Guy Fetherstonhaugh QC plays fortune teller once again, with his annual forecast of many of the major property cases heading to the courts this year
Given that the two arguably most significant influences in 2016 on the economy, the real estate world and wellbeing (well, pretty much everything really) – Brexit and Trump – caught the crystal ball gazers napping, it is with some trepidation that I attempt again to look through the glass darkly at what might be in store for us in 2017. But let me start on safer ground with the known knowns, derived from discussions in chambers as to who will be doing what over the course of the year ahead. That seems to me to be a pretty good basis for a survey of the property litigation market.
Development and sale of land
First, then, development agreement disputes. Last January, the High Court heard the claim in Generator Developments LLP v Lidl (UK) GMBH [2016] EWHC 814 (Ch), in which the claimant alleged that the defendant was bound by a constructive trust in respect of land bought with a view to a joint venture between the parties, before the defendant sought to find another development partner. Such trusts (“Pallant v Morgan trusts”) have assumed increased importance in recent years, and the decision in this case cast useful light in the area. The losing party will be seeking permission to appeal to the Court of Appeal on 16 March. If permission is granted, the views of the Court of Appeal will add valuable content to the growing body of law in this area.
The Court of Appeal will be asked for its views concerning another development in February, when Burrows Investments Ltd v Ward Homes Ltd [2015] EWHC 2287 (Ch); [2015] PLSCS 266 is to be heard. In that case, if the appellant wins on a preliminary point of interpretation, the court will be asked to consider whether or not damages in lieu are available where, in breach of contract, a developer disposes of land without obtaining the landowner’s consent. The developer’s solicitors had certified to the Land Registry that all contractual requirements had been complied with, thereby enabling the transfer to be registered. The question often arises, and it will be interesting to see how the Court of Appeal approaches the point.
Turning more generally to land sale contracts, the Court of Appeal will also be asked in February, in Royal Mail Estates Ltd v Maples Teesdale (a firm) [2015] EWHC 1890 (Ch); [2015] EGLR 55, whether a provision in a sale contract that it was personal to the buyer was an “agreement to the contrary” for the purposes of section 36C of the Companies Act 1985. In that case, the defendant had signed a contract on behalf of a company, yet to be formed, for the acquisition of a substantial property. The contract had not been completed, and the property was sold on to a third party. The claimant argued that the defendant was personally liable for the shortfall between the contract prices, amounting to some £5.1m, because section 36C had that effect in circumstances where an agreement is made with a company that has not been formed, “subject to any agreement to the contrary”. The defendant argued, unsuccessfully, that there was an agreement to the contrary, namely a provision in the contract that it was personal to “the buyer”, being the unformed company.
Landlord and tenant
In addition to land sale cases, the courts will again be asked to decide some intricate landlord and tenant disputes. Firstly, in Heron Quays (HQ2) T1 Ltd v The Joint Administrators of Lehman Brothers Ltd, due to start at the end of January, the High Court will be asked to determine a range of issues springing from the collapse of Lehman Brothers in 2008 – a financial crisis case if ever there was one. Although the issues are many and various, the most substantial one concerns the question whether landlord and tenant law should be brought into line with contract law, allowing recovery for repudiatory breach following lease termination of damages reflecting the lost rental income stream.
Secondly, EMI Group Ltd v O&H Q1 Ltd [2016] EWHC 529 (Ch); [2016] EGLR 26 is heading for the Court of Appeal in May, enabling heavyweight analysis of the correctness and effect of Lord Neuberger’s obiter dictum in K/S Victoria Street v House of Fraser (Stores Management) Ltd and others [2011] EWCA Civ 904; [2011] 2 EGLR 11 that, because of the Landlord and Tenant (Covenants) Act 1995, a lease “cannot be assigned” by the tenant to its guarantor.
Thirdly, the revival in Landlord and Tenant Act 1954 business tenancy renewal applications will be continued in January in Norfolk Square Ltd v M&P Enterprises Ltd – a case where the landlord is opposing renewal on the ground of its tenant’s conduct.
