Monthly Archives: February 2014

Claimant had to show Consultant’s construction advice would have changed outcome

It’s not enough to show that a Consultant was negligent in respect of advice given or not given. It is also necessary to show on the balance of probability that the breach of duty caused the loss or damage and that the loss or damage was not too remote.

In 199 Knightsbridge Development Ltd -v-WSP UK Ltd (2014) pressure surges in a high rise block of high class flats had fractured cold water pipework causing serious damage.

WSP were the Consultants on the new cold water system.

Negligence

By mid 2004, at the latest, WSP should have appreciated that water could travel up the risers at velocities considerably more than 3 metres per second even if only one pump was working. They should also have realised that the water would be entering a partial vacuum, causing unusually high pressure surges that could damage pipework and fittings.

WSP should have enquired about this with the pump manufacturers before they commissioned a booster set in July 2004, and asked what could be done to prevent the failure that had arisen in the foreseeable circumstances which had occurred.

They would probably have been told to arrange for there to be a slow fill procedure. They would also have been told that there was a new type of valve called an anti-surge valve which could protect the pipework in the event of excessive surges in pressure, but that testing of this valve was still in progress and was unlikely to be completed possibly well into the following year.

The damage which occurred on 15 September 2005 could only have been prevented had those valves been installed.

Causation

Even if WSP had arranged for there to be a slow fill procedure, and even if this procedure had been clearly and obviously displayed in the plant room, the Claimant had failed to prove on the balance of probability that it would have been adopted by those who were in the plant room on 15 September 2005 who decided to start the pumps again.

The manufacturer did not, until about July 2005, tell WSP that the anti surge valve testing had been successfully completed and that those valves were suitable for high rise buildings like 199 Knightsbridge.

By the end of July 2005 WSP should have advised the Claimant to do this (but WSP could not reasonably have been expected to give such advice before the end of July 2005).

No evidence had been provided that such advice, if given, would have been accepted by the Claimant. If anything, the evidence demonstrated the opposite.

Also, even if the Claimant had decided to accept the advice to install anti-surge valves at the top of each riser, it was unlikely that they would have been installed earlier enough to prevent the failures that happened on 15 September 2005.

So, any failure by WSP to give such advice did not cause either of those failures.

This blog has been posted out of general interest. It does not replace the need to get proper legal advice in individual cases.

The Game is Up for Insolvency Practitioners -v- Landlords

If rent is payable in arrear and the tenant company goes into administration or liquidation the administrator or liquidator must pay the rent as an expense of the liquidation or administration for any period during which he retains possession of the property for the insolvency work. If appropriate that liability will be apportioned by time so as to reflect, the amount of the benefit.

Where in contrast the rent is payable in advance , its been a vexed question whether part of an instalment of rent payable in advance can be treated as an administrators’ expense payable by administrators in the event of insolvency.

Two first instance decisions decided that it could not.

In Goldacre (Offices) Ltd v Nortel Networks UK Ltd [2009] it was decided that if a quarter’s rent (payable in advance) fell due during a period in which administrators kept the property for the purposes of the administration, the whole of the quarter’s rent was payable as an administration expense even if the administrators gave up occupation later in the same quarter.

In Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd [2012] it was decided that where a quarter’s rent payable in advance fell due before administration none of it was payable as an administration expense even if the administrators kept possession for the administration. The rent was merely provable as a debt in the administration.

As a result of those decisions it had become more common for companies to enter administration on the day after a quarter day, so avoiding the administrators’ liability to pay full rent even if they kept possession of the leasehold property.

So where the business was sold quickly to a phoenix company that company could effectively trade for the first three months with no rent having to be paid to the landlord.

It might be thought that if landlords managed to establish that part of an instalment of rent payable in advance could be treated as an administration expense, then the same principle should work both ways. On that basis, if rent payable in advance fell due during the period when the administrators kept possession, it would also have to be apportioned in favour of the landlord to the extent that they remained in possession during the quarter.

In Pillar Denton Ltd & Ors v Jervis & Ors [2014] one of the Game group of companies (“GSGL”) was the tenant of many hundreds of leasehold retail properties from which the group traded. On 25 March 2012 approximately £10 million of rent became due under the various leases. It went unpaid. The group went into administration on the next day.

