Real Estate Bulletin - Winter 2018/19

A welcome from the editor...

Welcome to the winter edition of the Real Estate Bulletin. This quarter, we look at cases involving 'occupation' for the purpose of business rates, how long a beneficiary has to enforce collateral warranties, what it means to be 'ready, willing and able' to complete, where the duty of care lies in relation to valuation reports, triggers for overage payments and whether you can have an easement for recreational rights. We revisit a case on the impact of Japanese Knotweed and of course, the Bulletin wouldn't be complete without some decisions on Town or Village Greens. For landlords and tenants, we look at one of the few cases brought under the Commercial Rent Arrears Recovery legislation, how to avoid creating a perpetually renewable lease, opposing lease renewals on the redevelopment ground and we revisit a case on misrepresentations made during lease negotiations. The planning point covers an appeal over an inaccurate enforcement notice. The Bulletin brings together highlights from our popular quarterly update training sessions, so if you are local to the East Midlands or pass through every now and again and would like details of our next event in March, please get in touch.

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Case Law Update

Business rates - occupation: R (Principled Offsite Logistics Ltd) v Trafford Council & Others

Key points:

• Liability for business rates on empty properties falls on the 'owner' - i.e. the person entitled to possession of the rateable property

• An owner can get a period of exemption if the property is unoccupied

• If the property is then occupied for a period of at least six weeks, during which time the occupier pays the rates, the owner can claim another exemption when the property becomes unoccupied again

• Short-term lettings can be a useful way for property owners to mitigate rates liability

POLL's primary business is entering into short-term leases of vacant business premises at a peppercorn rent for storage purposes with a view to reducing landlords' rates liability. The lettings trigger empty rates relief for a period of three or six months (depending on the nature of the property) and POLL charges the landlords a fee of 20% of the amount of rates saved. Whilst the lettings were genuine, they were challenged by a number of local authorities. The court had to look at whether the lettings were capable of giving rise to 'rateable occupation' such that liability to pay rates fell on POLL for the duration of the leases and whether this entitled the relevant landlords to empty rates relief when the leases came to an end. The local authorities were unsuccessful in their challenge.

 

Practical implications:

The arrangements with POLL satisfied all four tests for rateable occupation: (1) actual occupation; (2) exclusive occupation for the particular purposes of the occupier; (3) possession that was of some value or benefit to the occupier; and (4) possession that is not for too transient a period. Here, the third test was key - did possession provide some value or benefit to POLL? The Court saw no reason why the thing that was of value couldn't be the occupancy itself and POLL's motive in taking short-term lets was not relevant. Since empty rates relief was introduced in 2008, we've seen a number of cases where property owners and occupiers have sought to claim exemptions and not all have been successful. Many cases pending in the Magistrates' Courts were stayed pending the decision in this case, so whilst it seems like good news for property owners, the affected local authorities may appeal given the collective amount of rates income that could be at stake. Watch this space!

 

Construction - collateral warranties: Swansea Stadium Management Company Ltd v City & County of Swansea & Another

Key points:

• Where a claim is made under a contract executed as a deed, the limitation period is generally 12 years from the date of breach

• Collateral warranties sometimes state that the liability period runs from Practical Completion (PC), not from the date of the deed

• This is a question of intention

SSMC operates the Liberty Stadium, which was built over the course of two years, with PC being certified as at 31 March 2005. SSMC took a 50 year lease of the stadium, which imposed a full repairing obligation on the tenant. The building contractor entered into a collateral warranty with SSMC sometime in April 2005, but the document was not dated and did not contain any express commencement or expiry dates! After PC, the building contractor dealt with various snagging items and initial defects, but SSMC claimed there were more substantial and serious defects with the construction of the stadium and so brought proceedings for breach of warranty on 4 April 2017.The building contractor argued SSMC was out of time because the cause of action under the warranty arose on PC; SSMC argued time hadn't started to run until sometime after PC, when the collateral warranty took effect. The Court found in favour of the building contractor, deciding that the parties had intended the warranty to operate retrospectively from PC. However, SSMC did have a second claim relating to the building contractor's failure to rectify the defects alleged, which it may continue to litigate.

