News

Costs are a contentious issue when enforcing lease covenants.  Clauses enabling the landlord to seek recovery of advisers’ fees are often narrowly drafted but widely applied, particularly when a case is settled by negotiation.

The meaning and effect of a clause depends precisely on the words used but “fees, costs and expenses … in connection with any steps taken in or in contemplation of, or in relation to, any proceedings under section 146 or 147 of the Law of Property Act 1925 or the Leasehold Property (Repairs) Act 1938, including the preparation and service of all notices” are comparatively common and arose in the case of Argricullo Ltd v Yorkshire Housing Limited [2010] EWCA Civ 229.

The landlord served a s146 notice upon the tenant’s failure to repair.  The tenant claimed protection of the 1938 Act.  The landlord did not seek the court’s consent to issue proceedings (as it was obliged to do under the 1938 Act).  Instead, its legal and surveying advisers opened protracted negotiations with the tenant.  The tenant eventually commenced works of repair but the parties could not agree liability for the landlord’s substantial costs incurred.  The landlord sought recovery through the courts.

The judge at first instance held the case “finely balalnced” but found that in looking at the words of the covenant, they contemplated proceedings for forfeiture or damages being issued pursuant to s146.  No such proceedings had been commenced and negotiation of a settlement was outside the ambit of the covenant.  The Court of Appeal agreed.  Lord Justice Patten, in looking at the relevant cluase, said one comes back to asking if proceedings under s146 were either in existence or in contemplation at the relevant time.  The process adopted was “ultimately consensual” and the problem was dealt with by negotiation.  In construing the clause as written in the light of such a process did not involve or contemplate proceedings.  The landlord’s appeal failed.

If you wish to more about this important issue, contact Hatherleigh Training.

The Equality Bill became an Act on 8 April 2010.  The core provisions will come into force in October 2010.  New non-statutory Codes of Practice are awaited from the Commission for Equality and Human Rights.

The Act contains a mixed and extensive list of “protected characteristics” including age, disability, gender, marriage, pregnancy, race, religion and sex.  The present legislation relating to discrimination exhibited against one or more persons within these groups is diverse, often muddled and very confusing.  The aim of the Equality Act is to create a fairer Britain within a clear and understandable framework.  It sweeps away previous legislation dating back, in some instances, to the 1960s.

The Act introduces four forms of prohibited conduct against any person with one or more of the protected characteristics (direct and indirect discrimination, harassment and victimisation) and an additional form of conduct relating to disabled persons only.  Once in force, if a person (A) treats B in a particular way and because of B’s disability, the treatment is to the detriment of B that will amount to discrimination even if A would have treated any other person in the same way.  So, there is no comparator.  This will circumvent the House of Lords’ decision in London Borough of Lewisham v Malcolm.  The Law Lords held the Council had not discriminated against Mr Malcolm, suffering from schizophrenia and unable to understand the consequences of his actions, as it treated him, a defaulting tenant, in the same way as it would treat any defaulting tenant by seeking possession of a flat leased to him.

Various bodies and persons will have varying duties under the Act including the making of reasonable adjustments when a (a) provision criterion or practice, (b) physical feature or (c) lack of auxiliary aid would put a disabled person at a substantial disadvantage in comparison with persons who are not disabled.

Wish to hear more?  Then contact Hatherleigh Training.

Planning is not an area normally covered by this news letter but a recent case caught our eye.

Part IX of the Town and Country Planning Act 1990 gives power to a local authority to acquire land in its area compulsorily to secure the carrying out of a particular development.

A site in Raglan Street, Wolverhampton was owned as to the greater part by Sainsbury’s, the remainder being owned by Tesco.  Each company wished to develop the site but could not do so without the City Council acquiring the other company’s interest.

Tesco controlled a site in Wolverhampton call the Royal Hospital site (”RHS”) for which the City Council wished to secure regeneration.  Tesco considered it not financially viable without subsidy elsewhere.  However, Tesco offered to enter into a planning obligation in respect of RHS if the Council acquired Sainsbury’s interest in the Raglan Street site.  The City Council decided to do so regarding Tesco’s promise to regenerate the RHS as decisive.  The Supreme Court appeal in R (on the application of  Sainsbury’s Supermarkets Ltd) v Wolverhampton City Council and another [2010] UKSC 20 was successful but only on a majority of 4 to 3.

