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Issue 51 – March 2008

Contents

Cases
Statutory Instruments

Features
Articles
News

Events
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Cases

1. Roberts v Crown Estate Commissioners

Citation: [2008] EWCA Civ 98
Hearing date: 20 February 2008
Court: Court of Appeal, Civil Division
Judges: Mummery, Jacob LJJ and Mann J
Relevant legislation: Limitation Act 1980; Crown Proceedings Act 1947
Summary: limitation of action – land – acquisition of title by squatter

The claimant had acquired in excess of 60 manors over a number of years. In October 1997, the claimant acquired the Lordship of Magor, and with it he asserted title over parts of the adjoining foreshore and bed of the tidal estuary of the River Severn on its Welsh side. He claimed that the paper title of the manor dated back to the law applicable in the Marches of Wales following the conquest of the Principality of Wales by Edward I in 1282. The claimant set about registering a caution against first registration at the land registry. In view of the conflicts between the rival claimants to the land, the land registry directed that there should be proceedings to resolve the dispute. The claimant sought a declaration of, inter alia, title to the Magor land. The defendant commissioners (the commissioners), against whom the declaration was sought, was a statutory corporation responsible for the management of the Crown Estate on behalf of the Crown. The defendant asserted that it was the owner of Magor's foreshore and river bed by ancient prerogative right or, alternatively, by adverse possession. A preliminary issue was directed to be tried as to whether, inter alia, the defendant had acquired title of the Magor land by adverse possession. That preliminary issue was tried on the assumption, which was made only for the purpose of the hearing and judgment on the preliminary issues, that the claimant and his predecessors had claimed capacities that entitled them to ownership of the claimed estates, rights and interests. The judge rejected the submissions of the claimant and accepted the defendant's case that the Crown, under the express provisions of the Limitation Act 1980, enjoyed the same legal rights as its subjects in limitation matters and that in the case of any person, including the Crown, pleading adverse possession under the 1980 Act, the nature of the possession was irrelevant. In the event, the judge made a declaration that, inter alia, the defendant had by adverse possession extinguished whatever title the claimant might otherwise have had to the area of the Magor land. The claimant appealed.

The claimant submitted, inter alia, that, as a matter of law, the Crown could not acquire title by adverse possession against a subject except where its original entry on to the subject's land, by its servants or agents, was lawful. The claimant submitted, that, as a matter of principle, because the Crown could not commit a wrong against one of its subjects, it could not base a claim to title by adverse possession on its dispossession of the subject's land and was the corollary of the principle that a subject could not bring an action for ejectment claiming that the Crown had disseised him of his land. The claimant further submitted that the legal impediment was based on a supposed fundamental constitutional principle, which successive Statutes of Limitation over the last 400 years, in particular the 1939 and 1980 Limitation Acts, and the Crown Proceedings Act 1947 had not removed.

The appeal would be dismissed.

There was no possible legal basis for denying to the Crown the ability to plead a limitation defence that any of its subjects could plead or for treating the Crown's ordinary possession of another's land as other than that of a person in whose favour time could run under the 1980 Act.

The law of limitation had been enacted for a purpose that applied as much to the case of the Crown itself as it did to the Crown's subjects. Even if the position had been possibly different at some remote period in legal history, which would be surprising, as the Crown was treated as a favoured litigant, modern legislation, namely the 1947 Act and the 1939 and 1980 Limitation Acts, had put the matter beyond doubt.

In the instant case, the alleged historic and constitutional distinction between disseisin of land by the Crown, in which case it could not plead limitation, had not been established by the claimant.

J A Pye (Oxford) Ltd v Graham [2002] 3 All ER 865 considered.

Lindsay J [2007] All ER (D) 233 (Mar); affirmed.

Case annotation in other services: Roberts v Crown Estate Commissioners [2008] All ER (D) 286 (Feb); J A Pye (Oxford) Ltd v Graham [2002] 3 All ER 865; Lindsay J [2007] All ER (D) 233 (Mar)
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2. Edstaff Ltd v Anglo Overseas Group (Properties) Ltd

Citation: [2008] All ER (D) 270 (Feb)
Hearing date: 19 February 2008
Court: Court of Appeal, Civil Division
Judges: Jacob and Wilson LJJ
Summary: contract – licence – contractual licence to occupy premises

