It all turns on the facts of the case

In November 2016 we considered business rates.  We mentioned the awaited Supreme Court judgement in Newbigin v SJ & J Monk.  Published on 1 March ([2017] UKSC 14), the question before the court was in circumstances where premises are stripped out for refurbishment, at what point are they incapable of beneficial occupation and not liable for business rates?

Having accepted a surrender of a lease for a single office suite, the landlord completely stripped out the property with the intention of creating adaptable space either to be used for single occupancy or for three separate suites.  The building works included removal of all internal components excepting enclosures for lift and stairways leading to other floors.  Suspended ceilings, raised floors, masonry walls, partitioning, electrical, sanitary and drainage systems were all removed.  Whilst the works were conducted the landlord’s agents proposed a rateable value reduction for the premises from the previous £102,000 to £1.  The valuation officer refused and an appeal was lodged with the Valuation Tribunal.  The Tribunal held the premises were out of repair but assumed in reasonable repair pursuant to the Rating (Valuation) Act, 1999.  The Upper Tribunal did not agree - the works went beyond those for disrepair and reduced the rateable value to £1.  The Court of Appeal overturned the decision and the case came before the Supreme Court.

Their Lordships concluded the premises were undergoing reconstruction on the material day and that the Upper Tribunal was entitled to alter the rating list as it did (i.e. giving a rateable value of £1) to reflect the reality of the stripped out premises.

Whilst welcomed by all business rate payers, the decision is based on the very particular facts of the case and the works being conducted.  Care should be taken in applying the decision to other facts and circumstances.

Stopped by a great crested newt?

Stories of the great crested newt, a protected species under European and UK law, stopping developers in their tracks, abound.  Disturbance of or damage to newts and their habitat can only take place on the grant of a protected species European licence.  Granted on a site-by-site basis, it can take years to obtain one.  However, in presenting his department’s white paper on housing to the Commons on 7 February 2017, the Rt Hon Sajid Javid said house building will be speeded up and “we will tackle unnecessary delays caused by everything from planning conditions to great crested newts”.  This white paper relates to England alone.

Future protection of the great crested newt is to be conducted on a nationwide and not site-by-site basis and councils will be able to authorize development if outside new national protected areas, even if it affects newts, when granting planning permission.  Natural England stated in a recent press release that the project will remove “the need for expensive surveys prior to building works and individual licences to disturb newts if they are present.”

This is not, however, going to happen tomorrow.  Piloted in Woking, Surrey and envisaged as a three year programme, areas where the great crested newt is most prevalent will be surveyed, mapped and the areas linked across England.  Small, isolated colonies of newts may struggle to survive but if part of a large protected area, they can reportedly thrive.  Developers will be encouraged to develop elsewhere safe in the knowledge that their development will not be delayed by the potential existence of this creature.

Whether or not this proposal will assist development, only time will tell.

All Aboard!

The Equality Act 2010 imposes a duty on any service provider (providing a service to the public or a section of the public whether or not for a fee) to make reasonable adjustments to, inter alia, a provision, criterion or practice which puts a disabled person at a substantial disadvantage in comparison with persons who are not disabled.  In line with its duty, a bus company provided a space (’the space’) on buses for wheelchair users.  A sign read “Please give up this space if needed for a wheelchair user.”  A wheelchair user wished to board a bus but was asked by the driver to wait as the space was occupied by a woman passenger with a pushchair.  Upon being asked by the driver to move, the woman refused and the wheelchair user was left at the bus stop.  He issued proceedings against the bus company and the case proceeded to the Supreme Court (FirstGroup plc v Paulley [2017] UKSC 4).

The bus company’s policy at the time of the incident did not give wheelchairs priority over ‘buggies’.  This was later changed giving wheelchair users priority but the bus company made clear that a driver had no power to compel passengers to vacate the space.  Although conduct regulations authorise a driver to remove a passenger infringing regulations or request assistance from a police constable, the company’s policy was simply to request that the space be vacated if required.  The seven Supreme Court judges hearing the case felt this did not go far enough.  Although the judges could foresee difficulties and potential inconvenience to other passengers, to reasonably require and not simply request a passenger to move would, they felt, be sufficient.  Lady Hale said “With a proper system of notices, making the position plain, backed up with firm statements from the driver, everyone would know where they stood.  The culture would change.  Disruption and confrontation would be unlikely.”  It is hoped they are correct.

