The Legal Notes team of Louise Clark, Elizabeth Dwomoh and Stuart Pemble present their annual festive round-up of the year’s major cases.
It was the eve of Christmas and the partners of Ditchim, Quicke & Hyde were enjoying a warming glass of mulled wine together before the holiday and reflecting on the year. Like the Supreme Court and the Court of Appeal, the firm had received many referrals. Theirs were from a grateful client, Maya Truelove, whom the firm’s family team had extricated from a nasty relationship on favourable terms.
In the last 12 days, it seemed, she had been particularly busy.
On the 12th day before Christmas, Maya Truelove had referred 12 landowners, whose land was subject to a compulsory purchase order, for advice on compensation.
Will Ditchim had reassured them that they were entitled to the open-market value of the land. This includes any enhanced value resulting from planning permission in force and in prospect at the valuation date, as well as appropriate alternative development where such planning permission could reasonably have been expected to be granted, at the valuation date.
And – drum roll, please – the clients could benefit from the Supreme Court’s decision in Secretary of State for Transport v Curzon Park Ltd and others [2023] UKSC 30; [2023] EGLR 36 that, when considering a certificate of appropriate alternative development, it is for the local authority to decide what weight to give to such applications or decisions on other land.
On the 11th day before Christmas, Maya Truelove’s local music group (oddly made up of 11 players of the flute and piccolo) wanted to know if the defective work done recently to their rehearsal room was covered solely by the all-risks insurance policy jointly covering the group and its contractor. Could the group still sue the contractor for its poor workmanship?
Thankfully, Sue Quicke recalled the Court of Appeal’s decision in FM Conway Ltd v The Rugby Football Union and others [2023] EWCA Civ 418, which stressed that the answer depended on the insurance provisions of the contract in question, a tricky bit of analysis that she promised the group would liven up her otherwise dull January.
Quicke, a clarinet player herself, also helpfully suggested that the 11 pipers might want to add a few more instruments to their repertoire.
On the 10th day before Christmas, Maya Truelove sent along 10 qualifying tenants whose landlord had leapt over their right of first refusal under the Landlord and Tenant Act 1987.
Could recent case law help? Ronan Hyde confirmed that the two decisions in Prescott Place Freeholder Ltd and others v Batin and another [2023] EWHC 435 (Ch) and [2023] EWHC 1445 (Ch) just might.
In March 2023, in a similar scenario, the court decided that an “incumbrance”, under section 12B(5)(b), was not limited to registered incumbrances. However, an order made under section 19 – compelling the freeholder to convey the freehold interest to the nominee purchaser – did not prohibit it from granting further interests out of the land. Leaping lords! Would offending landlords escape sanction?
In June 2023, the court confirmed that a section 19 order took immediate effect as an interest in land and, if registered, would take priority over any equitable leases subsequently granted. But the real pot of gold for the tenants – which could help these clients – was the court’s determination that it had power to grant a final injunction to restrain unconscionable conduct by a freeholder attempting to circumvent a section 19 order.
On the ninth day before Christmas, Maya Truelove had met nine dancers threatened with legal action if they did not pay service charges demanded for their studio. They objected to many of the items, or sums claimed, in their landlord’s service charge certificate.
Ditchim advised that, in Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2; [2023] EGLR 16, the Supreme Court decided that where, as here, a lease provides that a landlord’s certificate as to service charge payable is conclusive as to the sum the tenant is required to pay, then (absent error or fraud) the contractual words prevail.
However, payment of the certified sum does not preclude the tenant from challenging liability at a later date. So, to keep on dancing, the dancers had to pay, but could raise objections later.
On the eighth day before Christmas, Maya Truelove queried whether there was a VAT-efficient way to develop, lease (to the Milkmaids’ Benevolent Fund, a local charity) and then sell land she had retained from her former relationship.
Her ex had exercised the option to tax on the land, meaning that Truelove might have to charge VAT on the sale and account to HMRC. She had heard that complicated and circular drafting in the Value Added Tax Act 1994 and Value Added Tax Regulations 1995 might help where the landowner is a developer and the tenant provides VAT-exempt supplies (as is the case with a charity).
Hyde had to break the news that, following the Supreme Court’s decision in Moulsdale (trading as Moulsdale Properties) v Commissioners of HM Revenue and Customs [2023] UKSC 12; [2023] EGLR 22, the circular drafting was to be interpreted against tax avoidance and so VAT was almost certainly chargeable.
On the seventh day before Christmas, Maya Truelove sent swans a-swimming in the minds of the firm by asking the true meaning of “live/work”. Hmm, was this a philosophical question, like “what is the meaning of life?”
Eventually, the egg hatched. Truelove was referring to a clause in her nephew’s lease. Quicke referred her to the decision of the Court of Appeal in AHGR Ltd v Kane-Laverack and another [2023] EWCA Civ 428; [2023] PLSCS 71 where the court decided that, depending on the facts of the case, the phrase “live/work” in a lease could mean to “live and/or work” or to “live and work”.
