Cases

Tecof International Ltd v Town Castle Limited and others

Citation: [2009] All ER (D) 104 (Feb)
Hearing Date: 11 February 2009
Court: Chancery Division
Judge: Robin Knowles QC (sitting as a deputy judge of the Chancery Division)
Representation: Nicholas Asprey (instructed by Beale and Company LLP) for the claimant. Aidan Casey (instructed by Vyman Ltd) for S. The first defendant did not appear and was not represented.
Abstract: Sale of land � Title. Chancery Division: A claim that the transfer of a property had been made in order for the transferee to hold the property on trust for the claimant failed where the evidence showed that in fact the transfer had been an outright sale. The claim that the transferee was estopped from denying the existence of a trust also failed since there was no evidence to show that the requisite conditions for establishing such an estoppel existed.

Keywords: Sale of land � Title � Equitable owner � Claimant transferring property to defendant company � Defendant company subsequently selling property on � Claimant claiming defendant holding property on trust for claimant � Claimant alleging defendant estopped from denying existence of trust � Whether transfer outright sale.

Summary: In 1999, property in London E2 (the property) was transferred by the claimant, acting principally through B, to the first defendant, Town Castle (TC), a company connected with the second defendant, S. S was registered as the proprietor of the property in March 1999. The claimant owed money to S and to another company unconnected with the instant proceedings. TC paid �569,000 for the property, of which most was paid directly to the third company in settlement of the debt which it was owed by the claimant. The claimant accepted that the aim of the transfer was to put the property out of the reach of its legitimate creditors. Further, it was accepted by S that the value of the property had not appeared in any relevant accounts after the transfer because of the desire to keep that information from the tax authorities. TC subsequently sold the property for �1,061,907 in April 2000 and the claimant issued proceedings against TC and S, seeking to recover that sum which, he contended, was in the hands of S.

The claimant submitted that the transfer of the property had been effected in order for TC to hold the property on the claimant's behalf and that a trust or constructive trust had been created. It was further submitted that, even if the transfer had been a genuine sale, TC was estopped from denying that the property was held on trust the ground, inter alia, that there had been representations to that effect. S contended that the property had been transferred to TC by way of outright sale, as a result of which TC owned the beneficial and legal interests in the property. S further contended that there was discussion between the parties as to the redevelopment potential of the property and that he had proposed that, once the claimant's debts had been settled, if a profit was made from any such redevelopment then it would be split equally between S and the claimant.

The claim would be dismissed.

In the instant case, whichever way the claim was approached it failed on the facts. The transfer of the property had been by way of true sale, the intention of which had been to transfer the property outright to TC. There had never been any intention on anyone's part to create a trust or fiduciary relationship between TC and the claimant, nor to grant or reserve any interest in the property to the claimant and there was no context of trust or confidence capable of supporting any such conclusion. While TC had agreed that the proceeds of a re-sale of the property by TC would be shared with B, that agreement was, at most, part of a commercial contract.
The submission that TC had been estopped from denying that the property was held on trust also failed, since the question of the claimant's acquiring or retaining a beneficial interest had not come into the transaction, whether by agreement, arrangement or understanding. On the evidence, there had been no representation, express or implied, that the property would be held on trust. Moreover, there had been no common intention that TC or S had threatened to defeat and no unconscionable conduct (see [24] and [27]-[29] of the judgment).

Grant v Edwards [1986] 2 All ER 426 considered; Lloyds Bank plc v Rosset [1990] 1 All ER 1111 considered; Yaxley v Gotts [2000] 1 All ER 711 considered.

Melhuish v Fishburn

Citation: [2009] All ER (D) 23 (Jan)
Alternative Citations: [2008] EWCA Civ 1382
Hearing Date: 19 November 2008
Court: Court of Appeal, Civil Division
Judge: Tuckey, Jacob LJJ and Sir William Aldous
Representation: John Critchley (instructed by AWB Partnership) for the claimant. Charles Auld (instructed by Messrs Draper & Co) for the defendant.

Abstract: Boundary � Conveyance. Court of Appeal, Civil Division: The claimant's appeal against the finding of the court in a boundary dispute, where the evidence of the defendant had been preferred to his evidence, was dismissed. The finding of the judge was open to him on the evidence. The boundary agreement was not a contract for the sale or disposition of an interest in land for the purposes of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 simply because a trivial transfer of land was involved.

