Monthly Archives: August 2014

Village Green used of right not as of right so registration thwarted

Registration of a town or village green under section 15(2)(a) of the Commons Act 2006 (“the 2006 Act”) depends on the acquiescence or toleration by the landowner of a significant number of inhabitants of any locality (or neighbourhood within in it) indulging in lawful sports and pastimes on his land over a 20 year period without having any right to do so, but as if they had i.e. “as of right”.

The legal meaning of “as of right” is the opposite of “by right”.

If a person uses privately owned land as if he has a right to do so but his use is not permitted by its owner, his use is “as of right”.

But, if his use has been permitted by the landowner, his use is rightful – it is “by right”.

It makes no difference to the right, the public has to use the land, whether it has been made available for public recreational use by an owning local authority, or under an arrangement which a non owning local authority has with the actual landowner.

During that arrangement, the landowner has permitted (or allowed the local authority to permit) the public to use the land for recreational purposes.

The local authority’s powers to permit that use may be explicit or implicit in the enactment under which the local authority makes the arrangements, and, the local authority making the land available for use for the recreational purposes is sufficient communication to the public of that permission (if communication is in fact an essential element).

During the subsistence of those arrangement neither the landowner nor the authority can assert that a member of the public using the land for those purposes is a trespasser.

Members of the public would not be using the land “as of right” i.e. merely with the tolerance, as opposed to explicit permission of, the landowner, such as to found a prescriptive right.

Instead, they would be using it “by right” for a purpose for which they had been invited to use it. In other words, use by the public would be with permission from the landowner (or from a person the landowner had authorised to give it) and “by right”.

In the recent Planning Court case of Naylor v Essex County Council [2014] the claimant challenged the respondent’s refusal to register the relevant land as town or village green based on the fact that the public’s use of it for lawful sports and pastimes had been “by right” during the 20 year period before the application for it’s registration was made, rather than being “as of right”.

The relevant land was owned by Silverbrook Estates Limited. But, except for some works in 1993, the land had been managed and maintained by the District Council as if it were an area of public open space or parkland available and open for all to use, at least from 1989-90 when it was included in a grounds maintenance contract let by the District Council.

The Planning Inspector had found it probable there had been a much longer term arrangement for it’s management and maintenance going back to before 1974. The most probable explanation was that the District Council had managed and controlled the land under sections 9 and 10 of the Open Spaces Act 1906 (“the 1906 Act”) or section 164 of the Public Health Act 1875.

So the Inspector had been entitled find that the use made of the land for lawful sports and pastimes had been “by right” (not “as of right”) during part of the 20 year period before the application for it’s registration was made.

This was based on fact that the relevant land had been made available by the District Council for such use by the public, with the agreement of the landowner, under the powers which that authority had vested in it by section 9 of the 1906 Act.

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

Mortgagee could enforce mortgage just to pressurise

If a lender is enforcing a mortgage it should do so to recover it’s debt. Usually this will be by selling or letting the property.

It cannot do so for a collateral purpose.

Most mortgages entitle a lender to recover, also, the costs it incurs in enforcing the mortgage.

In The Co-Operative Bank Plc v Phillips (2014) the bank had a legal charge which stood second to Barclays Bank’s first mortgages over the properties.

The Co-Operative Bank Plc (“Coop”) had no realistic chance, or therefore intention, of recovering the borrower’s indebtedness by selling or leasing the properties.

It withdrew the enforcement proceedings.

Mr Phillips claimed the bank had merely brought the proceedings to frighten family members into paying. Indeed his daughter had raised £50,000 to pay to the bank. He said this was an invalid collateral purpose entitling him to recoup his costs from the bank on the much more generous “indemnity basis”.

The High Court took a broader view. Whilst there was no prospect, or intention, of the bank recouping itself by a sale or letting of the properties, it was quite entitled to take proceedings to bring pressure on the family to pay money to the bank. The bank was merely seeking to get its money back, which was the whole purpose of mortgages. So Mr Phillips’ claim to indemnity costs failed.