The defendant company was the owner of premises in Liverpool (the property). The director of the defendant, B, granted a licence to the claimant company to occupy a studio in the property between 1 January 2005 and 31 March 2006. A clause in the contract provided that the agreement could be terminated by any party giving one months' notice. In February 2005, the claimant entered into discussions with the defendant about making a further prior payment to extend the licence period until 31 June 2006. It was agreed between the parties that, if the claimant made an advance payment, the licence fee would be reduced. The claimant paid the licence fee to secure its right to occupy the property until 31 June 2006. One of the directors of the claimant, L, asked B to confirm certain issues, which B confirmed by writing a postscript on a letter in the presence of L. The postscript stated that the defendant would waive the right to terminate on a month's notice. The claimant gave notice that it would be ceasing occupation and claimed a refund of the licence fee from 1 April 2006 to 31 June 2006. The defendant disputed that refund. The claimant commenced proceedings. The claimant alleged that although it had received a copy of the letter, it had never received a copy of the letter with the postscript. L said that B had given her a copy of the typed letter, that he had scribbled something on the bottom in her presence, but that he had never sent to the claimant a copy of that letter with the endorsement. The district judge upheld the claimant's entitlement to the refund. He found that there was nothing in the endorsement to suggest that the waiver extended to the claimant. The defendant appealed, and the judge found that the district judge had been right in the view he had taken and that it was not necessary that the agreement had to cut both ways. The defendant appealed against that decision.

It submitted that the judge had erred in finding that the endorsement only affected it and not the claimant.

The appeal would be allowed.

It was difficult to understand how both judges had reached the conclusion that the endorsement was not one that had affected both parties equally. Moreover, it was not just difficult, but impossible to wring out a meaning that preserved the claimant's right to terminate on one month's notice. For the claimant, the endorsement assured it a right to occupy the property until June 2006, and for the defendant, it assured the right to retain the claimant's licence fee but precluded the eviction of the claimant prior to that date. The decision reached by the judges had been demonstrably untenable. The errors of the court below were glaring.

Case annotations in other services: Edstaff Ltd v Anglo Overseas Group (Properties) Ltd [2008] All ER (D) 270 (Feb)
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3. Fowles v Heathrow Airport Ltd

Citation: [2008] EWHC 219 (Ch)
Hearing date: 15 February 2008
Court: Chancery Division
Judge: Lewison J
Relevant legislation: Land Registration Act 2002 schedule 6, schedule 12 paragraph 18(1); Landlord and Tenant Act 1954 section 25, 30(1)(c)
Summary: landlord and tenant – opposition to grant of new tenancy of business premises – notice of opposition

In 1978, R leased a site to the claimant, who carried on various commercial activities there. In 1989, R sold the land to Malmain Property Developments Ltd (Malmain), who served a notice terminating the claimant's tenancy pursuant to section 25 of the Landlord and Tenant Act 1954. The notice stated that Malmain would oppose the grant of a new tenancy. On 19 May 1988, the local authority served an enforcement notice on the claimant, alleging breaches of planning control. The notice related to a material change in the use of the land to use for a haulage contractors' yard, including the parking and storage of trailers and vehicles, the installation, stationing and operation of a concrete crusher and soil hopper, and the storage of materials including soil, concrete and excavated materials. It required the discontinuance of that use and the removal of associated items within 12 months from 15 May 1989. The claimant failed to comply with the notice and in 1990 was convicted for continuing to use the site in breach thereof. A further prosecution against him was superseded by the grant of temporary planning permission in 1994. That permission was for use of the site for the reception, processing and recycling of waste concrete with the restoration of part of the site to grassland and the construction of a landscaped bund for a temporary period of seven years. In 1995, the mortgagee of the site transferred it to the defendant, Malmain having gone into liquidation. The claimant subsequently made unsuccessful applications for permanent planning permission. On 21 December 2006, the local authority served a breach of condition notice on him, requiring him to cease concrete crushing within six months, but not requiring him to restore the land. He applied to the administrative court for an order quashing that notice. While that application was pending, he applied for a new tenancy. The defendant opposed the grant of such a tenancy, relying on section 30(1)(c) of the Act.

An issue arose as to whether, in light of the breach of condition and enforcement notices, the claimant's use of the site constituted the commission of criminal offences so that he should not be granted a new tenancy. The claimant submitted, inter alia, that the local authority had not been entitled to serve the breach of condition notice, as the relevant condition was a composite one, meaning that it was not permissible to rewrite it by severing the cessation of use from the restoration of the land. A further issue arose as to whether, by erecting gates across the only access to the site, the claimant had acquired a freehold title to land not expressly let to him (the Green land) by adverse possession.

The application would be dismissed.

(1) The local planning authority had been entitled to serve a breach of condition notice in respect of anything upon which the planning permission was conditional. The condition did not have to be contained in a separate paragraph. Therefore, the notice had been valid, and the claimant's failure to comply with it meant that he had been committing and would continue committing a criminal offence by continuing his concrete crushing operations on the site. Furthermore, the effect of the enforcement notice was that the claimant could not legally carry on his haulage business at the site. Accordingly, since the vast majority of the claimant's activities had been illegal and would remain so, the defendant had made out its ground of opposition. The claimant ought not to be granted a tenancy because of reasons connected with his use and management of the holding.

