Litigation Highlights 2014
2014/5: HIGHLIGHTS AND NEWS
COMING UP IN 2015
There are currently three appeals bound for the Supreme Court in 2015 in which members of Falcon Chambers are involved:
(1) Marks And Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2014] EWCA Civ 603
(2) Loose v Lynn Shellfish Limited [2014] EWCA Civ 846
(3) McDonald v McDonald[2014] EWCA Civ 1049
In M&S v BNP, Guy Fetherstonhaugh QC will be seeking to persuade the Supreme Court that the Court of Appeal was wrong to refuse to imply a term providing for a landlord to reimburse the tenant the amount of rent it had paid that was referable to the period after a break date in a lease. Nicholas Dowding QC will be supporting the decision of the Court of Appeal.
In Loose v Lynn Shellfish, a case involving a blend of the doctrines of prescription and accretion, Guy Fetherstonhaugh QC, Charles Harpum and Philip Sissons will argue that a prescriptive pre-Magna Carta right to take shellfish from the Wash Estuary does not extend to a right to take shellfish wherever sandbanks are accessible from the shore.
McDonald v McDonald considers the much-debated question of what role, if any, Article 8 ECHR has to play in possession claims between private individuals. The Appellant was a tenant of a house in Witney, and her landlords were her parents. Receivers were appointed under a legal charge over the house, and they served a section 21 notice under the Housing Act 1988. If valid, such a notice is an unanswerable, mandatory ground for possession. The Appellant defended on the basis that the house was her home, and that she had Article 8 rights. The Court of Appeal decided that Article 8 was inapplicable. Stephen Jourdan QC and Ciara Fairley appeared for the successful Respondents.
In addition, in the spring of 2015, the Court of Appeal will hear the appeal in Safin v Badrig which has been leaprfrogged from the County Court to the Court of Appeal because it will consider the important issue of whether and, if so, in what circumstances a Court should vary a consent order containing a contract of compromise at the suit of one of the parties. Nat Duckworth, on behalf of the Appellant, will be arguing that the Court should only do so in exceptional circumstances and not at all where the applicant seeks to avoid the consequences of an express default provision within the consent order. In seeking to support the decision of the lower Court, Jonathan Gaunt QC will arguing that the Court has an essentially untrammelled jurisdiction to vary a contract of compromise consent order.
2014’S LITIGATION HIGHLIGHTS
REAL PROPERTY
A wide range of real property disputes have arisen this year. The cases below are a selection of the highlights. In addition, Chambers has published in this area, with the latest edition of Fisher and Lightwood’s Law of Mortgages (under the general editorship of Wayne Clark) appearing earlier this year. Members of Chambers have appeared in the Courts and the First Tier Tribunals on a very wide range of real property matters.
Adverse Possession and Illegality
Jonathan Karas QC appeared in the appeal in Best v The Chief Land Registrar[2014] EWHC 1370 (Admin) (presently under consideration by the Court of Appeal), on the question of whether a squatter could rely on acts of possession which were criminal offences, in this case the new offence of residential squatting introduced by section 144(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. The decision of the Court of Appeal is awaited.
Easements and Rights of Way
Tamsin Cox recently appeared for the successful party in Begley v Taylor [2014] EWHC 1180 (Ch), a Chancery trial in the High Court. This was a claim relating to the establishment of and interference with rights of way and rights to park in a privately-owned roadway. The case attracted newspaper attention: see here
Jonathan Gaunt QC appeared Wood & Anor v Waddington [2014] EWHC 1358 (Ch), a case concerning rights of way, which considered in detail the rules relating to the creation of, and interference with, easements. Of particular interest is the discussion by the Court of section 62 of the Law of Property Act 1925, and the consideration given to the need for prior diversity of occupation in order for that section to operate.
Loose v Lynn Shellfish Limited [2014] EWCA Civ 846 concerned the extent of a private fishery over part of the foreshore based on a presumed lost grant made before 1189. The Court determined that this grant would have extended over the foreshore as it existed from time to time. The Court of Appeal decided that, while the seaward boundary would fluctuate according to the tide, the most likely boundary was to be fixed by reference to the lowest astronomical tide. Guy Fetherstonhaugh QC and Phillip Sissons appeared for the appellants.