Nevertheless, as there was no realistic prospect of a sale or letting, the legal costs the bank had caused to be incurred by enforcing the charge were not “properly incurred” as the legal charge’s cost recoupment clause had stipulated. This may seem strange to some, given the court’s earlier ruling that the proceedings were a legitimate tactic to enforce the legal charge’s purpose of getting the money back.

As such the bank was neither entitled to recoup it’s own legal outlay through the legal charge, nor was it entitled to recoup, through the legal charge, the legal costs the court had awarded Mr Phillips against the bank when the bank withdrew its proceedings against him.

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

8 hours late filing under CIS Scheme: Oversight not reasonable excuse

The current Construction Industry Scheme (“CIS”) was introduced by the Finance Act 2004 (“FA 2004”) with effect from 6 April 2007. The basic legislation was added to by the Income Tax (Construction Industry Scheme) Regulations 2005, SI 2005 No. 2045 (“The Income Tax (CIS) Regulations 2005”).

The Scheme provides for certain payments, made under construction contracts by a contractor to a subcontractor, to be made under deduction at source of income tax.

Subcontractors who are registered for gross payment may receive payment without deduction.

Section 61 FA 2004 requires a contractor to make deductions at a relevant percentage from payments made to those subcontractors who are not registered to be paid gross under Section 63 FA 2004.

Regulation 4 of The Income Tax (CIS) Regulations 2005 requires contractors to submit periodic returns. The regulations are made under Section 70 FA 2004.

Regulation 4(1) says that a return must be made to HM Revenue and Customs (“HMRC”) not later than 14 days after the end of every tax month. A tax month runs from the 6th of one month to the 5th of the next month. So a return has to be made by the 19th of each calendar month.

If the return is not received by the filing date, a penalty of £100 is payable in accordance with Paragraph 8 Schedule 55 Finance Act 2009 (“FA 2009”). If the return remains outstanding after a period of 12 months, beginning with the penalty date, a penalty is payable in accordance with Paragraph 11 Schedule 55 FA 2009. This is the higher of 5% of the payments which would have been due under the return or £300.

The onus of proof is on HMRC to show that the penalty was rightly imposed. If it does, the onus moves to the contractor to show that there was reasonable excuse for late filing of its CIS return.

The standard of proof is the ordinary civil test of the balance of probabilities.

‘Reasonable excuse’ is not defined in the legislation. All the circumstances are to be considered.

In the First-tier Tribunal (Tax) case of Viridian Energy Solutions Ltd v Revenue & Customs [2014]

The Appellant was required to file a Contractor Monthly return but did so a day late, however paying the amount due at the same time.

HMRC sent the Appellant a late filing penalty notice for £100.

The Appellant appealed against the penalty, saying the company was still in its infancy, with only two administration employees, who were new to tax administration, the return was filed only eight hours late, and the payment was made the same day. It had merely been an oversight, and the revenue wasn’t disadvantaged financially by the late return.

The Tribunal said “a reasonable excuse is normally an unexpected or unusual event that is either unforeseeable or beyond the taxpayer’s control, and which prevents them from complying with their obligation to pay on time. A combination of unexpected and unforeseeable events may, when viewed together, be a reasonable excuse.”

A taxpayer must act in a reasonable manner which ensured that they adhered to their legislative obligations.

Whether or not it is within their control, if a prudent person, exercising reasonable foresight and due diligence, and having proper regard for their responsibilities under the Tax Acts, could reasonably have foreseen the event, the contractor should have taken steps to meet their obligations. If there was a reasonable excuse, it must have existed throughout the failure period.

No reason had been given as to why the filing of the return had been overlooked. There had been no unexpected or unusual event that was either unforeseeable, or beyond the contractor’s control, which caused the return to be filed late.

Without any such explanation, there had been no reasonable excuse that prevented the Appellant from operating the Scheme correctly, and submitting the monthly return on time.

Late filing penalties were to encourage prompt filing, the efficient workings of the tax system, and to redress the balance between contractors who file on time, and those who do not.

It had been the Appellant’s responsibility to ensure that the CIS monthly return was filed on time, and to ensure that its CIS obligations were met. The Appellant had failed to operate CIS correctly, and HMRC had to be consistent towards their customers, particularly those who comply with the regulations.