(2) The Land Registration Act 2002 came into force on 13 October 2003. It was not possible to claim title to registered land by adverse possession by relying on adverse possession after that date, unless complying with the procedure set out in schedule 6. However, if a squatter could prove that he or she was in adverse possession of registered land for the applicable limitation period prior to 3 October 2003, he or she was entitled to be registered as proprietor under paragraph 18(1) of schedule 12. It followed, therefore, that for the claimant's claim to have acquired title by adverse possession, to succeed he had to show that he had taken possession by 13 October 1991. By erecting new gates controlling access to the yard, he had effectively taken possession of the whole site. However, on the evidence, the gates had been installed some time in the autumn or winter of 1994. Accordingly, the claim to have acquired title by adverse possession failed on the facts.

The defendant was entitled to an order for possession of the Green land.

Case annotations in other services: Fowles v Heathrow Airport Ltd [2008] All ER (D) 226 (Feb)
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4. Coleman and another v Ibstock Brick Ltd

Citation: [2008] EWCA Civ 73
Hearing date: 14 February 2008
Court: Court of Appeal, Civil Division
Judges: Arden, Lawerence Collins LJJ and Lindsay J
Summary: sale of land – conveyance – construction

The claimants were the successors in title to the interest of the deceased in an exception and reservation contained in a conveyance dated 24 March 1921 (the 1921 conveyance). Under that conveyance, subject to the exception and reservation, the deceased conveyed to a wholesale fruit and potato salesman, a farm comprising about 196 acres of land (the disposition site). Much of the area of the disposition site and the land on which the defendant operated lay above carboniferous strata, which comprised “Upper Coal Measures”. The exception and reservation in the 1921 conveyance (the 1921 exception) excepted and reserved “unto the vendor her heirs and assigns the mines beds and seams of coal and ironstone and other metals and minerals within and under the hereditaments hereby conveyed with all necessary and proper powers rights and easements for searching for winning working getting and carrying away the same by underground workings [...]” The defendant company was the registered proprietor of the freehold of part of the disposition site, which had earlier been acquired by MMB Ltd. The claimants sought, inter alia, declarations that they were entitled as against the defendant to the ironstone, fireclay, brickshale and clay, which was on and within the land subject to the 1921 exception and the airspace created by the extraction of those substances. The substances that were in issue and fell within the disputed site formed part of the Upper Coal Measures. It was ordered that the issues of liability and quantum be tried separately. The claimants contended that ironstone, fireclay, brickshale and clay were “minerals” within the 1921 exception. The issue before the judge on a number of preliminary issues was whether brickshale and what was described as fireclay in the wider sense were within the expression “other […] minerals” in the exception and reservation. The problem arose because the word “minerals” in its widest signification could potentially mean every inorganic substance forming part of the crust of the earth other than the layer of soil that sustained vegetable life. At trial the judge considered expert reports from both parties. In determining the issue the judge had to consider three pointers to determining the issue set out under settled law, namely Waring v Foden. The first was that unless the meaning was clear on the face of the legislation or the instrument, the first duty of the court in construing a grant of mines and minerals was to try to ascertain what the phrase meant in the vernacular of the mining world, the commercial world and landowners at the time of the grant. The second was whether the substance in question was exceptional in use, in value and in character and not the ordinary soil of the district, which, if reserved, would practically swallow up the grant (the exceptionality issue). The third factor was whether there were any express powers of working, or limitations on powers of working, which shed light on whether the substance in question was intended to be included in the reservation (the powers of working issue). In respect of the exceptionality issue, the judge applied the principle established in Waring v Foden and found that it was clear from the evidence that coal, ironstone and fireclay, in the narrow sense, could not be regarded as part of the soil of the district. He was of the view that fireclay in the narrow sense was a substance of exceptional value, use and character. However, the judge found that fireclay in the wider sense was not in vernacular usage a mineral in 1921 and in connection with that issue he preferred the defendant's expert report. The judge further concluded brickshale did not form part of the soil or subsoil of the district in a geological sense and that the brickshale in the disputed site was not as exceptional in character and value as other well recognised minerals associated with the Upper Coal Measures. In considering the powers of working issue, the judge concluded that brickshale and fireclay in the wider sense were not “other […] minerals.” In doing so he rejected the claimants' argument that the fact that the power of working was limited to underground methods was, in fact, neutral and not a pointer against them because it was evidence only of a “stand off”. The claimants appealed.

