Managing Third Party Impacts During Development

  1. INTRODUCTION
    1. In a crowded urban environment like central London it is all but certain that in carrying out a substantial development the developer will infringe the legal rights of neighbours to some degree. The common example of this would be rights of light but other examples would include impacting rights of way or covenants affecting the development site and held by neighbours.
    2. Unless handled correctly these can be material matters with serious consequences. This article summarises the available tools to navigate these difficult waters. Every case is different and advice on the specifics should always be taken.
  2. historical research
    1. Depending on the site, historical research can play an important part in fully defining the rights that benefit and burden the development site.
    2. These can range from medieval charters to the Acts of Parliament authorising the construction of infrastructure such as waterways, railway stations and lines, and the precise terms on which larger landholdings were subdivided with cross rights etc. Meticulous research and analysis in this area can bear invaluable fruit in allowing a complete assessment of the overall position.
    3. All this is part of the essential development constraints analysis that should be undertaken early and used to inform design and engineering aspects of the project.
  3. conduct
    1. Once the decision is taken to move forward with a scheme which affects third parties one of the key issues is the way in which the developer team conducts itself with the neighbours from the outset.
    2. If it does not prove possible to reach an accommodation with a third party litigation is likely to ensue . The award by the courts of an injunction to prevent development or require reinstatement of a built building is a discretionary matter where the court’s view of the conduct of the developer will be highly influential.
    3. This is simple courtesy and common sense but takes time and costs money; all too often the imperative to drive the project forward ,secure planning and ensure delivery of the product at the right point in the cycle can work against this.  
  4. injunctions  
    1. The risk of injunctive relief for infringing third party rights is real. The importance of developer conduct has been mentioned . In the case of rights of light for any interference to be actionable it would need to be shown that there is substantial interference – ie substantial loss of amenity.
    2. On the other hand the court will not lightly grant an injunction if it is obvious that the claimant is only interested in money. However the threshold for this test is not easy and great care is needed if construction is to start before all claims have been settled.
  5. damages 
    1. The law in this area continues to evolve but it is fair to say that there is now an increasing convergence in the treatment of these interferences with lawful rights.
    2. On the more material infringements damages are usually now based on a share of notional development profit. This can be a very complex area from a computational perspective .
    3. This is particularly the case where multiple third parties have eg rights of light injuries each requiring cut backs etc.
    4. These factors are all relevant in undertaking the negotiations to avoid litigation.
  6. insurance  
    1. Insurance for rights of light claims is an essential risk management tool; depending on the facts it may be an essential requirement of funders and financiers.
    2. Agreed conduct provisions are important in allowing the developer flexibility to approach relevant injured parties to negotiate settlements proactively.
    3. It is an obvious enough point that once a claim is made under the policy control passes to the insurers and if ( as can happen ) work has started on site before the claims have been settled there can be scope for differences of priority between the insurer and the insured.
  7. modifications of covenants 
    1. Where a site is affected by covenants ( even relatively recent ones ) it is always worth bearing in mind the provisions of S 84 of the Law of Property Act 1925. This grants the Upper Tribunal the power to modify covenants on various grounds of which the most relevant would be likely to be that retaining the covenant without modification would not confer on the beneficiary practical benefits of substantial value and advantage.
    2. That test would be measured by looking at the difference in amenity between the proposed development and a scheme which would not infringe the covenants in question. It is of interest that this test has similarities to the test for actionable interference with rights of light which may be of relevance in the cases of covenants not to build. 
  8. conclusion
    1. This is a specialised and complex area where it is essential to deploy an experienced professional team of lawyers, surveyors, engineers and architects to optimise the outcome.