Author: Chris Alexander

Regular blog readers may recall that I have written about some of the more curious senior court decision concerning the provisions of the Housing Act 2004 in relation to tenancy deposit schemes.

These were schemes set up to require that landlords paid the tenancy deposit into a government authorized scheme and confirm details of these arrangements with the tenant to prevent exploitation of tenants at the end of a tenancy.  Failure to do so meant that a landlord could not rely on section 21 as a ground for possession and faced returning the deposit and a fine to the value of three times the value of the deposit for non-compliance.

The courts took the view that the punishment did not fit the crime, particularly in relation to the fine payable and the decisions in Tiensia v Vision Enterprises Ltd (trading as Universal Estates); Honeysuckle Properties v Fletcher and others; and Gladehurst Properties Ltd v Hashemi more or less stripped the legislation of its effectiveness.

The government went back to the drawing board and under the Localism Act 2011 has tried to plug the holes created by the judiciary with some amendments to the original legislation:

1. Penalties for non-compliance apply to tenancies that have come to an end after 6 April 2012.
2. Penalties for non-compliance apply where the landlord or agent has protected the deposit after the deadline.
3. The deadline for the protection of deposits has been extended from 14 days to 30 days.
4. An element of judicial discretion has been introduced so that the financial penalty for non-compliance is now between one and three times the deposit.

It remains to be seen whether the Tiensia decision will stand and that a landlord can still fully protect themselves by registering a deposit before the final hearing for the matter.  However, the clear message for landlords must be to ensure that the deposit is protected and the tenant is properly informed of its whereabouts or face the consequences!

The Department for Communities and Local Government FAQ is published here.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact Chris Alexander on 01727 798042 or by email chris.alexander@salaw.com or any member of the Property Litigation Team.

© SA LAW 2012
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case.

Author: Victoria Thomson

SA Law’s outstanding work for commercial and private clients has been recognised by the Chambers and Partners 2012 Guide to the UK legal profession.

SA Law has been recognised as a leading regional practice by independent legal research bodies Chambers & Partners and The Legal 500, in addition to achieving The Law Society’s Conveyancing Quality Scheme accreditation.

A leading publisher of legal research, Chambers conducts thousands of interviews with lawyers and their clients every year to identify regional leaders around the world.
All of SA Law’s departments have been recognised as regional leaders in the Northern Home Counties, with Managing Partner Steve Ryan cited as a top tier lawyer: “These achievements are extremely important in a sector that suffers from fierce competition in a slow economy. Achieving recognised first class credentials in the marketplace has never been more essential.” Adds Steve Ryan.

To find out more about SA Law and how our dedicated team can assist your business, visit our website www.salaw.com

Author: David Linklater

The recent case of Avocet Industrial Estates LLP vs Merol Limited [2011] EWHC (Ch) has imposed an additional burden on commercial tenants wishing to exercise a break option.

Avocet was a commercial tenant and served a break notice to terminate its lease.

The break right, as is often the case, was conditional and required Avocet to pay all rent and “other sums” due under the lease.  It also had to pay a premium.

The tenant paid the premium by cheque, which was delivered to the landlord one day before the break date.  The tenant had a history of paying rent late and the lease provided that the tenant should pay interest on late payments.
Whilst the landlord had indicated that it wanted interest to be paid, it had not invoiced for interest.  The tenant had dismissed the landlord’s request for interest as “silly”.

The tenant vacated the premises and handed it back on the break date.  The landlord refused to accept that the tenant had validly exercised the break, arguing that the premium was not “paid” when the cheque was received (as it had not cleared), and the interest on late cheque payments should have been paid as well.

The disputed interest was approximately £130.

The Court found that the supply of the cheque meant that the premium had been “paid”, as there was an implied agreement that payment could be made by cheque.

However, interest should have been paid as well and therefore the break notice was ineffective and the lease continued.  This was the case even though the landlord had not invoiced for the interest because the lease stated that interest was “payable” regardless of whether or not a formal demand had been made.

As a result of the failure to pay the £130 interest, the tenant now finds itself in a lease that is does not want, which in theory will result in a liability in excess of £300,000.

The break clause in Avocet was not unusual and the provisions regarding interest are also commonplace.  This scenario will affect tenants who have throughout the course of a tenancy paid any sums by cheque, or been at all late in making any payments to the landlord.

