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Issue 42 - April 2007

Contents

Cases

Statutory Instruments

Features

Articles

News

Events

Discounts (how to book and claim any discounts)

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Cases

1. Thompson and others v First Secretary of State and others; Powell v First Secretary of State and others

Citation: [2007] All ER (D) 425 (Mar)
Hearing date: 26 March 2007
Court: Queen's Bench Division (Administrative Court)
Judge: Sullivan J
Relevant legislation: Town and Country Planning 1990 s288
Summary: Town and country planning — Permission for development — Material consideration

Two different local planning authorities refused the claimants planning permission for the stationing of gypsy caravans within the greenbelt. The claimants each appealed to planning inspectors, who recommended that temporary planning permission should be granted. The Secretary of State decided that no permission should be granted. A circular on the provision of sites for gypsies was subsequently published, and the claimants applied to quash the decisions of the Secretary of State under s288 of the Town and Country Planning Act 1990. The applications were heard together.

The claimants contended, inter alia, that the court should recognise that there had been a material change of circumstances as a result of the publication of the circular and should quash the decisions, thereby adopting a procedure whereby that change of circumstances could be taken into account by the Secretary of State. They argued that the court had an “inherent jurisdiction” to look afresh at the time of review at the question of interference with rights and proportionality under the European Convention on Human Rights. The claimants also complained that they would have to incur additional expense if the court did not quash the decisions.

The application would be dismissed. 
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2. Dean v Barclays Bank plc

Citation: [2007] All ER (D) 382 (Mar)
Hearing date: 22 March 2007
Court: Chancery Division
Judge: John Randall QC sitting as a deputy judge of the High Court
Citation: [2007] All ER (D) 382 (Mar)
Summary: Mortgage — Sale — Duty of mortgagee — Defendant obtaining sale orders in relation to claimant's properties  

The claimant and his former wife had been the joint owners of an area of land comprising some 4.8 acres (the land). The land had previously been utilised as a commercial nursery, and several greenhouses remained on the land. In 1983, planning permission was granted for the construction of stable blocks and the creation of a riding school. Following the creation of the riding school, the business was conducted jointly by the claimant and his former wife until it stopped trading in 1990. On 3 July, 1987, the claimant obtained conditional planning permission for the construction of a dwelling house (the house), its title being split from that of the land, and comprising approximately one acre.

Central to the grant of that permission was an occupancy condition that the person occupying the house had to have been operating a nursery or equestrian business from the land; the rationale behind that restriction being the fact that the land was situated within an area where permission for the construction of new dwellings was not generally granted. Subsequently, the house was built, it being in the sole ownership of the claimant. The defendant bank was the successor of the first mortgagee of the house, and also held registered charges over the land. In the event, the defendant obtained a possession order in respect of the dwelling in 1992, and subsequently, the dwelling and the land fell to be sold jointly in 1998.

The defendant instructed agents to conduct the sale. In light of the condition of the properties, which had variously been described as, inter alia, dilapidated, the nature of the occupancy restriction, and the fact that neither a nursery business nor an equestrian business had been conducted from the properties for several years, those agents took various strategic decisions in respect of how the properties were marketed and the guide prices. Eventually, the properties were sold for £245,250. The claimant issued proceedings alleging that the defendant had failed to fulfil its equitable obligation to take reasonable care to obtain the best price for the sale of the properties.

Three principal issues fell to be determined, namely: (i) whether the defendant had fairly assessed the condition of the properties; (ii) whether the marketing strategies employed had been sufficient; and (iii) what had been the market value as at the time of sale.

The claim would be dismissed. 
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3. Kensington Heights Commercial Co Ltd v Campden Hill Developments Ltd

Citation: [2007] EWCA Civ 245
Hearing date: 21 March 2007
Court: Court of Appeal
Judge: Longmore, Lawrence Collins LJJ and Sir Martin Nourse
Relevant legislation: Landlord and Tenant Act 1987 s5, s12(b), s16
Summary: Landlord and tenant — Flats — Tenants’ right to acquire landlord’s reversion

In 1973, the defendant was granted a lease over a site for a term of 121 years. The defendant subsequently developed the site by building a block of flats and town houses. Underleases of the flats and houses were then granted to the tenants. The claimant was the person nominated by the overwhelming majority of the tenants of the flats to exercise their rights under the Landlord and Tenant Act 1987. The freehold of the property was held by K. In 2000, K and the defendant entered into an agreement whereby the defendant would surrender the 1973 lease and be granted a new lease of the same property, minus a narrow strip of land.