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

Way assets organised prevented offshoring of property income

Tax legislation deals with schemes that have, as their object, the shelter, from UK tax, of income arising in the UK.

Section 739 of the Income and Corporation Taxes Act 1988 (“ICTA”) says in effect………

(3) Where before or after any [relevant] asset transfer an individual [in question] receives or is entitled to receive any “capital sum”
THEN:
any income that accrues directly, or through “associated operations”, as a result of that transfer to a person resident or domiciled outside the United Kingdom, is to be attributed to that individual for UK tax purposes.

By subsection (4) “capital sum” includes…

(a) any sum paid or payable by way of loan or repayment of a loan.

And under section 742 (1) “an associated operation” includes an operation of any kind effected by any person in relation to any of … the income arising from any such assets…”

And under section 742(2) an individual is deemed to have power to enjoy income of a person resident outside the United Kingdom [including] if… the receipt or accrual of the income operates to increase the value to the individual of any assets held by him or for his benefit.

In the First-tier Tribunal (Tax) case of Seesurrun & Anor v Revenue & Customs [2014] various residential homes had been divided between offshore companies Calinda and Mannville and leased to the operating companies. At times the rents collected were above the rates specified in the leases.

Mr and Mrs Seesurrun were creditors of Calinda in different amounts from the sales of Manor Court and Drake Court to Calinda and an advance made by Mr Seesurrun to Calinda to enable it to purchase Goldthorn Court. This otherwise arose from the Seesurrun’s allowing much of the sale price to remain unpaid and outstanding on interest free unsecured terms. The terms on which Mr and Mrs Seesurrun transferred Churchill to Mannville were uncertain. Any such transfer might have caused Mr and Mrs Seesurrun to become creditors of Mannville.

The shares of two of the operating companies Manor and Ashleigh were held by Calinda.

The shares of Calinda and Mannville were owned by the RS Settlement and the GS Settlement, the respective interest in possession settlements of Mr Seesurrun and his wife.

MML were the professional trustees of the RS and GS Settlements and held the shares in Calinda and Mannville for those settlements respectively.

HM Revenue & Customs (“HMRC”) said Mr Seesurrun had received a capital sum within section 739(3) ICTA, so that income of Calinda (a person resident outside the United Kingdom) was to be deemed to be Mr Seesurrun’s income.

Mr Seesurrun owed the Trust/Calinda £2,705,589 and HMRC said this was evidence of the receipt by him of a capital sum of that amount within section 739(3) ICTA.

HMRC made particular reference to a dividend of £110,000 declared by Manor to Calinda and the dividend of £240,000 declared by Ashleigh to Calinda being applied to reduce Mr Seesurrun’s indebtedness. This showed that Mr Seesurrun had not only had power to enjoy the income of Calinda but had actually received and enjoyed the funds.

Mr and Mrs Seesurrun’s entitlements as beneficiaries under either of the RS or GS Settlements had been excluded by the execution of deeds of variation.

All the same, the Tribunal said the debts owed to Mr and Mrs Seesurrun by Calinda, were unsecured, interest free and payable on demand, and therefore such that the receipt of income by Calinda ‘operated to increase the value to [Mr and Mrs Seesurrun] of [the debts] held by [them]’ (section 742(2)(b) ICTA). So, for the purposes of section 739 ICTA, Mr and Mrs Seesurrun had power to enjoy the rental income received by Calinda (as well as the dividends declared by Manor and Ashleigh).

Therefore Mr and Mrs Seesurrun had a liability to income tax under section 739(2) ICTA.

Mr and Mrs Seesurrun had received “capital sums” whose payment was connected with the transfers of assets and associated operations. This meant that Mr and Mrs Seesurrun also had a liability to income tax under section 739(3) ICTA.

The “capital sums” were as follows.

1. Calinda and/or the RS Settlement and/or the GS Settlement lending Mr Seesurrun £2,705,589.

2. Loans of £1,183,094, as at 5 April 2005, and £959,794, as at 5 April 2006, due to Calinda from Mr and Mrs Seesurrun.

3. Loans of £1,529,872, as at 5 April 2006, due to Mannville from Mr Seesurrun. Though this could not cause the capital gain realised by Mannville to be chargeable to income tax in Mr Seesurran’s hands.