Some stores were closed down immediately, but others stores continued trading continued in other stores and they were quickly sold to Game Retail Ltd. Approximately £3 million of the March rent remained outstanding in respect of those stores.

The Court of Appeal decided that rent payable in advance should be dealt with in the same way as rent payable in arrear so that the administrators must pay rent at the rate payable under the leases for the duration of their keeping possession of the let property for the benefit of the winding up or administration. They said that the rent is to be treated as accruing from day to day.

Those payments would be payable as expenses of the winding up or administration.

The extent of the period would be a question of fact in each case and not just decided according to which rent days occur before, during or after that period.

This blog has been posted out of general interest and it does not remove the need to get proper legal advice in individual cases.

Planning Inspector’s Housing Decision Upheld in Face of Conflicting Emerging Core Strategy

Barrow Upon Soar Parish Council v Secretary of State for Communities & Local Government & Ors [2014] concerned in part the weight to be given to the emerging Core Strategy.

In that case it had said that to prevent deterioration in the quality of life new housing in settlements such as Barrow upon Soar should not exceed 200 houses.

However under the current application alone the Planning Inspector had granted permission for 300 in Barrow upon Soar.

It was argued that this should open the Core Strategy up for further representations.

The Court refused this saying that Rule 17 (5) of the Town and Country Planning Inquiries Procedure) (England) Rules 2000 (2000 No.1624) required the Secretary of State to notify those persons who were entitled to appear at the inquiry and receive further representations or, if asked to do so, consider reopening the inquiry if minded to disagree with the Inspector on the relevant issues.

Here the Secretary of State did not disagree with the inspector’s recommendation. Thus the Rules did not oblige the Secretary of State to seek further representations let alone a reopening of the inquiry.

In Paragraph 5 of the Inspector’s decision letter, this was said:-

“The Secretary of State ….. has also had regard to the fact that the Council is progressing work on its Core Strategy. However, as that is at an early stage in its preparation, he gives it little weight.”

It follows that Ground for Judicial Review also failed.

This blog is posted out of general interest. It does not remove the need to get proper legal advice in individual cases.

Local Authority Liable to Owners for Bad Construction Work of Its Building Contractor

Where a local authority commissions work from a building contractor to properties it does not own and its defective those owners are unlikely to be able to sue that contractor for breach of contract or in tort as the relevant relationship is between the Council and the contractor. Unless the owners benefit from collateral warranbies or rights under the Contracts (Rights of Third Parties) Act 1999.

In Cometson & Anor v Merthyr Tydfil County Borough Council [2014] the Claimants were, the freehold owners of a property at 22 Aberfan Road, Aberfan (“the property”).

Initial procedings against the contractor as second defendant for tort were unsurprisingly unsuccessful and they were claiming damages against Merthyr Tydfil County Borough Council (“the Council”) as first defendant, for breaches of a contract.

At the first hearing the court found “the Council’s obligations:

i) did not consist of entering into a building contract as agent for the Claimants;

ii) did not involve the Council contracting with the Claimants that the Council would procure the doing of the works to the Claimants’ property so as to be responsible for the quality and progress of those works;

iii) did involve the Council contracting with the Claimants to arrange for the carrying out of the Scheme at any rate in relation to the works to be done to the Claimants’ property.”

The Judge considered the effect of sections 12 to 14 of the Supply of Goods and Services Act 1982 and concluded that the contract between the Claimants and the Council obliged the Council to provide the service of arranging the relevant works and that it was an implied term of that contract that the Council would carry out that service with reasonable skill and care and within a reasonable time.

In connection with the Council’s obligation as being an obligation to “arrange” or to “organise” the works. There was an obvious need for the Council to be involved with the arrangement of the works. The works involved in the scheme were being done on a number of properties that the Council did not own. It would be necessary for the Council to plan how the work should be approached.

The service to be provided by the Council to the Claimants included the “supervision” of the contractor.