 

Practical implications:

Ideally collateral warranties should be completed at the same time as the agreement for lease or lease, but they sometimes follow on after the event. As defects may not come to light immediately, it is important to know exactly when time starts to run for claims under the warranties. Please contact a member of our Construction Team for advice about entering into or enforcing collateral warranties.

 

Contracts - notice to complete: Cantt Park Ltd v Pak Southern China Property Investment Ltd

Key points:

• Generally, either party to a contract can give the other party notice to complete at any time on or after the contractual completion date

• The party serving the notice must be 'ready, able and willing' to complete itself

• If the defaulting party doesn't complete in accordance with the notice, the innocent party is entitled to rescind the contract

CP exchanged contracts to sell a property, part of which was occupied by various commercial entities under licence arrangements. The contract provided that CP would sell with vacant possession (VP) on completion. PSC failed to complete on the contractual completion date of 1 December 2016. On 8 December 2016, CP served a notice to complete on PSC and the parties agreed that, if the notice was effective, the notice period would expire at 1.00pm on 22 December 2016.Completion did not take place by the deadline, so CP served a notice of rescission on PSC and proceedings followed. PSC argued the notice to complete was invalid, as CP had not been ready, willing and able to secure VP at the time it served the notice, and, even if it was valid, CP was in breach by failing to have actually secured VP by the completion deadline. CP argued it had been ready, willing and able to secure VP when it served the notice, but acknowledged that at some point during the notice period, it had become impossible for CP to do this by the deadline. Arguably, therefore, CP was in breach, but, as PSC failed to pay over the purchase price by the deadline, CP was still entitled to rescind. The Court found for CP. On the evidence, the judge decided that when CP served the notice to complete it was in a position to give VP on or before the completion deadline and therefore was ready, willing and able to complete. CP's failure to secure VP had given PSC a choice: (1) to rescind the contract; or (2) treat the contract as continuing. PSC chose not to rescind, so it was obliged to comply with its own requirement to pay the completion monies. PSC was in repudiatory breach by failing to do so, and CP was entitled to accept the repudiation, notwithstanding its own breach.

 

Practical implications:

The validity of a notice to complete is judged only at the time it is served. There is no requirement that the person giving the notice must remain ready, willing and able to complete throughout the notice period.This decision is a useful reminder of the options available to a party to a contract when faced with a repudiatory breach by the other party. If the non-defaulting party chooses not to terminate the contract, it will still be required to comply with its own contractual obligations, although other remedies may be available in relation to the defaulting party's breach.Sellers of occupied properties can be in a difficult situation - if they are receiving income from the property, but have agreed to sell with VP, they need to be certain that the sale is going to complete before terminating the occupational arrangements. If a seller takes steps to secure VP but the buyer doesn't complete, the seller will have lost income and will need to spend time and money getting new occupiers in or finding another buyer. This case may be of comfort to sellers, as it shows a seller's failure to comply with an obligation to provide VP will not necessarily prevent it from rescinding the contract if the buyer fails to complete. However, sellers may need to act quickly in case the buyer decides to try and terminate the contract based on the seller's breach. Whether you are on the serving or the receiving end of a notice to complete, you should always take advice on your options and tactics - speak to a member of our Real Estate Litigation Team.