Of course, that did not cause the same income to be taxed under both section 739(2) and section 739(3).

In conclusion, even if the Seesurruns were effectively excluded from any possibility of benefit under the RS Settlement and the GS Settlement by the later deed of variation, the income of the offshore structure, was nevertheless deemed to be their income, for income tax purposes under section 739(2) and (3) ICTA, because of their effective power to enjoy it and/or their receipt of, or entitlement to receive, capital sums from the structure.

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

Qualifying capital expenditure not proved to reduce capital gain on property sale

In the First-tier Tribunal (Tax) Appeal of Swain & Ors v Revenue & Customs [2014] the Appellant company Clarisa Limited (“Clarisa”), in its accounts and in its tax return. claimed to have incurred additional expenditure of £360,000 in improving let properties that it owned.

In consequence of making a part disposal of one of the units in the properties, Clarisa claimed to have made a loss rather than a gain for capital gains purposes.

HM Revenue & Customs (“HMRC”) challenged whether the expenditure had been incurred.

Clarisa bought the relevant properties in about 1995 for £75,000 from the husband of its current shareholder. Clarisa itself appeared not to have traded and, was simply holding the various properties that had been transferred to it. They were all tenanted. No evidence was given as to how many tenants there were, and whether there was a regular turnover of tenancies and tenants.

12 Pelham Arcade, Hastings, representing roughly 25% of the total value, was sold. The properties 9 to 11 Pelham Arcade were retained. The capital gains calculation recorded gross sale proceeds of £90,000, reduced to £69,238 by costs claimed to be connected with the sale of the property.

Clarisa’s original acquisition cost of all four properties (£75,000) was then said to have been enhanced by £360,000 expenditure, and 25% of these costs were claimed as extra deductible costs in assessing the capital loss of £41,175 Clarisa now claimed on the part disposal of 12 Pelham Arcade.

When HMRC investigated what expenditure of £360,000 had been incurred in the year of claim, the husband of Clarisa’s shareholder said that he did not know why the accountant had inserted the deduction in that year’s accounts when it had actually been incurred, 15 years earlier, following the purchase of the property, at a time when the property was “derelict”.

When the work that had allegedly been carried out 15 years earlier, was described it was said that it included waterproofing, painting, layout changes, moving the kitchen, replacing toilets and redecoration.

Several of those items would not be deductible in a capital gains computation even if they might have been dealt with as revenue expenses deductible against rental income.

Apart from that, there was no evidence of anything that supported the claim concerning the work allegedly undertaken.

An accountant was said to have advised that a mortgage be registered against the properties. However even in 2007, and even assuming no other expenses and no salary payments to directors, since the rental income was only £30,000 per annum, it would have taken 12 years of gross income, to have financed either the expenditure or the repayment of borrowings. There was no evidence of them anyway.

There had been no account as to:

– how any capital expenditure had been incurred at any earlier time;

– what the money had been spent on;

– which contractors had been used; or

– how the company had actually financed the expenditure.

So, Clarisa had failed to demonstrate that such expenditure had been incurred, and HMRC was right to disallow the claimed expenditure, and to substitute a gain for the claimed loss, and to charge a penalty.

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

Notice of refusal application for mobile home transfer must follow

Before 26 May 2013 paragraph 8(1) of Schedule 1 to the Mobile Homes Act 1983) (“the 1983 Act”) implied that mobile homes on protected sites in England benefited from a term that the occupier was entitled to sell the mobile home and to assign the site agreement to a person approved by the owner of the site (“owner”) whose approval was not to be unreasonably withheld.

But if an owner withheld consent to a proposed sale and assignment unreasonably there was no equivalent of the statutory right to damages for unreasonable refusal conferred on tenants by the Landlord and Tenant Act 1988.

If, after receiving notice of a proposed sale, the owner wishes to object to it, the Mobile Homes Act 2013 (“the 2013 Act”) makes the owner apply to the First-tier Tribunal (Property Chamber) (in England).

The time limit for such an application is just 21 days beginning with the date on which the owner received the notice of proposed sale (“the 21-day period”) and the owner must give notice of the application to the occupier within the same period.