The new lease was for a term of 125 years, ie a term of 32 years longer than the existing lease. Pursuant to the 2000 agreement, the lease was surrendered and the new lease granted (the 2000 lease). By virtue of the Act, the proposed disposal of the defendant’s interest in the property required the lessees of the flats to be offered the right of first refusal. However, no offer notices under s5 of the Act had been served on the tenants prior to the 2000 agreement to surrender the 1973 lease. Accordingly, the tenants served a purchase notice under s12(b) of the Act on K, stating, inter alia, that K had acquired an interest in the property from the defendant under the 2000 agreement; and the disposal to K was a relevant disposal that had been made without the defendant having served notice under s5 of the Act.

By the notice, the tenants required K to dispose of the interest that was the subject-matter of the disposal to K on the terms on which it had been made, including the consideration, to the claimant. They also called upon K to forward the s12(b) notice to the defendant under s16 of the 1987 Act. They stated that the claimant would be seeking an order from the court under s12(b5) that “the lease” be transferred to the claimant, free from any lease entered into subsequent to October 2000. Subsequently, the claimant commenced proceedings seeking an order that the defendant transfer to it the term created by the 2000 lease, rather than the 1973 lease. The judge ordered, inter alia, that the defendant should transfer to the claimant the 2000 lease, on consideration to be determined by the Leasehold Valuation Tribunal. The defendant appealed.

It submitted, inter alia, that s12(b) did not apply where the disposal had been a surrender, or agreement to surrender, the lease. Moreover, it contended that s 12(c) applied to surrenders and agreements to surrender, so that the tenants should have served a s12(c) notice instead, after which the claimant would have become entitled to a grant by K of a lease on the same terms and for the same term as that of the 1973 lease, and not the term created by the 2000 lease. Further, it contended that an order could not be made against it to grant the claimant a lease on the same terms as the 1973 lease, as s16 did not apply to it, since it did not have the same estate or interest that had been the subject-matter of the original disposal.

The appeal would be allowed.

Case annotations in other services: Kensington Heights Commercial Co Ltd v Campden Hill Developments Ltd [2007] All ER (D) 353 (Mar) 
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4. Centreleven Ltd v Askon Developments Ltd

Citation: [2007] All ER (D) 352 (Mar)
Hearing date: 21 March 2007
Court: Chancery Division
Judge: Lewison J
Summary: Contract — Construction — Contractual term

By a contract dated 23 December, 2005, the parties exchanged contracts for the sale of land in Bristol, which incorporated the standard conditions of sale and a number of special conditions. The property comprised in the contract consisted of a larger development in the course of construction, which consisted of commercial property and 17 flats. Pursuant to special conditions 10, 11, 12 and 13, it was in the mutual contemplation of the parties that by the time of completion all that would remain to be done was the “snagging list”, and that works might continue to be carried on after completion of the contract.

Two alternative dates were specified in the contract as the probable completion dates, namely (i) 31 March, 2006, or 10 days sooner, or (ii) 31 March, 2006, or 10 days later. The claimant's view was that the completion date was the former date, whilst the defendant argued that it was the latter. The claimant applied for summary judgment on the issue.

In support of the date contended for by the defendant, the defendant's solicitor, T, filed evidence stating that the parties had expressly agreed that the date argued for by the defendant was to be the completion date, a fact which he claimed had been agreed by telephone before the exchange of contracts took place. T's evidence about that telephone conversation was supported by a letter of 29 December, 2005, which confirmed that the parties had agreed to that date over the phone. The defendant further submitted that it intended to issue a claim for rectification to insert certain words into the contract. The claimant argued that in the absence of a rectification claim actually being made by the defendant, the court should decide which construction of the completion date was to be preferred.

The application would be dismissed.
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5. Khan and others v Rehman and others

Citation: [2007] EWHC 439 (Ch)
Hearing date: 21 March 2007
Court: Chancery Division
Judge: Judge Hodge QC
Summary: Land — Interest in land — Deeds of transfer

The claimants brought proceedings against the defendants alleging that their signatures on various deeds of transfer, declarations of trust, and documents executing legal charges in favour of the defendants had been forged and sought rectification of the Land Register. Both sides relied on expert evidence from handwriting specialists; one or other or both of whom was or were of the opinion that each of the claimants' signatures was genuine. Certain of those documents had been witnessed by an “S Johnson” of a particular address, but the person of that name at that address gave evidence that he had not witnessed the transactions in question, that he had had post stolen, and that his identity had been used to apply for store and credit cards. Issues arose, inter alia, as to the ownership of the properties in question.