Lastly, we are also likely to see even more break clause cases, as parties seek to understand their rights in the light of the decision of the Supreme Court in Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd and another [2015] UKSC 72; [2016] EGLR 8.
Leasehold enfranchisement
As with last year, leasehold enfranchisement disputes will continue unabated, given the convoluted nature of the statutory material, the amount of money at stake, and the courts’ willingness to hear appeals in this area. If you thought that there were enough cases on the question whether a building is a house, you would be wrong: in Merix International Ventures Ltd v Grosvenor (Mayfair) Estate in March, the court will be asked to decide whether a six-storey Edwardian mansion in Upper Grosvenor Street, five floors of which were last used as offices, is indeed a house.
Similarly, it seems that there are not enough notice validity cases either in the leasehold world: in the same month, in Miltonland Ltd v Platinum House (Harrow) RTM Co Ltd [2015] UKUT 236 (LC); [2015] PLSCS 192, the Court of Appeal is being asked to rule on the validity of a notice of claim in a right to manage case.
Lastly, in Curzon v Wolstenholme and others [2015] UKUT 173 (LC); [2015] PLSCS 122 in July, the Court of Appeal will hear an appeal in a collective enfranchisement case as to, first, whether a section 13 notice survived a transfer of the freehold at a time when the notice was not protected on the register; and secondly whether an agreement as to the price to be paid for the freehold before other terms are agreed is binding.
Restrictive covenants
Real property disputes will also receive some attention in the appeal courts, mainly in the arena of restrictive covenants, as people with restrictions on the use to which they can put their property seek to extend what they can do. In July, the Upper Tribunal will hear an application in Pendennis Shipyard (Holdings) v A&P Falmouth, in which the claimant yacht builders ask for a modification of a covenant prohibiting boat building on adjacent land acquired by them (originally imposed, ironically, to prevent competition with the claimant’s business), to allow the opposite.
Meanwhile in January, another round of the long running dispute in Hicks v 89 Holland Park (Management) Ltd [2014] EWHC 2962 (Ch); [2014] PLSCS 252 will be heard in the Chancery Division, this time to consider whether the holder of the benefit of a covenant was reasonably entitled to withhold consent to a development. Although there are many cases concerning such covenants, few explore their practical ramifications, and this is one to watch for.
Other business
Niche areas will not be neglected. In Downs v Lewis in March, the Upper Tribunal will be asked to consider the length of the period during which a tenant farmer must satisfy the principal source of livelihood test in order to be eligible to succeed on retirement by a relevant relative. In Balogun v Boyes Sutton & Perry [2015] EWHC 275 (QB) in January, the Court of Appeal will consider the important question to what extent does a solicitor have to venture beyond a client’s instructions, and consider matters that were within the client’s direct knowledge and expertise, when advising in a commercial leasehold transaction.
And finally in O’Connor v The Proprietors, Strata Plan No. 51, the Privy Council will be asked to decide an appeal from the Turks & Caicos about the interpretation of condominium bylaws and their validity in the light of the relevant ordinance.
Legislation
This rich and varied bag of New Year litigious goodies will be accompanied by some legislative activity in the property field. We wait to see in what state the already awful piece of drafting that is the Electronic Communications Code will finally emerge following the consideration by both Houses of its almost equally awful successor in the Digital Economy Bill. We also wait with un-bated breath to see the fate of the Property Boundaries (Resolution of Disputes) Bill, recently launched in the House of Lords – although we would urge boundary disputants instead to peruse the third property protocol on the subject, shortly to be launched at www.propertyprotocols.co.uk. And we will see the first disputes emerging under the Pubs Code 2016.
These are the cases in which I and members of my chambers are principally involved. There are many others. 2017 will be an interesting year.
Guy Fetherstonhaugh QC is a barrister at Falcon Chambers