Guy Fetherstonhaugh QC instructed by Gregsons solicitors appeared for the respondent in the Court of Appeal in Evans v Wimbledon & Putney Conservators [2014] EWCA Civ 940. The case involved a challenge by judicial review ([2013] EWHC 3411 Civ) by the Appellant to the Conservators' exercise of their power under the Wimbledon and Putney Commons Act 1871 to grant easements. The Appellant alleged that such grant was inconsistent with other obligations under the 1871 Act. The Court of Appeal rejected that argument and upheld the Conservators' decision to grant the easements, thereby unlocking a valuable development site. The decision also gave detailed consideration to the question of what ancillary works were permissible to give effect to such a grant.
Also in a statutory setting, but in a slightly unusual context, was the case of First Great Western v Jones [2014] EWCA Civ 301. This concerned the regulation of taxis at Bristol Temple Meads station. Even though there was a public taxi rank at FGW's (leasehold) station at Bristol Temple Meads, to which FGW consented, that did not give licensed taxi drivers unfettered access to the rank; FGW were entitled to issue their own licences to taxi drivers wishing to use the station stand, levy a charge and impose extra conditions beyond those imposed by the taxi licensing authorities.
Finally, Guy Fetherstonhaugh QC acted for the Appellants and Caroline Shea acted for the Respondents in Winterburn v Bennett in the Upper Tribunal (Tax and Chancery Chamber), a case concerning the acquisition of prescriptive rights (of access and to park) over a car park. The decision is of importance (not least because permission to appeal to the Court of Appeal was granted), in that it raises issues which affect owners of land of all types, and may have far reaching practical effects on the way in which the acquisition of easements by prescription can be prevented.
The Upper Tribunal’s decision (given by HH Judge Purle QC, sitting as a Judge of the High Court) was concerned with two issues. The first was whether use of the servient tenement by customers of the dominant tenement, in circumstances where such use was neither expressly condoned nor controlled by the dominant owner, was user on which the dominant owner could rely to establish prescriptive rights in favour of the dominant land. The Judge determined this point against the Appellants. The second issue was whether a clearly visible sign to the effect that the car park was private, which had been displayed throughout the prescriptive period, but which had not been enforced in anything other than an occasional and desultory way, was sufficient to render the use contentious, such that the dominant owner was unable to say that it was use as of right. The Judge allowed the appeal on this point, albeit giving permission to appeal.
Mortgages
Gary Cowen appeared in the recent decision In the matter of Black Ant Co Limited [2014] EWHC 1161 (Ch). The case is important as it is the first direct consideration of the meaning of “further advances” in relation to loan facilities secured by mortgages. The Court of Appeal will consider that decision in 2015. The other notable mortgage case of the year, Commercial First Business Ltd v Munday & Anor [2014] EWCA Civ 1296, is considered below under the “Agricultural” heading.
Party Walls
Jonathan Gaunt QC appeared for the successful appellant in Dillard v F&C Commercial Property Holdings Ltd [2014] EWHC 1219 (QB). The case concerned the meaning and effect of a deed intended to regulate disputes in relation a party wall, and also considered the distinction between an appeal properly so-called and a challenge to an award made without jurisdiction.
Restrictive Covenants: Injunctions and Remedies
Enforcement of restrictive covenants was considered in Hicks v 89 Holland Park (Management) Limited (Lawtel 18/07/14) This is the latest decision in the 89 Holland Park litigation (with the earlier decision reported at [2013] EWHC 391 (Ch)). The case concerns a restrictive covenant over what was formerly garden land which regulate development. The High Court was, on this occasion, asked to consider whether or not to grant an interim injunction to restrain the making of a planning application. Agreeing with the Defendant, the High Court concluded that, on the basis of undertakings given, an injunction was not appropriate. Nicholas Dowding QC and Mark Sefton appeared for the Defendants.
Village Greens
In Church Commissioners for England, R v Hampshire County Council & Anor [2014] EWCA Civ 634, Jonathan Karas QC appeared for the successful Appellant in recent significant decision on the procedure for registering town and village greens. The Court of Appeal considered the extent to which it was open to a local authority to extend time for the correction of defective applications for registration under the Commons (Registration of Town or Village Greens) (Interim Arrangements) (England) Regulations 2007. The Court of Appeal accepted that corrections took effect retrospectively. However it also agreed with the Appellant that excessive time had been given for the corrections necessary to be made, so that the application for registration failed, leaving the Appellant’s land free to be developed.