A failure to pay any interest due could therefore potentially invalidate a break.  The key to this is in the wording of the lease and if in doubt, legal advice should be sought.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact David Linklater on 01727 798097 or by email at david.linklater@salaw.com or any member of the Property Litigation Team.

© SA LAW 2012
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case.

Author: Chris Alexander

Misrepresentation claims in property transactions are notoriously difficult to succeed with. When the recession hit, I saw an increase in clients wanting to explore misrepresentation claims as a means of escaping the consequences of contracts that they had entered into, alleging that the agents had promised them the earth but that the vendor had only contracted to provide them with the moon.

The best way to protect yourself against these circumstances is always to ensure that the contract fully reflects the parties expectations and if some of those expectations are not going to feature in the contract that everyone is at least aware of this. However, there will always be some circumstances where a disagreement will emerge some time after exchange of contracts…

To read the full article click here.

Author: Jacqueline Button

St Albans is a bustling market town 22 miles north of London with expensive houses, high end shops and a multitude of pubs and restaurants. It has done well in the recession with shops opening where in other towns they have closed although there are still empty shop units, particularly at the north end of the town. St Albans is popular with tourists and, although it is fairly well served by hotels one operator, Premier Inn, has seen a gap in the market and wants to fill it.

2000 years ago Verulamium was the first major stop for travellers heading north on Watling Street. It had, as far as we know, expensive town houses, a forum, basilica and theatre. It prospered in Roman times although, as no copies of Retail Week’s forerunner Vendere Hebdomas survive, there are no records of shop unit vacancy rates.

As an important trading centre and the Roman equivalent of motorway services Verulamium would have contained a selection of places to stay for all types of visitor from the luxury guest villa with en suite bath house to the budget hostelry – rooms for 29 sestertii a night with hire 2 slave girls get 1 free offers. As Lenny Henry’s Roman ancestor might have said “omnia princeps nisi pretium”.

Premier Inn is a budget hotel operator and it really does offer rooms from £29 a night and has a stay 3 times get 1 night free offer. It has submitted a planning application for a 4-5 storey 125 bedroom hotel with gym facilities at the north end of St Peters Street. Three empty shops (including the old McDonald’s unit) form part of the development site and will be revitalised as either shops or restaurants.

This is surely a good decision. St Albans is a tourist destination not only in its own right but also because of its proximity to London (where, lets not forget, a fairly big sporting event initiated by the Roman’s Greek rivals, is taking place next year). More tourists means more spending in shops and restaurants and on local services. The north part of the town will receive a much needed boost and a medium sized hotel will create a large number of jobs.

So everyone is happy about it? No, of course not. A debate on the Review website became heated as residents objected to both the location and the quality of the proposed hotel and, most vehemently, its design. Artists’ impressions of the new development are shown here.
And copies of the full planning documents can be viewed on the Council’s website.  The drawings, other than the fact that they are as bland as all artists’ impressions, don’t look too bad. Clean, smart and just a little bit unimaginative but not, according to the Review’s readers good enough for historic St Albans with our beautiful cathedral and clock tower. Oh, and those expensive houses.

Much has been written about the government’s proposed changes to planning laws (including by myself here) and, in particular, the concept of localism which is supposed to give councillors, communities and individuals more say in the development of their area. People (particularly the people of St Albans it seems) are sceptical about the new proposals and fear that the power promised to people to control development in their neighbourhood will be overridden by economic concerns.

Premier Inn are a reputable company and their hotels are popular. Some residents might think that a budget hotel doesn’t fit with St Albans’ upmarket image but they are ignoring the true history of the historic town as a trading centre and staging post.  Surely any development at the north of the town is better than none and the extra money the new hotel will bring will be welcome to the local economy. As for the design, there are some beautiful buildings in St Albans but there are plenty of ugly ones too and something plain and inoffensive certainly won’t make the balance worse.

The planning application has only just been submitted and it will be interesting to see how it progresses – with or without the input of the local community.

Author: Jacqueline Button

Most people who encounter it agree that the planning system in England is cumbersome, complex and confusing. Whether you’re putting a conservatory on your house or redeveloping a town centre you’re at the mercy of laws riddled with jargon, inconsistencies and red tape. You will encounter the local authority with its members and planning officers and committees and delegated powers and you might emerge with a planning consent or you might not. And either way you will have spent time and money on the process.