The court ruled: Given the complete absence of any cogent evidence to contradict the experts' opinion, the claimants' signatures were all genuine. Furthermore, in light of the evidence of the putative witness, the deeds bearing his name as witness had not been attested, and the first defendant had been aware of that fact. However, although the non-attestation of those documents meant that they could not take effect as legal charges and could not validly transfer legal title, they did have effect in equity.

Case annotations in other services: Khan and others v Rehman and others [2007] All ER (D) 343 (Mar); Shah v Shah [2001] 4 All ER 138 
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6. Camden Lock (London) Ltd v Camden London Borough Council

Citation: [2007] EWHC 495 (Admin)
Hearing date: 16 March 2007
Court: Queen's Bench Division (Divisional Court)
Judge: Collins J
Relevant legislation: Town and Country Planning Act 1990 s287
Summary: Town and country planning – Unitary development plan – Planning purpose

The claimant's land was in a conservation area. He had planning permission for open market use. The claimant wanted to construct a building to house the market. In 1999, the Secretary of State granted permission for a two-storey building for retail and restaurant use. In 2004, the permission was renewed. It was not implemented because London Underground Ltd (LUL) was known to intend to improve the station and had indicated that they would seek powers to acquire the whole site. LUL applied for the necessary permissions to, inter alia, the Secretary of State for Transport. An inquiry was held, at which the claimant appeared as objector. The inquiry into the UDP was held and closed before the results of LUL's applications were known.

In the event the 2000 UDP for the site in the proposals schedule read: 'Current uses: Open market. Proposal: Permanent building completing road frontages and containing market and/or retail uses'. There was a deposit draft of the UDP which did not include a market in its preferred uses. The claimant complained to the authority stating that the amendment had to include the continuation of the existing market uses. The defendant altered its proposals to include a reference to market and/or retail uses, but the claimant argued that that did not go far enough. Meanwhile an inspector appointed in respect of the Transport and Works Order (the TWO inspector) recorded that the market made a vital contribution to the health of the town centre as a whole. He concluded that the housing, suitability and transport benefits would be far outweighed by the detrimental impact on the vitality and viability of the conservation area. He stated that there would be no need to compulsorily acquire the claimant's land since only temporary acquisition was needed.

The Secretary of State for Transport and the First Secretary of State concurred with the TWO inspector's conclusions. The UDP inspector noted those decisions but decided that, in relation to the market, the benefit of the new station justified its loss. The defendant decided to accept the recommendation, but to use a deposit which did not contain any reference to a market in its preferred use. The claimant objected but the defendant authority responded that the inspector's reasoning was satisfactory and that they had accepted his recommendation. The claimant brought a claim under s 287 of the Town and Country Planning Act 1990 seeking to quash an entry in the Camden Replacement Unitary Development Plan 2006 (the UDP).

It argued that the authority had unlawfully failed to identify the desirability of the continuation if possible of the market use in the UDP's indication of the uses appropriate on the land. The claim would be allowed.

Case annotations in other services: Camden Lock (London) Ltd v Camden London Borough Council [2007] All ER (D) 298 (Mar)  
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7. Crest Nicholson plc v South Gloucestershire Council

Cite: [2007] All ER (D) 263 (Mar)
Hearing date: 15 March 2007
Court: Chancery Division
Judge: David Donaldson QC sitting as a deputy judge of the High Court
Relevant legislation: Town and Country Planning Act 1990 s106
Summary: Sale of land — Option to purchase land or interest therein — Exercise of option 

On 28 April, 2000, the claimant and defendant entered into an agreement under s106 of the Town and Country Planning Act 1990. The agreement was concluded in the context of planning permission, granted by the defendant, for the development of an area of land owned by the claimant. The defendant had hoped to construct a park and ride facility and had identified a portion of the land described as the “red land” for that purpose.

Clause 19 of the agreement granted to the defendant an option to acquire the red land in the following terms: “19.2 The Option over the Red Land is granted to the Council by Plc in consideration of £1 and shall not be exercisable until the Commencement of the Development … 19.3 The Red Land Option is exercisable on the Council giving Plc six months notice in writing of its intention to exercise the Red Land Option … 19.4 On the receipt of such notice from the Council Plc shall transfer the Red Land to the Council at nil cost upon the expiry of the said six months notice … 19.5 If: 19.5.1 by 1 January, 2005, the Council has either: 19.5.1.1 not given notice to Plc of its intention to exercise the Red Land Option; or 19.1.5.2 exercised the Red Land Option but has not commenced work on a park and ride car park on the Red Land (by having let a contract for such works); or 19.5.2 by 1 January, 2007, the Council has not substantially completed the construction of park and ride car park on the Red Land … then either the Red Land Option shall cease to have effect or the Council shall transfer the Red Land back to Plc in consideration for £1 upon the same terms upon which it was transferred other than any restrictive covenants restricting its uses (as the case may be)”.