Overriding easements

We looked at rights to light two years ago in December 2014.  We still await the Government’s reaction to the Law Commissioners’ draft bill although the chances of MPs taking time with this issue in the present political climate are exceedingly unlikely.  In consequence, developers still face the difficulties presented by rights to light.  Some will have proposed developments redesigned to avoid breach of a neighbour’s rights, others will purchase those rights and a few will fight the matter out in the courts hoping the change in the Shelfer rules will assist them (see our May 2015 newsletter).

On occasions, however, the relevant local planning authority, wishing to see a development go ahead for planning purposes, will exercise their statutory right to override easements by acquiring or appropriating an interest in the property concerned.  Originally, this right was encapsulated in s237 Town and Country Planning Act, 1990.  However, this has now been rescinded and replaced by s203 Housing and Planning Act, 2016.  The sections are similarly worded and many commentators say differ little.  What the new section has done is ‘tidy up’ this law in relation to both local authorities and other statutory authorities.

Local authorities used s237 (and will now use s203) to differing degrees.  The City of London, for instance, will consider its use on a case by case basis and has used it in a few high profile cases e.g. to enable the development of the building now known as the Walkie Talkie building at 20 Fenchurch Street.  It appears, however, that neighbouring Tower Hamlets used the section for the first time in January 2014 to enable the City Point and Island Point development.

Some people have expressed concern that use of this statutory right might breach human rights (in that private rights are overridden by the acquiring local authority).  However, the right can only be exercised for planning purposes which might be said to be for everyone’s benefit.  Time will tell, no doubt.

Business Rates

Business rates are payable on most non-domestic properties.  The rateable values used for these properties in England and Wales have recently been reviewed.  Proposed new rateable values were published in draft by the Government on 30 September 2016 and these figues (based on April 2015 rental values) will form the basis of business rate demands from 1 April 2017.  Press coverage has reported that businesses in London will bear the brunt of the increase.  The Guardian states that, for instance, shops on the Capital’s Regent Street will face an 87% increase whereas those in Northern towns will ‘enjoy a drop of up to 56%’.  In Scotland, too, business rates are to be reviewed in 2017.  The anticipated review in Northern Ireland is yet to be announced.  The multipliers (poundage rate in Scotland) also used in business rate calculation will be reviewed, too.

In addition, an important court case relating to business rates has been heard in the Supreme Court although it is uncertain when judgement will be given.  In Newbegin v SJ & J Monk [2015] EWCA Civ 78 (citation for the appealed Court of Appeal judgement), the Court is to determine the physical state of premises before liability for rates is assumed.  The premises were stripped out for refurbishment.  The question is would the premises be capable of beneficial occupation and hence liable for rates?

Finally, some 57 cases were heard together early in 2016 by the Valuation Tribunal relating to whether or not Automated Teller Machines (ATMs), such as one finds in supermarkets, should be valued as a separate hereditament from its host store or premises for business rate purposes.  If separate, it was feared business rates payable on ATMs would be substantial.  In each case, the Tribunal found ATMs were to be classed as separate hereditaments.  It is understood that Sainsburys and others are appealing these decisions.

Watch this space for further news on these appeals.

As easy as it sounds?

A recent decision of Martin Rodger QC, Deputy President of the Upper Tribunal (Lands Chamber), has highlighted one reason why service charges have proven, over the years, to be so problematic.  The Leaseholders of the Foundling Court and anor v The London Borough of Camden and others [2016] UKUT 366 (LC) concerns substantial works conducted by the freehold owner of “a grade II listed complex of shops, flats, offices, car parks and other premises”.  The London Borough of Camden held a long lease of some residential parts of the Centre.  Pursuant to its lease, it was required to pay, through a service charge, costs incurred by the freehold owner.  In turn, Camden required leaseholders to contribute, again through a service charge, towards certain costs incurred by Camden.