Keywords: Boundary � Conveyance � Conveyance of dwelling house � Land Registry plan showing boundary of garden as straight line � Defendant contending that subsequent oral agreement with claimant altering boundary � Oral agreement being reflected in layout of garden � Claimant denying existence of agreement � Whether claimant agreeing to boundary as it stood � Whether agreement a contract for sale or other disposition of interest in land � Law of Property (Miscellaneous Provisions) Act 1989, section 2.

Summary: The claimant was a property developer. In November 2001, he sold a property to the defendant. The Land Registry plan showed the boundary of the garden as straight lines but at the time of the sale the boundary was not marked out. The defendant contended that, towards the end of 2001, he and the claimant had agreed that the boundary would be curved in order that the claimant would be afforded access to other land which he owned and that the defendant would be given an extra piece of land to compensate him for the loss of land which that would involve. The defendant's garden was increased in size by 1.8%. The agreement was reflected in plans prepared by a garden architect in November 2001.

In April and May 2002, the garden was laid out according to the plan by a garden contractor, who gave evidence that he had agreed the layout with the claimant before carrying out the work. The claimant contended that he had not made any agreement with the defendant or the garden contractor, and that the defendant had stolen his land. In June 2002, a plan showing the current boundary was prepared by a surveyor for which the parties paid jointly. The judge accepted the evidence of the defendant as to the position of the boundary and rejected the contention of the claimant that the agreement should have complied with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The claimant appealed.

He submitted, inter alia, that (1) the trial was procedurally unfair as he had not been given an opportunity to deal with the defendant's case; and (2) the oral agreement relied on by the defendant fell foul of section 2 of the 1989 Act.

The appeal would be dismissed.

The finding of the judge was open to him on the evidence. The claimant had repeatedly denied the defendant's case when it was put to him in cross-examination and there was nothing unfair in the judge not accepting those denials. Further, the judge had given good reasons for accepting the evidence of the garden contractor. The judge was correct to find that the agreement was merely to demarcate a boundary and was not a contract for the sale or disposition of an interest in land for the purposes of section 2 of the 1989 Act simply because a trivial transfer of land was involved.
Joyce v Rigolli [2004] All ER (D) 203 (Feb) applied.

Ezekiel and another v Kohali and another

Citation: [2009] All ER (D) 256 (Jan)
Alternative Citations: [2009] EWCA Civ 35
Hearing Date: 30 January 2009
Court: Court of Appeal, Civil Division
Judge: Mummery, Wall and Stanley Burnton LJJ
Representation: Michael Michell (instructed by Kenneth Elliot & Rowe) for the claimant. Gary Blaker (instructed by Lawrence Sternberg & Co) for the first defendant. Michael Lee (instructed by Davidson & Co) for the second defendant.

Abstract: Sale of land � Title. Court of Appeal, Civil Division: On the evidence, the judge had been justified to find that the claimant purchasers of land from the defendant vendors had had actual knowledge before entering into a contract for sale of that land that the defendants could not make good registered title for the entirety of that land. Their appeal against the judge's finding to that effect was therefore dismissed.

Keywords: Sale of land � Title � Vendor's obligation to prove � Rebuttal of implied legal obligation to make good title on sale of land � Parties entering into contract for sale of plots of land � Vendors having registered title to greater part of site � Whether purchasers having knowledge before entering into contract that defendants unable to make good registered title in respect of entirety of plot � Judge finding purchasers having actual knowledge � Whether judge in error.

Summary: The claimants were property developers. They entered into a contract in September 1999 with the defendant vendors for the sale of two adjoining plots of undeveloped land. The heads of agreement recorded payment of two sums of �3,500 as consideration for the agreement. The purchase price for the land was �300,000. The agreement was silent on, inter alia, title and easements such as the foul and surface water drainage from the plots. The defendants had registered title to the greater part of the site. In September 2005, the claimants started proceedings for specific performance of the agreement with an abatement of the total purchase price of �300,000 to compensate for the defendants' inability to make good title to all the land and inability to grant drainage easements for the benefit of the land.