Commencement of the development work took place shortly after the execution of the agreement. On 20 December, 2004, the defendant wrote to the claimant stating that that letter should be taken as its notice exercising the option to purchase the red land, pursuant to cl19.3 of the agreement. In the event, no works contract had been let by 1 January, 2005. The claimant took the view that the absence of such a contract had triggered the operation of cl19.5 so that the option ceased to have effect on that date. The defendant resisted that contention and claimed that it had been entitled to transfer of the red land upon the expiry of the six month period. The claimant issued proceedings by which it sought declarations that the option had ceased to have effect on 2 January, 2005, by virtue of cl19.5.1 of the agreement, and, therefore, that it was not obliged to transfer the red land. The defendant counterclaimed for a declaration to the opposite effect. The question of the construction of cl19 of the agreement and whether the option had ceased, so that the claimant was not bound to transfer the red land to the defendant, was tried as a preliminary issue.

The defendant submitted, inter alia, that cl19.3 fell to be interpreted as meaning that the option was not to have been exercised upon the provision of notice but only six months after that notice had been given. Accordingly, cl19.5.1.2 had not been engaged since the option had not been exercised by 1 January, 2005. The claimant submitted, inter alia, that the notice itself constituted exercise of the option.

The court ruled: On its true construction, the option agreement for the purchase the red land was exercised upon the giving of notice by the council. Read in the context of the agreement as a whole, the words “exercisable on” in cl19.3 were synonymous with “exercisable by”. Furthermore, it was apparent from the structure of cl19.5.1 that clauses 19.5.1.1 and 19.5.1.2 were to be treated as alternatives: one was to proceed to cl19.5.1.2 in the event that cl19.5.1.1 was factually inapplicable. That could only have been the case if notice under cl19.3 constituted exercise of the option itself. In those circumstances, the defendant's notice of 20 December, 2004, had constituted an exercise of the option, and satisfied the first condition in cl19.5.1.2. Failure to enter into a works contract by 1 January, 2005, had resulted in the option ceasing to have effect. Accordingly, the claimant was not obliged to transfer the red land to the defendant.
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8. Ashe v National Westminster Bank plc

Citation: [2007] EWHC 494 (Ch)
Hearing date: 13 March 2007
Court: Chancery Division
Judge: Richard Arnold QC sitting as a deputy judge of the High Court
Relevant legislation: Limitation Act 1980
Summary: Limitation of action — Accrual of cause of action — Cause of action

Paragraph eight of part one of schedule one to the Limitation Act 1980 provides “(1) No right of action to recover land shall be treated as accruing, unless the land is in the possession of some person in whose favour the period of limitation can run (referred to below in this paragraph as 'adverse possession'); and where, under the preceding provisions of this Schedule, any such right of action is treated as accruing on a certain date, and no person is in adverse possession on that date, the right of action shall not be treated as accruing unless and until adverse possession is taken of the land.

(2) Where a right of action to recover land has accrued and after its accrual, before the right is barred, the land ceases to be in adverse possession, the right of action shall no longer be treated as having accrued, and no fresh right of action shall be treated as accruing unless and until the land is again taken into adverse possession.

(3) For the purposes of this paragraph (a) possession of any land subject to a rentcharge by a person (other than the person entitled to the rentcharge) who does not pay the rent shall be treated as adverse possession of the rentcharge; and (b) receipt of rent under a lease by a person wrongfully claiming to be entitled to the land in reversion immediately expectant on the determination of the lease shall be treated as adverse possession of the land.

(4) For the purpose of determining whether a person occupying any land is in adverse possession of the land, it shall not be assumed by implication of law that his occupation is, by permission of the person entitled to the land, merely by virtue of the fact that his occupation is not inconsistent with the latter's present or future enjoyment of the land. This provision shall not be taken as prejudicing a finding to the effect that a person's occupation of any land is by implied permission of the person entitled to the land in any case where such a finding is justified on the actual facts of the case.”

The claimant was the trustee in bankruptcy for B, who was registered as the owner of a property together with his wife. In 1989, B and his wife charged the property by way of legal mortgage provided by the defendant bank. Between 21 January, 1992, and 4 June, 1992, there were various correspondences between the defendant and B in relation to the outstanding balance of the mortgage. In particular, on 4 June, 1992, the defendant wrote to B to say that, in the absence of the repayments promised by B, it intended to enforce its security and enclosed a formal demand for payment of the sum then owing. In March 1993, B was adjudged to be bankrupt.