If a landlord of residential premises intends to conduct works, the costs of which are recoverable from tenants pursuant to a service charge, the landlord has to give notice of its intentions to its tenants and to consult with them concerning the works before the works are conducted (see Landlord and Tenant Act 1985 and The Service Charge (Consultation Requirements) (England) Regulations 2003).  As a second stage of the consultation, the landlord must submit to its tenants estimates for carrying out the intended work giving at least 30 days’ notice enabling them to respond to the notices.  If the landlord fails to follow this procedure, it can only recover a maximum of £250 from each of its tenants towards the cost of the works conducted.  The landlord will suffer any shortfall.

The preliminary question before Martin Rodger QC was whether the obligation to consult with the leasehold owners of the flats was imposed on the freehold owner or upon Camden.  He held the statutory obligation to consult fell on the freehold owner as it was conducting the works.  He recognised the practical difficulties of so doing but expressed the view that it could obtain the information required from its tenant (in this case Camden Council) which would co-operate as it would be it (and not the freehold owner) that suffered any shortfall in the service charge.  This sounds easy but it needs little imagination to anticipate the problems that could arise.

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

‘Without Prejudice’ rules ok?

In October 2014 we looked at the much used but sadly oft misused words ‘without prejudice’ in the light of the High Court decision in Avonwick Holdings Ltd v Webinvest Ltd and another [2014] EWHC 3322 (Ch).  With great speed an appeal was taken to and heard by the Court of Appeal.  Judgement was given by Lord Justice Lewison.  He held “There are two bases for the operation of the without prejudice rule.  The first rests on public policy and that policy is to encourage people to settle their differences.  However, in order for that head of public policy to be engaged there must be a dispute. … The other basis for the rule is contractual, that is by contract the parties may extend the usual ambit of the without prejudice rule.”

Lord Justice Lewison considered the case and determined that “On the facts of this case, in my judment the judge was right to say there was no dispute at the time the communications took place” and, in relation to the second basis for operating the without prejudice rule, “Freedom of contact is a basic principle of English law.  If A and B agree for valuable consideration that their communications will not be used in civil proceedings in court, I find it difficult to see why, as a matter of principle, the court should not uphold their agreement.”  However, he continued “This must however be done by agreement.  One person cannot unilaterally impose a rule on another.”  He found there was no agreement.  Hence, the High Court decision was upheld and the appeal dismissed.

The Court of Appeal in Gresham Pension Trustees v Cammack [2016] EWCA Civ 655 re-confirms that without prejudice privilege cannot be waived unilaterally.  Following late settlement of a dispure, the parties agreed costs should be decided by the trial judge.  Counsel for the claimant showed the judge an undisclosed attendance note referring to settlement discussions between counsel for each party.  As a result, the judge ordered the defendant to pay the claimant’s costs from the discussion date.  However, the Court of Appeal considered it to be “plain beyond any argument” that the recorded conversations were ‘without prejudice’.  The defendant had not consented to waive privilege.  The note was, therefore, wrongly put before the judge and hence use of his discretion re costs was flawed.

Use of the words ‘without prejudice’ must be handled with care and with full knowledge of the implications.  If you wish to hear more, why not contact Hatherleigh Training?

Planning for potential fireworks in England

Royal assent to the much anticipated Housing and Planning Bill was given on 12 May 2016.  The Act, parts only of which are presently in force, applies in England.  Other parts of the United Kingdom have their own planning legislation and regulations.

The introductory text to this Act states it is “An Act to make provision about housing, estate agents, rentcharges, planning and compulsory purchase.”  There is much hidden behind these words in the nine Parts of the Act.  For instance, Part 1 deals with new homes in England regulating both starter homes and self-build and custom housebuilding.  Part 2 introduces the concept of rogue landlords and property agents leading to potential banning orders preventing those convicted from letting housing in England or engaging in letting agency or property management work.  Their names will appear on a database administered by local housing authorities.

Part 4 of the Act deals with various aspects of social housing including a duty upon English housing authorities to sell higher value housing which has become vacant, the introduction of regulations imposing rental levels which equate to tenant income levels and the phasing out of tenancies for life.

