Category Archives: Property Litigation

Initial toleration of fence placement did not abandon right of way

The courts do not lightly accept that rights have been abandoned through mere disuse. There has to be pretty unequivocal evidence that they have been intentionally and permanently abandoned by the owner and any tenants of the land benefitting from them.

In the Court of Appeal case of Higson & Anor v Guenault & Anor [2014] the appellants, owned a house and garden at Lancaster (“the Higsons’ property”).

The respondents were representative members of the Bowerham Lawn Tennis Club (“the Club”). The Club was accessed by a narrow track which ran alongside the Higsons’ property (“the lane”).

The case centred on a larch lap fence mounted on concrete posts which the Higsons erected in 2004, (“the 2004 fence”).

In 2006, the Club wanted to recover the tennis courts. When the Club contracted to have the courts resurfaced, the drivers of the independent contractor lorries were unable to get down the lane to offload the material.

The issue was whether the Club had a right of way up to the hedge on the south side of the lane or whether the right of way was only up to the 2004 fence.

The court concluded that, as at 1997, the physical extent of the right of way which the Club enjoyed was up to the hedge on the south side of the lane.

The appellants claimed that the physical extent of the right of way might have been reduced by virtue of the 2004 fence. The court did not accept that argument. The mere fact that the owner of land benefitting from a right of way does not use the full extent of his right of way over the land burdened by the right of way all the time does not mean that the right of way is abandoned or modified.

It must be proved that the person having the right intends to abandon it. There was no evidence of that.

So in a victory for the Club, the court concluded that the Club’s right of way over the lane on the south side was, and remained, right up to the hedge, and up to the line of the former hedge where it had been cut down, e.g. to provide access points to the Higsons’ property.

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.

Property loss would have occurred regardless of alleged negligence

It’s not enough to have a negligence claim against solicitors or other property professionals. Claimants need to be able to show that the negligence caused the loss claimed and to overcome any defence that the loss was too remote from the negligence.

In AW Group Ltd v Taylor Walton (a firm) [2014] the claimant’s case was that, had the defendants given adequate advice about the existing planning consents at the site, the lack of planning permission to park HGVs at the rear, and the prospects of getting satisfactory planning permission later, the claimant would have pulled out of buying the property (“Packhorse Place”) and would, if necessary, have resigned itself to the loss of the deposit, it had paid. and would have looked for somewhere else to buy.

The first instance judge had assessed the open market value of Packhorse Place on 2nd November 2005 with the benefit of its actual planning consents at £2.07 million, so that the claimant had overpaid £730,000 relative to it’s worth at the time.

The court found that the devendant’s negligence was not the effective cause of its loss as the claimant would have gone ahead anyway. The claimant was already too committed to the purchase of Packhorse Place to be able to back out by the time the defendants ought to have warned of the planning difficulties. :

1. it would have been too late to find and purchase an alternative site. At best, a temporary alternative might have been leased.

2. The deposit of £140,000 would have been forfeited to the Seller of Packhorse Place.

3. The claimant would have suffered a penalty of up to £500,000 if it did not vacate its existing site, Chaul End.

4. On past experience, even after getting competent advice from the defendants, the claimant’s managing director would have taken the pragmatic view that enforcement action at Packhorse Place was unlikely, and nothing seriously to worry about.

5. The businesses of the claimant’s associated companies AWT and AWCR, housed at Chaul End, lost money. The claimant’s main reason for relocating to Packhorse Place was the obtaining of roll-over relief, rather than ensuring their long term survival.

6. The claimant could take the risk of enforcement action, because it would be unlikely to have become effective early enough to prevent the claimant getting full roll-over relief from Capital Gains Tax by moving to Packhorse Place. In fact, both companies went into insolvency procedings before effective enforcement action was taken against them.

7. There was insufficient evidence provided to support the claimant’s allegation that their bank would have withdrawn or reduced funding for the purchase had they been properly notified and advised by the defendants about the planning position.