The defendant's response to the proceedings included a counterclaim for specific performance at the contract price. The main issue at trial was whether, before the September agreement, the claimants had known the extent of the defendants' title to the plots. The judge found that the claimants had had actual knowledge of the extent of the title, so that that rebutted an implied legal obligation to make good title on the sale of the plots, and that the claimants had no defence to the counterclaim for specific agreement at the agreed price. The claimants appealed. The defendants appealed on other issues.

The claimants submitted that the registered title did not include the entirety of the plots which the defendants had orally represented that had title to sell and which they had contracted to sell. That breach of their implied obligation to make good title was a ground for refusing specific performance at the contract price and for ordering it at a reduced price. The extent of that abatement should be determined on a separate inquiry. They contended that the judge had wrongly found what was inherently unlikely, namely, that they had agreed to buy land which they had actually known was not owned by the vendors.

The claimants' appeal would be dismissed. The defendants' appeal would be dismissed on other grounds.

On settled authority, if the contract was open, the obligation which the law would import into it to make a good title in every respect might be rebutted by proving that the purchaser had entered into the contract with knowledge of certain defects in the title. The inference in such a case was that he was content to take a title less complete than that which the law which would otherwise have given him by implication. Where the bargain for title was implied and no expressed, evidence could be admitted to show that, in view of the knowledge of the parties prior to the contract, the usual implication to show a full title ought not to be made (see [20]-[22] of the judgment).

Although there was, in general, much to be said for the proposition that it was inherently improbable that the claimants had knowingly agreed to buy land to which the defendants were unable to make good title, the judge had tested that proposition against the oral and documentary evidence and had been satisfied that they had actually known the extent of the defendant's title to the plots and had proceeded to enter into the agreement. It had to be borne in mind that the defendants could make good registered title to the majority of the land and there was no evidence to indicate that anyone else was claiming or disputing title to the parts of the plots which were not registered in the registered title. The judge had had to reach a conclusion on the claimants' state of knowledge in the light of the probabilities of the situation and the conflicting evidence on the point. It had, on the evidence, been open to the judge to draw inferences of actual knowledge if such inferences were justified by all the relevant circumstances. It had not been demonstrated that the judge's conclusion as to actual knowledge as to the extent of the defendants' title was wrong, but rather there was ample evidence from which the judge could reasonably and properly infer that, on the balance of probabilities, they had actually known of the extent of the defendants' registered title to the plots, that the titles did not cover the entirety of the plots and that there was no other documentary evidence to prove their title (see [32]-[34] of the judgment).

McGrory v Alderdale Estate Co Ltd [1918-19] All ER Rep 1184 applied. Decision of Sarah Asplin QC [2008] All ER (D) 165 (Apr); affirmed.

G & S Brough Ltd v Salvage Wharf Ltd and another

Citation: [2009] All ER (D) 241 (Jan)
Alternative Citations: [2009] EWCA Civ 21
Hearing Date: 29 January 2009
Court: Court of Appeal, Civil Division
Judge: Tuckey, Carnwath and Jackson LJJ
Representation: John Randall QC and John de Waal (instructed by Tyndallwoods) for the claimant. Ashley Underwood QC and Stephen Bickford-Smith (instructed by Eversheds LLP) for the defendants.
Abstract: Easement � Light. Court of Appeal, Civil Division: Where the claimant and the first defendant had entered into an agreement concerning the defendants' redevelopment of an area within which the claimant's company was situated, the claimant had not abandoned or agreed to abandon its rights to light by signing that agreement. Moreover, the defendants had not been entitled to build a notional wall since the claimant had been consenting to a development that might cause some obstruction to light, not a development which would completely block all light from passing through the claimant's windows.

Keywords: Easement � Light � Interference with light � Claimant's company within vicinity of defendants' development � Claimant entering into agreement with first defendant concerning, inter alia, effects on right to light � First defendant applying for light obstruction notice � Local planning authority granting notice � Judge finding that interference with claimant's rights of light by construction of further development going beyond what agreement permitting � Prescription Act 1832, section 3.

Summary: Section 3 of the Prescription Act 1832, so far as material, provides: 'Right to the use of light enjoyed for twenty years, indefeasible, unless shown to have been by consent ... When the access and use of light to and for any dwelling house, workshop, or other building shall have been actually enjoyed therewith for the full period of twenty years without interruption, the right thereto shall be deemed absolute and indefeasible, any local usage or custom to the contrary notwithstanding, unless it shall appear that the same was enjoyed by some consent or agreement expressly made or given for that purpose by deed or writing.'

