Hubbard v Bank of Scotland Plc (t/a Birmingham Midshires)[2014] EWCA Civ 648

The Court of Appeal has confirmed that, assuming there are appropriate limitations in the retainer, a valuation surveyor only has to report apparent defects which could have a material effect on value.

This Court of Appeal has confirmed that there is a clear difference between the scope of duty of a surveyor carrying out a mortgage valuation and a surveyor undertaking a full structural survey. It confirmed that a surveyor providing a valuation survey was not obliged to recommend more extensive investigations because of any suspicion it might have, but only has to do so where there is sufficient evidence that the defect could affect the material value of the property.

The key to protecting the surveyor in this case was that his retainer “amply and clearly spelled out” the limitations of the valuation report i.e. that only those items which could materially affect the value would be highlighted. This case demonstrates that if surveyors are careful when preparing their retainers they will be afforded protection by the Court against claims.

 

Iceland Foods Limited v Castlebrook Holdings Limited [2014] PLSCS 95

A surprise decision by the County Court to order a tenant to take a longer term than it had asked for in a lease renewal claim.

Iceland (who had been in occupation of the site for over 20 years having taken over a 35 year lease from Tesco) made an application for a new lease with a term of 5 years. This was contested by the landlord who sought a 15 year term.

In the current market most tenants are pushing for a short term on renewal to allow as much flexibility as possible or, if this cannot be agreed, a longer term with rights to break.

The Court in this case considered the evidence of competitors in surrounding towns and areas and decided that a 10 year term, with no break, would strike a reasonable balance between the landlord and the tenant. The Judge also took into account the length of the previous lease and the fact that there was evidence that Iceland’s profits for that site were declining. Interestingly, the Court refused to grant a right to break at 5 years, confirming that to do so would effectively give the tenant a 5 year term.

Whilst this is a county court decision and, therefore, not binding, it is a decision that practitioners need to be alive to when advising their clients, particularly because the previous cases on this point have been firmly in the tenant’s favour.

 

Singh v Dhanji [2014] All ER (D) 135

A reminder that unreasonably withholding consent can prove very costly for landlords.

It is, of course, well known that, in the absence of an absolute prohibition against assignment, a landlord has a statutory duty not to unreasonably withhold consent. If a landlord fails to respond to a request for consent with a reasonable time, or provide its decision and any conditions within a reasonable time this can amount to unreasonably withholding consent.

In this particular case, the landlord had granted consent, but with conditions which required the tenant to remedy its breaches of covenant and then allow the landlord to inspect those, and to stop trespassing on the landlord’s adjoining land. The tenant objected to the conditions on the basis that they were unreasonable, and the Court agreed awarding the tenant £183,000 in damages along with £31,000 in interest.

It is the landlord who has to demonstrate that it has acted reasonably and this case is a helpful reminder that only serious breaches of covenant will be adequate justification to refuse consent.

 

Yeung v Potel & Summers [2014] EWCA Civ 481

A reminder that express easements are only as broad as the actual wording permits.

This case concerned an easement which gave a flat owner the right to enter onto an adjoining flat to carry out works to conduits. Unfortunately, the right granted and the right reserved in the respective leases were not identical and, therefore, whilst the owner of the flat had the right to lay new conduits, only a right of access for maintenance of conduits had been reserved.

The Court dismissed the argument that the right should be implied because, when the leases were read together, the intention of the parties were clear because the right was not one of necessity. It held that the right was limited to the express reservation and that no access was permitted for the purpose of laying new conduits.

This case reiterates the importance of not only ensuring that easements are drafted broadly enough to allow for future development, but that the rights reserved and the rights granted are consistent.

 

Friends Life Management Services Ltd v A & A Express Building Ltd [2014]  EWHC 1463 (Ch)

Clarification on how the service charge payable for the last year of a lease should be calculated

The key question in this case was whether the tenant was entitled to receive a credit for sums paid as service charge for future major works where the works were not carried out before the end of the term.

For three years the landlord had, as it was allowed to do, made provision in the service charge for future expenditure amounting to £875,000 for works which would cost in excess of £1m. The tenant had paid over 90% of those costs, but, on the termination of the tenant’s lease (by virtue of a break clause) the works had not commenced.

The Court determined that the final service charge year under the lease was the full calendar year, not the period ending on the termination of the lease. However, it held that the landlord could only recover as service charge costs incurred in that year and this could not include a charge for major expenditure in the following year. Once that total cost for the final service charge year had been calculated, it should have to be apportioned by reference to the tenant’s period of occupation. Finally, the tenant is also entitled to a refund of any costs it has paid in previous years for works which have not been carried out by the end of the final service charge year.

It is important to remember that the Court arrived at its decision based on the construction of a particular lease, however, this case is good authority to suggest that, where there is no express provision in a lease entitling landlords to keep monies acquired for future expenditure, such monies will have to be repaid to the tenant if they have not been spent before the end of the final service charge year. Landlords and their agents would be well advised to consider this when planning and programming major works, particularly if one tenant pays the lion’s share of the service charge.

 

R (on the application of Barkas) v North Yorkshire County Council and Scarborough Borough Council [2014]  UKSC 31

Welcome guidance from the Supreme Court on what “as of right” means in the context of town and village green cases.

The Supreme Court has confirmed that where a third party has the right to enter on to land, whether in private or public law, they are permitted to be there and, therefore, their use of the land cannot be as of right, it is, instead, by right. As such any application to register land as a town or village green where the public have a private or statutory right to use the land will fail.

This decision is welcome news for local authorities, but also provides clarity to a previously conflicted area of law as the Supreme Court have overturned the 2003 decision of the House of Lords in the case of Beresford where it was held that a statutory right to use the land did not prevent the publics’ use being as of right.

 

Daejan Properties v Griffin  [2014] UKUT 206 (LC)

Tenants may be able to escape payment of service charges where the charges would not have been incurred had the landlord not been historically in breach of its repairing covenants.

The Upper Tribunal has confirmed that where costs of repair could have been reduced or avoided, but for the landlord’s historic breach of its repairing obligations, this will be a valid defence to a claim for service charges. However, expert evidence will need to be provided to show that the costs were only incurred, or were increased by a specific amount as a direct result of the historic breach.

In this particular case, the Tribunal held that substantially the same work would have been required at any time and, therefore, no real savings would have been made if the works were carried out earlier.

This decision can only be seen as a fair one, but should act as a warning to landlords to ensure that when determining the timing for works, any delays will not result in increased costs in the future. Further, whilst this decision relates to residential property, there is no reason why similar reasoning could not be relied upon by commercial tenants.

For more information about any of these cases or for advice on a contentious property issue please contact Michael Clark