Earlier this year the government announced an overhaul of the system producing a framework which will be “localist in its approach, handing back power to local communities to decide what is right for them” according to Planning Minister, Greg Clark. He also promised that the new system would be “simpler and swifter”.

Most people agree that a revamp is desperately needed but the rows over the details began immediately. According to the Country Land and Business Association (CLA) an organisation which represents landowners and rural business the policy is too cautious and doesn’t address the lack of rural housing or sustainable jobs.

But other bodies representing rural interests take a different view. The Campaign to Protect Rural England (CPRE) says the new laws will have “grave consequences for the English countryside and the character of our towns and villages” whilst the National Trust (NT)  says the framework “fails to protect the everyday places that local communities love.”

Meanwhile the British Chambers of Commerce (BCC) is optimistic about the proposals and said that “a pro-growth approach must fast become reality on the ground with local councils saying yes to business growth and expansion far more than they do at present”.

So which of these acronyms is right?

In support of its argument the NT produced (in a more bizarre than alarmist manner) an aerial shot of Los Angeles with its high rise buildings and dense development but they can’t seriously fear than England’s green and pleasant land is going to be transformed by the proposed new laws into Beverley Hills with bad weather.

The CPRE in a more balanced response said that it welcomed “much of the thinking” behind the framework but worries about the “crude focus on economic growth”.

The government (of course) defended the proposals as encouraging “opportunities for sustainable growth to rebuild the economy” and says they commit to protecting the greenbelt and Areas of Outstanding Natural Beauty and Sites of Special Scientific Interest and specifically deal with other environmental issues like electric car charging points and renewable energy projects.

Excessive development and development in the wrong place should be avoided at all costs and new laws need to make sure this does not happen. But the fact of the matter is that England needs development. The number of people owning their own homes is at the lowest level since the 1980s. House building is needed as is commercial and social development to go with that new housing.

The Home Builders Federation (who perhaps call themselves the HBF) justifiably accuse the NT of “scaremongering” and correctly say that the new policy must “focus on the wider needs of the country not the narrow focus of the few.”

The framework is now the subject of a 12 week consultation period. Whatever the outcome of that consultation it looks as if the rows will run and run.

Related Posts: Not so Premier – Jacqui Button comments on the planning application for a Premier Inn Hotel to be constructed in St Albans and the concept of localism issues following the proposed planning law changes.
Click here to read the post.

Author: Chris Alexander

This is hopefully a statement that the vast majority of us will never have to utter.  However, with the recent spate of civil unrest and several buildings across London ablaze over the last couple of nights, it is worth considering what provision your lease makes in the case of destruction or damage by an insured risk:

1.    Commercial leasehold premises

Every lease will be different but the usual position is that the landlord is responsible for insuring the building against  loss or damage by certain insured risks for its full reinstatement cost.  Fire and civil commotion (which is considered to include riots) are usually insured risks in most leases.

If the building is damaged or destroyed by an insured risk then the usual position is that the tenant should notify the landlord of the damage and the landlord should make a claim on the buildings insurance policy (most policies require notification within a certain period of time or cover can be lost).  The landlord is then usually obliged to apply the insurance monies for the reinstatement or rebuilding of the premises.  However, there are some exceptions to this general position:

a)    where the landlords obligations are conditional upon the tenant paying the insurance rent  and the tenant has failed to make payment;
b)    where the lease gives the landlord a discretion to decide whether to rebuild/reinstate (usually only in cases where it is considered impossible or impractical to do so)

I would also usually expect to see a suspension of rent clause, which will mean that the tenant is not obliged to pay the rent again until the premises are fit for occupation.

However, that said insurers as a general rule exclude riot from their fire damage policies.  It may therefore be the case that the policy in place does not exactly coincide with the landlord’s insurance obligations.  In the case of a claim denied by the insurers this could lead to a dispute between the landlord and tenant (unless the landlord’s obligation to insure is subject to any exclusions, limitations, excesses and conditions that may be imposed by the insurers).

The Riot (Damages) Act 1886 does give a right of action for damage against the police authority in instances of riot (although claims must be delivered within 14 clear days after the day on which the happenings giving rise to them occurred).  This provides alternative recourse for those affected by riot damage.

Finally, the landlord’s insurance covenant will rarely require the landlord to insure against the tenant’s loss of profit for the period for which the premises are beyond use.  Therefore, only tenants who have taken out business interruption insurance will be completely protected.

