Author: Chris Alexander

After watching this weeks Dispatches programme on Channel 4 (Landlords from Hell), I thought that it might be useful to summarise a number of the legal issues raised by John Snow in his investigation of the private rental market.

The main issues raised were:

• Unlawful eviction
• Rent Control
• Disrepair
• Overcrowding/HMO’s
• Sale and rent back agreements

I have written an article which you can read by clicking here looking at the various offences that landlords can commit and the private remedies that exist for tenants.

My own view is that the programme recognised that the legal remedies exist to punish rogue landlords but that local housing authorities have been woefully inadequate in prosecuting those offences.  Further, the types of tenant worst affected are those with low incomes with the least practical access to justice especially as legal aid becomes increasingly scarce.

I tend to act more for landlords than for tenants in these cases and anecdotally, many private landlords feel that the balance is stacked too heavily in favour of the tenant, for example it generally takes at least three months to evict a tenant with rent arrears.  My own view is that the private market is not currently well suited to low income or housing benefit tenants who often require greater overall support than most small scale private landlord’s can afford to offer; but Grant Shapps showed little appetite for changing the status quo in his interview.

Click here to read the full  Dispatches Landlords from Hell article.

For further information about our Property Litigation services or to discuss a particular matter or situation in more detail, contact Chris Alexander at our St Albans office by email at chris.alexander@salaw.com or on 01727 798000.

© 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 cases.

Author: David Linklater

As I have mentioned in a recent blog, break clauses are often tricky to operate and a tenant may have to meet certain conditions in order to ensure that the break option has been validly exercised.

A condition sometimes found in break clauses is that the tenant must on the break date give to the landlord vacant possession of the premises.  Whilst this sounds a simple enough proposition, sometimes tenants do fall foul of this requirement.

The Court of Appeal was called to rule on such a situation in the recent case of NYK Logistics (UK) v Ibrend Estates BV.

The facts of the case are straightforward.  The tenant served a break notice and one of the conditions of the break option was that the landlord was to be given vacant possession on the break date.  The tenant commenced works to put the premises into the condition required by the lease, but as the break date approached, it became apparent that the works would overrun.

At that stage, the tenant entered into discussions with the landlord, seeking permission to remain in occupation until the works were completed, without prejudicing the break right.  No agreement to that effect was reached.  On and after the break date, the tenant remained in occupation of the premises, still had keys and had security guards in place, and had not cleared the premises of its belongings.

The tenant believed that the lease ended on the break date, claiming that by entering into negotiations with the tenant, the landlord had waived the requirement for vacant possession.  The landlord stated that it was never its intention to waive the requirement.

The case served as a useful reminder of the questions that the Court will ask when considering compliance:

•    Was the party that was required to give vacant possession still actually using the premises for it own purposes?

•    Is the physical condition of the premises in such a state that there is no substantial impediment to use of the premises, or a substantial part of it, by the party taking the premises?

The Court of Appeal found that the tenant had taken no steps to comply with the first point above.  The second point is rarely problematic and certainly wasn’t in this case, as physical impediments have to be onerous to the extreme in order to cause a tenant to fail that test.

The Court also found that there was no evidence of waiver.  Waiver is a very difficult concept to prove and really should only be used as a last resort, rather than something to be relied on prior to an event.

This judgment reiterates the importance of taking legal advice prior to exercising any break option and highlights the need to seek clarification on any points of ambiguity.  Conditions must be strictly adhered to and landlords (and the Court) are unlikely to assist a tenant that falls foul of those conditions.

For further information about our Property Litigation services or to discuss a particular matter or situation in more detail, contact David Linklater at our St Albans office by email at david.linklater@salaw.com or on 01727 798000.

© 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 cases.

Author: David Linklater

The current economic climate has seen a number of commercial tenants looking to reduce overheads and a popular way of doing so is by disposing of unwanted premises.  Many leases contain break clauses allowing early termination by a tenant and these are becoming increasingly exercised.  Landlords, of course, will often seek to challenge a defective break notice, so it is essential to serve a break notice in accordance with the requirements of the lease.

The recent case of MW Trustees and others v Telular Corporation highlighted the potential pitfalls that can be encountered in exercising a break clause.

In that case, the tenant prepared and served the break notice itself, unfortunately addressing and sending the notice to the original landlord, rather than its current landlord.  The original landlord informed the tenant that the property had been transferred and the tenant emailed the new landlord a copy of the break notice that had been sent to the original landlord.

The new landlord’s managing agent sent an email to the tenant, saying:-

“We accept the attached letter and can confirm that we are happy for you to break the lease, however, please could you re-address this letter to [the new landlord]”

On the same day, the new landlord sent an email to the tenant, asking for details of the subtenant and asking when the lease would end.

The tenant failed to re-serve the break notice and at the break date, the landlord argued that the tenant had failed to properly exercise the break.

In addressing the break notice to the wrong landlord, the tenant had clearly failed to properly serve the break notice and in most cases, the lease would simply continue.  In the current case, however, the tenant successfully argued that the emails from the managing agent and landlord  respectively combined to demonstrate that the landlord had waived the invalidity of the break notice and accepted that as a result the lease would end.