Following that, there were further correspondences between B and the defendant, in regard to payment of the mortgage. On 25 September, 1999, B wrote to the defendant's solicitors and stated: “I received your letter, and I was shocked. Approximately 10 years ago I lost everything, and, unfortunately, I did not recover at all. I shall enclose all my details to you, as I am on the dole, as I do not have a job.” Following further correspondences between B and the defendant, on 27 April, 2001, B's solicitors wrote to the defendant and stated that they had been unable to take instructions on the documents sent by them due to their client's illness and asked for more time in order to do so. In October 2004, the claimant was appointed as B's trustee in bankruptcy. On 4 January, 2006, the defendant wrote to B and his wife reminding them that they were continuing to rely on the mortgage over the property and stated that they required full repayment when the next dealing in the property took place. The claimant applied for a declaration that the defendant's charge over the property had been extinguished and for consequential relief.

The claimant submitted that: (i) the defendant's right of action to recover the property had accrued either on 21 January, 1992, when the defendant demanded repayment from B, or on 4 June, 1992, when it made formal demand relying upon the mortgage; (ii) either way, the right of action had accrued more than 12 years ago; (iii) accordingly, the right of action was statute-barred by virtue of s15(1) of the Limitation Act 1980 ; and (iv) it followed that the defendant's charge had been extinguished by s17 of the Act.

The defendant submitted that their right of action to recover the property had not yet accrued because: (i) the date on which the right of action accrued was to be determined in accordance with paragraph eight of part one of schedule one to the Act ; (ii) under paragraph eight, time did not run unless the occupier of the land was in adverse possession of it; and (iii) B and his wife had not been in adverse possession of the property since repayment was demanded from B, but on the contrary had occupied it with the implied permission of the defendant, as no unequivocal demand for possession had been made by the defendant. The defendant also submitted that, even if its right of action to recover land accrued more than 12 years ago, B acknowledged its title in his letter dated 25 September, 1999, and/or his solicitors did so in their letter dated 27 April, 2001, and, accordingly, there was a fresh accrual of its right of action on those dates by virtue of s29(2) of the Act.

The application would be allowed.

Case annotations in other services: Ashe v National Westminster Bank plc [2007] All ER (D) 227 (Mar)  
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9. Megaro v Di Popolo Hotels LTD

Citation: [2007] All ER (D) 210 (Mar)
Hearing date: 13 March 2007
Court: Court of Appeal, Civil Division
Judge: Chadwick, Dyson and Thomas LJJ
Summary: Easement — Right of way — Extinguishment 

The claimant's property and the respondent's property were in common ownership until the respondent's property was transferred out of title to the respondent. The claimant's property remained under the original title until it was acquired by the claimant. Both the claimant and the respondent acquired the properties through a 1998 transfer. The two buildings were served by one fire escape, and a grant had been made in respect of the emergency exit. A clause in the grant stipulated that the occupier of the respondent's property could use an external staircase and a ground floor roof in the claimant's property in the event of an emergency, provided that the said roof and staircase still existed. The grant also provided that the route of the emergency exit on the claimant's property could be altered by the occupier of the property. The position was that the common fire escape was over the claimant's property.

The claimant obtained planning permission to convert the existing offices into a hotel. The re-development involved erecting a new structure on the flat roof and demolition of the staircase, both of which were used as part of the emergency exit from the respondent's property. The claimant was unwilling to permit the occupiers of the respondent's property to use the new route through his property. The claimant's solicitor wrote to the respondent, stating that the respondent had had a right to cross the roof and use the stairs of the claimant's property in the case of an emergency; however, the staircase no longer existed, and the roof could no longer be used. The respondent replied, alleging that, although there had been a reserved right to change the route, there had been no right to remove it.

The claimant sought a declaration as to the existence of his right of egress in terms of the 1998 transfer, and an injunction to restrain the respondent from obstructing exercise of that right. The respondent sought a declaration that its right of egress remained extant and sought an order that the claimant reinstate the staircase or provide an alternative means of escape. The judge observed that a hypothetical reasonable man would think that it was a “nonsense” that the right granted to the respondent could be exterminated by the removal of the roof or staircase, and that it was highly unlikely that that had been agreed. He found that the right granted by the 1998 transfer was extant and ordered that the claimant provide the respondent's property with an alternative means of escape in an emergency. The claimant appealed.