The Council was found to be in breach of its duties in relation to many of the works. To the extent that these were wider than the Council had previously admitted to there had been no failure by Mr Cometson to mitigate his loss and he recovered damages. In respect of some that the Council had offered to repair Mr Cometson was unable to recover damages as he had declined to afford the Council access so failing to mitigate his loss.

In relation to most of the breaches the Council was found to have its own “back to back” claim against the contractor.

This blog has been posted out of general interest. It does not remove the need to get proper legal advice in individual cases.

Signs Prevented Town and Village Green Use Qualifying for Registration as Of Right

Section 15(3) of the of the Commons Act 2006 effectively provides that if the use of land “as of right” had ceased before the commencement of the two-year period prior to the application being made, there can be no registration of that land as a town and village green under that application.

Burrows (on behalf of Wraysbury Action Group), R (on the application of) v The Royal Borough of Windsor and Maidenhead & Anor [2014] challenged the decision of the Royal Borough of Windsor and Maidenhead (“the Local Authority”) to refuse registration of land called Thamesfield in Wraysbury as a town or village green under section 15 of the Commons Act 2006.

A planning inspector “conclude[d] that although Thamesfield ha[d] been used for lawful sports and pastimes by significant number of the local people for more than twenty years, such use [had] bec[o]me contentious and ceased to be use “as of right” in July 2007 and that the application fail[ed] because it was not made within two years of that cessation.”

The wording of the signs erected at some, but not all, entrances to the land in early July 2007 was:

‘PRIVATE PROPERTY

Access to this land is by permission of the owners’

The local inhabitants argued that they were ambiguous as to whether the signs are prohibitory or permissive signs. They could mean that the land was privately owned, but the owner gave general permission to all and sundry to access the field. Or, it could mean that no one was entitled to access Thamesfield without the permission of the landowners.

This case involved a permission application, to establish whether the residents had an arguable case for judicial review of the earlier decision to refuse registration so the Judge did not necessarily follow through argument in the same detail that would have been necessary if he had been dealing with this on a substantive basis and, therefore said his conclusions should not be seen (or cited) as in any way authoritative.

The crux of the case was whether the effect of the words was prohibitory or permissive seen in the full context in which they were used. Only in the former case could the sign operate in favour of the landowner.

To an ordinary reasonable reader the words used on the signs could only convey the message that there was no right to use the land. Although they were not at every entrance they were sufficient to give that general impression.

“As of right” does not mean “of right”. Its meaning is closer to “as if of right”…. So paradoxically a trespasser (provided he acts peaceably and openly) may acquire rights by prescription in spite of, or reinforced by acting in defiance of, a “Keep Out” sign, whereas a licensee, who enters the land with the owner’s consent, will probably not acquire such rights.

This Judge in this case did not follow that argument through to the same conclusion and appears to have taken the narrower approach that the presence of signs whether or not backed up by any enforcement action somewho prevented the people who defied them acting “as if they had the right” to be there for recreation.

This blog has been posted out of general interest and it does not remove the need to get proper legal advice in individual cases.

Neither Improper nor Unduly Influential for Project Councillor to have Addressed Planning Committee

Councillors are often business people. Given the pressure on authorities to release value they may want to deploy their entrepreneurial skills in projects that they may become very passionate about. However the following case indicates the need to keep within a fine line.

In Bishop’s Stortford Civic Federation v East Hertfordshire District Council & Ors [2014] a Councillor had attended a planning committee meeting and spoken strongly in favour of a mixed use regeneration project in another ward than his. The development involved some Council land and he had been involved in the negotiations with the developer.

The decision to grant planning consent was subjected to a judicial review application suggesting that he had unduly influenced the decision and misled the committee as to the implications of a previous development agreement and so the decision had been based on an immaterial consideration.

The High Court ruled that the planning committee was built up of experienced councillors well briefed by the planning office and trained in the need to base their decisions on relevant planning conditions.

There had been nothing unlawful in the Councillor addressing the planning committee if it allowed him and there had been no evidence that he had improperly influenced the decision of the committee to grant the permission.

In passing the High Court Judge deprecated the idea that it was the court’s role to unduly interfere in the workings of democratically elected Councillors with a public mandate and knowledge of their communities.

This blog has been posted out of general interest. It does not remove the need for proper legal advice in individual cases.