So the claim failed on causation grounds alone and the appeal against dismissal of the claimant’s claim against the defendant was dismissed.

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

Court implies duty on Seller to cooperate in property sale conveyancing

In the scenario where a defaulting Buyer has its deposit at risk on a flat purchase and arrives at a settlement agreement, to what extent is the Seller impicitly obliged to cooperate in the normal conveyancing process to meet the deadlines laid down in the settlement for one of the Buyers to buy an alternative flat off the Seller?

In Gateway Plaza Ltd v White [2014] the Buyer concerned had been given till 28 March 2012 to “exchange contracts” for the purchase of the alternative flat.

However the Seller’s large Leeds conveyancing solicitors sent the Buyer’s solicitors documentation still wrongly in the joint names of the Buyer and the other original buyer (who had by now dropped out of the purchase and then died) and for whatever reason did not provide the CML disclosure of incentives form required by the Buyer’s Mortgagees under the Council of Mortgage Lenders’ Rules. In consequence the purchase had still not been completed in May and the Seller alleged that the Buyer had failed to take the alternative flat purchase available to him under the settlement and so must suffer the full financial consequences of not going along with the alternative flat offer compromise.

The High Court had no difficulty inferring terms that it had been incumbent on the Seller to comply with the normal conveyancing process and requirements of the Buyer’s solicitors and of its lender to meet the deadline and to have done all the things normal Sellers’ solicitors would do including produce correctly drawn documents and a CML Certificate.

So it was the Seller, rather than the Buyer, who had failed to comply with the obligations, which were impliedly imposed on the Seller under the settlement agreement as soon has the Buyer had decided to take up the opportunity the settlement offered of the alternative flat.

This is no “rocket science”.

Applying one of the standard tests for implying legal terms, if at the settlement hearing a “reasonable bystander” had asked whether the Seller would cooperate with the conveyancing process the Seller would hardly have said “no”. The parties would have both said “of course”.

Different rules apply to court settlements like this though. Under normal land contracts its not safe to rely on implying terms as Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires all terms to be express and contained in the contract and (where applicable) other documents whose terms are properly incorporated by reference into the contract.

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

Non payout highlights need for lawyer negotiated provision for payout deadline extensions in property Joint Venture Agreements

If there are circumstances that might justify the extension of a Joint Venture, Option or Conditional Contract Period it is very important that they be spelt out in the Agreement and that these be backed up by appropriate dispute resolution mechanisms.

Nordic Insulated Doors Ltd v Land Resources Ltd [2014] was a dispute between the parties under a Joint Venture Agreement (“the JVA”) of 31st August 2011 for the development of a property at St Lukes Court Willerby Hull (the “Property”). the Claimant wanted £160,000 damages for the Defendant’s failure to pay the amount due under the JVA.

The Claimant’s Mr Finn provided the expertise to renovate and/or improve properties and the Defendant’s Mr Maguire would put in the finance.

The JVA had been drawn up by the parties without legal advice.

Initially there was an dispute about the split of any profits on the sale of the Property with the Defendant claiming the first £600,000 of profit i.e. after repayment of the considerable sums that it had put in to JVA’s expenses.

The Claimant’s case was that the Defendant was entitled to a fixed sum of £600,000 on account of its expenditure after which the profits were to be split 50/50. Thus the Claimant was entitled to £150,000 plus a modest figure in respect of rental income.

clause 6 of the JVA was the major reason for non payment:-

“6. This agreement will finish on 01/08/2012 and after that date [the Claimant] will have no vested interest in the site.”

This passed a high risk to the Claimant. As this case illustrated, it could do a lot towards a sale only then to be denied any entitlement because the £900,000 sale only completed after 1st August 2012. Nevertheless, the Claimant’s Mr Finn had worded this clause and had conceded he knew and understood that, without any extension, the JVA came to an end after 1st August 2012 and that the Claimant would have no claim in respect of the JVA after that.