In his leading majority judgement, Lord Collins held it was legitimate for a local authority to take into account “off-site” benefits of a proposed development provided there was “a real rather than fanciful or remote” connection between the “off-site” benefits and the development for which the compulsory acquisition is made.  For the minority, Lord Phillips held the Council made two decisions.  One, whether to exercise its compulsory purchase powers at all.  Here Wolverhampton City Council was not entitled to take account of a benefit unconnected with the proposed development and had not.  Two, to decide which of the rivals to support and in this case, the Council could have regard to unconnected benefits.

If you wish to hear more, why not contact Hatherleigh Training?

Lord Justice Jackson’s Review of Civil Litigation Costs, dated 21 December 2009, reports civil litigation costs can be disproportionate and impede access to justice.  His Lordship proposed reforms designed to control costs and promote access to justice.  The senior judiciary considered its response and in March 2010 agreed to support the Report’s recommendations.  A judicial steering group, to include the Master of the Rolls, will now lead implementation of the Review.  It will require Government support to legislate on some key reforms.

One major recommendation is that conditional fee arrangements (most commonly “no win, no fee” arrangements) and “after-the-event” insurance premiums should no longer be recoverable from unsuccessful opponents in civil litigation.  Clients may still enter in to such arrangements with their lawyers but any success fee will be borne by the client.  Lawyers will, too, be enabled to enter into contingency fee arrangements but protective provisos will safeguard the interest of clients.

In relation to the civil procedure rules, LJ Jackson expressed the view that whilst protocols “perform a useful function, by encouraging the early settlement of disputes” he thought the general pre-action conduct practice directions, introduced in 2009, should be repealed as it can lead to pre-action costs being incurred unnecessarily.  It was, however, alternative dispute resolution that attracted Lord Jackson’s attention.  It “has a vital role to play in reducing the costs of civil disputes” and he felt there should be a serious campaign to ensure that all litigation lawyers and judges are properly informed on how it works and the benefits it can bring.

Interestingly, contrary to Lord Woolf’s findings prior to introducing his civil procedure rules, Lord Jackson thinks there is nothing fundamentally wrong with the manner civil evidence is adduced by witness statements and expert reports.  However, some are unduly long thus unnecessarily increasing costs.  His recommendations will enhance the courts’ role in case management thereby, with cost sanctions, controlling the content and length of statements.

If you wish to hear more, contact Hatherleigh Training.

As the law stands, a witness is generally immune from suit.  However, matters may change.

In Paul Wynne Jones v Sue Kaney [2010] EWHC 61, a consultant, appointed an expert witness, reported the claimant had a post traumatic stress disorder.  Following a meeting with another expert witness, a joint statement was issued damaging to the claimant’s prospects of success.  The claimant issued proceedings against the consultant who pleaded immunity.

The judge, the Honourable Mr Justice Blake, heard submissions to the effect that recent developments in the law eroded the rule of immunity in tort.  First, an expert witness might be vulnerable to an order for costs under the civil proceedings rules; second, professional disciplinary proceedings may infringe the immunity principle and finally, blanket immunity is vulnerable to attack on Human Rights grounds.  He was, however, satisfied that the law, as it presently stands, was binding on him and on the Court of Appeal but “… that there is a substantial likelihood that on re-examination by a superior court, with the power to do so, it will emerge that the public policy justification for the rule cannot support it”.  

In consequence, the judge, whilst striking out the claimant’s claim as he was bound to do, has taken the very unusual step of issuing a certificate to the effect that the appeal should be considered by the Supreme Court.  He commented “It is, of course, entirely a matter for the Supreme Court whether they will grant leave to appeal to entertain this case and the re-consideration of this particular area of law that the application gives rise to.”