DEVELOPMENT DISPUTES
The £¾ Billion Development Litigation
This year, Janet Bignell appeared in what is believed to be the highest-ever value property dispute to be issued in the Chancery Division: Dorchester Project Management Ltd v. BNP Paribas Real Estate Advisory & Property Management UK Ltd (1) and Landprop Holding BV (2) [2014]. She was instructed by Ashurst LLP For Landprop (with Sa’ad Hossain QC), a vehicle of Inter IKEA’s property division, defending a £750 million claim arising from the Second Defendant’s acquisition and subsequent plans for a mixed use development of substantial land in Stratford, London (Sugar House Lane). This was a factually and legally complex case involving issues of duties of confidence, planning, development valuation, measure of damages (loss of chance, loss of profits, accounts and Wrotham Park basis), expert evidence of valuation, planning and development finance. The litigation settled part way through a 3 week Chancery Division trial. Given the high profile of the parties, the development and the high value, the case attracted considerable media interest:
COMMERCIAL LANDLORD AND TENANT
The topic that has attracted perhaps the most attention this year has been break notices, with two very significant Court of Appeal cases considering different aspects of such notices. However, technical issues under the 1995 Act, the rule in Holme v Brunskill and the law of fixtures have also produced a number of high- profile cases. Timothy Fancourt QC’s Enforceability of Landlord and Tenant Covenants, the leading textbook on the Landlord and Tenant (Covenants) Act 1995, was also published this year. A significant area of Chambers’ practice has been work under the Electronic Communications Code.
Break Notices in the Court of Appeal: Formal Requirements For Notices
Timothy Fancourt QC appeared in Friends Life Ltd v Siemens Hearing Instruments Ltd [2014] EWCA Civ 382, in which the Court of Appeal held that a requirement that a break notice be “expressed to be given under section 24(2) of the Landlord and Tenant Act 1954” was a condition of exercise of the right to break the term of years and that, since such a right was in the nature of a unilateral contract, the Court had no power to hold that the requirement served no purpose and did not need to be complied with.
Break Notices and Payment of Rent
In Marks And Spencer Plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd & Anor [2014] EWCA Civ 603, the tenant argued that a term should be implied into the lease that, upon the break taking effect, the rent for the broken period should be returnable. The parties had expressly so provided in relation to service charges. The Court of Appeal accepted the landlord’s submission, however, that no such term could be implied. Other terms of the lease showed that the parties had considered what would happen post-break date in other contexts, and further the possibility that a tenant could be liable for a full rental period payable immediately before the break date was obvious from the lease. Further, the parties would have been aware of the underlying case law as part of the admissible background, and one could conclude that, if the parties had intended there to be a term to this effect, they would in fact have made express provision for it. Guy Fetherstonhaugh QC appeared for the tenant, and Nicholas Dowding QC for the landlord.
The Law of Fixtures
In Peel Land and Property (Ports No. 3) Ltd v TS Sheerness Ltd [2014] EWCA Civ 100 the Court of Appeal considered the principles of construction and the question of when a lease can be said to have ousted the tenant’s prima facie right to remove its fixtures. The case raises a number of questions of general importance in relation to the law of fixtures, a question which has not received a great deal of judicial attention. Kirk Reynolds QC and Greville Healey appeared for the Respondent.
The Landlord and Tenant (Covenants) Act 1995 and Intra-Group Transfers
Tindall Cobham 1 Limited & Others v Adda Hotels (An Unlimited Company) and others [2014] EWCA Civ 1215 considered the effect of the 1995 Act, and the anti-avoidance provisions thereunder. Kirk Reynolds QC appeared for the successful Respondents in the Court of Appeal. The appeal took place on 27th and 28th August 2014, having been determined by Peter Smith J at first instance on a summary judgment application on 29th July. The Court of Appeal considered the effect of the anti-avoidance provisions in the Landlord and Tenant (Covenants) Act 1995, K/S Victoria and the extent of the principle of construction that contracts should be construed as far as possible to ensure that they are valid and effective. The Court’s consideration of the first question is most significant.