On the sixth day before Christmas, Maya Truelove laid before them a man with a plea, to find his golden goose. The disgruntled client had agreed with a property owner that if he introduced a buyer for the property at £6.5m, he would receive commission of £1.2m. The client had introduced such a buyer although the eventual sale was for £6m. The property owner was refusing to pay. What could be done?
Allaying no fears, Hyde had to advise that the Supreme Court had confirmed in Barton and others v Morris and others [2023] UKSC 3; [2023] EGLR 17 that a contract does what it says and only what it says unless terms can be implied by law or “go without saying”. The client agreed that he had not been obliged to perform the contract. So while the property owner had been enriched, that was the bargain the parties had made and, therefore, not unjust.
On the fifth day before Christmas, Maya Truelove posed the query whether an architect’s negligent design of the former HQ of the well-known French jewellery store Cinq Anneaux D’or was actionable and, if it was, when the cause of action accrued. The design was so poor that the shop had been sold and arguably the jewellers had not suffered any loss.
The Court of Appeal’s judgment in URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772; [2023] PLSCS 116 gave Ditchim an easy answer. Designers (like architects) can owe a duty of care not to cause economic loss to their clients’ proprietary interest and, where there is no physical damage, the cause of action accrues at practical completion.
On the fourth day before Christmas, Maya Truelove called offering Blackbirds, a fledgling telecoms operator, seeking renewal of agreements under the Electronic Communications Code. Quicke confirmed that, thanks to the purposive approach adopted by the Court of Appeal in Vodafone Ltd v Potting Shed Bar and Gardens Ltd and another [2023] EWCA Civ 825; [2023] EGLR 31, holders of concurrent leases subject to pre-existing code agreements, like Blackbirds, are entitled to terminate or modify a code agreement.
In overturning the Upper Tribunal (Lands Chamber) decision that concurrent lessees could not be treated as “a party to the agreement”, the Court of Appeal gave effect to the intention of the Code, not just the words used. Those entitled to the benefit and burden of an agreement – both as operator and site provider – are to be treated as parties to the agreement whether or not they are the original parties to the agreement or their successors in title.
On the third day before Christmas, Maya Truelove presented instructions from three cackling French tenants, whose immediate landlord, Paille, was in control of an unlicensed house in multiple occupation. They wanted to obtain a rent repayment order against the superior landlord, Faverolles, due to Paille appearing to be a “straw company”.
Alas, Ditchim had to tell them not to count their chickens. In a straightforward interpretation of sections 40(2) and 40(2)(a) of the Housing and Planning Act 2016, the Supreme Court decided in Rakusen v Jepsen and others [2023] UKSC 9; [2023] EGLR 20 that an RRO could only be made against the immediate landlord of the tenancy that generated the relevant rent.
On the second day before Christmas, Maya Truelove sent Frey and Kit Turtelduv, whose tenants were challenging their contractual right to apportion service charges in a different way to that stated in their leases. The tenants argued that the Turtelduvs’ apportionments were void under section 27A(6) of the Landlord and Tenant Act 1985.
Hyde gleefully referred them to Williams and others v Aviva Investors Ground Rent GP Ltd and another [2023] UKSC 6; [2023] PLSCS 29, in which the Supreme Court threw traditional orthodoxy up in the air.
The First-tier Tribunal had no jurisdiction to determine the apportionment of service charges or to make discretionary management decisions. Section 27A(6) was only engaged if a contractual provision sought to oust the jurisdiction of the FTT to review the lawfulness of the service charge demanded. The clients flew happily away.
On the day before Christmas, Maya Truelove referred Ava Partridge who had built a treehouse in her pear tree. Her neighbours had complained of overlooking and were threatening legal action to prevent her using it. Could they do this? Quicke thought it unlikely.
The Supreme Court had considered two cases of nuisance recently. Jalla and another v Shell International Trading and Shipping Co Ltd and another [2023] UKSC 16; [2023] EGLR 24 confirmed that, for there to be a continuing nuisance, there must be a repetition of the activity or omission.
Fearn and others v Board of Trustees of Tate Gallery [2023] UKSC 4; [2023] EGLR 14 decided that the Tate Modern was responsible for the visual intrusion caused to the claimants by thousands of people on its viewing gallery continually looking into their flats – a far cry from potential overlooking from a pear tree!
The Supreme Court set out and confirmed the fundamental principles of nuisance. These include that overlooking is not actionable. Partridge can remain in her pear tree.
With property law remaining at the forefront of judicial activity, Ditchim, Quicke and Hyde raise their glasses to an eventful 2023 and look forward to an equally exciting 2024 as busy lawyers, lawyering. Happy days!
Season’s greetings to all our readers.
Louise Clark is a property law consultant, Elizabeth Dwomoh is a barrister at Lamb Chambers and Stuart Pemble is a partner at Mills & Reeve