He contended that the judge's interpretation of the grant had been incorrect; and that he had failed to give any weight to the proviso. The appeal would be allowed.  
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10. Berkeley v First Secretary of State and others

Citation: [2007] All ER (D) 160 (Mar)
Hearing date: 9 March 2007
Court: Queen's Bench Division (Administrative Court)
Judge: Judge Hamilton sitting as a judge of the High Court
Relevant legislation: Town and Country Planning Act s288
Summary: Town and country planning — Permission for development — Application for permission

The case arose from a proposed development on a site adjacent to the River Thames which straddled the boundaries between the second and third defendant local planning authorities. The Secretary of State recommended refusing the applications for permission on the basis of the height of a proposed tower. The Secretary of State overruled his inspector and granted permission. The claimant applied to the court pursuant to s288 of the Town and Country Planning Act 1990 to quash the Secretary of State's decision.

The claimant's grounds of challenge related to the Secretary of State's interpretation, and, where he relied on the inspector, the latter's interpretation, of various planning policies and the way in which an alleged conflict had been resolved. In particular, the claimant contended, inter alia, that the Secretary of State had misconstrued and misapplied various policies, which formed part of the blue ribbon network (BRN) policies contained within the London plan.

The application would be dismissed. 
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11. Scottish & Newcastle plc v Raguz

Citation: [2007] EWCA Civ 150
Hearing date: 6 March 2007
Court: Court of Appeal, Civil Division
Judge: Mummery, Rix and Lloyd LJJ
Relevant legislation: Landlord and Tenant (Covenants) Act 1995, s 17(2); Land Registration Act 1925 s24(1)(b)
Summary: Landlord and tenant — Assignment of lease — Implied covenant
 
The claimant was the original tenant under two underleases. The defendant took an assignment of both leases from the claimant. The premises were subsequently occupied by a later assignee, H, who went into administrative receivership. The amount of the rent due under each lease was increased as a result of two rent reviews, but H did not pay the reviewed rents. The reversioner demanded payment of the same amounts from the claimant, who paid them. The question in the proceedings between the parties was whether the defendant was liable to indemnify the claimant for the sums it had paid to the reversioner under the terms of s 24(1)(b) of the Land Registration Act 1925. The judge held that the claimant was entitled to an indemnity from the defendant “in respect of those sums properly sought from it by [the reversioner]” under the two leases. The defendant appealed.

The following issue, inter alia, arose on the appeal: whether it was a precondition to liability of an original tenant to pay the arrears that the reversioner should have served notice on the original tenant under s17(2) of the Landlord and Tenant (Covenants) Act 1995 within six months of the original unreviewed rent falling due, followed by a notice under s17(4) on the completion of the review, or whether it was sufficient to serve notice under s17(2) when the rent review had been completed.

The appeal would be dismissed.

Case annotations in other services: Scottish & Newcastle plc v Raguz [2007] All ER (D) 78 (Mar) 

Please note subscribers can go to LexisNexis Butterworths for further details about all the above cases. Non-subscribers can sign up for a free trial of the online service.

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Statutory Instruments

1. Planning-gain Supplement (Preparations) Act 2007

Enactment date: 20 March 2007
Summary: An Act to permit expenditure in preparation for the imposition of a tax on the increase in the value of land resulting from the grant of permission for development.  
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2. Housing (Right to Buy) (Prescribed Forms) (Amendment) (England) Regulations 2007

Number: SI 2007/784
Enabling power: Housing Act 1985
Commencement: 3 April 2007
Summary: Regulation two of these regulations substitutes the form of notice to be used by a tenant claiming to exercise the right to buy his or her dwelling-house in accordance with section 122 of the Housing Act 1985. The regulations apply in relation to houses and flats in England only.
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3. Housing (Tenancy Deposits) (Prescribed Information) Order 2007

Number: SI 2007/797
Enabling power: Housing Act 2004
Commencement: 6 April 2007
Summary: This order, which applies to England and Wales, prescribes the information that the landlord is required to give. The information relates to the authorised tenancy deposit scheme applying to the deposit, to compliance by the landlord of any initial requirements imposed on him by the scheme and to the operation of the provisions contained in sections 212 to 215 and schedule 10 of the Act.

Please note subscribers can go to LexisNexis Butterworths for further details about all the above SI. Non-subscribers can sign up for a free trial of the online service.

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Features

1. Research reveals REIT confusion amongst financial advisers

Since the launch of UK REITs on 1 January, 2007, many leading property companies have already converted to REIT status, and a quarter of advisers claim they have taken enquiries from clients interested in investing.