The assigning tenants had purported to assign hotel leases to valueless shell companies. Their leases contained an alienation provision in the following terms:
3.14.6 The Tenant shall not assign this Lease to any Associated Company of the Tenant without the prior consent of the Landlord Provided Always that for the purposes of Section 19(1A) of the Landlord and Tenant Covenants Act 1995, the Landlord shall be entitled to impose any or all of the following conditions set out in sub clauses (a) and (b) below: (a) that the Tenant shall provide the Landlord with notice of any such assignment within 10 Working Days of completion of the same; (b) that on any such assignment, the Tenant shall procure that the Guarantor and any other guarantor of the Tenant shall covenant by deed with the Landlord in the terms set out in the Sixth Schedule at the Tenant's sole cost and subject to the Tenant's compliance with such conditions the Landlords consent shall be given
The tenant submitted that section 25 should only be operated to render void parts of clauses that actually offended the scheme of the 1995 Act. On that basis, they submitted that only sub-clause (b) was void (and therefore had to be deleted). The trouble with that submission, from the landlords’ point of view, was that the only remaining restriction on the tenants’ rights of alienation was therefore sub-clause (a). This could be satisfied by the simple giving of a notice under (a) within the requisite time limit, following which consent was to be given by the landlord in accordance with the final part of the covenant. That rendered the covenant almost entirely unqualified. The landlords’ submission was therefore that the tenants’ construction fundamentally altered the deal done in Clause 3.14.6. It was more sensible to treat (a) and (b) as interdependent, and to regard (b) as unseverable from the rest of the proviso. Viewed in that way, what section 25 actually required was the deletion of the entire proviso so that the Clause simply read “The Tenant shall not assign this Lease to any Associated Company of the Tenant without the prior consent of the Landlord”. This is an important decision on the effect of section 25, and demonstrates that, when considering whether to render void part or parts of a lease which offends the 1995 Act, a mechanical approach should not be applied and consideration should be given to the intended effect of the provisions of the lease.
The Rule in Holme v Brunskill Reconsidered
Edward Cole appeared for the successful party in the Court of Appeal in Topland Portfolio No.1 Limited v Smiths News Trading Limited [2014] EWCA Civ 18, which has attracted considerable interest in the specialist press. The respondent guarantor of a commercial lease was released from liability under that rule because the terms of the lease were found to have been varied by a subsequent licence to alter, to which the guarantor had not been a party. On a proper construction, the liability of the guarantor had not been preserved either by the terms of the lease itself or the licence. The landlord’s appeal was accordingly rejected by the Court of Appeal.
Arbitration Appeals
Edward Peters acted in Fulham Broadway Trustees No.1 Ltd v Telefonica UK Ltd [2014] EWHC 1048 (Ch) for the successful tenant in this arbitration claim in the High Court, Chancery Division. The rent review arbitration concerned the rent payable for a shop in the Fulham Broadway Shopping Centre, conducted on the basis of written submissions without a hearing. The landlord challenged the Award under s. 68 of the Arbitration Act 1996 on two grounds. It alleged that the arbitrator had failed to comply with his general duties under s. 33 of the 1996 Act, by supposedly failing to give the landlord a reasonable opportunity to give evidence on an issue; and that the arbitrator had failed to deal with all the issues that were put to him. The judgment considers, amongst other issues: the nature of such rent review arbitrations, and the general approach which the courts should take when reviewing an arbitrator’s conduct of such an arbitration; the difference between “a failure to deal with all the issues” within the meaning of s. 68(2)(d) of the 1996 Act, and a failure to give reasons for the way in which an issue is decided; the difference between an “issue” and an argument or submission which is made about an issue; and the nature of the evidence which needs to be adduced to satisfy the “substantial injustice” test under s. 68(2) of the 1996 Act.
Tenancies At Will
In Erimus Housing Limited v Barclays Wealth Trustees (Jersey) Limited [2014] EWCA Civ. 303, the Court of Appeal has reversed the decision of the Chancery Division and held that Erimus Housing Limited did not become an annual tenant when it held over after the expiry of a contracted-out fixed term tenancy during negotiations for a new lease. The Deputy Judge of the Chancery Division held that the negotiations were “desultory” and “sporadic” and therefore that this was not a case where the parties were in the “throes of negotiation”, which was the sort of case described by Nicholls LJ in Javad v Aqil [1991] 1 WLR 1007 as a case where the appropriate inference to draw from the payment and acceptance of rent was a tenancy at will. The Court of Appeal disagreed, holding that the occupation of Erimus was always against the backdrop of a negotiation for a new lease and therefore it was inappropriate to draw the inference that the parties intended, at any point before Erimus vacated, that Erimus should become an annual tenant, subject to the protection of the Landlord and Tenant Act 1954. Adam Rosenthal acted for the successful appellant.
Interim Rent and the Landlord and Tenant Act 1954
In Boots UK Limited v Goldpine Estates Limited LTL 19/06/2014, Court of Appeal, Tamsin Cox appeared for the Respondent in the Court of Appeal in Boots v Goldpine, considered the effect of agreed lease terms in a 1954 Act unopposed renewal being “subject to contract”, and whether, where the terms had been agreed on that basis, the Court had to wait and see whether a new lease would be granted on the agreed (or any other) terms, to allow it to determine whether or not the interim rent would fall under sections 24C or D.