The claimants submitted: (i) that the judge had misinterpreted the principle established in Waring v Foden; (ii) as regards powers of working, the judge wrongly rejected their contention that the fact that the power of working was limited to underground methods was, in fact, neutral and not a pointer against them because it was evidence only of a “stand off”. The claimants also sought to: (iii) challenge the judge's finding that fireclay in the wider sense was not in vernacular usage a mineral in 1921.

The appeal would be dismissed.

(1) The test of exceptionality as restated in Waring v Foden was derived from earlier case authority. Those cases were not endeavouring to state what was meant by exceptionality, nor what the comparator was meant to be. All exceptional seemed to mean in that context was something special. The judgment in Waring v Foden was not a statutory code. The judge in that case had been endeavouring to apply to a consensual arrangement the principles in the cases on compulsory acquisition to give guidance on what the parties had to be taken to have intended. Applied to the instant case, it meant that where a not especially valuable substance, not exceptional in any sense, was ubiquitous in the area, that was a pointer, but only a pointer, to brickshale not being regarded as a mineral. Therefore, the court agreed with the judge's conclusion that the nature of the substance was not a pointer to its inclusion in the expression mineral. All the judge seemed to have been doing when he said that brickshale was not the soil of the area was that it was not the surface soil and subsoil. The evidence was that strata of brickshale were ubiquitous in the area, and not especially valuable. Accordingly, the judge was right to conclude that he did not gain any assistance in construing the words of the reservation and exception from the exceptionality test as applied to brickshale.

(2) The surrounding circumstances of the case strongly supported the judge's conclusion that the underground working restriction was a strong pointer against brickshale being a mineral for the purpose of the 1921 conveyance.

(3) In relation to the fireclay issue, the judge had the benefit of the evidence of the two experts as to the vernacular meaning of fireclay in 1921, and preferred that of the defendant. Accordingly, there was no basis for interfering with his conclusion.

Waring v Foden, Waring v Booth Crushed Gravel Co [1931] All ER Rep 291 applied; Lord Provost and Magistrates of Glasgow v Farie [1888] 13 App Cas 669 considered; Great Western Rly Co v Blades [1900-3] All ER Rep Ext 1418 considered; North British Rly Co v Budhill Coal and Sandstone Co [1910] AC 116 considered; Great Western Rly Co v Carpalla United China Clay Co Ltd [1910] AC 83 considered; Caledonian Rly Co v Glenboig Union Fireclay Co [1911-13] All ER Rep 307 considered. Richard Sheldon QC; [2007] All ER (D) 499 (Mar) affirmed.

Case annotations in other services: Coleman and another v Ibstock Brick Ltd [2008] All ER (D) 217 (Feb); [2007] All ER (D) 499 (Mar); Waring v Foden, Waring v Booth Crushed Gravel Co [1931] All ER Rep 291; Lord Provost and Magistrates of Glasgow v Farie (1888) 13 App Cas 669; Great Western Rly Co v Blades [1900-3] All ER Rep Ext 1418; North British Rly Co v Budhill Coal and Sandstone Co [1910] AC 116; Great Western Rly Co v Carpalla United China Clay Co Ltd [1910] AC 83; Caledonian Rly Co v Glenboig Union Fireclay Co [1911-13] All ER Rep 307
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5. AMG Global Nominees (Private) Ltd v SMM Holdings Ltd and others

Citation: [2008] EWHC 221 (Ch)
Hearing date: 13 February 2008
Court: Chancery Division
Judge: Evans-Lombe J
Relevant legislation: Companies Act 1985 schedule 359
Summary: mortgage – sale – exercise of power of sale by mortgagee

The capital of the first and second defendants, companies incorporated in England, was represented by bearer share warrants which were held by T & N plc (T & N), an English company, as security for the purchase price under a contract whereby those shares were purchased by Africa Resources Ltd (ARL), a company registered in the British Virgin Islands. The first defendant's only valuable asset comprised its holding of all issued shares in its subsidiary, a Zimbabwean company, SMM Holdings (Pvt) Ltd (SMMZ), which owned asbestos mines in Zimbabwe. The terms of the agreement for the purchase of the bearer share warrants by ARL provided that the purchase price should be paid in 12 monthly instalments of $5 million to be found from the proceeds of export sales of asbestos by SMMZ outside Zimbabwe. The purchase price had to be found from that source because of the exchange control regulations in force in Zimbabwe at the time. Clause 3(1) of the memorandum of deposit and charge (MDC) provided that if on the due date for payment of the principal amount there were insufficient funds derived from export proceeds, the deficit would be carried forward with interest. In July 1996, in the light of financial difficulties for SMMZ arising due to, inter alia, operational difficulties at the mine, T & N agreed to reduce the monthly instalments payable by ARL to $1 million. In October 1997, those payments were suspended due to further cash flow difficulties. In April 1999, T & N confirmed that it was still expecting to be paid the outstanding balance of $37 million, but was not looking to enforce its security over the share warrants. In 2001, T & N was placed into administration. ARL wrote to the administrators seeking to negotiate a settlement of its indebtedness, but received no substantive response. In 2004, T & N by its administrators entered into an agreement (the SSA) for the sale of the bearer share warrants in its possession as mortgagee to the claimant for $2 million. As a result of the refusal by directors of the first and second defendants to register the claimant as a member, it applied to rectify their registers pursuant to s 359 of the Companies Act 1985 to show it as the registered shareholder of all issued shares in the first and second defendants. ARL was joined to the proceedings as a part 20 claimant. It sought declarations that it alone was entitled to the bearer share warrants and that the claimant had not acquired title to them under the SSA.