The grounds on which an owner can oppose a proposed assignment are also very restricted.

In Wyldecrest Parks (Management) Ltd, Re 11 Scatterdells Park [2014] the Park was a protected site within the meaning of the 1983 Act. The respondent gave notice to the appellant of the intended sale of their mobile home and assignment of their pitch agreement to someone who wanted to keep two dogs at the mobile home. The appellant considered this would be a breach of the pitch agreement.

By letter dated 10 October 2013 the appellant informed the respondent that they were applying for a refusal order and gave its reasons.

On 11 October 2013 the appellant applied for a refusal order.

The tribunal refused to make a refusal order, but by that stage the proposed purchaser had withdrawn from the purchase.

The 2013 Act distinguishes between pitch agreements made after 26 May 2013, which are referred to as “new agreements”, and those made before that date which are “other agreements”.

Section 10 of the 2013 Act introduces two new paragraphs into Schedule 1 to the 1983 Act:

– paragraph 7A concerning new agreements; and

– paragraph 7B dealing with other agreements.

Paragraph 7B(4) of the 1983 Act now provides that, if within the the 21-day period the owner applies to a tribunal for a refusal order, but the occupier does not receive notice of the application from the owner within that period, the application is to be treated as not having been made, and the occupier is entitled to sell the mobile home and assign the agreement without the approval of the owner.

The issue in this appeal was whether, paragraph 7B requires that notice of an application for a refusal order must be given by an owner to an occupier after the application has been received by the Tribunal or whether, as the appellant contended, notice of the application may be given before the owner has applied to the Tribunal for a refusal order.

The appeal condition, with its requirement that notice be given that “the owner has applied” indicated that notice could not be given prospectively of an event that had not yet occurred. Were it otherwise the occupier would be left uncertain whether the application, it had been given notice of, had actually been made.

Both the application and the notice (in that order) must therefore come within the 21-day period.

The Tribunal said it ought to be permissible for an owner, who has in fact sent an application for a refusal order to a tribunal, to give a notice to the occupier saying that an application “has been made”, even before receiving confirmation from the tribunal itself that the application has been received. The language of the first condition would seem to admit of that. But it was not necessary to express a concluded view on that issue.

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

Could Landlord recoup general litigation costs?

Many landlords and tenants will be familiar with lease clauses that require the tenant:

“To pay all reasonable costs charges and expenses (including solicitors’ costs and surveyors’ fees) incurred by the Lessor in or in contemplation of any proceedings or the preparation of any notice under section 146 of the Law of Property Act 1925 notwithstanding forfeiture is avoided otherwise than by relief granted by the Court.”

The object of such a clause is to give the landlord the contractual right to recoup its expenses on those preparatory steps, even where no proceedings result, in which the tenant’s payment of the landlord’s costs would probably have been made a pre-condition of the court awarding relief against the forfeiture of the tenant’s lease.

A landlord may or may not commence proceedings with a view to forfeiture. A landlord may simply wish to receive payment of the sum due, without any wish to end the tenant’s lease. A landlord may not have reached the stage of considering whether to forfeit the lease if the tenant failed to pay after the tribunal had given judgment against it.

In the Upper Tribunal (Lands Chamber) case of Barrett v Robinson [2014] the appellant was the long leaseholder of a flat above a shop in Camberley. She queried the insurance rent under her lease. The appellant considered that the sum was too high.

A leasehold valuation tribunal (“LVT”) decided that the manner in which the insurance premium had been apportioned was reasonable.

A second LVT found that the appellant was liable, under her lease, to pay £6,250 to the respondent as costs of the proceedings before the first LVT. As a result the appellant was faced with a bill for costs almost 20 times as great as the insurance rent demanded by the respondent. This appeal was against the decision of the second LVT.

Clause 14(4) of the lease as to payment of the respondent’s costs was as set out above.

At the second LVT the appellant drew attention to the fact that clause 4(14) related only to the costs of forfeiture proceedings.

In fact the first LVT proceedings had been initiated by the appellant to establish the amount of the insurance rent appellant was liable to pay. The appellant said that the first proceedings did not relate to forfeiture and so clause 4(14) did not allow the respondent to recover her costs.