It is understood that the Supreme Court is to consider the application for leave in November 2010.  Until then, any person instructed as an expert witness must consider their position but should bear in mind that if they give their opinion “honestly and in good faith” he should not be involved in subsequent proceedings commenced against him.

To hear more, contact Hatherleigh Training.

Some readers may recall the arguments which raged about original tenant liability.  The Landlord and Tenant (Covenants) Act 1995 was introduced to lessen the burden on original tenants and their guarantors once the leasehold interest has been assigned to a third party.

The Act releases a tenant from covenants in a lease entered in to on or after 1 January 1996 upon assignment but does not preclude him from entering in to an authorised guarantee agreement (an “AGA”) with the landlord with respect to the assignee.  The question that arose in the case of Good Harvest Partnership LLP -v- Centaur Services Limited [2010] EWHC 330 (Ch) was where this left the tenant’s guarantor.

Looking at the wording of the Act, Mr Justice Newey said he concluded that the Act “was meant to ensure that any obligations undertaken by a person as guarantor for a tenant should come to an end on the assignment of the lease”.  However, he did not think it clear whether the Act permits a guarantor to sub-guarantee a tenant’s obligations under an AGA.  He said the Act “is plainly designed to impose restrictions on freedom of contract.  The question is how far those restrictions go.”  Nevertheless, he concluded that if a landlord were able to call on the tenant’s guarantor to give a guarantee for an assignee it would drive “the proverbial “coach and horse” through the legislation”.  Therefore, despite the wording of the lease, which required the tenant and its guarantor to enter into an AGA upon any assignment, he stated that the landlord was unable to pursue the tenant’s guarantor after the tenant’s assignment of its leasehold interest.

Whilst on the question of the 1995 Act, it is worth recalling that in relation to any lease (whether granted before or after 1 January 1996), a landlord can not recover any “fixed” sums due under the tenancy from a former tenant or guarantor unless a notice (a “s17 notice”) has been served within 6 months of the date when the sum fell due.

Wish to hear more?  Why not contact Hatherleigh Training?

Commonly, a tenant fails to yield up property at the lease end in a physical state which accords with its repairing covenant.  This happened in the case of Van Dal Footwear Ltd v Ryman Ltd [2009] EWCA Civ 1478.  The dispute concerned the landlord’s level of damages.

The first instance judge assessed the cost of conducting the works under the tenant’s covenant at £135,606.  He considered whether this was capped by the provisions of s18(1) Landlord and Tenant Act 1927.  The landlord’s damages shall not, said Mr Justice Lewison sitting in the Court of Appeal, “exceed the amount, if any, by which the value of the reversion whether immediate or not, in the premises is diminished, owing to the breach of [the tenant’s] covenant or agreement”.  He held the judge had been correct when he said “The diminiution in value is assessed by assuming an outright sale of landlord’s interests in the property on the term date in the open market, on the basis that the Defendant had done all the work which the tenant ought to have done and on the basis of its actual state and condition.  The difference between these two values is the diminution in value caused by the breaches.”  On the advice of experts, the judge found that the value of the building in repair would have been £1,068,838 and that the value of the building in its actual condition would have been £950,000, a difference of £118,838.

However, the experts also agreed that for the property to sell on the date the lease expired, it would have been necessary to have marketed it for six months.  During that hypothetical marketing period, argued the tenant, it would have offered to take a new lease to the prospective purchaser (as it had in fact unsuccessfully done to the landlord prior to the lease end).  The judge agreed and found that the hypothetical purchaser would have accepted the offer and consequentially would have increased its bid by 7.4% giving a value of £1,020,300 - leaving an assessment of damages of £48,538.  Mr Justice Lewison said the judge was wrong and “what the judge was required to do was to value the bundle of rights that the landlord actually had on the valuation date”.  The judge, he said, had “mis-identified the subject of the valuation”.

If you wish to hear more about dilapidations, why not speak to Hatherleigh Training?