ARL submitted, inter alia, that the SSA was ineffective because the power of sale under T & N's mortgage had not arisen.

The part 20 claim would be allowed.

Construing the agreement and MDC together, ARL had a primary obligation to pay the purchase price, but only from a defined source, and, to the extent that that source had failed from time to time (and often with the agreement of T & N), the payments to T & N had been reduced or had ceased. However, the obligation to pay the balance of the purchase price had not, thereby, been released, and T & N remained entitled to retain the share warrants as security, so long as that debt and accrued interest remained unpaid. ARL, while not in default, retained an equity of redemption in the share warrants so long as it did not default in its obligation to pay T & N from surplus export proceeds. There being no evidence of such default, it had not been established that T & N had been in a position to enter into the SSA. ARL had been, at that time and subsequently, able to redeem the share warrants by payment of the balance of the purchase price and interest from whatever source was available to it.

Case annotations in other services: AMG Global Nominees (Private) Ltd v SMM Holdings Ltd and others [2008] All ER (D) 181 (Feb)
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6. Langridge v Mansfield District Council

Citation: [2008] All ER (D) 180 (Feb)
Hearing date: 13 February 2008
Court: Court of Appeal, Civil Division
Judges: Sir Mark Potter P, Lloyd LJ and Sir Peter Gibson
Relevant legislation: Housing Act 1985, section 79
Summary: landlord and tenant – tenancy – tenancy distinguished from licence

In 2004, the respondent local authority granted a secured tenancy of property M to the appellant. Following allegations of bad conduct against the appellant, the authority issued possession proceedings against him. The appellant subsequently suffered a serious assault, spending a considerable period of time in hospital. While in hospital, he returned the keys to M to the authority, albeit not by way of surrender. Upon his release from hospital, the appellant sought the return of the keys to M. The authority refused, and the appellant sought an interim injunction compelling the authority to allow him to return to the property pending the outcome of the possession proceedings. The court granted the injunction but stayed its coming into effect upon the basis of the authority's identification of alternative accommodation (property W) in respect of which it was willing to offer the appellant an insecure licence until the conclusion of the main proceedings. The appellant subsequently signed a licence agreement in relation to that property for the period from 14 August to 22 September 2006, the latter being the date upon which judgment in the possession proceedings was anticipated. An order for possession of property M was made on 28 September. Following the expiry of a notice to quit property W that had been served on the appellant, the authority brought proceedings for the possession of that property. A possession order was made notwithstanding the appellant's contention that he had been granted a secured tenancy thereof. The judge held that it had been the mutual intention of the parties at the time of the licence agreement that occupation should be limited in time to the delivery of the judgment in the possession proceedings. He held, moreover, that it had not been let as a separate dwelling as required by section 79 of the Housing Act 1985 to constitute a secured tenancy. That decision was upheld on appeal to the High Court. The appellant challenged those decisions.

The principal issue that fell to be determined was whether, despite the express intentions of the parties, the licence agreement had conferred a secure tenancy of property W upon the appellant in accordance within the terms of section 79 of the Housing Act 1985.

The appeal would be allowed.

In the instant case, the licence agreement had given the appellant exclusive possession of property W as a separate dwelling in return for the payment of a rent. In those circumstances, the conditions of section 79 of the 1985 Housing Act had been satisfied. Accordingly, despite the intentions of both parties, the licence agreement had conferred a secure tenancy of property W upon the appellant.