While 39 per cent of advisers surveyed in the study claimed they already had permission from the Financial Services Authority (FSA) to advise on REITs, nearly a third of financial advisers still do not know whether they can legally give their clients financial advice on REITs, either individually or as a firm.

An REIT is basically an organisation with the sole purpose of owning and managing investment properties. REITs provide such advantages as tax breaks, income return and inflationary protection, say supporters. They are also classed as “pass-through”, meaning that most of the income cash flows can be issued to the investors free of corporation tax, which may generate stronger shareholder dividends by rental revenue from the managed properties. Shares in REITs are freely tradable on the stock market and thus provide greater flexibility than buying and selling property as an individual.

Dave Butler, project director of the REITs and quoted property group at Reita, a promotional body, says: “we are not surprised at the results of this survey, as there has been very little information from the FSA on the regulatory status of REITs, and without this guidance many advisers simply will not know whether they are legally authorised to advise or not”.

“While the increasing awareness of REITs is very encouraging, the confusion over the regulatory position for advisers is concerning. Whether or not formal qualifications are introduced for advisers, we are excited by the demand for more education, which is at the very heart of our mission.”

Mr Butler says that there are several reasons for the confusion. “These investment vehicles are brand new, so not everyone will be aware of what they are, how they should be sold and how they operate, which is no doubt having an impact of their take-up.

“The FSA has not issued any strict guidance on REITs and the duties that IFAs have when selling them or recommending them to clients. Until the regulator provides such guidance, IFAs are going to continue to be reluctant about having anything to do with them.”

Other reasons for the confusion include the fact that REITs are stock-market listed companies that have changed their status to — among other issues — avoid paying capital gains tax. “IFAs typically offer their clients products and services provided by large financial services providers. But REITs are not as well known, yet, and do not have that kind of ‘big name’ status, which is why many IFAs do not want to take a risk,” he says.

“Normally,” says Mr Butler, “IFAs do not offer clients the possibility to buy shares in companies, which is the way a REIT works, so many IFAs are wary of changing the way they operate, or think that they do not have the mechanism to sell this kind of investment vehicle.”

The results are part of a larger independent research project commissioned by Reita and carried out by consultants NMG Research. More than 250 financial advisers took part in the survey, which ran in three waves: May and October 2006, then February 2007.

(16/03/2007)
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2. Property developers take further hit by latest right to light case

In a landmark court ruling (Tamares v Fairpoint Properties) at the end of February, a High Court judge ordered a developer to pay £50,000 — almost a third of its profit — to the owner of a neighbouring office as compensation for loss of light. This was despite the fact that the infringement was relatively inconsequential and involved loss of light on a staircase. Previously, compensation paid was usually no more than 15 per cent of a developer’s profits.

Simon Freeman, property litigation partner at commercial law firm Wedlake Bell, says that this case clarifies the way compensation for loss of light is calculated and should sound an urgent wake up call to property developers who ignore rights to light law in the hope that neighbours are uninformed about their rights or will not fight for them.

“Until now developers have been able to settle the bulk of disputes by a relatively inexpensive payment to neighbours,” says Mr Freeman. “They now have to acknowledge the more serious impact these infringements could have on their profits.”

Mr Freeman believes that: “this case is another scary illustration of the law in practice because of how relatively small the loss of light actually was. Property owners are wising up to their rights, and developers need to realise that they could face serious losses for even the slightest infringements.”

He adds that planning policies encouraging higher population density and more brownfield developments are likely to add to the risk, as there are more frequent infringements because of the increasing height of buildings.

The Tamares v Fairpoint Properties case follows last years’ Court of Appeal ruling in the case of Regan v Paul Properties Ltd, which saw a Brighton developer being forced to demolish part of a four-storey development overshadowing a neighbour’s property, despite the fact that the decrease in the value of the affected property was just £5,000.

“Affected parties will undoubtedly see this case as green light to demand larger amounts to settle than in the past,” says Mr Freeman. “If they don’t get the compensation they’re looking for, they know that they will find it in court,” he adds.

According to Mr Freeman, specialist right to light chartered surveyors say that they have seen at least a 30 per cent increase over the past two years in the number of rights to light cases. He also warns that even if planning permission has been granted by a Local Authority, a development can subsequently be prevented due to right to light infringements.

Mr Freeman says that there is still a large amount of ignorance about rights to light. “Developers need to realise that, regardless of planning permission or how small the amounts involved are, they face huge costs and problems. They need to address and deal with right to light issues before building actually begins,” he says.