Foundation of prior Estate Company Prevented Separate Right to Manage Companies of Apartment Blocks within Estate

There are limitations on the right to set up “right to manage” (“RTM”) companies for residential housing blocks.

Section 73)4) of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) says:

“(4) And a company is not a RTM company in relation to premises if another company is already a RTM company in relation to the premises or to any premises containing or contained in the premises.”

The mischief which the statute tries to avoid is that of different RTM companies claiming overlapping responsibility for the same premises.

In Fencott Ltd v Lyttelton Court RTM Company Ltd [2014] Lyttelton Court comprised three blocks of long leasehold flats with communal gardens around them.

Each of the respondents claimed to be an RTM company incorporated in accordance with the 2002 Act to acquire the right to manage one of those three blocks. The fourth company Lyttelton Court RTM Company Ltd, (“the Estate Company”) also claimed to be an RTM Company but it was an older company whose objects were to acquire the right to manage the Lyttelton Court estate as a whole, including all three blocks.

The appellant, Fencott Ltd, was the owner of the reversionary head-leasehold title to Lyttelton Court, and was the respondent to each of the four RTM applications.

Each respondent served a claim notice in relation to its particular one of the Lyttelton Court blocks while the Estate Company served its own single claim notice claiming the right to manage Lyttelton Court as a whole.

Applying the recent Upper Tribunal decision in Ninety Broomfield Road the tribunal could see no objection to an RTM company claiming to manage more than one self contained block in a single claim notice or claiming the right to manage an entire estate.

Common sense suggested that in those circumstances a single RTM company should manage the shared facilities. If the tenants did not want it they did not need to back it and become members.

However the effect of Section 73(4) was that the tenants of an individual block would themselves be prevented from forming a single-block RTM company if an estate RTM company which included as one of its objects the acquisition of the right to manage their block had already been formed at Companies’ House.

If a company was formed whose objects claimed to be the right to manage, but whose real purpose was to frustrate others from acquiring the right to manage, “some route would be found, if necessary, to prevent it from frustrating the purpose of the 2002 Act” the Upper Tribunal said.

So the individual companies set up to manage the separate blocks found themselves prevented from becoming RTM companies for the blocks as the Estate Company had already been set up as an RTM for the Estate which included those blocks.

This blog has been posed out of general interest. It does not replace the need to get proper legal advice in individual cases.

Payee Entitled to Enforce Property Completion Against Insolvent and Only Then Collect from Escrow Account

Where a company contracts to sell property and then goes into administration

1. Is that contract enforceable against the administrators by specific performance so as to require the property to be transferred?

2. Is the other party entitled to payment of money held in escrow by solicitors in connection with the sale?

In Bristol Alliance Nominee No 1 Ltd & Ors v Bennett & Ors [2013] a company had contracted with the company’s landlords to surrender the company’s leasehold premises in Bristol and Leicester.

As the company had since the agreements gone into administration, no such proceedings could be brought without either the administrators’ consent (which had been refused) or the court’s permission (paragraph 43(6) of Schedule B1 of the Insolvency 1986).

The Landlord and the administrators later agreed a surrender but on terms that were expressly without prejudice to the question as to the beneficial entitlement to the reverse premium of £210,000 payable to the Landlord which the company had paid into an escrow, i.e. whether the solicitors had pay it to the Landlord or back to the administrators as an asset of the company.

The Landlords unsuccessfully sought the administrators’ consent to the issue of proceedings against the company for specific performance of the two surrender agreements.

The present proceedings arose from the administrators seeking the court’s directions in relation to both surrender agreements.

The Court held that the Landlord’s only right to the escrow money was as part of the price for the surrender.

That money was therefore only payable to the Landlord against the transfer of the property upon completion. Unless and until the surrender agreement was completed (whether under an order for specific performance or otherwise), the Landlord had acquired no right to the payment.

Faced with the administrators’ refusal to complete the surrender, the Landlord’s contractual rights were either (i) to serve notice to complete and then treat further refusal to complete as a repudiation of the agreement and to accept it, so bringing the agreement to an end; or (ii) to do as it had and seek permission to sue for specific performance of the agreement.