 

Development - overage triggers: London & Ilford Ltd v Sovereign Property Holdings Ltd

Key points:

• Sellers often sell development sites subject to overage provisions

• These provisions require the buyer to pay some additional consideration on the happening of certain trigger events

• To assist with the housing shortage, the Town and Country Planning (General Permitted Development) (England) Order 2015 (the Order) grants deemed planning permission for change of use from office to residential, subject to prior approval

LIL bought a mixed-use building for £7.35M, intending to change the use, under permitted development rights, to residential. LIL wanted to convert the building into a block of at least 60 flats. The sale contract obliged LIL to pay the seller, SPH, additional consideration of £750,000 on the occurrence of a “First Trigger Event” during the agreed overage period. The First Trigger Event was defined as “the receipt by the buyer of a Prior Approval in relation to a proposal for the Development relating to a minimum of sixty (60) Residential Units shown on the plans or such other similar scheme submitted by the Seller that delivers a minimum of sixty (60) Residential Units at the Property”. A “Prior Approval” was defined as written notice from the local planning authority giving its prior approval under the Order in respect of the proposed development. LIL did receive prior approval for a scheme consisting of 60 flats from the local planning authority within the overage period; however, not all 60 of the flats could actually be built, because a number of them would contravene Building Regulations. LIL therefore argued that the requirement to pay the additional £750,000 had not been triggered because the scheme would not deliver the minimum of 60 units. The courts (this matter went through the High Court and on to the Court of Appeal) did not agree. The trigger event in the contract was clear and related only to obtaining prior approval in accordance with the planning regime; building control is an entirely separate regime and the contract made no mention of compliance with Building Regulations or any other requirements that may have impacted on the physical construction and delivery of the scheme.

 

Practical implications:

A stark (and expensive) reminder that careful definition of trigger events in contracts is essential. In relation to overage arrangements, the parties will have different agendas, particularly around when payment should be triggered and the courts will not cut experienced and legally-advised developers any slack if they sign up to a bad deal. LIL will have to pay the extra £750,000 even though it cannot fully develop a 60-unit scheme and it may have been better off entering into a contract that was conditional upon it obtaining a 'satisfactory' planning consent and maybe given itself some 'wriggle room'.

 

Easements - recreational rights: Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd

Key points:

• There are four long-established conditions that must be met for a right to be capable of being a legal easement
• For the first time, the courts have had to consider whether recreational rights are capable of being legal easements

RVT owned a timeshare holiday park in Kent and DRE owned the adjacent Broome Park Estate. The holiday park was sold off in 1981 together with the benefit of rights in relation to service and access and, crucially in this case, rights to use the swimming pool, golf course, squash and tennis courts and other outdoor and indoor sporting and recreational facilities that were located on the Broome Park Estate.The facilities had fallen into disrepair, and whilst the timeshare owners made voluntary payments towards maintenance and upkeep, they ultimately brought proceedings through the trustee company RVT, for a declaration that they were entitled to use all of the sporting and recreational facilities for free. The question for the courts (all of them, as this went all the way to the top!) was whether the rights were personal rights (so had to be paid for) or legal easements (so went with the property and could be used for free).The High Court found the rights were easements and could be used free of charge. The Court of Appeal upheld this decision, save in relation to the use of the indoor facilities, which it said were personal rights to use chattels and services. The majority of the Supreme Court found in favour of RVT - the rights, including in relation to the indoor facilities, were easements, which benefited the holiday park and did not deprive the owner of Broome Park Estate of its own use of the Estate (an argument DRE ran, unsuccessfully).

 

Practical implications:

Whilst recreational easements have come to be recognised in other jurisdictions, this is the first time the courts in England and Wales have had to consider the issue and they have created some new law in the process, by taking account of new types of property ownership (such as timeshare) and different ways of enjoying the use of land. When buying land that is subject to the legal rights of others, it is important to be clear about the nature and extent of the rights granted and, importantly, who pays for what.