On 23 March 1999, the claimant company, which occupied a property (the Brough property) within the vicinity of a development, and the first defendant, which had entered into a previous agreement to develop land, entered into a written agreement (the 1999 agreement). Clause 6.1 of the 1999 agreement provided, inter alia, that the parties agreed and declared that 'the Owner acknowledges that the Project may have adverse effects on subsisting rights to light air support and other easements and rights belonging to or enjoyed by the Property'. Whilst the parties were negotiating the terms of that agreement, the local planning authority granted planning permission to Birmingham Mailbox Ltd (BML) on 18 March 1999, for a redevelopment of a former sorting office and land belonging to the British Waterways Board (BWB land). The development was duly carried out and a very large building, the Mail Box, was constructed as were four storey blocks of flats, and a residential development. The second defendant, a company with the same directors and shareholders as the first defendant and BML, was incorporated in 2004.

Later that year, a construction was proposed (the Cube) for developing the area behind the Mail Box. In February 2006, outline permission was granted for the construction of the Cube. On 9 June 2006, the first defendant applied to the authority for registration of a light obstruction notice pursuant to section 2 of the Rights of Light Act 1959 against the Brough property. In that notice, the first defendant stated, inter alia, 'Registration of this notice is intended to be equivalent to the obstruction of access of light to the said building across our land which would be caused by the erection of an opaque structure of unlimited height [the notional wall] ...'. That notice was registered. The claimant became concerned to protect its position in respect of the rights of light. Accordingly, it commenced proceedings, applying for: (i) a declaration that it was entitled to an easement to receive light through its windows of the Brough property; and (ii) a declaration that the light obstruction notice be cancelled. The judge held that by virtue of section 3 of the Prescription Act 1832 the Brough property enjoyed an easement of light through its windows; that clause 6 of the 1999 agreement did not amount to an abandonment of rights to light; that the project, as described in the 1999 agreement, did not include the Cube development; and that any interference with the claimant's rights of light by the Cube development would go beyond what was permitted by the 1999 agreement. The defendants appealed against that decision.

The issues were: (i) whether pursuant to section 3 of the 1832 Act as a consequence of entering into the 1999 agreement, the claimant had lost all rights of light; and (ii) whether the first defendant had been entitled to register its Light Obstruction Notice. The second issue also involved construing the 1999 agreement.

The appeal would be dismissed.

(1) The crucial question was whether the proviso to section 3 of the 1832 Act had been triggered. Clause 6 of the 1999 agreement referred to and acknowledged the claimant's subsisting rights to light. If the project had 'adverse effects' upon the claimant's subsisting rights of light, the claimant agreed not to take enforcement action. The claimant had not abandoned or agreed to abandon its rights to light. On the proper construction of cl 6, the 1999 agreement did not constitute a 'consent or agreement' of the kind referred to in the proviso to section 3 of the 1832 Act. Whilst in law consideration did not have to be adequate it would be most remarkable if the claimant had given up obviously valuable rights of light and had received virtually nothing in return. Accordingly, the judge had been correct to find that the claimant had not abandoned his rights to light by entering into the 1999 agreement. Nor had the claimant lost those rights to light by operation of the proviso to section 3 of the 1832 Act (see [49], [61] and [64]-[66] of the judgment).

Willoughby v Eckstein [1937] 1 All ER 257 considered; RHJ Ltd v FT Patten (Holdings) Ltd [2007] 4 All ER 744 considered.

(2) Where a written agreement as drafted was a nonsense and it was clear what the parties were trying to say, the court would, as a matter of construction, give effect to the obvious intention of the parties (see [80] of the judgment).

Neither the first defendant nor the second defendant had been entitled to build the notional wall in June 2006 since, inter alia, (a) the wall shown on a subsequent drawing bore no relationship to the development described in the 1999 agreement; (b) the development had not involved or included the notional wall or anything like it; and (c) the claimant had been consenting to a development which might have caused some obstruction to light, it had not been consenting to a completely different development which would completely block all light from passing through the claimant's windows. The claimant's right to light were of considerable value. It would be remarkable if the claimant gave up those rights for very little in return. On the true construction of the 1999 agreement, the claimant had not been permitting the developer to a build the notional wall. The 1999 agreement had not entitled either defendant to construct the notional wall (see [75], [76] and [81] of the judgment).