Alternative (i) would:

1. probably have allowed the Landlord to forfeit any deposit paid. Though in this case there was no deposit and the escrow money had not been paid as a deposit either; and

2. claim damages for its loss for breach of contract, for which it would have to prove in the company’s insolvency.

But would not have allowed the Landlord to claim the escrow money, since upon its accepting the repudiation would have meant that the price would no longer be payable and the event on which the Landlord’s entitlement to the escrow money was predicated could not happen.

If, however, the Landlord was able to sue for, and obtain an order for, specific performance, then on completion of the transfer under that order, it would be entitled to the escrow money.

That is because the completion of that transfer was the event that would trigger its entitlement to the escrow money.

Prior to the administration, the Landlord had a right, to give appropriate notice and compel the company to complete the surrender. There could have been no good reason for the court to refuse to order this. The company’s entry into administration cannot have materially changed circumstances.

The court cited In re Bastable, Ex parte The Trustee [1901] where a trustee in bankruptcy unsuccessfully sought disclaim a property sale agreement and to resist specific performance of the property transfer.

They cited Lord Justice Collins “in an English bankruptcy, the trustee stands exactly in the same position as the bankrupt himself stands in, and therefore his trustee is bound to perform the contract in exactly the same way as he himself was bound to perform it.”

The court said principle underlying Bastable’s case shows that the Landlord remained as much entitled to an order for specific performance as it had before.

Had the court refused an order for specific performance it would have made it possible for the company’s contingent interest in the money to be realised.

However there was no basis for such refusal. To do so would unjustifiably promote the interests of the company’s creditors over those of the Landlord.

The order of specific performance and completion of the surrender would entitle the Landlord to the escrow money. It would not thereby denude any part of the company’s assets distributable to its creditors because the escrow money was held and dealt with by the solicitor-stakeholder, outside the company’s estate, pursuant to, what was effectively, a tripartite contract between the Landlord, the Company and that stakeholder.

The Court of Appeal therefore ordered specific performance of both the Bristol and the Leicester agreements.

This blog has been posted as a matter of general interest. It does not replace the need to get proper legal advice in individual cases.

Courts would not Rectify or Re-Interpret Lease Wording to Address Unanticipated Circumstances

Where parties do not anticipate future circumstances in a contract the court will not intervene to rewrite it under the guise of “rectification” or “interpretation”.

Blueco Ltd v BWAT Retail Nominee & Ors [2014] concerned the financial distribution of rents from Bluewater Shopping Centre.

In 1996, the intended initial structure of the Centre, comprised (1) a ground lease by HC12F01351 Blueco Limited (“Blueco”), as freeholder, to various banks (“the Ground Lease”); (2) a headlease by the banks to Blueco (“the Headlease”); (3) a lease by Blueco to Prudential Assurance (“the PAC Lease”); (4) a lease by Prudential to Blueco (“the Management Lease”); and (5) occupational leases by Blueco to tenants of the retail shop units.

Under this structure Blueco was to collect rents from the occupying tenants.

After deductions for the expenses of the upkeep and management of Bluewater, the net rents were split between Blueco, Prudential and the banks as they were either held or passed on up the chain of leases.

The agreed form of the Management Lease attached to the 1996 documentation provided for 15 per cent of the net rents to be paid (along with other sums) by way of rent to Prudential.

Under the Tenth Schedule to the agreed Management Lease (“the Tenth Schedule”) Prudential had the right to boost its investment in certain circumstances by paying a lump sum (calculated per a prescribed formula) to obtain a further 15 per cent of the new rents from Blueco (“the pre-emption”).

That right was conditional on Blueco serving a notice in the circumstances laid down in paragraph 2 of the Tenth Schedule.

The Finance Act 1997 changed the tax treatment of finance lease structures in a way that harmed Blueco.

There followed a restructuring whose effect was to greatly reduce the Banks entitlement to net rents under the chain of leases. That released 55 per cent of future net rents, previously payable to the banks or in other ways not available, henceforth for disposal by Blueco under that structure.

Nevertheless before and after 1998 both Blueco and Prudential intended that Prudential’s right to obtain the additional 15 per cent of net rents should remain conditional and not unconditional.