It is perhaps Part 6 of the Act dealing with neighbourhood planning, which will have the greatest impact on the English planning system.  Introduced pursuant to previous legislation, the government is now to have the power to impose a long-stop date for its improvisation by local planning authorieis (’lpa’) with intervention powers where the relevant lpa fails to act.  Additionally, development orders may grant planning in principle (already named ‘pips’) for housing-led development of land in England and the government may introduce regulations imposing restrictions and conditions on the enforceability of planning obligations with regard to affordable housing.  Finally, Part 6 enables the government to provide for temporary arrangements to “test the practicality and desirability of competition (but not determining) of applications to do with planning.”

Watch out for the fireworks which are sure to be released as this Act is brought into force.

Don’t leave your chattels behind!

In September 2011 we looked at what amounted to a fixture as opposed to a chattel.  The issue arose again in the judgement of His Honour Judge Saffman delivered this month in the High Court in Riverside Park Limited v NHS Property Services Ltd [2016] EWHC 1313 (Ch).  A useful case as it reviews the law re vacant possession and construction of documents but the judge underlines that “no test is definitive and it is a question of fact whether an article is a chattel or a fixture“.

The case turned on the age old problem of a break clause exercisable by the tenant “Provided That any notice served by the Tenant shall only be effective to determine this Lease if the Tenant gives vacant possession of the Premises to the Landlord on or before the Break Date“.  The tenant purported to determine the lease but left in the Premises on the break date a large amount of partitioning, kitchen units, floor coverings, window blinds, intruder alarm and water stand pipes.  In order to give vacant possession the tenant should yield up the Premises empty of people and of chattels if the presence of chattels would prevent or interfere with the enjoyment of the right of possession or a substantial part of the property.

A single joint expert was instructed to report on what items remained at the Premises and the manner in which they were attached or annexed to it.  Taking, for example, the partitioning, it sat on top of the raised floor and extended to the underside of the suspended ceiling.  It was not fixed to the structure of the Premises and the judge found it to be a chattel which resulted in a series of small offices which evidence showed was not what prospective tenants generally looked for.  In consequence the judge found the partitioning did not afford a lasting improvement to the Premises, would affect the Landlord’s ability to re-let the premises and hence interfered with the enjoyment of the right of possession.  Recognising his decision as harsh he adopted Lewison J’s words in a previously reported case i.e. “there is no room for general considerations of fairness or conduct” in an assessment as to whether the conditions attached to a break clause have been met.

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

You can’t park there!

In February 2015 we reported the case of fish and chip shop customers acquiring, for the shop owners’ benefit, easements by prescription namely a pedestrian right of way and parking on land owned by the neighbouring Conservative Club.  On appeal the Upper Tribunal upheld the rights of access but Judge Purle held, in the light of notices stating parking was for Club patrons only, there was no right to park.  However, he gave leave to appeal (Bennett v Winterburn [2015] UKUT 59 (TCC)).

The appeal was dismissed by the Court of Appeal ([2016] EWCA Civ 482).  Giving judgement, Lord Justice David Richards stated the existence of notices sufficient to prevent rights to park arising but did consider the steps an owner of land should take to prevent others using the land without permission and acquiring rights over it.  He said

“The situation which has arisen in the present case is commonplace.  Many millions of people in this country own property.  Most people do not seek confrontation, whether orally or in writing, and in many cases they may be concerned or even frightened of doing so.  Most people do not have the means to bring legal proceedings.  There is a social cost to confrontation and, unless absolutely necessary, the law of property should not require confrontation in order for people to retain and defend what is theirs.  The erection and maintenance of an appropriate sign is a peaceful and inexpensive means of making clear that property is private and not to be used by others.  I do not see why those who choose to ignore such signs should thereby be entitled to obtain legal rights over the land.”

The decision is suprising to some who support Mr Jonathan Gaunt QC’s view that the club should have done more in the light of its notice being ignored “by the simple expedient of erecting a chain across the entrance to the car park, or objecting orally, or writing letters of objection, or threatening or commencing legal proceedings”.  We wait to see if the shop owners appeal to the Supreme Court.

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

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