The judge had been correct to allow the claimant's claim and to direct cancellation of the light obstruction notice (see [82] of the judgment).

Investors' Compensation Scheme Ltd v West Bromwich Building Society, Investors' Compensation Scheme Ltd v Hopkin & Sons (a firm), Alford v West Bromwich Building Society, Armitage v West Bromwich Building Society [1998] 1 All ER 98 considered.

*Clarence House Ltd v National Westminster Bank plc

Citation: [2009] All ER (D) 190 (Jan)
Alternative Citations: [2009] EWHC 77 (Ch)
Hearing Date: 23 January 2009
Court: Chancery Division
Judge: Judge Hodge QC sitting as a judge of the High Court
Representation: Jonathan Gavaghan (instructed by Brian Drewitt, Cheshire) for the landlord. Simon Brilliant (instructed by Stephenson Harwood) for the tenant.

Abstract: Landlord and tenant � Lease. Chancery Division: By entering into a virtual assignment of a lease by which all the economic benefits and burdens of the lease were transferred to the assignee, the defendant tenant had acted in breach of the alienation covenants contained in the lease not to share possession of the property, and the claimant landlord was accordingly entitled to the declaration it sought.

Keywords: Landlord and tenant � Lease � Assignment � Lease containing covenants against alienation by tenant � Defendant tenant entering into virtual assignment of lease whereby all economic benefits and burdens of the lease transferred � Whether defendant in breach of covenants in lease.

Summary: By a lease made in 1985 between the claimant's predecessor in title, as landlord, and the defendant's predecessor in title, as tenant, office premises were let for a term of 25 years. The lease contained various common form restrictions against alienation on the part of the tenant, including covenants: (i) not to execute any declaration of trust with regard to the property; (ii) not to share possession of the property; (iii) not to underlet the property without the landlord's consent; and (iv) not to assign the property without the landlord's consent. In 2001, with the consent of the claimant's predecessor in title, the defendant tenant underlet the property to M for a term of years expiring in 2010.

A nominal reversion of three days was retained. In June 2005, the tenant entered into a virtual assignment of the lease to New Liberty Property Holdings ('New Liberty') by which all the economic benefits and burdens of the lease and the underlease to M were transferred to New Liberty but without any actual assignment of the leasehold interest or any change in the occupancy of the premises. The tenant also granted a power of attorney to New Liberty which enabled it to act in the name and on behalf of the tenant in relation to the property, in accordance with the terms of the virtual assignment. The consent of the claimant landlord to the virtual assignment was not sought. The landlord sought a declaration that by entering into the virtual assignment the tenant had acted in breach in the alienation covenants contained in the lease, and an inquiry into damages.
The issue was whether by entering into a 'virtual assignment', the tenant had acted in breach of the standard form alienation covenants contained in the lease under which the premises were held.

The court ruled:

On the basis that the entire property was underlet to a third party, the effect of the virtual assignment was that New Liberty was to deal with the property as the tenant, as the head leasehold owner, would otherwise have been expected to deal with it, and the tenant no longer had the right to do so. Accordingly, by executing the virtual assignment, the tenant had either parted with possession of the property to New Liberty or at least was sharing, or permitting the sharing of, the property with New Liberty and had, therefore, acted in breach of the alienation covenants contained in the lease. However, as the virtual assignment neither reserved nor purported to reserve any reversion to the tenant, it did not, either in form or substance, amount to an underletting, and accordingly, there was no breach of the qualified covenant against underletting. The covenant in the lease against assigning the demised premises covered only a legal assignment, therefore, the virtual assignment which did not effect a legal assignment of the lease, was not a breach of the qualified covenant against assignment. As the tenant had not constituted itself a trustee of the property for New Liberty, the virtual assignment had not constituted a breach of the covenant not to execute any declaration of trust with regard to the property or any part of the lease (see [13], [14], [17], [21], [23] of the judgment).