Whilst the tenant must have felt incredibly relieved at the outcome of this decision, it was saved by the actions of the landlord and the managing agent, rather than through any action on its own part.  The tenant clearly had a very lucky escape – most recent cases that have been before the courts on this point have been decided against the tenant.

The above demonstrates the importance of careful drafting of break notices.  Mistakes can be incredibly costly.  In addition to ensuring service by and to the correct party, it is important to ensure that all conditions of a break clause are met.

For further information about our Property Litigation services or to discuss a particular matter or situation in more detail, contact David Linklater at our St Albans office by email at david.linklater@salaw.com or on 01727 798000.

© 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 cases.

Author: David Linklater

It has been reported in the press that campaigners are calling for greater transparency to planning laws, apparently so as to give communities a greater understanding of new businesses opening in their locality.

This come hot on the back of reports that a Tesco Express was attacked by rioters in the Bristol April riots. On the afternoon of those riots, slogans such as ‘I love community’ and ‘not welcome’ were daubed in the vicinity of the building.

It is thought that the objection to the arrival of Tesco was down to a fear that it would compromise the Bohemian nature of the area and drive away individual business. It is reported that locals were angry at the local planning office,which had failed to highlight the fact that a new supermarket would be opened. As a result of this adverse publicity, Bristol City Council wrote to the Department for Communities and Local Government requesting that a new ‘supermarket’ use class be adopted. This would differentiate supermarkets from other retail outlets.

The justification of this is that communities feel that national chain stores have a greater potential impact on an area than a local, independent retailer, in that a national chain is more likely to have frequent deliveries from heavy goods vehicles and more of an economic impact on rival retailers.

The Department for Communities and Local Government has said that it is not the role of the planning system to restrict competition or to give one retailer an advantage over an another.

It remains to be seen what step campaigners will take next. However, what can be predicted is that any further steps will be fiercely resisted by Tesco, national supermarkets and large retail chains generally, the latter being likely to enter the fray to avoid a dangerous precedent being set. It seems unlikely that local campaigners will be able to resist the force of such national giants, however, what remains to be seen is whether Tesco, once approved and opened, would be boycotted by the same campaigners. The success of Tesco and its national competitors suggests possibly not, but it will be interesting nevertheless to see how this one plays out.

David Linklater is an Associate Solicitor in the Property Litigation department. He specialises in all aspects of commercial property litigation, acting for tenants, landlords, investors and developers.

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
© 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 cases.

Author: David Linklater

As you may have heard in the newspapers recently, there has been much speculation about the possible takeover of Iceland by Morrisons.  The 40-year-old Iceland chain has been put up for auction by the Resolution Committee of Landsbanki, the failed Icelandic bank that took ownership as a creditor of Icelandic retail group Baugur.
It is suggested that this would give Morrisons the much needed boost to rival their nearest competitors by increasing the company’s market share by about 2% to 14%, bringing it nearer to its closest rival, Sainsbury’s, which has a 16% share of the sector.
Iceland has roughly 800 stores, mainly focused on high streets which will mean Morrisons get a long awaited foothold on the high street market and be a more dominant force in the South East.
There is also speculation that rival supermarket chains Sainsbury and Asda are interested in buying the majority stake in the frozen food retailer. Another name linked with the takeover is Iceland chief executive Malcolm Walker who already owns 26% and made an offer on the remaining shares of £1bn last year.
The sale process begins in September when all eyes will be watching to see what happens to the iconic brand and whether it retains its position in the market as a leading provider of discounted frozen foods or whether the new owner will try to re-brand.

Author: Marilyn Bell

The Supreme Court will be ruling  on a case where the Court of Appeal gave an ex partner an equal share in a property they both owned although they had been separated for 13 years and he had not paid toward the mortgage since they separated.
This case identifies the difficulties facing unmarried couples who jointly own property.  It is probably the biggest area of law for confusion and misunderstanding. The partner who remains in the home often thinks that their ex’s share will be limited to the value of the property at the time they split up;  or even that he/she won’t have any rights to it as they chose to move out and have not been paying toward it. This is not the case and it highlights the importance of seeking legal advice at the time of the split and basing future decisions on that advice.
It can be heartbreaking for the remaining partner to have spent years paying for a property and taking good care of it, with repairs, maintenance and improvements only to find their ex successfully claiming half.

To read more about the impact of Cohabitation Rights, click here.

© 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 cases.

Author: Chris Alexander

Consumer Focus has recently published a report into Before the Event Insurance (“BTE”) entitled “In Case of Emergency” and has criticised the complexity and uncertainty of current provision.

They estimate that some 25 million UK households had the benefit of such policies as part of their household buildings or contents cover but that few knew they had it and fewer still understood what it would cover.  I have acted in a number of neighbour disputes in the past where legal expenses insurance has been available and in each case the parties were unaware of the fact that they had it before they took legal advice.