By abandoning its earlier claim to rectification of the lease structures, Prudential accepted the first instance Judge’s factual and legal findings on that issue.

So on appeal Prudential sought to argue that that Judge had failed to apply the objective analysis for common mistake rectification laid down in Lord Hoffmann’s speech (and endorsed by others of his colleagues) in Chartbrook Ltd v Persimmon Homes Ltd [2009] and, that, even if that Judge had applied the objective test for mutual mistake, that Judge had taken into account facts inadmissible when a contract fell to be interpreted.

The court dismissed as “not the most promising starting point” this apparent suggestion that the court should “interpret a contractual pre-emption provision in a way not actually intended by either party to it.”

From the objective standpoint Prudential were arguing that the commercial purpose of paragraph 2 of the Tenth Schedule was that if (as had happened due to the tax changes) by 30 September 2011 Blueco had become entitled to dispose of at least an additional 15 per cent of the net rents, it would then be obliged to offer that share to Prudential.

In short, if a further 15 per cent became available by whatever means, it was to be tantamount to the exercise of the conditions specified in paragraph 2 of the Tenth Schedule.

Even on an objective interpretation the court could see no justification for that conclusion which it equated to another way of re-writing rather than interpreting the Management Lease.

In fact the court found the meaning of the Tenth Schedule clear enough.

This blog has been posted out of general interest. It does not replace the need to get proper legal advice in individual cases.

Case illustrates the virtual impossibility of right of way abandonment by long disuse and/or obstruction

A recent Court of Appeal case illustrates the virtual impossibility of persuading a court that a right of way has been abandoned by long disuse and/or obstruction.

In Dwyer v The City of Westminster [2014] the respondent had a right of way over a passageway under a 1922 conveyance. The appellant, began to use the passageway as a place for storing his stalls and other equipment used for his market trading at the end of the 1960s, just after the appellant’s residential development (“the Island Site”) had been completed. He continued to do so until this dispute arose in 2010, and obtained from the Land Registry registered possessory title to the passageway in 2007, based on adverse possession.

Throughout his use of the passageway, the Edgware Road end of it was permanently obstructed, not just by the original wrought iron gates, but also by corrugated iron sheets on the inside, and on the inside by brickwork, two courses high, at ground level. From 2010 there was also wooden shuttering outside of it. At the other end, connecting with the service road, there were doors which the appellant kept locked, comprising a wood framing with corrugated iron sheeting outside it.

Since the passageway was effectively covered by the continuation of the Edgware Road terrace at first floor level, the blocking at one end and the gates at the other end of the passageway made it into an enclosed storage unit, through which no access between Edgware Road and the respondent’s Island Site had been obtained for forty years.

Nonetheless it would only involve modest time and expense for the passageway to be re-opened by the removal of those obstructions.

The respondent made no objection to the obstruction of the passageway from the end of the 1960s until 2010, because the access arrangements associated with the 1960s residential development of the Island Site rendered the Passageway effectively redundant.

The respondent now wished to redevelop the Island Site and, re-open the passageway.

The appellant refused to do on the ground that the right of way had been abandoned.

The Court of Appeal ruled that the right of way extended not merely to the land sold in 1922 as a whole, but to every part of it.

The fact that particular structures or residential units which existed on the benefiting land at the time of the grant might be demolished and replaced by others was irrelevant.

The trial judge was also wrong to conclude that there had been, or could be, a partial abandonment of a right of way, by reference to different classes of potential users of it (whether tenants, other occupiers or mere licensees).

This was very long non-use of the passageway as a right of way, for a period when neither the freehold owner of the benefiting land, nor any such person using any part of that land with the freeholder’s consent had any use for the passageway as a right of way.

There was no acquiescence in any alteration of the passageway that a claim of abandonment of a right of way could be based on. The obstructions were all superficial changes, which could easily be removed. Nor would the respondent suffer any significant prejudice. It was mere non-use, insufficient as a basis for concluding that the right of way had been abandoned for all time. There had, therefore, been no abandonment at all.

This blog has been posted as a matter of general interest. It does not remove the need to get proper legal advice in individual cases.