The Upper Tribunal (Lands Chamber) said Clause 4(14) did not provide a general indemnity against all legal costs which may be incurred by the landlord. It was restricted to costs incurred:

– in proceedings under section 146 of the 1925 Act;
– in contemplation of such proceedings;
– in the preparation of any notice under section 146; or
– in contemplation of the preparation of any such notice.

The clear sense of the clause was that it only covered costs incurred in taking steps preparatory to forfeiture such as envisaged by section 146.

The parties probably regarded it as fair that costs incurred by the landlord in dealing with a breach of the tenant’s covenants should be borne by the tenant and not the landlord.

However, neither party could have considered it fair for the tenant to be liable to pay the landlord’s costs of any proceedings, irrespective of their subject matter or result.

If “any proceedings” in clause 4(14) was not qualified by the reference to section 146, the parties would have given the landlord an improbably generous indemnity against the costs of even speculative and frivolous proceedings.

Costs would only be incurred in contemplation of proceedings, or the service of a notice under section 146 if, at the time the expenditure is incurred, the landlord had those proceedings or that notice in mind as part of the reason for the outlay.

A landlord who does not actually contemplate the service of a section 146 notice when that outlay is made, will not be able to rely on a clause like clause 4(14) to provide any contractual right to recover its costs.

Here there was no evidence whatsoever that the respondent contemplated proceedings for the forfeiture of the appellant’s lease or the service of a notice under section 146, preliminary to such proceedings.

The first LVT proceedings were begun by the appellant under section 27A of the Landlord and Tenant Act 1985 to get a determination of how much insurance rent she had to pay. Nothing that the respondent’s statement to the first LVT said suggested that she had any intention of forfeiting the lease. Neither did the correspondence from her solicitors suggest that she contemplated such a course of action. Moreover, there was no mention of forfeiture in the skeleton argument prepared by her counsel.

So there was no justification for the second LVT believing that costs of £6,250 had been incurred in or in contemplation of proceedings, or the preparation of a notice, under section 146.

Worse still for the respondent, the insurance rent the respondent claimed could not in any event provide grounds for forfeiture because it was below the statutory threshold created by section 167(1) of the Commonhold and Leasehold Reform Act 2002. Section 167 prohibits a landlord from exercising a right of forfeiture in respect of rent, service charges or administration charges unless the unpaid amount exceeds that prescribed sum.

The sum currently prescribed under the Rights of Re-entry and Forfeiture (Prescribed Sum and Period) (England) Regulations 2004 was £350.

So, the respondent could never have legitimately contemplated the service of a notice under section 146, nor could the first LVT proceedings ever have been a prelude to forfeiture. The sum involved was simply too small for forfeiture to have been an option.

For these reasons the appeal was allowed and the appellant was not liable to pay the sum of £6,250.

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

#HS2 Safeguarding Directions did not trigger SEA Assessment

The Planning Court case of HS2 Action Alliance Ltd & Anor, R (on the application of) v Secretary of State for Transport & Anor [2014] was a claim for judicial review by HS2 Action Alliance and the London Borough of Hillingdon Council, who said that the defendant, the Secretary of State for Transport (“the Secretary of State”), acted unlawfully when he used statutory powers to make safeguarding directions protecting the route for Phase 1 of HS2. Amongst other things they required High Speed Two (HS2) Limited (“HS2 Ltd.”) to be consulted on planning proposals affecting the route.

The claimants said that the safeguarding directions ought to have been previously assessed under the regime for strategic environmental assessment (“SEA”) in Directive 2001/42/EC “on the assessment of the effects of certain plans and programmes on the environment” (“the SEA Directive”) and the Environmental Assessment of Plans and Programmes Regulations 2004 (“the SEA regulations”), and that the safeguarding directions were unlawful and should be quashed because of the Secretary of State’s failure to undertake such an assessment.

The claimants said that the safeguarding directions were a plan or programme within article 2(a) of the SEA Directive. They had been prepared for transport, town and country planning and land use, and so came within the ambit of article 3(2)(a).

