As another year draws to a close, Santa’s elves are busy manufacturing in his many workshops. But, much to Santa’s consternation, complaints about noise from one of these workshops threatened to bring production to a halt earlier this year, which could have caused a major festive hiccup.
Fortunately, the Supreme Court came to the rescue in Lawrence v Coventry (t/a RDC Promotions) [2014] UKSC 13; [2014] 1 EGLR 47, when it confirmed the arrival of a new easement in the form of a right to transmit sound waves over land and shook up the law on the availability of injunctions to protect property rights. Santa’s legal team used the decision to good effect and was able to negotiate a satisfactory outcome for all concerned.
Thanksgiving
Landlords celebrated early this year, following the Court of Appeal’s decision in Siemens Hearing Instruments Ltd v Friends Life Ltd [2014] EWCA Civ 382; [2014] EGILR 29 upholding and applying the common law rule requiring strict compliance with notice requirements when exercising options.
As a result, a technical defect in a break notice – which omitted meaningless words prescribed by the parties’ lease – rendered the notice ineffective, much to the tenant’s dismay and landlord’s relief.
Those who had hoped that Marks & Spencer plc v BNP Paribas Security Services Trust Co (Jersey) Ltd [2014] EWCA Civ 603; [2014] EGILR 32 would redress the balance, and mark a turning point in the battle for apportionments when a lease is broken, were also disappointed. The Court of Appeal applied the common law rule, laid down in Ellis v Rowbotham [1900] 1 QB 470, that rents payable in advance are not apportionable at common law, or under the Apportionment Act 1870, and refused to imply a term into a lease that would have enabled the tenant to recover rent paid in advance in respect of a period after a break date. All eyes will now be firmly fixed on the battle to persuade the Supreme Court to overturn the decision when the appeal is heard next year.
Meanwhile, the Supreme Court has refused to hear an appeal from the decision in Jervis v Pillar Denton Ltd [2014] EWCA Civ 180; [2014] EGILR 25. Landlords will be delighted that administrators must “pay as they go” while occupying leasehold properties for the purposes of an administration. However, the decision cuts both ways and, if rent is payable quarterly, administrators who are using premises on the quarter day will not have to pay a whole quarter’s rent as an expense of the administration if they vacate before the quarter ends.
Christmas comes early
Agents and construction consultants may find that Santa is less than generous this Christmas given the significant judicial presents already received this year. Property clients, on the other hand, may be looking to take some solace from a bumper stocking full of goodies from St Nick, given the paucity of judicial treats on offer.
In a series of cases, the High Court and Court of Appeal have emphasised a key point: not all mistakes made by professionals will necessarily result in damages (or what the innocent party might consider to be the correct amount of damages) being paid. The moral of a number of cases – including Gillian Harrison v Technical Sign Co Ltd [2013] EWCA Civ 1569 and Hunt v Optima (Cambridge) Ltd [2014] EWCA Civ 714; [2014] PLSCS 240 and Sainsbury’s Supermarkets v Condek Holdings Ltd [2014] EWHC 2016 (TCC); [2014] PLSCS 190 – is the need for clients to agree the terms of their contracts, especially the services and duty of care offered, as clearly as possible. Absent agreement, clients may find it very difficult indeed to establish a duty of care in tort of the type that will enable them to be compensated for their losses.
Clients also need to bear in mind that not all problems have a legal solution. In Northumbrian Water Ltd v Sir Robert McAlpine Ltd [2013] EWCA Civ 685; [2014] PLSCS 155, the Court of Appeal held that, because no-one knew of the existence of a private sewer in Newcastle’s city centre, McAlpine was not liable to Northumbrian Water when concrete leaked from McAlpine’s building site into the sewerage system.
Two other cases in particular stand out from what is a busy crowd. Consultants and their insurers will take great comfort from the Court of Appeal’s robust endorsement of net contribution clauses in West v Ian Finlay & Associates (a firm) [2014] EWCA Civ 316; [2014] EGILR 28, especially since the court doubted whether “any lawyer advising a commercial party to a building contract would be likely to object to such a term”. While not everyone agrees with that conclusion, it remains the most significant judicial comment on net contribution clauses to date and is likely to remain so for some time.
It wasn’t all doom and gloom for clients though. They can take some comfort from Green J’s decision in Northampton Regional Livestock Centre Co Ltd v Cowling [2014] EWHC 30 (QB); [2014] PLSCS 30, which stressed the difficulties that arise (outside of residential agency) when an agent acts for both the seller and purchaser of property. Unless both clients give fully informed consent, the agent will be in breach of fiduciary duty and have to refund fees earned.
Christmas crackers
In the residential sphere, 2014 saw two decisions of the Supreme Court on possession proceedings. First was Telchadder v Wickland (Holdings) Ltd [2014] UKSC 57; [2014] PLSCS 304 where the court decided that a breach of a covenant against antisocial behaviour can be remedied and that the occupier should be given notice before the owner takes steps to terminate the agreement and seek possession.
Second, in Sims v Dacorum Borough Council [2014] UKSC 63; [2014] PLSCS 315, the court decided that there was no breach of an occupier’s human rights where a landlord sought possession against a former joint tenant whose former partner had left and given a valid notice to quit to the landlord. This confirms a widespread practice by social landlords seeking to recover possession where a couple’s relationship breaks down, by asking the one who is rehoused to terminate the existing tenancy.
The eagerly awaited decision Phillips
v Francis [2014] EWCA Civ 1395; [2014] PLSCS 300 has clarified the position on statutory consultation requirements on residential service charges. Consultation is required where the costs of works to a leaseholder will exceed £250 per year. Overruling the High Court, the Court of Appeal confirmed that only specific works, the costs of which are likely to exceed this limit, require consultation. One should not aggregate the costs of works in a particular accounting period to see if the statutory limit will be exceeded.
Another high point this year was the much anticipated High Court decision in Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] EWHC 2433; [2014] PLSCS 216, in what is thought to be the largest ever collective enfranchisement claim. Mann J rejected all of the objections to the enfranchisement claim, paving the way for the claimants to acquire one of the best known residential and commercial estates in the country. It appears that there will be no appeal from the decision, since the parties have now settled.
On the legislative front, measured by its length, the Leasehold Reform (Amendment) Act 2014 is very modest, occupying as it does, just two sections. However, the amendments it made to the Leasehold Reform, Housing and Urban Development Act 1993 are far-reaching in their practical effects. It amends section 99, which deals with the notices that have to be given in new flat lease or enfranchisement claims, by removing the requirement that the notices must be personally signed by the leaseholders.
Finally, in Di Marco v Morshead Mansions Ltd [2014] EWCA Civ 96; [2014] EGILR 21 the court decided that a landlord’s obligation to give statements on service charges and other matters under provisions in the Landlord and Tenant Act 1985 is not enforceable by an injunction.
Hopes and fears
Sadly, the battle for priority between lenders and sale-and-leaseback tenants in Scott v Southern Pacific Mortgages Ltd [2014] UKSC 52; [2014] PLSCS 288 ended in tears for the tenants and may mean that some will be looking forward to their last Christmas in their current homes. Will the forthcoming Law Commission review of aspects of land registration law offer the court more options in the future? We must wait and see.
Meanwhile, the Law Commission’s suggested changes to the law on rights to light have provoked much debate and elicited many comments. It remains to be seen whether Parliament will adopt its proposals. However, it is probably safe to say that the hopes and fears of many have been met, in one way or another, in 2014.
Stuart Pemble is a partner at Mills & Reeve LLP, James Driscoll is a solicitor and author and Allyson Colby is a property law consultant