The sale did not take place until after 1st August 2012. So the Defendant contended that the Claimant was not entitled to anything.

The court found that there had been no point agreeing another 3 months extension in the hope that something might turn up. Neither Mr Finn nor Mr Maguire were willing to put any more money into the project. The Defendant had reached or exceeded the £600,000 allowed for deduction of expenditure. Nor would 3 months have been anything like long enough to obtain necessary planning permissions and building regulation approval.

Although the Defendant’s relationship with the Claimant had broken down, the Defendant was willing to stand by the letter of the JVA but nothing more. It did so.

Completion was 2 days too late for the Claimant to get a share for reasons that were not the Defendant’s fault. Had the Defendant wanted to block the Claimant getting the monies there were any number of things it could have done to slow the progress of exchange and completion whilst avoiding appearing to be thwarting the completion. In fact the sale would have exchanged and completed within the JVA time limit but for the fact that the buyer did not have sufficient funds.

The Claimant’s misfortune here arose from the freely agreed penal nature of clause 6 of the JVA and not from any default on the part of the Defendant.

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.

In initial 30 days residential landlord’s contract to protect tenant’s deposit fulfilled preconditions of termination notice

Private landlords can take proceedings to regain possession of their property without having to give any reasons under the Housing Act 1988 using Section 21’s automatic right of possession once the fixed term has expired.

A landlord cannot use Section 21 to regain possession during the fixed term. They can serve a Section 21 notice on the tenant during that term, providing the date they state they require possession on does not precede the end of the fixed term.

If their tenant paid a deposit, Section 215(1) (a) of the Housing Act 2004 (“the 2004 Act”) says the landlord cannot rely on the Section 21 notice unless the deposit has been protected in accordance with the tenancy deposit schemes.

In Tummond, R (on the application of) v Reading County Court & Anor [2014] the landlord had let a property for 6 months under an assured shorthold tenancy.

In December 2012 the Landlord served a notice requiring possession at the end of the tenancy under section 21.

In June 2013, after the fixed term had expired, the landlord commenced proceedings for possession, relying on that notice.

The claimant asserted that the landlord could not rely on the section 21 notice because it had been served at a time when the claimant’s deposit was not held in accordance with an authorised scheme. Accordingly, the landlord could not rely on the Section 21 notice.

Section 215 is headed “Sanctions for non-compliance”. However, there had been no non-compliance in this case.

The 2004 Act required that the deposit be protected within 30 days (s.213 (3)). This had been done.

The 2004 Act also required that the prescribed information referred to in s.213 (5) of the 2004 Act be provided in substantially the prescribed form within 30 days (s213 (6)).

This too had been done.

In so far as there had been any other “initial requirements” under the authorised scheme these had been complied with inside the 30 day period, and actually by 2nd January 2013.

Since there had been no “non-compliance” there could be no justification for “sanctions” predicated on there being “non-compliance”.

Moreover, Section 215(1) (b) would only be triggered if the landlord had failed to comply with the initial requirements, including protection of the deposit, within the prescribed 30 day period.

The clear inference was that unless and until that occurred there would be no applicable sanction.

The claimant’s case that there would be was wrong.

In the interim before the 30 day period expired the landlord had contractually agreed to comply with scheme requirements and to protect the deposit within the 30 days.

The claimant’s case that he would in that intervening period still be subject to the “sanction” of s.215 (and s.214) until the deposit had been formally protected was untenable.

In this case where the landlord was contractually bound by the tenancy agreement to protect the deposit under an authorised scheme from the moment of its receipt that Landlord would “hold” the deposit “in accordance with an authorised scheme” even before the deposit was protected.

The fact that the defendant had at the time of service of the Section 21 notice been contractually obliged to deal with the deposit in accordance with an authorised scheme satisfied the requirements of s.213 (1).