Environmental - nuisance - Japanese Knotweed: Williams v Network Rail Infrastructure Ltd and Waistell v Network Rail Infrastructure Ltd

Key points:

• Japanese Knotweed is highly invasive and its presence on or near to properties can render them unmortgageable and therefore potentially unsaleable
• Property owners need to take appropriate steps to stop Japanese Knotweed not only from encroaching onto adjoining properties but also to prevent its growth close to boundaries
• Private nuisance is a violation of property rights involving either an interference with the legal rights of a landowner (for example, interference with an easement) or interference with the amenity of the land

Regular readers may recall this case from 2017. Two couples (W) owned the freehold interest in adjoining semi-detached bungalows that abutted a railway embankment and access path owned by NR. The embankment and path had been infested with Japanese Knotweed for 50 years and had persistently spread to the adjoining bungalows. W brought their claim in private nuisance, claiming that the Japanese Knotweed had also spread into the foundations of their properties. W argued their claim in two ways: (1) encroachment of the Japanese Knotweed onto their land; and (2) its presence on NR's land, which they argued interfered with the enjoyment or amenity value of their land and affected their ability to sell their properties at market value. The County Court found in favour of W and the Court of Appeal has dismissed NR's appeal. Its knowledge of the presence of the Japanese Knotweed and its failure reasonably to prevent the interference with the amenity of the bungalows (that is, the right to use and enjoy the land) were sufficient to give rise to a cause of action in nuisance and damages were awarded for this. However, unlike the County Court, the Court of Appeal said that an action in nuisance for diminution in value due to the presence of Japanese Knotweed is not possible, as this would be an action for pure economic loss. Although, the interference arose from a natural occurrence (i.e. the growth of weeds), the Court ruled that NR ought to have known that the presence of knotweed created a risk for W, and, from the time it ought to have known, it failed to take sufficient steps to eradicate it. Whilst it had undertaken some treatment between 2013 and 2016 (including spraying it with herbicide) the Court found this to have been inadequate.

 

Practical implications:

Owners and occupiers should not allow Japanese Knotweed to spread outside their land - causing it to grow in the wild is an offence under the Wildlife and Countryside Act 1981, carrying maximum penalties of an unlimited fine and two years' imprisonment. Allowing it to spread to an adjoining property may also amount to a statutory nuisance (as well as a private nuisance, as in this case), giving the local authority a power to serve an 'abatement notice' requiring it to be controlled. Breach of an abatement notice is an offence. This can be a particular issue on development sites, particularly those that have been cleared or disused for a period of time. Environmental regulators now have powers to serve 'species control orders' on landowners and occupiers requiring them to control Japanese Knotweed on their land. Breaching a species control order is also an offence. When treating Japanese Knotweed, there are a number of regulatory issues to consider - for example, only approved herbicides may be used and there are strict controls on the management of Japanese Knotweed waste. The safest solution is to use a competent contractor who can provide an insurance-backed guarantee. The Court of Appeal also said there was no reason why, in appropriate circumstances, a claimant should not be able to obtain a final mandatory injunction where the amenity value of land was diminished by the presence of roots, even though there was no physical damage at the time. For further advice on this issue, please contact a member of our Planning & Environmental Team.

 

Security - duty of care - valuation: Rehman & Another v Santander UK PLC & Another

Key points:

• In a claim for negligence, the claimant needs to show the defendant has breached its duty to exercise reasonable skill and care
• In the context of commercial lending, the courts are reluctant to extend the existing limits of the duties of lenders and of valuers
• In any valuation report, the 'small print' - disclaimers, addressee etc. - is almost as important as the content

SUK provided a refinanced loan facility to a company that operated two nursing homes, subject to an acceptable valuation of the two properties being charged. SUK also required personal guarantees, including from the company's directors and shareholders, R. SUK instructed the valuer, B, to produce valuation reports. The finalised reports were stated to be private and confidential and not to be relied upon by any third parties without B's consent. R provided the personal guarantees and, as the valuation report was satisfactory, the loan of £2M was advanced. The company defaulted on the loan and went into administration, so SUK sought to enforce the personal guarantees. Ultimately the nursing homes were sold and the proceeds paid over to SUK. R brought proceedings against both SUK and B, alleging breaches of various duties of care, but were unsuccessful against both defendants. The Court found that the valuation reports were produced for SUK's own internal purposes and that simply by confirming the valuations were acceptable and advancing the loan, SUK was not making any representation to R about the accuracy of the report or the competency of the valuer. In relation to the claim against B, the Court found no evidence to suggest B was even aware of R's involvement, never mind consenting to them relying on the reports' content.