Case annotations in other services: Langridge v Mansfield District Council [2008] All ER (D) 180 (Feb)
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7. Fitzkriston LLP v Panayi and another

Citation: [2008] All ER (D) 165 (Feb)
Hearing date: 12 February 2008
Court: Court of Appeal, Civil Division
Judges: Laws, Rix and Jacob LJJ
Relevant legislation: Land Registration Act 2002; Landlord and Tenant Act 1954, section 54
Summary: landlord and tenant – periodic tenancy – creation

The claimant company brought proceedings against the first defendant and second defendant, a company owned by the first defendant, claiming the right to possession of a property as freehold owner, following its purchase of the property in July 2006. The defendants resisted the claim relying on a document they asserted was a lease agreement made in 1998 for a one-year tenancy between the prior owner to the property and the first defendant's brother. The defendants submitted that they had taken the benefit of the lease and accordingly had a periodic tenancy over the property, which was protected by the Landlord and Tenant Act 1954. They further submitted that the rent was £4,000 and was paid in cash. The claimant disputed the genuineness of the asserted lease and the fact that it had been executed. It further submitted that, as registered owner, its title took precedence over all prior interests unless they were overriding interests within the meaning of the Land Registration Act 2002. The claimant argued that, therefore, meant the tenancy could not suffice as a periodic tenancy unless it fell within section 54 of the Law of Property Act 1925. The issue that arose from that provision was whether, assuming in favour of the defendants that a periodic tenancy, might have been otherwise created, whether there was a parole lease because the lease document had not been properly executed, at the best rent or a rent at market rate (the best rent issue). The best rent issue was argued before the judge, and evidence was presented to the judge in relation to it. The judge found in favour of the claimant on the basis that the documents on did not amount to a lease and made an order giving possession of the property. However, the judge did not make any judgment on the best rent issue. The defendants appealed. The claimant cross-appealed.

The defendants submitted that the conduct of the judge had prevented them from receiving a fair trial.

The claimant conceded that defendants had not received a fair trial and so the issue that remained was the issue arising from the claimant's cross-appeal, namely the best rent issue.

The appeal would be dismissed. The cross-appeal would be allowed.

In the instant case, the point that the judge had entirely ignored was a good point. The effect was that, even giving the fullest effect to the material relied on by the defendants as evidence that a lease had been granted, it could not give rise to a continuing periodic tenancy under the Landlord and Tenant Act 1954. That was because it was clear that, on the evidence, any agreement made for a tenancy at £4,000 of the property was not within the meaning of section 54 of the Act a best rent. Accordingly, the claimant was entitled to possession of the property.

Case annotations in other services: Fitzkriston LLP v Panayi and another [2008] All ER (D) 165 (Feb)
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8. Falmouth House Ltd and another v Rahmizadeh and others

Citation: [2008] EWHC 214 (Ch)
Hearing date: 12 February 2008
Court: Chancery Division
Judge: Morgan J
Relevant legislation: Leasehold Reform, Housing and Urban Development Act 1993 part 1, chapter 1
Summary: landlord and tenant – leasehold enfranchisement – collective enfranchisement

The first defendant was the lessee of flat 32 in a block of flats. The second, third and fourth defendants were the lessees of flat 36 in the same block. On 19 March 2003, the second claimant entered into a participation agreement with the first defendant, before entering into a second participation agreement with the second and third defendants in identical terms. The purpose of the agreements was to set out the terms on which the first and second claimants (the nominee purchaser) would act on behalf of the block's lessees, and in particular to acquire the freehold of the block pursuant to the collective enfranchisement provisions contained in part 1, chapter 1, of the Leasehold Reform, Housing and Urban Development Act 1993. Clause 3.3.1 of the agreements required the lessees to pay to the nominee purchaser's solicitors within 14 days of demand the lessees' contribution to “the price payable for the transfer of the property to the [nominee purchaser] as determined exclusively by the [nominee purchaser's] surveyor”. One element of that contribution was the appropriate proportion of the price payable by the nominee purchaser for the freehold of the block. In October 2003, a schedule was produced by the nominee purchaser's surveyor, D, showing the amounts to be paid by the defendants as the appropriate proportion of the price. In November, a further schedule was produced by one of D's colleagues, showing that larger sums were due from the defendants. In April 2004, the requested sums were paid by the defendants and the freehold and head lease were transferred to the first claimant, which granted 999 year leases in respect of both flats. On 8 April 2005, D produced a further schedule showing a different apportionment, meaning that the defendants owed further sums in that respect. In the light of the defendants' refusal to pay those sums, the nominee purchaser brought proceedings against them. The judge held, inter alia, that the apportionment of the price for the purpose of calculating the lessees' contributions had to be carried out by D whose decision would be final and binding on the nominee purchaser and the participating lessees. He held that there had been no such determination in October or November 2003 and that it had been open to the nominee purchaser thereafter to call upon D to make a final determination under clause 3.1.1. The nominee purchaser appealed against the judge's order as it did not contain a ruling upon the validity of D's purported determination on 8 April 2005. The lessees cross-appealed, challenging the decision that there had been no valid determination in October 2003.