The existence of that obligation to deal with the deposit in that way meant that from the moment the deposit was received by the landlord, it was also being “held” in accordance with an authorised scheme.

At all subsequent times the money was dealt with in accordance with the scheme requirements. So the court rejected the tenant’s claim.

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.

Flat owner had no right to lay new pipes outside its leased property

In Yeung v Potel & Anor [2014] a four-storey property at 50 Warwick Gardens, London W14 was divided into four flats, each one being above the other.

The Flat 3 occupier carried out building works which caused damage to Flat 4 and nuisance to its occupants. He did not give notice to the claimants of what he was proposing to do. Nor did he serve any Party Wall Act notice on the claimants.

In the County Court damages were assessed at £87,627.05. This figure included £4,000 general damages and £12,850 VAT, due on the remedial costs.

The principal issues before the Court of Appeal were
whether the occupant of Flat 3 had a right of access to Flat 4 to facilitate the proposed moving of a gas pipe and gas meter.

National Grid PLC was willing to do the work, but would need temporarily to shut off the gas supply in Flat 4 for that purpose.

In Flat 3 there was a ceiling attached to joists. Above that there was a gap and then a separate set of joists, which supported the floor of Flat 4. On the underside of the floor joists there was, or had been, a lath and plaster ceiling.

Clause 1 of the Flat 3 and 4 leases defined the flats as including the ceilings and floor of and in the flat the joists or beams on which those floors were laid but not the joists or beams to which those ceilings were attached.

In fact Flat 3’s ceiling had been raised so the defendant’s let was extended no further than up to the ceiling which existed from 1964 until 2008.

So by removing that ceiling and installing a new ceiling at a higher level the defendant had already trespassed on the claimants’ property or on property retained by the Landlord.

Flat 3’s owner was wanting to lay the pipes within what used to be the void between Flat 4’s floor joists and Flat 3’s previous ceiling.

The defendant had, in effect, carried out a “land grab” by raising the ceiling of his flat.

There would be no objection to the defendant re-routing the gas pipe within his own let. Whether he could do so outside that depended what rights he benefited from granted by his own lease and what reservations he benefited from under other flat leases.

Schedule 1 to the leases included rights in the leases. These included:

4. The right to use the service pipes and wire which now are or may at any time hereafter be in under or passing through the remainder Building or any part of the Building.

5. The right to enter upon other parts of the Building usually on notice for the purpose of maintaining or renewing and of laying down service pipes and wires causing as little disturbance as possible and making good any damage caused.

In respect of each flat Schedule 2 to the leases reserved corresponding rights in favour of the rest of the Building. Except that the right of entry only extended to “renewing” sewers, drains, watercourses, cables, pipes and wires, it did not include “for the purpose of…laying down any new sewers drains and watercourses cables pipes and wires”.

E.g. computer cables different from and additional to the electric wires already in a property would not be replacements for those electric wires.

The question therefore arose whether there should be implied into the reservations clause the additional words “or laying new”. But if the parties had considered that the reservations clause had been insufficiently wide, they could and should have amended it by means of the general updating deed of variation they had entered into a few years earlier.

The court interpreted the reservations clause to mean either (a) the lessor or (b) the lessees of other flats could enter Flat 3 or Flat 4 for:

i) Repairing, cleaning or maintaining sewers, drains, watercourses, cables, pipes and wires.

ii) Renewing sewers, drains, watercourses, cables, pipes and wires.

In that context “renewing” pipes or wires meant substituting new pipes or wires as replacements for the pre-existing ones. It did not extend to laying new and additional pipes or wires of a different character from the pre-existing ones.

Re-routing a gas pipe so that it lay within an area outside the let flat was not authorised by the rights or reservations in the leases.

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

Parents’ Council House Discount highlights need for comprehensive trust deeds on joint property purchases

Where property is bought by more than one person, and they are not husband and wife, it is important to have a trust deed setting out (or providing for) the shares the property will be held in and how the income (usually any rent) and outgoings (including mortgage payments, maintenance costs and council tax) will be shared between the parties and reflected in those shares.