2.    Residential Long Leases

The position is similar in a residential long leasehold situation, in that the landlord is likely to be obliged to insure and reinstate in the same way.  However, in the event that it is impractical or impossible to repair or rebuild the building, there may be an issue of an insurance shortfall between the reinstatement cost (which is what the insurers would pay out for) and the market value of the leasehold premises (ie what it was purchased for).

Chris advises on litigation and dispute resolution within the property sector, with a particular specialism in ‘real property’ and landlord/tenant matters.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact Chris Alexander on 01727 798000 or by email at chris.alexander@salaw.com.

© SA LAW 2011
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case

Author: Chris Alexander

Is your business committing a criminal offence if its terms and conditions are unfair? A High Court decision earlier this year has raised the question as to whether unfair contract terms are now illegal as well as unenforceable.

SA Law Property Litigation Solicitor Chris Alexander discusses hidden dangers in terms and conditions.

Click here to read the full article

Author: Chris Alexander

It is not often that commercial lease renewal proceedings become headline news, however, this weekend I was flicking through the business pages of the Times and noticed that Humber Oil Terminals Trustee Ltd v Associated British Ports had made the papers.

The case concerned the Immingham oil terminal in the Humber Estuary which is owned by Associated British Ports and was let to a joint venture vehicle owned by Total and Conoco Phillips.  As tenant, they wanted to renew their 40 year lease which was coming to an end and to try and achieve that they had issued proceedings for a new lease under the Landlord and Tenant Act 1954.

This Act provides security of tenure for business tenants and means that a landlord can only terminate a lease after the end of the fixed term on a limited number of grounds.  One of the most common grounds for terminating a commercial lease is redevelopment but this case concerned the landlords intention to occupy the oil terminal itself.  The key date for assessing these intentions is the date of the hearing of the claim, which can often be important for tactical reasons and may have been one of the reasons that this particular part of the claim was heard as a preliminary issue.

The tenant had little option but to fight this case, as it expected that if APB assumed control of the terminal then it would cost it up to £40 million in additional charges.  APB’s case was that it wanted to occupy the terminal but that its business would involve giving access over or through the premises to other third parties.  There was a question as to whether APB’s plan would constitute occupying the premises for its own purposes and if so when, and in what circumstances APB so intended (ie if it could not show the relevant intention at the hearing date then its defence to the tenants claim for a new tenancy would fail).

Mr Justice Vos in the High Court decided in favour of APB.  In order to show sufficient intention the landlord only needed to show an ability to put its plan into effect.  Even thought the landlord’s plan may involve contracting with the current tenant charging it fees for using the port facilities, it was likely that ABP would occupy the oil terminal from the termination of the lease for the purposes of providing port facilities to third party oil companies or traders.

There remain other unresolved disputes but the landlord is now one step closer to recovering possession and the tenant.

Author: Chris Alexander

It has been an interesting few months in the courts for the tenancy deposit legislation and the balance of power has swung very firmly in favour of the landlords.

All private residential landlords should be familiar with the requirement to pay a tenancy deposit into an authorised scheme within 14 days of receipt.  It has been a mandatory requirement to do so since April 2009.  There legislation provided for some fairly draconian penalties against landlords for non-compliance, including a requirement to either return the deposit to the tenant or to pay it into a scheme and to pay the tenant a fine to the value of three times the amount of the deposit after the tenant has applied to Court.

Those of you who read my blogs in November 2010 (Tenancy Deposit Schemes, common sense prevails?) and in May 2011 (More Deposit Protection Developments) will be familiar with the fact that landlords can escape this fine if they pay the deposit into a scheme before the Court hearing date and that they can do this even after the tenancy has ended.

The position has got even tougher for tenants after the recent decision in Gladehurst Properties Ltd v Hashemi and another [2011] EWCA Civ 604.  Now, if a tenant fails to issue their Court proceedings before their tenancy ends, they will be too late to claim their fine as the Court of Appeal ruled that after the tenancy had ended it lacked the genuine discretion to choose.  This decision could be interpreted one step further and mean that even proceedings issued shortly before the end of the tenancy may not be effective as if the tenancy ends before the hearing then the tenant will lose.

This whole episode means that the likelihood of many more of these cases coming to Court is fairly limited as the door has been firmly slammed in the faces of the tenant.

However, it does not make compliance optional for landlords, until the deposit is properly protected and the relevant information has been served upon the tenant then the landlord still cannot use section 21, which is usually the cheapest way to evict a tenant.