The appeal would be dismissed and the cross-appeal allowed.

On the facts, D had been asked by the nominee purchaser to perform the contractual function under clause 3.1.1 of the participation agreements to apportion the price between the participating tenants and he had done so. He had not been asked to carry out a provisional apportionment. He had not said at the time that his apportionment had been provisional only. On that basis, it was not relevant to inquire into his private and unexpressed views about the legal consequences of his apportionment and whether it was legally open to the nominee purchaser to do the apportionment a second time and recover further amounts from the lessees. Clause 3.1.1 provided for the determination exercise to be carried out once in relation to any particular price. The price apportioned by D in October 2003 had not changed and the result was that it had not been open to the nominee purchaser to invite D to carry out a second different apportionment of that same price.

Case annotations in other services: Falmouth House Ltd and another v Rahmizadeh and others [2008] All ER (D) 162 (Feb)
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9. R (on the application of Flenley) v Hammersmith and Fulham London Borough Council

Citation: [2008] All ER (D) 134 (Feb)
Hearing date: 11 February 2008
Court: Queen's Bench Division, Administrative Court
Judge: Sir Michael Harrison sitting as a judge of the High Court
Summary: town and country planning – permission for development – material consideration

The claimant lived in a conservation area for which the Hammersmith and Fulham London Borough Council was the local planning authority. His property adjoined, but was not attached to, another property whose owner had submitted an application for planning permission for a two-storey rear extension. According to the application, the length of the side wall required for the extension was about 80 per cent of the width of the existing property. Under powers delegated to her, the area team leader in the planning division of the authority (the delegated officer), assisted by another planning officer, conducted two site visits. Thereafter, a report was compiled by the delegated officer, in which she addressed, inter alios, the claimant's concerns, and identified the planning issues. Various policies set out in the relevant unitary development plan were also mentioned, including policy EN8b which, so far as relevant, stated that “extensions should comprise no more than half the width of the existing property”, but that policy was not expressly handled. In her concluding remarks, the delegated officer was of the opinion that the proposed extension was “not an over-development of the property”, that it was acceptable in terms of “visual amenity” and, further, that it “did not impact upon the conservation area”. Accordingly, planning permission was recommended. The authority subsequently approved that recommendation, granting conditional planning permission. The justifications attached to the permission were couched in similar terms to the conclusions of the delegated officer. The claimant then became aware of the grant of planning permission, together, for the first time, with policy EN8b, and applied for judicial review.

The claimant submitted, inter alia, that the authority had failed to take into account a material consideration, namely policy EN8b, in its decision to approve the delegated officer's recommendation for planning permission. The authority accepted that it had not expressly referred to policy EN8b in its decision, but submitted, that its failure to do so did not mean that regard had not been taken of it. In addition, after proceedings had commenced, the authority lodged two witness statements (one from the delegated officer, and one from the assistant officer) to support its contention that it had considered the width issue under policy EN8b. The claimant contended that those statements contained ex post facto reasoning to which the instant court should not afford any weight.

The application would be allowed.

On the facts, the width issue was a material consideration which had to be taken into account given that it affected how close the side wall would come across the claimant's property, and accordingly, his visual amenity. In the light of the fact that the offending wall would extend to about 80 per cent of the width of the existing property, it would be reasonable to expect the delegated officer to have expressly handled that issue in her report. The failure of the officer to have done so and, further, the absence of reference to the issue in the authority's justification attached to the planning permission, meant that there had been a failure to take into account a material consideration. Furthermore, the subsequent witness statements produced by the authority could not be regarded as remedying that failure. There was a very real danger of ex post facto rationalisation in the instant case, which could not be permitted. In any event, the witness statements were far from compelling in respect of recognising the width issue as a material consideration.

Case annotations in other services: R (on the application of Flenley) v Hammersmith and Fulham London Borough Council [2008] All ER (D) 134 (Feb)
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10. Ward v 1066 Housing Association

Citation: [2008] All ER (D) 125 (Feb)
Hearing date: 8 February 2008
Court: Queen's Bench Division
Judge: Cranston J
Relevant legislation: Housing Act 1988, schedule 2
Summary: housing – housing association – possession

The appellant was a secured tenant of a local housing authority property. In 1996, he signed a tenancy agreement (first agreement) with the local authority. The first agreement founded that possession of the property would only be sought on the basis of redevelopment or construction. The freehold of the property was transferred to the respondent housing association; the appellant entered into a tenancy agreement (the second agreement) with the respondent and was classified as an assured tenant. It was a clause of the second agreement that if a tenant had remained a tenant at the date of the transfer of the freehold to the housing association, then that tenant would continue to have rights under the first agreement. The housing association sought possession of the property under ground 9 of schedule 2 to the Housing Act 1988, namely that suitable alternative accommodation was available for the appellant or would be available for him when the order for possession took effect. The claimant submitted that he required the property because he was an artist. The matter came before a county court judge who granted the order for possession. He found that on a proper construction of the agreements the appellant's right in respect of possession under the first agreement had not been preserved. He further found that the appellant was not a professional artist and, therefore, need could not be taken into consideration. The appellant appealed.