 

Practical implications:

Given the express limitations set out in the reports, this decision is not a huge surprise, but in similar circumstances, lenders and valuers are usually the opposing sides in the litigation, so this decision is at least of comfort to both! Lenders are reminded of the importance of the 'small print' of valuation reports, particularly in terms of reliance and guarantors would be well-advised to seek their own valuations in relation to high-value loans. 

 

Town or Village Green - 'as of right': TW Logistics Ltd v Essex County Council & Tucker

Key points:

• Registration of land as a town or village green (TVG) means the landowner's ability to develop the land is severely restricted
• This doesn't mean a landowner cannot continue to use the land for its commercial activities, provided this is not incompatible with the public's recreational use

TWL owned and operated two quays in the port of Mistley in Essex. In September 2008, TWL fenced off a previously-open quayside, used by local residents and for the commercial activities of TWL, as the Health & Safety Executive had raised concerns about employees and others falling into the water. A couple of years later, Mr T applied to register an area of land, including the quayside as a TVG. After a public inquiry, ECC registered the quayside accordingly, based on use by local residents for lawful sports and pastimes over a 20 year period ending with the erection of the fencing in 2008. The pastimes in question included walking, with and without dogs, crabbing and feeding the swans. TWL applied for judicial review of ECC's decision to register the quayside as a TVG. One of TWL's objections was that the recreational use by local residents had been enjoyed with TWL's implied permission, based on the long-standing mix of recreational and commercial use. The Court of Appeal didn't agree, saying that there was a difference between permission (whether express or implied) and toleration or acquiescence. Based on the evidence presented to the Court, TWL had tolerated the recreational use, it had not permitted it.

 

Practical implications:

Advice to landowners is pretty consistent: ensure that members of the public using your land are doing so only with your permission. Practical solutions include erecting clear signage in prominent positions which state that access to the land is with permission; physically preventing access and regularly inspecting boundary features and carrying out repairs if, for example, fences have been broken down in particular places.Anyone looking to buy areas of open land, even if not the traditional greenfield site, should inspect the site and the boundaries and be alert to indications that other people have been using the land. A successful TVG registration will seriously hamper your ability to develop the site, if that is your intention. It can also impact on a proposed change of use, if the intended commercial activities are incompatible with the recreational use. 

 

Town or Village Green - trigger events: Cooper Estates Strategic Land Ltd v Wiltshire Council

Key points:

• Certain statutory trigger events can prevent land being registered as a town or village green (TVG)
• These can provide some relief for landowners from the risk of their land being registered, but they can be revoked

CESL owned an area of land in Wootton Bassett that had been used as amenity land in a residential area, prior to the land being fenced off. WC accepted an application to register the land as a TVG, which CESL challenged on the basis that a statutory trigger event had occurred. The trigger event CESL relied on was that the land in question had been identified in a development plan document for potential development. CESL asserted that two policy documents forming part of the Wiltshire Core Strategy 2015 identified the land for potential development. The question for the Court was whether there was a sufficient connection between the development plan document and the land in question. In this case, the Core Strategy identified various areas, including the market town of Wootton Bassett, as suitable for development and the Court found that WC should not have accepted the application for registration and that the registration should be cancelled.

 

Practical implications:

If you would like further advice on all things TVG, please contact Mark Brown in our Milton Keynes office Mark.Brown@freeths.co.uk; (0345 271 6764).