The claimant said the safeguarding directions:

– set the framework for future development consent of projects;

– operated as a legal constraint on development consent being granted by local planning authorities for various projects;

– set criteria by which that legal constraint could affect decisions on applications for planning permission – that future development is proposed within the safeguarded area and does not fall within the specified categories of exempted development; and

– operated to constrain the Secretary of State’s discretion as to whether and how to restrict the grant of planning permission in cases passed on to him, because the requirement for the HS2 land would be a material consideration for him to take into account.

The court said that to qualify as a “framework” subject to SEA assessment, the safeguarding directions would have to be more than merely persuasive but guiding and telling because they had a stated role in the hierarchy of considerations to be taken into account by decision makers.

Similar previous litigation based on the failure to subject HS2’s 2012 Command Paper to SEA assessment failed in the Supreme Court because the 2012 Command Paper did not seek to place any further constraint on Parliament’s consideration of the environmental impacts of the project as a whole, under the hybrid Bill procedure. Also the Supreme Court had concluded that to qualify as a policy “framework” that needed prior SEA assessment the item:

“must operate as a constraint on the discretion of the authority charged with making the subsequent decision about development consent”. It “must at least limit the range of discretionary factors which can be taken into account in making that decision, or affect the weight to be attached to them”.

Here safeguarding directions were a consequence of the decision to promote the HS2 project.

They were foreseen by the 2012 Command Paper and were part of the process by which the HS2 project decision was proposed to be put into effect.

They were not a framework of policy or criteria constraining the discretion of the decision-maker in the making of the decision. It would be the HS2 project itself, as it was at the relevant time, which would inform:

– the response of HS2 Ltd. to consultation; and

– the intervention of the Secretary of State in the process, if he did intervene.

and it would not be the safeguarding directions that exerted a substantive influence on the decision, but the HS2 project itself.

So the safeguarding directions were not a plan or programme which set the framework for development consent, such as themselves to be subject to SEA assessment, but merely the servant of the HS2 Project which would itself have to pass environmental impact assessment (“EIA”).

The EIA for the HS2 project is having to comply with the requirements for an assessment prepared under the Annexes I and II to Directive 85/337/EEC and Article 1(4) of the EIA Directive (2011/92/EU).

In that assessment consideration would have to be given to the likely significant effects of the railway on the environment, including the use of the sites for use in its construction, and as to alternatives.

The authorities hosting the construction and operation of the railway, the owners of land affected by the project and also the public would have had the opportunity to participate in that process.

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

Receivers could serve Section 21 notice to end Assured Shorthold Tenancy

Section 21(4) of the Housing Act 1988 (“HA 1988”), imposes a duty on the court to make a possession order of a dwelling held under an Assured Shorthold Tenancy (“AST”) if it is satisfied that any previous fixed term AST no longer exists and the landlord or, at least one of them, has given to the tenant not less than two months’ notice in writing that he requires possession of the dwelling-house.

In McDonald v McDonald & Anor [2014] the landlords were the tenant’s parents. The parents had borrowed off Capital Homes Ltd (“CHL”), to buy the property and the loan was secured by a mortgage over the property. The tenant paid the rent with housing benefit and her parents used that money to pay the sums payable to CHL.

The mortgage conditions forbade any tenancy to a tenant assisted by social security. Other tenancies had to be ASTs previously approved by CHL. The parents failed to apply for approval. A further condition said the parents must advise CHL if they proposed to let to a family member. They did not do this either. They later fell into arrears and CHL appointed receivers of the property, (“the receivers”).

Under the mortgage conditions, they had the same powers as CHL, and they were the agents of the borrowers.

When the receivers were appointed, the tenant was in possession under the terms of an AST expiring on 14 July 2009. She kept possession after then under a statutory periodic tenancy which was subject to the landlord’s power to terminate and get a possession order under section 21(4) of the HA 1988.

The receivers claimed to use their powers under the mortgage to serve a notice (“section 21 notice”) in their own names on the tenant under section 21(4)(b) of the HA 1988 and to commence possession proceedings in the name of the landlords.

The section 21 notice was given by the receivers and not the landlords. Had they power to do this?