BTE can provide parties protection from the costs of litigation, both for their own costs and the adverse cost risks that litigation brings.  The Jackson Review on litigation costs endorsed the wider promotion of BTE as a means of increasing access to justice, which at present is increasingly the preserve of the wealthy.

Other issues identified by Consumer Focus were that consumers were restricted in their choice of solicitor, cover was not comprehensive and there was often duplication of cover across various policies.  The freedom to instruct a solicitor is in my view vitally important.  In my experience, the panel firms who insurers funnel their clients towards may be very cheap because of the volume of work which they are referred but this comes at the cost of service to clients.  Further, that system does not provide a proper incentive to the solicitors to seek the best possible result for their clients as this can come at a cost to the insurers who will be pressurizing them to keep costs to an absolute minimum.

The other option for Claimants is After the Event Insurance (“ATE”). This is an insurance policy that can be put in place to shield a party from the risks of adverse costs in proceedings.  It is often combined with a form of conditional fee agreement with the solicitor.  Oddly, while such a scheme also helps to improve access to justice, conditional fee agreements themselves were put under threat from the Jackson Review and the indications in Ken Clarke’s recent proposals are that they are to be outlawed.

You can read the whole Consumer Focus report here.

Author: Chris Alexander

You may have read my previous blogs about JJB Sports CVA proposal, the Press Association is today reporting that JJB is putting the CVA to creditors and shareholders for their approval.  It requires approval from 50% of shareholders, 50% of external creditors and 75% of all creditors.

One interesting aspect to emerge from the reports are that the biggest creditor is a company called Blane Leisure Ltd (“Blane”), a wholly owned subsidiary of JJB.  Blane was acquired by JJB in 1998 and was until that time a major competitor, running “Sports Division” branded stores.  In effect, JJB can count upon the support of this creditor and so in practice this arrangement substantially lowers the creditor support threshold.  Blane itself existed an insolvency procedure earlier this year.

Peel Holdings and Hammerson are reported to be backing the CVA which is estimated will only see creditors recovering around 25p in the pound.  However, this is set against a predicted 1p in the pound in the event of administration.

The creditors and shareholders meetings are taking place today, so watch this space.

Author: Chris Alexander

Further to my recent blog article on the proposed JJB Sports CVA, the company has pushed ahead with those plans and has circulated the proposals to creditors. Retail Week have reported that 43 stores are to close in the next 13 months, with a further 46 under review until April 2013. This could potentially leave the troubled retailer with only around 160 stores left by 2013. Before the first CVA in 2009 that figure was closer to 390, with 140 closing as a result of that agreement.

The other details to emerge are that there is provision for a payment to landlord’s compromised by the CVA (ie those who will be losing their tenant) in the form of cash or shares (set between £2.5 million and £7.5 million). The prospect of a shareholding may not be very tempting for landlords given the assessment by KPMG of a dividend in the event of administration of 1.1p in the pound, indicating that the real value of those JJB shares would not be significant.

The balance for JJB to strike in its CVA proposal is to ensure that creditors get a better deal than they would in an administration and KPMG believe that this balance has been struck. Landlords will be a powerful class of creditor as it is understood that suppliers like Nike and Adidas have negotiated a preferential trading terms in order to continue to supply such a financially vulnerable customer and KPMG estimate that in the CVA landlords recover around 25p in the pound.

The creditors are due to meet on 22 March 2011 to discuss the proposal and in the mean time JJB are pushing through other funding arrangements to see them through in the short term.

Author: David Linklater

One of the challenges that faces retailers is to remain as competitive as possible in a fast-changing market.  Key to this is the ability to increase market share whilst keeping overheads as low as possible.

Retailers can achieve this through the use of “multi-channel retailing”, which is where the retailer offers the consumer multiple ways in which to buy a product.  This allows consumers to choose the means of shopping that is most convenient to their lifestyle.

A study by Deloitte has revealed that shoppers who use a combination of channels will spend on average over 80% more than consumers who only shop in store.  A shrewd retailer will realise the potential to be unlocked from investing in multi-channel retailing and many already have additional channels to complement traditional in-store purchases.

Whilst consumers increasingly shop around online for goods, most still like to be able to check out certain items in a store first and the challenge for the retailer is to ensure that when those consumers do make their purchase, they don’t make the purchase elsewhere.  Deloitte found that retailers without a store presence can benefit from attracting customers who have seen goods in store elsewhere.  This is of course a serious cause for concern amongst retailers with a physical presence, as their rivals will attract the customer on the basis of price alone, without having made the initial investment.

To combat this, the purpose of a retailer’s premises will move from being primarily one of retail to one of brand promotion, product showroom and collection point.  This will either attract customers into the store or cause them to bear in mind that particular retail brand, should they decide to make the purchase via another channel.

What is clear is that the battle lines between purely online retailers and those with a physical presence have been drawn and it will become increasingly hard for the latter to compete, when faced with their increased overheads.  It is essential that they diversify and change their physical presence into a strength rather than a weakness.  Clever use of floor space, marketing and multi-channelling will all assist in this process.

Ultimately, though, it is the consumer that will have the final say.