Landlord And Tenant Round Up

Lease renewals - opposing on grounds of demolition or reconstruction: S'Franses Ltd v The Cavendish Hotel (London) Ltd

Key points:

• To successfully oppose a lease renewal under Section 30(1)(f) of the Landlord & Tenant Act 1954 (ground (f)), landlords need to establish an intention to redevelop
• Motive is not relevant, unless it can be shown that it undermines the genuineness of the landlord's intention
• Ground (f) can be established in some cases where the landlord does not intend to carry out the works itself (see the Santander case below)

SFL occupied the ground floor and basement of premises in Jermyn Street from where it operated an art gallery. TCH, the landlord, occupied the rest of the building and ran a luxury hotel. SFL wanted a new lease and served the necessary notices under the 1954 Act, but TCH served counter notices, relying on ground (f). TCH proposed redevelopment works that had in fact been designed specifically to satisfy ground (f) and prevent SFL from renewing its lease - in fact, the works, if they were implemented, would make the premises completely unusable and would cost TCH over a million pounds! TCH had also indicated that if SFL left the premises voluntarily, it wouldn't carry out the works. In order to reinforce its intention and to remove SFL from the premises, a director of TCH gave an undertaking to the County Court that TCH would start the works as soon as SFL vacated and would proceed diligently to get them finished. This was enough to convince the judge that TCH had made out ground (f), but SFL felt that TCH's intention was not genuine and appealed to the High Court. Unfortunately for SFL, the High Court did not agree. Regardless of motive, TCH had provided evidence of intention and of its genuineness. As we highlighted in our previous bulletin covering this case, there was a 'leap-frogged' appeal direct to the Supreme Court, which has now given its ruling in favour of SFL.

 

Practical implications:

Whilst the focus of the previous hearings was on TCH's motive in opposing the lease renewal, the Supreme Court looked at the case from a slightly different perspective and created an 'acid test' that should make things clearer in future. The question to be asked is simply 'would the landlord intend to do the same works if the tenant left the premises voluntarily?' In this particular case, TCH had in the previous hearing been entirely upfront about the fact that it would not be doing the works if SFL moved out of its own accord.

 

Lease renewals - opposing on grounds of demolition or reconstruction: Santander UK PLC v LPS Estates Ltd

In this case, SUK wanted to renew its lease and, as above, LPS opposed the grant of a new lease on ground (f). LPS had entered into an agreement for a building lease with another prospective tenant and under the terms of this agreement, the new tenant would carry out the relevant redevelopment works. LPS argued this proved its intention to redevelop. SUK had tried to delay the hearing of its claim until the Supreme Court decision in S'Franses. However, the works in question, unlike those in the S'Franses case, were genuinely intended, rather than being contrived as a way to defeat the tenant's claim for a new lease. In this case, it was the fact that the landlord intended a third party to carry out the works that was the issue. Unfortunately for SUK, there is case law confirming that a landlord does not have to carry out redevelopment works personally for ground (f) to come into play, so the Court found for LPS.

 

Practical implications:

This decision confirms the position that it is possible for a landlord who opposes a lease renewal to establish ground (f) where it has agreed to let the premises to a new tenant who is obliged to carry out the works. The point is, the landlord has retained control over the redevelopment works by dictating what the new tenant should do. Please contact a member of our Real Estate Litigation Team for advice on lease renewals.

Misrepresentation - Non-reliance clause: First Tower Trustees Ltd v CDS (Superstores International) Ltd

Key points:

• Tenants will rely on information provided during due diligence when entering into a lease
• Landlords should provide accurate information and update tenants when they become aware of new facts

Another case we've seen before - CDS took a lease of a warehouse unit. It raised the usual pre-contract enquiries, which included questions about breaches of environmental law or other environmental issues affecting the property. FTTL initially stated it was not aware of any such matters but was later alerted to the presence of asbestos in the property, both in a report and in an email from specialist consultants, advising of the health and safety risks. Although this happened before completion of the lease, FTTL did not pass on this new information to CDS. CDS discovered the asbestos soon after moving in and then brought a claim for the cost of the remedial work and of alternative accommodation, as the unit was unfit for occupation for around eight months. The High Court found that FTTL was liable for negligent misrepresentation and that the clause in the lease that purported to exclude FTTL's liability for reliance on pre-lease representations was unreasonable and void. FTTL appealed, but was unsuccessful, so CDS was entitled to damages amounting to the cost of the remedial work and the alternative accommodation.