Commercial Service Charges and Interpretation of Leases
Philip Sissons appeared in Innerspaces Self Storage Ltd v Harding & Ors [2014] EWCA Civ 46 in the Court of Appeal. The decision concerned the operation of management provisions of an industrial estate, and, particularly, the liability of the landlord to ensure that the industrial estate was not left in an unsightly condition. The case considers the correct approach to the construction of such obligations, and the extent to which the state and condition of the estate at the date of grant of management covenants is relevant to their true construction.
RESIDENTIAL LANDLORD AND TENANT
Possession Claims
McDonald v McDonald & Anor [2014] EWCA Civ 1049 considered the much-debated question of what role, if any, Article 8 ECHR has to play in possession claims between private individuals. The Appellant was a tenant of a house in Witney, and her landlords were her parents. Receivers were appointed under a legal charge over the house, and they served a section 21 notice under the Housing Act 1988. If valid, such a notice is an unanswerable, mandatory ground for possession. The Appellant defended on the basis that the house was her home, and that she had Article 8 rights. The Court of Appeal decided that Article 8 was inapplicable. Stephen Jourdan QC and Ciara Fairley appeared for the successful Respondents
Enfranchisement
Enfranchisement remains a core area of Chambers activity. The sixth edition of Hague’s Leasehold Enfranchisement, of which Anthony Radevsky is co-author, was published this year. Members of Chambers have appeared in the Courts on a range of questions of construction of the 1967 and 1993 Acts, and in the First Tier and Upper Tribunals on matters of valuation and determination of terms.
Interpretation of the Statutory Machinery under the 1967 and 1993 Acts
A number of technical issues of statutory interpretation have come before the Courts.
Anthony Radevsky appeared for the successful landlord in the Court of Appeal in Free Grammar School of John Lyon v Helman [2014] EWCA Civ 17. The Court held that the receivers under a charge could not make a claim under the Leasehold Reform Act 1967 in the name of a lessee of a house who had been made bankrupt. The lease had vested automatically in the trustee on bankruptcy under the Insolvency Act and the Land Registration Act, and the lessee did not satisfy the requirement that he had held the lease for two years prior to service of the notice.
Additionally, in Regent Wealth Ltd v Wiggins [2014] EWCA Civ 1078, the Court of Appeal allowed the appeal of three head leaseholders of flats in a collective enfranchisement claim under the Leasehold Reform, Housing and Urban Development Act 1993. The nominee purchaser had failed to register the initial notice under s. 97 of the 1993 Act against their titles at the Land Registry. This enabled the leaseholders to grant new head leases to each other of their respective flats. The nominee purchaser applied successfully to the county court to amend the initial notice under Paragraph 15 of Schedule 3 to the 1993 Act so as to claim the new leases as well. Reversing the county court judge, the Court of Appeal held that Paragraph 15 of Schedule 3 could not be used to claim an interest that had not been in existence at the date the initial notice was served, and that the lessees under the new leases took free of the claim. Jonathan Gaunt QC and Anthony Radevsky acted for the Appellants and Stephen Jourdan QC acted for the Respondent.
Stephen Jourdan QC appeared in the Upper Tribunal (Lands Chamber) for the successful landlord in Queensbridge Investment Ltd v 61 Queens Gate Freehold Ltd [2014] UKUT 0437 (LC), decided by Martin Rodger QC, Deputy President, on 6 October 2014. In a collective enfranchisement claim, the landlord claimed leasebacks of three flats. The LVT determined a dispute about the terms of the leasebacks in favour of the tenants. The landlord appealed against that decision. While the appeal was pending, the landlord granted new leases of those flats to connected companies, on the terms it had proposed to the LVT but which had been rejected. It then contended, successfully, that this meant that it was under no obligation to proceed with the leasebacks, and that the acquisition of the freehold on behalf of the tenants would be subject to the new leases.
In Howard de Walden Estates Ltd v Accordway Ltd and Kateb [2014] UKUT 0486 (LC), the Upper Tribunal decided a point of statutory construction under the Leasehold Reform, Housing and Urban Development Act 1993 which had previously led to conflicting LVT decisions. It held that the freeholder, the competent landlord, was able to agree all the terms of acquisition with the lessee of the flat, even after a notice of separate representation had been served by the intermediate lessee. The intermediate lessee’s remedy was to claim a breach of statutory duty by the competent landlord, to which the latter has a defence if he acts in good faith and with reasonable care and diligence. The Tribunal also rejected the intermediate landlord’s arguments based on the Human Rights Act.
Anthony Radevsky acted for the successful appellant.