He submitted that the judge had erred in law as he had applied the law incorrectly in respect of the balancing exercise.

The appeal would be dismissed.

In all the circumstances, reading the two agreements together produced the construction to which the judge had come. The clause in the second agreement was introductory and had not preserved the rights, in relation to the exercise of possession, which had been found in the first agreement. Furthermore, the judge had been perfectly entitled to find that the claimant's art work was for recreational purposes rather than professional. He had correctly balanced the needs.

Accordingly, the judge had been entitled to make the possession order.

Case annotations in other services: Ward v 1066 Housing Association [2008] All ER (D) 125 (Feb)
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11. Leonora Investment Company Ltd v Mott Macdonald Ltd

Citation: [2008] EWHC 136 (QB)
Hearing date: 7 February 2008
Court: Queen's Bench Division
Judge: Richard Seymour QC sitting as a judge of the High Court
Summary: landlord and tenant – service charge – business premises

By a lease dated 7 July 2000, the claimant demised to the defendant the greater part of the ground floor of a building for a period of 10 years, retaining some part of the floor as common parts. By three other leases of the same date, the claimant demised to the defendant the greater part of the first, second and third floors of the building. Each of those leases was in the same terms as the ground floor lease. That lease provided for the payment of a service charge, which was defined as “the sum payable by the tenant in accordance with part 2 of the Schedule of Services”. By that schedule, the service charge to be paid was “to be such fair proportion [...] of the actual or anticipated service costs for each service charge year”, which would be assessed by the landlord or its surveyor “according to a reasonable and proper basis for apportionment applicable from time to time to the premises”. Paragraph 2 stated that the landlord could make and send to the tenant notice in writing of its estimate for the coming service charge year and that the tenant would pay such by equal quarterly instalments in advance. Paragraph 3 provided that, as soon as practicable after the end of each service charge year, the landlord would prepare and send to the tenant a statement of the actual service costs and service charge, at which point any overpayment would be credited to, or any deficit demanded of, the tenant. The claimant elected to operate the mechanism contained in paragraph 2 of part 2 of the schedule in respect of the service charge year ending 24 December 2002. The schedule of actual expenditure showed an overpayment had been made by the defendant. On 15 January 2003, the defendant received an invoice demanding in excess of £260,000 as “contribution for redecoration etc”. In the course of proceedings brought by the claimant against the defendant, the court ordered the trial of a preliminary issue, namely whether, having regard to the service charge provisions in the four leases, the defendant was liable to the claimant pursuant to the invoice.

The defendant submitted, inter alia, that, on the proper construction of the leases, the nature of its obligation to pay the service charge was to pay what was demanded in accordance with the procedure set out in part 2 of the Schedule of Services. Therefore, as charges claimed under paragraph 2 thereof in respect of the service charge year ending 24 December 2002 had been paid, and a statement under paragraph 3 had been provided, showing overpayments by the defendant, it had discharged its obligation. It submitted, further, that the claimant was only entitled to raise one claim under paragraph 2 for each relevant quarter, and was only entitled to produce one statement under paragraph 3 to form the basis of a balancing at the end of the year.

The court ruled:
The defendant was not liable to the claimant pursuant to the invoice. It was plain that the obligation to pay sums in advance on a quarterly basis depended upon the claimant exercising the option in paragraph 2. In the circumstances, on the proper construction of the ground floor lease, the defendant was only liable to pay service charges if the procedure in paragraph 2 or paragraph 3 of the Schedule of Services had been followed. The delivery of the invoice had not been in accordance with that procedure. Furthermore, where the claimant chose to exercise its option in paragraph 2 of part 2 of the schedule, it could do so only once. The option could only sensibly be exercised prior to the commencement of a service charge year, because payment had to be made by equal quarterly instalments. For the same reason, and also for reasons of commercial common sense, it had not been open to the claimant, having made an estimate of anticipated service costs, thereafter to revise it so as to increase the amount of quarterly instalments. It followed that the defendant had discharged its obligations under paragraph 2 of part 2 of the schedule in respect of the service charge year ending December 2002 by making its quarterly payments as it had.

Case annotations in other services: Leonora Investment Company Ltd v Mott Macdonald Ltd [2008] All ER (D) 137 (Feb)
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