Relevant cases: Tamares (Vincent Square) Ltd v Fairpoint Properties (Vincent Square) Ltd  [2007] All ER (D) 151 (Mar); Regan v Paul Properties Ltd and others  [2006] EWCA Civ 1391
 
(15/03/2007)
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3. Government department decides to curb city’s skyscrapers

An unpublished report follows a severe reprimand from Unesco slating the UK government over the lack of protection for what it considers to be London's international historical landmarks, including the Tower of London, Westminster Abbey and the Palace of Westminster.

The criticism followed visits by the organisation to both London and Liverpool last year, amid concerns that rapid urban development in the world’s strongest economies put heritage sites at risk. The governments conservation advisers, English Heritage, has also demanded a veto on new skyscrapers being built between the City of London and Canary Wharf after warning they would blight the city’s historic skyline.

Oliver Goodwin, head of planning at law firm Mishcon de Reya, is one who is concerned about the government’s plans to clamp down on what has been seen as a liberal planning regime in London. They come, he points out, ironically, at a time when the Mayor of London is seeking to extend his planning powers.

"Currently the Greater London Authority (Mayor of London) Order 2000 requires local planning authorities in London to consult the Mayor on proposals for tall buildings that are 75 metres tall or more and in the city of London; 25 metres or more and on the riverside; and 30 metres or more in all other London boroughs," he says.

Mr Goodwin explains that the Greater London Bill, which is expected to come into force in April, will give the mayor the power to decide all applications of strategic importance in Greater London. He believes this will allow lawyers to expect generally greater consistency in decision making from the Mayor’s office and expect a greater likelihood of consent. But he warns to watch out for the Secretary of State response to Unesco, as it is likely that the government will take heed of the warning.

"If the government comes under pressure to respond to respond to Unesco, we may get another pool in the planning arena increasing the areas of conflict,” he says.

For those using the planning system, Mr Goodwin advises: "Theoretically, with everything going to the Mayor, he should be applying a London-wide policy, so people should have a clear idea of the procedure. However, there could actually be less certainty because of a three-way warfare between the Mayor, the Secretary of State and local authorities.”

“The local authority has a bigger role in theory than practice because most of the Mayor’s policy demanding consultation on tall buildings.” However, Mr Goodwin adds that local authorities “have a big voice in informing the Secretary of State whether developments should be called in.”

The government can also take issue with a building without being prompted; by way of example Goodwin refers to developer Land Securities proposed 160-metre “Walkie Talkie” tower in East London. The plans were called in by Secretary of State Ruth Kelly to consider the appropriateness of a very tall building in the location — as it is outside the city’s designated zone for tall buildings.

Mr Goodwin adds the changes — if introduced — will not have a retrospective effect on schemes that include tall buildings that have already been approved under the planning system.

(07/03/2007)
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Articles

1. Student house: change of use?

Journal: Journal of Planning and Environmental Law
Citation: [2007] JPL 518
Issue date: 1 April 2007
Author: Alec Samuels
Summary: Considers the growing “problem” of multiple occupation by students and says the statutory law and regulation leaves much to be desired. It does not lay down clear principles, or address the problem of HMOs.
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2. Beware of tax traps in the countryside

Journal: Tolley's Practical Tax Newsletter
Citation: 28 PTN 6, 45
Issue date: 16 March 2007
Author: Julie Butler
Summary: HM Revenue and Customs have stated that they will be looking closely at the tax treatment of all land and property and that this will include rural locations and activities. This article aims to set out the areas that are coming under attack and to suggest practical solutions.
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3. Costa del tax changes

Journal: Taxation
Citation: 8 March 2007, 278
Issue date: 8 March 2007
Author: León Fernando del Canto
Summary: Examines how Spanish tax reforms will affect British owners of holiday homes in Spain. 
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4. Commonhold Social Housing: The Shared Ownership Trust

Journal: Journal of Housing Law
Citation: [2007] JHL 22
Issue date: 1 March 2007
Author: Laurence Target
Summary: Looks at the problems with long leasehold residential ownership. Planning policy also requires significant provision of shared ownership housing in new residential and mixed-use developments. Take-up of commonhold has been disappointing.

Please note subscribers can go to LexisNexis Butterworths for further details about all the above articles. Non-subscribers can sign up for a free trial of the online service.

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Discounts

1. How to book and claim any discount

This e-alert is not intended to provide comprehensive records of information concerning the property sector. If you have any feedback or suggestions, please email propertysection@lawsociety.org.uk. This e-alert was created in conjunction with LexisNexis UK Legal Updater Service. For further information about any of the articles, please contact sabina.smith@lexisnexis.co.uk. The views expressed by the Legal Analysis interviewees are not necessarily those of the proprietor.
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