possession of the lessee is treated as the possession of the lessor and when the lessor acquires title to the land by adverse possession, then the land is treated as being the subject of the demise to the lessee. In this case the Court held that the right to light was acquired under section 3 of the Prescription Act 1832 and this was a right appurtenant to the freehold and is a right which is treated as demised to the lessee under the lease. As such the right to light was part of "the demised premises".

Encroachment

The Court considered that the erection of a building on the development site resulting in an actionable interference with the right to light enjoyed by 1-20 Royal Mint Street would be an encroachment upon the right to light. As “the demised premises” includes the right to light, such interference would be an encroachment upon or against the demised premises. A permission for such interference would be to permit such an encroachment. A release of the right to light would necessarily involve such a permission. Accordingly, a release by Metropolitan of the right to light would be contrary to the lease if the further requirement of the lease, that the encroachment “might be or grow to the damage annoyance or inconvenience of the landlord” was satisfied.

Damage annoyance or inconvenience to the landlord

The Court held that if there was an interruption in the enjoyment of light at the present time that might be or grow to the damage of RMC in the future. If there was no interruption at the present time and the light continued to be enjoyed until the lease ended, and RMC became entitled to the premises free of the lease and any underleases, then at that point the block of flats would continue to enjoy a right to light and the light would not have been interrupted. However if, on the other hand, there was an interruption of the light in the near future then, even if RMC continued to have a right to light at the end of the headlease, the fact that the interruption had continued for many years in between would significantly reduce (and may entirely remove) RMC's ability to obtain an injunction requiring the removal of the obstruction to the light. Accordingly the Court held that the encroachment might on the facts be or grow to the damage annoyance or inconvenience of RMC.

Comment

Developers should be careful when negotiating releases to ensure that they are negotiating with the right parties. The leases must be carefully checked to ensure that the tenants have a right of release.

This article first appeared in our Real Estate Bulletin - January 2018.