In the Court of Appeal case of Richards v Wood (2014) Mr Richards’ parents in law (the respondents) did not have enough money to buy their council house so Mr Richards agreed to provide a large chunk of the purchase price.

At the time of the purchase Mr and Mrs Woods’ long tenancy of the house had qualified them for a significant statutory discount.

There was a trust deed which said the parties would be entitled to share in the house in proportion to their contributions.

It said:

“3. At the date of the said transfer the market value of the property agreed with the Oldham Borough Council was £23,500. The agreed discount to which the purchasers were entitled was £14,100 and the purchase price paid by the purchasers to the council was therefore £9,400. Part of the said purchase price of £5,000 has been provided by Mr Richards and the balance of £4,400 by the purchasers.”

Clause B of the trust deed said that on the sale of the property the proceeds would be divided:

“on the basis of the initial respective contributions set out in clause 3 above provided always that if the purchasers or Mr Richards shall expend further monies on the property by way of improvement such monies shall be regarded as an increase in the interest of the person so providing the same and shall be taken into account in any division of the proceeds of sale.”

In fact Mr Richards provided the whole of the £9,400.

Between August 1989 and October 1990 Mr and Mrs Wood paid for double glazing to be installed at a cost to them of £3,878.

In 2006 the house was valued with a view to it being sold and the Mr Richards beng paid out. The agent said a reasonable asking price would be £114,950 but that they would be “happy to ask slightly higher if you wish.” Their marketing fee would have been 1.5 per cent of the price achieved.

But Mr and Mrs Wood did not place the property for sale on the open market. Instead, Mr and Mrs Wood sold the house to their son, Michael and his wife Janet. The sale price was £102,000.

Mr and Mrs Wood and Mr Richards fell out over the valuation and how the proceeds were to be shared.

Mr Richards’ valuer arrived at a value of £111,000 and Mr and Mrs Woods’ arrived at a value of £105,000. However, they agreed that “the difference between their valuations was within an acceptable range of tolerance” as between chartered surveyors’ valuations and that since the sale did not involve an estate agent and deduction of their commission charges the agreed price was within a reasonable negotiation range of the market value.

So the court dismissed Mr Richards’ undervalue claim.

The question also arose whether Mr Richards was entitled to share in the statutory discount or whether it was to be treated as part of Mr and Mrs Woods’ contribution augmenting their own share in the house.

If there is no express provision in the trust deed that deals with the way in which an entitlement to statutory discount is to be treated, the courts have usually held that it is to be treated as a contribution in monies’ worth to the purchase price and here the court found that the discount was to be treated as a contribution by Mr and Mrs Wood.

This aspect of the litigation could have been avoided had the attribution of the discount been expressly covered in the trust deed.

Mr Richards argued that the expenditure on double glazing was only to be taken into account in any division of the sale proceeds and only to the extent that it added value at the time of the sale, and, that it was a repair, rather than an improvement to be credited to Mr and Mrs Wood.

But the court rejected this because the trust deed directed the spender’s increased interest in the property to be geared to the monies spent, not the value added. So the historic cost of the double glazing had been correctly deducted from what would otherwise have been Mr Richards’ share of the proceeds of sale.

Also it was an improvement because Mr and Mrs Wood had cared for the previous windows and they had not needed repairing.

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

Supreme Court Judgment on Planning & Historic Property Nuisance Claims

The recent Supreme Court case of Coventry & Ors v Lawrence & Anor [2014] involved the claimants’ bungalow which was across some fields from a speedway track and raised a number of issues in the law of private nuisance namely:

How far a defendant may contend that he has established a prescriptive right to commit what would otherwise be a noise nuisance;

The court concluded that you can obtain by long use a prescriptive right to commit what would otherwise be a nuisance by noise, or, in short, to transmit sound waves over neighbouring property.