If the receivers had power to give the section 21 notice, they could do so in their own names because under section 45 of the HA 1988 the word “landlord” includes any person deriving title from the original landlord, and that would include CHL. Also, under the mortgage conditions the receivers could exercise all the powers that CHL were able to exercise.

On the other hand if they did not have power to give the section 21 notice, then their section 21 notice would be of no effect and the tenant’s statutory periodic tenancy would have continued as before.

The Court of Appeal said that the mortgage conditions had to be interpreted purposively. Their purpose was to enable the receivers to realise the mortgaged property in an orderly and efficient way.

The powers specified in clause 9.2.1 of the mortgage conditions included the power to sell the property and to take possession of it.

The powers conferred on the receivers must include power to do anything which is necessarily incidental to the exercise of the powers specified in the mortgage.

Here, service of the section 21 notice was an act which the receivers had to do to get vacant possession and thereby to sell the property at the best price.

The fact that:

– the mortgage conditions might have been drafted more widely so as to confer an express power on the mortgagee to give a section 21 notice; or

– that the mortgagee might have been able to serve the notice by virtue of being within the definition of “landlord”

did not mean that the receivers could not do so where they had that power under the mortgage conditions.

So the receivers had been entitled to serve the section 21 notice on the tenant and the tenant lost the appeal.

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

No power to cancel planning permission without compensation

As a general principle a planning permission cannot be revoked once it’s been granted. There is a limited power to modify or revoke it under the procedure contained in Sections 97 to 100 of Town and Country Planning Act 1990 (“the Act”) before the development has been completed but the planning authority must pay compensation.

In Gleeson Developments – v- Secretary of State (2013) there had been a planning appeal and the inspector had mistakenly issued a letter permitting the development. When the Planning Inspectorate realised they cancelled it.

Although the appeal was to have been decided by an inspector, the Secretary of State considered that he should determine it himself, and exercised his powers under Section 79 and paragraph 3 of schedule 6 of the Act, to direct that he should determine the appeal instead of an inspector.

So, instead of writing a decision, the inspector would prepare a report and recommendation to be forwarded to the Secretary of State.

The rationale behind the direction, contained in a letter dated 20th March 2013, was that the appeal involved a residential development of over 150 units, all on sites of over 5 hectares, “which would significantly impact on the government’s objective to secure a better balance between housing demand and supply and create high quality, sustainable mixed and inclusive communities.”

The High Court ruled it implicit in the legislation that the Secretary of State had a brief window of time to revoke a planning permission issued in error.

It was felt unfair to allow a developer to profit in such cases.

The developer appealed to the Court of Appeal.

The court said there was only one direction, namely that recovery letter, dated 20 March 2013, and that post-dated the inspector’s decision. So, there was no direction prior to the inspector’s decision. The inspector therefore had power to determine the appeal on 18 March, and the purported direction, two days later, had no effect whatsoever.

Secondly, if a planning permission has been granted, whether on appeal by the Secretary of State or by an appointed person, or on an application for planning permission by a local planning authority, there is no power to “withdraw” that planning permission on the basis that there has been an administrative error at some stage in the decision making process.

Once a planning permission has been granted, whether by a local planning authority on an application for planning permission, or by the Secretary of State or by their appointed inspector on an appeal there is no power to “withdraw” that planning permission on the basis that there has been an administrative error at some stage in the decision making process. Once granted, a planning permission confers a substantive right, often a very valuable substantive right, and it is therefore by it’s very nature irrevocable save under the procedure which is contained in Sections 79 to 100 of the Act which make provision for compensation.

There had been no error on the part of the decision taker.

There being no direction under paragraph 3 of schedule 6 of the Act, prior to the issue of his decision, the inspector, as the appointed person, had authority to issue his decision.

He allowed the appeal and granted planning permission.

An administrative error did occur elsewhere in the Planning Inspectorate, but the Secretary of State had no “an implicit auxiliary power” to “withdraw” a lawfully granted planning permission because a person other than the decision taker had made some administrative error at some stage in the process.

The planning code was highly prescriptive and had no place for an implied power which the High Court Judge had admitted to be of an uncertain extent.


This blog is posted as a matter of general interest. It does not replace the need for proper legal advice in individual cases.