Enfranchisement news was, however, dominated by the substantial litigation surrounding Dolphin Square. In Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] EWHC 2433 (Ch), Mr Justice Mann held that the long lessees of flats in Dolphin Square were entitled to acquire the freehold of what was once the largest block of flats in the world, under the Leasehold Reform, Housing and Urban Development Act 1993. It is believed that the Dolphin Square enfranchisement is the largest-ever enfranchisement.
The case considers a number of points of importance, principally:
(1) The use of company schemes in the enfranchisement context
(2) The meaning of “residential purposes” under the 1993 Act scheme
(3) The test for the validity of initial notices under the Act, in particular in relation to proposed purchase prices
(4) The law in relation to transactions at an undervalue under the Insolvency Act 1986, section 423.
In a long, detailed and important judgment delivered on 17 July 2014, the freeholder’s defences were all rejected. The lessee companies each held two flat leases. The lessees were not companies in the same group, and thereby avoided the provision that no more than 2 flats could be held by the same person. The 1993 Act was not to be construed so as to prevent these lessees from enfranchising; nor were Friends Life’s human rights infringed. In addition, Mann J held that less than 25% of Dolphin Square was not occupied for residential purposes, contrary to Friends Life’s argument regarding flats let for short stays or on longer terms as corporate housing. There was consideration about what parts of the premises were common parts. Friends Life were allowed to advance their arguments on the 25% rule, even though it had not been mentioned in their counter-notice.
A challenge to the validity of the initial notice, on the ground that the proposed price (of £111.6 million) was unrealistically low also failed. It had to be a genuine opening offer, as opposed to a nominal figure. The Judge went on to hold on the evidence he heard that this notice satisfied a more stringent test, if it were necessary to apply one.
Finally, a counterclaim brought by Friends Life that the granting of the leases to the lessee companies amounted to a transaction at an undervalue under s. 423 of the Insolvency Act was dismissed.
Nicholas Dowding QC and Anthony Radevsky acted for Westbrook. Stephen Jourdan QC and Mark Sefton acted for Friends Life.
Valuation Principles Considered
Questions of valuation also continue to arise in this area. In Kosta v Trustees of the Philimore Estate [2014] UKUT 0319 (LC), Gary Cowen appeared for the successful Respondent landlord. The principle issue in the appeal concerned relativity, the relationship between the value of a freehold property and its value on a leasehold term which forms an essential part of the valuation exercise required for leasehold enfranchisement including collective enfranchisement and individual lease extensions. In seeking to determine the value of a 52.45 year leasehold interest by comparison with the freehold interest of the same property, the Appellant lessee sought to adduce the expert evidence of an econometrist who justified his relativity by reference to a hedonic regression analysis, a statistical analysis of over 8,000 market transactions from the period 1987 to 1991, prior to the commencement of the Leasehold Reform Housing and Urban Development Act 1993. Whilst the Tribunal was prepared to find on a balance of probabilities that the analysis reflected relativity during the period 1987 to 1991, they rejected the evidence as being appropriate to reflect the market at the valuation date in October 2011. In particular, the Upper Tribunal accepted that because the 1993 Act postulates an assumption for the purposes of the valuation that the subject property carries no right to enfranchise under the 1993 Act but that other similar properties in the market do carry such rights, that would have a significantly negative impact on the existing lease which would render the results from the statistical analysis to be potentially flawed. In addition, the Upper Tribunal recognised differences in the market between 1987 to 1991 and 2011 which would call the results into question. The Upper Tribunal preferred the Respondent’s reliance on the published graphs of relativity, noting that anyone seeking advice as to the premium to be paid at the valuation date would have received such advice based on those graphs.
Stephen Jourdan QC appeared in the Upper Tribunal (Lands Chamber) for the appellant nominee purchaser in a collective enfranchisement dispute relating to 82 Portland Place, 82 Portland Place (Freehold) Limited v Howard De Walden Estates Limited [2014] UKUT 0133(LC), decided Martin Rodger QC, Deputy President and A J Trott FRICS on 8 September 2014. The decision considered three issues: (1) relativity; (2) the circumstances in which a tenant can become a participating tenant under s.14 of the 1993 Act, and (3) whether the freehold vacant possession value of the building should reflect a “purchaser’s margin” to be deducted from the aggregate value of the individual flats.