But you had to ask whether the nature and degree of the activity over a period of at least 20 years, taken as a whole, would make a reasonable person on the receiving end of that noise aware that a continuous right to enjoy making noise was being asserted and ought to be challenged if the plan was to resist it.

Here there were some non fatal gaps in the defendant’s claimed use of the track. However what was fatal to this defence was that they had failed to show that their activities during the 20 years amounted to a nuisance. It was even insufficent to show that the activity has created a noise for 20 years. What had to be established was that the activity had (or a combination of activities had) created a nuisance over 20 years.

How far a defendant to a nuisance claim can rely on the fact that the claimant “came to the nuisance”;

In this case the speedway track had been going since 1976, the year after it got planning permission. Other motor sports and greyhound uses had been added to the planning later. However the claimants had only been there since April 2006 and their predecessors since 1984.

The court said that the victim “coming to the nuisance” was no defence to a nuisance claim. This stemmed from the fact that nuisance is a property-based legal wrong. The right to allege a nuisance ran with the land. So it would be odd if a defendant was no longer liable for nuisance merely because the neighbour had changed, even though his neighbour’s property was still being used the same way.

It followed that it might be a defence for a defendant that an activity had only become a nuisance because the claimant had changed the use of, or built on, their land.

The extent, if any, to which it is open to a defendant to a nuisance claim to invoke the actual use of his premises, complained of by the claimant, when assessing the character of the locality;

Here the court got into most difficulty. The court accepted the initial premise that the defendant’s activities are to be taken into account when assessing the character of the locality. The leading judgment then said that they would however not be acceptable so far as they amounted to a legal nuisance which appears entirely circular.

However it said they would be deemed lawful for those purposes if a court had already awarded damages instead of an injunction in respect of them.

Looking at the judgment the court do not seem to have squared the circle here. Perhaps the test is whether seen against the backdrop of the locality the defendant’s activities stand out as being a legal nuisance to the claimant which the claimant ought not reasonably to be expected to put up with at all, or at any rate without compensation.

How far the grant of planning permission for a particular use can affect that use being a nuisance;

The court adhered to orthodoxy. Granting planning permission did not mean that that development was entirely lawful. It just meant that the public law, public interest hurdle of planning permission had been cleared. Things could be a legal nuisance in the 19th century even when the requirement for planning permission had not existed.

Anyway it would be wrong in principle if a planning authority could deprive a property owner of their right to object to a nuisance, without compensation, when there is no appropriate provision for them getting such compensation in planning laws.

The approach to be adopted by a court when deciding whether to grant an injunction to restrain a nuisance, or whether to award damages instead, and the relevance of planning permission to that issue

Current authorities on this point were inconsistent.

The leading judge said the approach of the courts should be much more flexible than that suggested in some of them. It was entirely a matter for the court’s discretion.

Damages could be based on the loss of value to the claimants’ property caused by the nuisance.

But it was also suggested that damages should not be limited to this if the defendant might have paid the defendant more for a licence to commit the nuisance.

However, the leading judgment said there were factors militating against nuisance damages being assessed based on the benefit to the defendant in no injunction being granted.

As the court had heard no argument on the issue and held differing views, rather than cloud the issue further, the leading judgment said the fairest way to deal with the point was to refuse the defendants permission to raise it, but to hold instead that the judge’s order should contain a proviso that the defendants be free to argue for the judge’s injunction stopping the nuisance noise to be discharged, and damages awarded instead.

The decision whether to award damages instead of an injunction may be dependent on a number of issues, including the behaviour and attitude of the parties The trial judge would be better able to assess these. However the defendants would have to give the claimants sufficient notice of their intention to raise such arguments to enable the claimants to prepare.

However some members of the court indicated that the fact planning permission had been granted would not of itself cause the court to order damages rather than an injunction.

This blog is posted out of general interest. It does not replace tne 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.

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.