 

Practical implications:

Although a sometimes painful exercise, providing replies to enquiries is a key part of most property transactions, not least because the acquiring party will rely on the information put forward and will be entitled to remedies if it is inaccurate. Sellers and landlords should keep replies to enquiries under review until exchange or completion and update buyers and tenants if they become aware of changes to any information provided. It is usual for contracts to include clauses that attempt to limit the ability of a buyer or tenant to rely on statements made pre-exchange, but these must be fair and reasonable in the circumstances and, crucially from a buyer or tenant's perspective, must not exclude reliance on replies to pre-contract enquiries. 

 

Remedies - Commercial Rent Arrears Recovery: Thirunavukkrasu v Brar & Another

Key points:

• The Commercial Rent Arrears Recovery (CRAR) regime came into effect in April 2014 and replaced the old common law remedy of distress for arrears of rent
• CRAR is a self-help remedy that allows landlords to take control of a tenant's goods to cover rent arrears that exceed a minimum threshold
• Landlords need to be aware of how using this remedy might impact on other options available in the event of tenant default

T had a lease of commercial premises in Middlesex. The lease contained standard provisions that the rent be paid quarterly in advance and that the landlord could forfeit the lease if rent was unpaid for 21 days. So far, so ordinary. T fell into arrears and in January 2016, landlord B sought recovery under CRAR. At the beginning of February, an enforcement agent took goods from the premises in the amount of just over £10,500, which was paid to B, but B claimed there was a shortfall as a cheque T had written towards the end of January for £3,000 had bounced. B then re-entered the premises and forfeited the lease. T challenged B's action in the High Court, which found that B's re-entry was unlawful.

 

Practical implications:

It is easy for landlords inadvertently to waive the right to forfeit a lease. Any action that suggests the landlord is treating the lease as continuing, including making use of self-help remedies, means the right to forfeit is lost. There have not been many cases on use of CRAR, and each case will, of course, turn on its facts, but this is a useful decision on how landlord remedies interact. For advice on how to deal with rent arrears or other tenant default, please contact a member of our Real Estate Litigation Team.

 

Planning Point

Enforcement Notices - errors: Oates v Secretary of State for Communities & Local Government

Key points:

• If there are errors in an enforcement notice, the next thing to consider is whether the notice is invalid but capable of correction, or if it is a nullity and therefore ineffective
• The context and materiality of the 'defective' part of the notice will be key in determining whether the error is sufficiently serious to render the whole notice a nullity

Readers may recall Mr O, who carried out substantial conversion works to three chicken sheds, which had permitted use rights for residential use (but not for operational development). The Council claimed the works were unauthorised development and served an enforcement notice stating the breach of planning control was “the erection of three new buildings” and requiring him to demolish them and make good the land underneath the three former buildings. Mr O appealed against the notice on the basis that it was inaccurate; amongst other things he claimed he had not erected three new buildings. The Planning Inspector took the view that although it was a conversion, the outcome was in effect three new buildings. Mr O appealed against the Inspector's decision, arguing that if one aspect of the enforcement was vague, the whole thing was a nullity. The High Court disagreed with Mr O and refused his appeal, but he was not prepared to leave it there and Mr O appealed to the Court of Appeal. Sadly, the Court of Appeal upheld the original decision.

Practical implications:

The practical implications for Mr O are that he will still need to demolish his shiny new 'chicken sheds'! Generally though, it is worth bearing in mind that a building doesn't have to be completely demolished and rebuilt in order to be a 'new' building. It is a question of fact and degree as to whether works go beyond mere alteration and that is a matter for the decision-maker's judgment. Where there is uncertainty around an enforcement notice, the court will give weight to any decision of the Planning Inspector to amend the notice in order to save it. In this case, the Planning Inspector had agreed to remove a further requirement in the notice to make good the land on the basis that this had been unclear.