The declaration sought, and an inquiry into damages, would be ordered.

Abbey National plc v Customs and Excise Comrs [2006] All ER (D) 336 (Jun) distinguished; Gentle v Faulkner [1900] 2 QB 267 considered.

Statutory instruments

Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009

Published Date: 11 February 2009
Jurisdiction: England
Enactment Citation: SI 2009/204
Commencement date: 9 March 2009
Legislation Affected: SI 1989/1058 amended
Enabling Power: Local Government Finance Act 1988, section 143(1), (2), schedule 9, paragraph 1
Abstract: SI 2009/204: Rates liability can be repaid over eight years from 9 March 2009.

Summary: Amend the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 to make special provision in relation to the collection of certain backdated liability to rates.
Those Regulations provide for annual rates liability to be discharged in instalments in many cases. However, where a demand notice � or rates bill � is issued after the end of the financial year to which it relates, the sum becomes payable in full. This can happen where a hereditament is shown on a rating list for the first time with effect from a date in that year following an amendment to the rating list which is not made until after the year has ended. These Regulations insert a new schedule 1A to provide that where a ratepayer is subject to backdated liability that has not already been discharged, the billing authority and the ratepayer can agree to reschedule the liability that accrued in the period between the effective date of the amendment to the rating list and the date the amendment was actually made, so that it is payable over a period not exceeding eight years.

Energy Act 2008 (Commencement No 1 and Savings) Order 2009

Published Date: 23 January 2009
Jurisdiction: England; Scotland; Northern Ireland; Wales
Enactment Citation: SI 2009/45
Enabling Power: Energy Act 2008, section 110(2), (3)
Related Digests: LNB News 27/11/2008 12
Abstract: SI 2009/45: From 1 April 2009 electricity suppliers may be subject to renewables obligations.

Summary: Commences various provision of the Energy Act 2008. Provisions coming into force on 26 January 2009 include, granting the Secretary of State power to modify licences under the Electricity Act 1989, decommissioning oil and gas installations and wells, transfer of a licence without the consent of the Secretary of State, model clauses for petroleum licences, provisions relating to duties of the Gas and Electricity Markets Authority, Energy reports, powers to amend gas and electricity licence conditions, renewable heat incentives, security of sensitive nuclear information and offences by corporate bodies. On 1 April 2009 provisions come into force on a renewable energy obligation and transferring functions of the Gas and Electricity Markets Authority under gas and electricity meter legislation to the Secretary of State. Provisions are brought into force on 6 April 2009 in relation to the importation and storage of gas, storage of carbon dioxide, decommissioning and clean up of nuclear sites and offshore renewables installations.

Industrial Training Levy (Construction Industry Training Board) Order 2009

Published Date: 23 January 2009
Jurisdiction: England; Scotland; Wales
Enactment Citation: SI 2009/Draft
Enabling Power: Industrial Training Act 1982, sections 11(2), 12(3), (4)
Abstract: SI 2009/Draft: Levy imposed on employers in the construction industry to raise money for Construction Industry Training Board.

Summary: Enables the Construction Industry Training Board to raise and impose a levy on employers in the construction industry. Industrial Training Boards are set up under the Industrial Training Act 1982 to ensure that the quantity and quality of training are adequate to meet the needs of the industries for which they are established. Sets out the periods for which the levy will be imposed, how the levy will be calculated for each construction establishment and time for payment of levy. Also provides an exemption for certain small businesses dependent on total amount of emoluments.

Home Information Pack (Amendment) Regulations 2009

Published Date: 22 January 2009
Jurisdiction: England; Wales
Enactment Citation: SI 2009/34
Commencement date: 6 April 2009
Legislation Affected: SI 2007/1667 amended
Enabling Power: Housing Act 2004, sections 163, 250(2)
Abstract: SI 2009/34: Property information questionnaire added to list of documents required at first point of marketing.

Summary: Amend the Home Information Pack (No 2) Regulations 2007 by adding the property information questionnaire to the list of required documents that must be in the home information pack before or at the first point of marketing. The requirement to include a property information questionnaire in the home information pack was introduced in the Home Information Pack (Amendment) (No 4) Regulations 2008 and comes into force on 6th April 2009.

Features

Is it moral to evict traveller families?