Interpretation of deeds of grant entered in to some time ago can often be problematic.  One’s task, and if necessary, that of the courts, is to establish the intention of the parties to the original documents ascertained from the words used read in the light of the background circumstances which would have been known to the parties.  So held Lord Justice Rimer in the Court of Appeal case Davill v Pull and Sanderson [2009] EWCA Civ 1309.

The case concerned eight cottages previously sold with a coalhouse, earth closet and piece of garden ground.  Additionally, each purchaser, heirs and assigns had the right to use “for all reasonable and usual purposes” such part of a track as was necessary to give access to and from the garden ground.  Mr Davill subsequently obtained planning permission to build a house on three of the garden plots.  In order to access the plots for the necessary construction works, he intended to use the track.  Neighbours objected asserting that if the houses were built, the track could not lawfully be used for access by their occupiers and visitors.

Lord Justice Rimer found (and the other judges agreed) that the conveyances did not restrict use of the plots to garden purposes nor did the easement over the track state it could only be used in connection with the use of the plots as garden land.  Use “for all reasonable and usual purposes” meant what it said and was not linked to nor limited by the use of the plots as gardens.  The easement over the track could therefore be used lawfully for the purposes of building houses and their occupation when built.

If you wish to hear more about easements, do contact Hatherleigh Training.

Whilst considering persons being “on the right track”, Hatherleigh Training is attending MIPIM 2010 to be held in Cannes in March.  If you wish to meet with Vivien King at the event, please do contact her.

Whether one calls them trespassers, squatters or travellers and whether one believes or not that more areas should be identified for their occupation, the problems caused by persons entering property for the purpose of establishing a home which they do not own or have any legal right to occpy remain the same.  They can cause distress, annoyance and unwanted hassle and loss to the person(s) entitled to occupy the premises and can involve either the police or the civil courts in the often long drawn out affair of having the occupiers evicted.

Whilst the scenario is not new, Lady Hale identified two aspects to come before the new Supreme Court: “First can the court grant a possession order in respect of land, no part of which is yet occupied by the defendant, because of the fear that she will do so if ejected from land which she currently does occupy?  Second, should the court grant an injunction against that feared trespass?”  (Secretary of State for Environment, Food an Rural Affairs v Meier and others [2009] UKSC 11.)

The Supreme Court held the courts could not grant an order for possession of land not yet occupied.  However, it could grant an injunction to restrain further occupation.  The Supreme Court shied away from saying how such an injunction could be enforced particularly where trespassers included women with young children.  Lord Rodger, for instance, believed “At the very least, the matter is one for the Master of the Rolls and the Rules Council who have the leisure and facilities to consider the issues.”  As the now Master of the Rolls, Lord Neuberger, was amongst Lord Rodger’s fellow judges, we await what, if anything, he will say of this invitation.

If you wish to hear more, why not contact Hatherleigh Training?

The Carbon Reduction Commitment Energy Efficiency Scheme is due to commence in April 2010.  It aims to improve “large” organisations’ energy efficiency and to reduce carbon dioxide (CO2) emissions.  It is estimated that aound 20,000 public and private sector organisations will be required to participate to some degree or another.  Some will simply be required to disclose their electricity usage. Others (thought to be about 5,000 in number) must record and monitor their CO2 emissions and purchase equivalent allowances from the Government initially at a fixed price of £12 per tonne of CO2. Participating organisations can buy and sell allowances on the secondary market.

Participating organisations will include central Government departments, local authorities, water companies, retailers and banks.  Company groups will be treated as one entity.  An organisation qualifies for full participation if it has at least one half hourly meter (i.e. its total consumption is recorded by the energy supplier every half hour) and  its annual electricity consumption through all of its half hourly meters amounts to at least 6,000 MWh.  (An organisation with one or more half hourly meters but with total consumption of less than 6,000 MWh simply has to disclose its consumption.)  Any organisation which does not comply with its legal obligations will be subject to financial penalties.

The Government will issue an annual performance league table ranking organisations according to their energy efficiency. There is information about energy efficiency available to participating organisations from many sources including, for instance, the British Property Federation and the Department of Energy and Climate Change webside.   Or learn more from Hatherleigh Training.