Service Charges
Edward Peters has appeared for the successful Appellant landlord in the Upper Tribunal decision in Daejan Properties Ltd v Griffin & Anor [2014] UKUT 206. The appeal considered an important issue in relation to landlord’s repairs funded by tenants’ service charge: to what extent can tenants argue that significant repair costs would have been lower, had cyclical repairs been carried out (also known as the “historic neglect” problem)? The case also gave important guidance on the recoverability of legal costs from tenants, and on the discretion given to tribunals to refuse such costs under section 20C (Limitation of Service Charges, Costs of Proceedings) of the Landlord and Tenant Act 1985
In Assethold Ltd v Watts [2014] UKUT 0537 (LC), Philip Sissons appeared for the successful Appellant in a case concerning service charges and the recovery of legal costs. The appeal re-affirmed that there were no special rules of construction applying to service charge provisions meaning that they were to be construed against the landlord in the event of any ambiguity. The Deputy President considered the recent decisions in Arnold v Britton [2013] EWCA Civ 902 and Francis v Philips [2014] EWCA Civ 1395 to that effect. The Upper Tribunal considered the meaning of a covenant which required the covenantor to “maintain” and to “repair”, and the important question of whether in order for a landlord to include legal costs as part of the sums comprising a service charge, it was necessary for specific words to appear. It was found that legal costs incurred in pursuing litigation against a third party were, in the circumstances, recoverable under general words regarding the cost of management of a building.
Right to Manage
Oliver Radley-Gardner appeared for one of the successful landlord appellants in Elim Court RTM Co Ltd v Avon Freeholds Ltd [2014] U.K.U.T. 0397 (LC), considering the right to manage provisions in Part 2 of the Commonhold Leasehold Reform Act 2002. The appeal concerned notices inviting participation under section 78, and, specifically, whether a failure to comply with the statutory requirements invalidated the right to manage process, or whether such a breach could be overlooked if there had been substantial compliance with those requirements and no material prejudice had been caused. The Deputy President decided that it was not open to the RTM Companies to argue that compliance had been defective but nonetheless substantial. This was because the requirements of section 78 were to be strictly interpreted as they affected the private law rights of landlords, tenants and RTM Companies. Where a statutory provision related to substantive rights or questions of jurisdiction, there was no room for arguing that substantial compliance sufficed. The decision considers the true effect of the principle of statutory interpretation set out in Jeyeanthan, R (on the application of) v Secretary of State for the Home Department respondent [1999] EWCA Civ 3010. It also considers technical issues in relation to the execution of notices under the Companies Act 2006.
Generally
Joe Ollech appeared for the successful respondent in Okadigbo v Chan & Chan on 24 October 20014 before Males J in an appeal from the County Court relating the exercise of judicial discretion and the multiple to be applied in assessing the payment of a penalty under s.214(4) of the Housing Act 2004. Issues raised by the appellants concerned the factors taken into account by the trial judge at first instances in considering culpability, and the application of Court of Appeal dicta in Ayannuga v Swindells[2012] EWCA Civ 1789, which was decided before changes to s.214(4) were introduced by the Localism Act 2011. The decision to award only a sum equal to the deposit at the lowest end of the spectrum of culpability was upheld.
AGRICULTURAL PROPERTY AND LANDLORD AND TENANT
As well as arbitrations in relation to agricultural tenancies, Chambers has been involved in a number of cases which concern matters of interest to agricultural practitioners. Proprietary estoppel has come under the microscope again in Davies v Davies [2014] EWCA Civ 568. Timothy Fancourt QC and Elizabeth Fitzgerald appeared in the appeal in relation a proprietary estoppel claim in the context of a family farming dispute. It is the latest case on the question of the operation of proprietary estoppel in an agricultural context, and it gives guidance on the questions of reliance and detriment.
Agricultural mortgages also give rise to difficult and important questions of general principle: Nathaniel Duckworth appeared for the successful Respondent in the Court of Appeal’s recent decision in Commercial First Business Ltd v Munday & Anor [2014] EWCA Civ 1296. The borrowers under two separate mortgages of agricultural property contended that there was an estoppel by convention or alternatively a procedural estoppel which precluded the mortgagee from relying on a cross-security provision, contained in both mortgages, at the enforcement stage. The borrowers argued that that was so because the mortgagee had obtained separate possession orders and separate judgments in 2007, in each case without reference to its security over the other property, and had not sought to reassert its right of cross-security until 2012, when it applied for a warrant for possession. The Court of Appeal held that the estoppel by convention had not been made out on the facts, but agreed with the borrowers that the mortgagee’s right of cross-security in respect of the 2007 judgment sum had merged with the judgment obtained and such that it was now no longer available to it. Only the interest accruing post judgment remained secured against both properties. The decision will be of interest to lenders generally who will now need to exercise care to ensure that their rights under an ‘all monies’ charge are not lost when enforcement action is taken against some, but not all, of the relevant security.