Published Date: 12 February 2009
Jurisdiction: UK
Related Legislation: Race Relations Act 1976; Town and Country Planning Act 1990; Disability Discrimination Act 1995
Related Cases: South Bucks District Council v Coates and others [2004] EWCA Civ 1378, [2004] All ER (D) 312 (Oct); R (on the application of O'Brien and others) v Basildon District Council [2006] EWHC 1346 (Admin); R (on the application of McCarthy and 41 others) v Basildon District Council and linked applications [2008] EWHC 987 (Admin), [2008] All ER (D) 118 (May)
Related Digest: LNB News 22/12/2008 74; LNB News 23/01/2009 24
Abstract: A recent landmark Court of Appeal ruling has found it legal to evict more than 60 Irish gypsy families from the largest illegal traveller settlement in the country. Claire Robinson speaks to traveller law specialist Marc Willers about the ruling.

Analysis: Hundreds of Irish gypsies and travellers living on a green belt site at Crays Hill in Essex face eviction following a landmark appeal ruling (R (McCarthy and Others) v Basildon DC and the Equality and Human Rights Commission [2008] EWHC 987).

Backed by the Secretary of State for Communities and Local Government, four years ago Basildon Council issued enforcement notices to clear the site. But in May 2008 High Court judge Mr Justice Collins blocked the notices and granted a judicial review of the council's decision on the grounds that consideration had not been given to the children, many of whom attended local schools.

However, three Appeal Court judges, Lord Justice Pill, Lord Justice Lloyd and Lord Justice Moses recently overturned the ruling, stating that the travellers had unlawfully disregarded the enforcement notices. Lord Justice Pill also pointed out that the decision to evict was taken lawfully under the Town and Country Planning Act 1990 and the council's appeal should be allowed.

Barrister Marc Willers of Garden Court Chambers specialises in town and country planning law with a particular emphasis on the representation of gypsies and travellers. Mr Willers is also the co-editor and co-author of a book entitled Gypsy and Traveller Law and is also one of the authors of the chapter on the rights of gypsies and travellers included in the book Your Rights published by Liberty. Mr Willers told LexisNexis News: �The Court of Appeal's decision in McCarthy is one of a line of recent cases in which the decision of a local authority to take direct action in order to evict gypsies and travellers from their land in circumstances where their occupation of the land is in breach of planning control has been challenged.�

Mr Willers added that this case highlighted the need for local authorities to take account of the humanitarian as well as the duties imposed on them by homelessness legislation, the Children Act 1988, education legislation, the Race Relations Act 1976 (as amended) and the Disability Discrimination Act 1995 (as amended). �However, in this instance the Court of Appeal was satisfied that the local authority had taken account of all relevant considerations before reaching its decision to take direct action to evict a large number of Irish traveller families from unauthorised sites in the District and that the decision could not otherwise be said to be unlawful (compare with the decision in O'Brien and Others v Basildon DC [2006] EWHC 1346 (Admin) in relation to a similar decision concerning another site within the District which Ouseley J quashed).�

Mr Willers said the case raises many questions of morality: �Whilst the District Council's decision has been held to be lawful the question whether it is morally acceptable to evict a large number of Irish traveller families from their land at a time when there is nowhere else for them to go remains. As Lord Justice Sedley stated in Coates and Others v South Buckinghamshire District Council [2004] EWCA Civ 1378 (at paragraph 34): �Evicting families from land to which they have good title but on which they have currently no right to live is a drastic step. The children who are at local schools will very probably go back into the cycle of innumeracy and illiteracy which continues to stand between travellers and the access enjoyed by the settled community to health and jobs. If the caravan stops on roadside verges they will be guilty of obstruction and liable to be fined and moved on. If they trespass on private land they will face immediate eviction. If they buy or rent land they will face planning controls and enforcement action.�

�Irish travellers evicted from their land in this case are likely to encounter all those difficulties identified by Lord Justice Sedley. But the moral question is even more relevant when one bears in mind the fact that it is likely that the Government will require the Council to identify sites for 71 new pitches within its District by 2011 in accordance with the guidance in ODPM [Office of the Deputy Prime Minister] Circular 1/2006. Those pitches would accommodate most if not all of the Irish travellers that are to be evicted as a result of this case and one has to question what purpose could possibly be served by uprooting these families and forcing them back onto the roadside where they will face considerable hardship when they may be accommodated in the next couple of years on more suitable sites,� commented Mr Willers.

