Monthly Archives: September 2015

Adjudication: Linked issues formed single dispute

In Whitney Town Council v Beam Construction (Cheltenham) Ltd [2011] Akenhead J gave guidance as to one way of identifying whether or not two separate disputes had been invalidly referred to an adjudicator:

“A useful if not invariable rule of thumb is that if a disputed claim No 1 cannot be decided without deciding all or part of disputed claim No 2, that establishes such a clear link and points to there being only one dispute.”

In that case a claim for a final account and a claim for the financial consequences of termination were ruled part of a single dispute.

In Wycombe Demolition Ltd v Topevent Ltd [2015] an adjudicator awarded £113,666.63, with interest and his fees and expenses due from the employer (“Topevent”) to the claimant contractor (“Wycombe”).

Topevent complained that the adjudicator had no jurisdiction because more than one dispute was referred to him. The adjudicator was addressing both the issue of valuation and, what they said, were separate issues arising out of the termination/cessation of the works, and that they were two entirely separate disputes.

The High Court said it was plain from the Notice of Adjudication that the dispute between the parties concerned the outstanding payment due to Wycombe, following the cessation of works on site.

That payment was made up of a number of elements, including both the value of variations, and the financial consequences of termination and demobilisation.

There was a claim for one final payment comprising all outstanding sums, including the £4,000, for “wrongful termination of contract.” Wycombe wanted one final payment so as to be able to close their books on this contract. That could only be achieved if the adjudicator addressed all their outstanding claims. So there was a clear link between their rejected claim for the cost consequences of the “wrongful termination”, and the overall claim for all sums outstanding. They were not separate disputes.

Secondly Topevent’s representative had written a letter saying that the valuation of Wycombe’s work could not be carried out properly unless the amount of incomplete work was taken into account. That letter made a direct link between those two issues.

Accordingly, both elements of the claimed payment were part of a single dispute. They were simply different components of the total sum in dispute.

Even if there were two separate disputes paragraph 11.1 of the TecSA Rules which were the basis of the adjudicator’s appointment made it clear that the adjudicator could deal with “any further matters which all Parties agree should be within the scope of the Adjudication”.

The disputes concerned with the valuation of the work, and the dispute about termination, were addressed without qualification by both parties during the adjudication.

Indeed, Topevent’s counterclaim of approximately £180,000 was based on the latter. But Topevent had never suggested that the termination dispute should not be dealt with in the adjudication. In fact, they wanted it so decided.

So if were two separate disputes, Topevent’s acquiescence in, and failure to object to, the adjudicator dealing with both disputes, gave him the necessary jurisdiction anyway.

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

Flats: Necessary consents to Lease changes should have been got earlier

Varying flat leases under section 35 of the Landlord and Tenant Act 1987 (as amended) can be contentious, expensive and time-consuming.

To allow the application to be made to a leasehold valuation tribunal for an order without first establishing whether it is sufficiently supported or insufficiently opposed by the required number of the flat owners, would be to put the cart-before-the-horse, and a complete waste of time and money.

In Simon v St Mildreds Court Residents Association Ltd [2015] the application was in respect of more than 8 leases.

So it had to be shown that it was not opposed, for any reason, by more than 10% of the total number of the parties concerned and that at least 75% of that number consented to it.

To calculate whether or not 75% of the parties concerned had consented to the application, the landlord constituted one of the parties (section 37(6)(b)).

The Upper Tribunal (Lands Chamber) said, the necessary consent to:

“the application … for an order varying each of those leases in such manner as is specified in the application” (section 37(1))

must have been achieved by or at the time the application was issued because of the mandatory wording of section 37(5) that:

“any such application [that is one made under sub-section (1)) shall only be made if” the requisite majority “consent to it”.

The issue of whether the application is not opposed for any reason by more than 10% of the total number of the parties concerned needed to be addressed by or at the time the application to the leasehold valuation tribunal was made.

This followed from the wording of the provision, which said that the application “shall only be made if” (etc).

So any consent received or opposition expressed after that time did not count towards compliance with section 37(5)(b).

In short section 37(5)(b) imposes two jurisdictional pre-requisites or hurdles which must or “shall” be satisfied to qualify the applicant to make an application under section 37(1):

1. that the application is not opposed by more than 10% and,

2. that it is consented to by 75%

of the parties concerned.

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

Banksy was the Landlord’s to pass on

What term is to be implied into a lease as to the ownership of a valuable part of a let property which is justifiably removed from the property by the tenant, in accordance with the tenant’s repairing obligation, and so becomes a chattel?

Usually the term, which is to be implied, is that the chattel becomes the property of the landlord. For:

1. the default position is that every part of the property belongs to the landlord. The tenant only has a tenancy for a period of time. If the tenant thinks differently it is for the tenant to show that it is right to imply into the lease a term which leads to a contrary conclusion;

2. the mere fact that the tenant is carrying out its repairing obligation does not imply that it acquires ownership of the chattel which results from part of the property being removed;

3. even if a term could be implied that (1) waste or (2) chattels with just scrap or salvage value belong to the tenant, it did not mean that it should be implied with respect to the ownership of a chattel with a substantial value. Such a term would not be necessary, would not go without saying and would not be one that would be implied as something that might have been raised by an “officious bystander” when the terms of the lease were originally hammered out;

4. it makes no difference that the value is attributable to the spontaneous actions of a third party. Whatever solution is adopted, one party gets a windfall. Who has the better right to the windfall? Usually it will be the landlord.

In The Creative Foundation v Dreamland Leisure Ltd & Others [2015] a Mural attributed to Banksy was removed by the First Defendant (“Dreamland”) from a building at Folkestone (“the Building”). Then the wall was made good. Dreamland was the tenant of the Building.

This was done without the knowledge or permission of Stonefield Estates Ltd (“the Landlord”). The Landlord had assigned to the Claimant (“the Foundation”) its ownership of the Mural and its rights to sue Dreamland. The claim was for the return of that section of wall.

The High Court said the problem arose from the public knowledge that a Banksy had been on the site and would remain the same whether the Banksy was removed by overpainting, cleaning or removal and reinstatement of the wall. The shrine would remain a shrine, whichever method was used. So the removal of the wall was not in any event justified.

Even if it had been justified the wall would still belong to the Foundation as assignee of the Landlord’s ownership of it – under points 1-4 listed above.

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