PLANNING AND CPO
HS2: Representing Affected Owners and Tenant Before the Commons Select Committee
Barry Denyer-Green has been appearing on behalf of a number of landowners before the House of Commons' Select Committee concerned with HS2, the proposed new railway between London and Birmingham. The railway line will pass through both rural and urban properties, and in the case of the former, the severance of farms, roads and land ownership units will cause huge problems for the owners and tenant affected. The Select Committee is currently hearing Petitions from such people, and in due course will report back to the House of Commons. Such hearings provoke the promoter to negotiate with petitioners for the withdrawal of petitions on terms. Such terms include agreements and assurances that may mitigate some of the adverse consequences of the railway line to the affected owners and tenants.
Injunctions, Enforcement and Planning Law: Court’s Residual Discretion to Refuse Enforcement
In London Borough of Newham v Zulfiqar Ali [2014] EWCA Civ 676, the Court of Appeal allowed an appeal by the trustees of land at Abbey Mills Riverine Centre, London E15, used as a mosque, against the lower court’s grant of an immediately effective injunction requiring use of the mosque to cease and all buildings associated with faith use to be demolished. The injunction was granted to enforce a planning obligation made under s.106 of the Planning Act. Although the Council was only seeking to enforce the terms of an agreement previously made by the trustees and there was no defence to the grant of an injunction, the Court retained a discretion, to be exercised sparingly, to suspend the effect of any injunction. In this case, it was right to suspend the injunction until after the Secretary of State had determined a planning appeal against the Council’s refusal to grant planning permission for permanent faith based use of the land. Timothy Fancourt QC acted for the successful appellants.
Planning, Predetermination/Bias, Treatment of Heritage Assets
Jonathan Karas QC appeared for the interested party in R (Carnegie) v London Borough of Ealing [2014] EWHC 3807 (Admin), which was a challenge by the Claimant to the grant of planning permission to redevelop Oaks Shopping Centre, Acton. The Claimant sought to argue that a substituted member of the planning committee had approached the question of whether permission should be granted with a closed mind, and that an improper approach was taken by the planning committee in relation to listed buildings. Patterson J (agreeing with the Defendant and the Interested Party) rejected those grounds and considered (a) the principles in relation to allegations of bias/predetermination and (b) considered how heritage assets should be taken into account.
The case raises one important point of practice. The Claimant had tried to avoid the requirements of the new 6 week time limit (under the amended CPR r54.5(5)) for planning judicial reviews by issuing proceedings within that period, but then stating that the statement of facts and grounds required by the rules would follow. The court deprecated this practice but was willing to extend time for service of the facts and grounds because the protocol letter stating the grounds was appended to the claim form and there was no prejudice to the other parties.
UTILITIES
The Water Industry Act 1991 in the Supreme Court
Jonathan Karas QC appeared for the successful appellants in Manchester Ship Canal Company Limited v United Utilities Water Plc [2014] UKSC 40 (on appeal from the Court of Appeal, [2013] EWCA Civ 40).
The issue of general public importance was whether a sewerage undertaker was entitled to discharge surface water and treated effluent into a private watercourse, without the consent of the owner of that watercourse. Ordinarily, unless consented to or authorised by statute, that would constitute a trespass. The undertaker’s rights arose under the Water Industry Act 1991, and it was common ground that the 1991 Act conferred no express right of discharge. The question was, therefore, one of necessary implication (as opposed to merely convenient or reasonable implication). If implied, the question was whether the implication was in relation only to already existing pipes in place when the 1991 Act came into force, or whether the right to be implied also permitted the installation of future pipes (as had been decided under the regime which the 1991 Act replaced).
The Supreme Court decided that the terms of the 1991 Act, in particular the terms requiring undertakers to continue operating from existing outlets until discontinued, was inconsistent with there being an immediate tortious right on the part of the owner of the watercourse to prevent the discharge. To that extent, therefore, the 1991 Act overrode the common law of trespass. However, the changes in the legislative language under the 1991 Act (albeit that it was a consolidating statute) meant that the formerly implied right to install new outlets had not survived beyond the coming into force of the 1991 Act.
Janet Bignell has also been involved in the case as part of the Manchester Ship Canal Co Ltd’s team with responsibility for property law issues. These aspects of the case were not the subject of the summary judgment application.
OTHER CHAMBERS NEWS
2014 saw the launch of the Falcon Chambers Arbitration Service see website here with a number of members of Chambers appointed FCIArb. This is a bespoke arbitration service intended to provide a specialist and efficient alternative to the Court.
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