Virtual assignment of leasehold office premises

Published Date: 16 February 2009
Jurisdiction: UK
Related Legislation: Law of Property Act 1925
Related Cases: Abbey National plc v Revenue and Customs Commissioners [2006] EWCA Civ 886, [2006] All ER (D) 336 (Jun); Clarence House Ltd v National Westminster Bank plc [2009] EWHC 77 (Ch), [2009] All ER (D) 190 (Jan)
Related Digests: LNB News 31/07/2006 5
Abstract: Did a �virtual assignment� amount to a breach of the alienation covenants contained in a lease? Evelyn Reid talks to Malcolm Dowden, solicitor and a member of the Property Litigation Association.

Analysis: In Clarence House v National Westminster Bank [2009] All ER (D) 190 the court had to decide whether by entering into a 'virtual assignment', the tenant had acted in breach of the covenants in a lease restricting assignment, parting with, sharing possession and underletting.
With the consent of the claimant's predecessor in title the defendant tenant, National Westminster Bank Plc, underlet the property to William M Mercer Ltd (Mercer). It entered into a virtual assignment of the lease to an offshore company New Liberty Property Holdings (New Liberty) by which all the economic benefits and burdens of the lease and the underlease to Mercer were transferred to New Liberty but without any actual assignment of the leasehold interest or any change in the occupancy of the premises.

The tenant also granted a power of attorney to New Liberty that enabled it to act in the name and on behalf of the tenant in accordance with the terms of the virtual assignment. The consent of the claimant landlord, Clarence House, to the virtual assignment was not sought.

Dowden, solicitor and a member of the Property Litigation Association, says: �The essence of a �virtual assignment� is that it passes the �economic benefit and burden� of a lease to the �virtual assignee�. There is no transfer of legal title. The virtual assignment agreement entitles the outsourcing company to receive rents from any under tenants and requires it to perform the tenant�s obligations (eg repairs and maintenance).�

Virtual assignments were developed during the 1990s as a means of overcoming delays arising from the need for landlord�s consent in large scale property outsourcing deals.

The rationale for outsourcing was that if responsibility for property management was outsourced, customers could focus on their core business. For outsourcing to work, the outsourcing companies had to take on the burden and rights of the customer. Where the customer occupied property as tenant, it stepped into the shoes of the tenant. Dowden says: �Commercial leases routinely prohibit or restrict the tenant�s right to dispose of their interest to third parties. Where landlord�s consent is required, it might take some time to obtain (eg where proceedings are required to establish that the landlord�s withholding of consent is unreasonable). Given the tight timescales for outsourcing deals, a method had to be developed to allow the outsourcing company to step into the tenant�s shoes without having to wait for landlord�s consent.�

The claimant sought a declaration that by entering into the virtual assignment the defendant had acted in breach of the alienation covenants contained in the lease.

The court ruled that a virtual assignment was not an underletting�the �virtual assignment� agreement did not create a new leasehold interest in the property, nor was it a breach of a covenant against assigning the lease without consent�there was no assignment of legal title (a covenant is breached only where there is such an assignment). However, there was a breach of the tenant�s covenant not to part with or share possession of the property.

Dowden says: �Possession of property as defined by section 205, Law of Property Act 1925 includes the right to receive rents (if any). Since that is a key element of a virtual assignment, the tenant was in breach.

�The judge also decided (�with some hesitation�) that the �virtual assignment� was not a breach of a covenant prohibiting the tenant from holding the lease on trust for another person. Rejecting a strong argument from counsel, the judge concluded that the virtual assignment did not create a trust. Its effect was in contract rather than in equity.�

This is the first case in which the relationship between a virtual assignment and the alienation clauses in a commercial lease has been considered. The only previous authority on virtual assignment concerned its VAT status: Abbey National v Revenue & Customs Commissioners [2006] All ER (D) 336 (Jun).

However, the judge said that whilst the Abbey National case was a useful aid to understand the concept of, and the commercial motivation for entering into, a virtual assignment he derived no assistance from it in resolving the issues in the present case.

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Property section

Issue 60 � March 2009