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Issue 62 – May 2009

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Cases

Newham London Borough Council v Thomas-Van Staden


Citation: [2009] All ER (D) 131 (Apr)
Alternative citations: [2008] EWCA Civ 1414
Hearing date: 29 July 2008
Court: Court of Appeal, Civil Division
Judge: Moore-Bick and Rimer LJJ and Sir John Chadwick
Representation: Naomi Hawkes (instructed by Helen Sidwell) for the authority.The defendant appeared in person.


Abstract: Landlord and tenant – Recovery of possession. Court of Appeal, Civil Division: The court held that a clause in a commercial lease which provided that the same was to be for a fixed term with such term to include 'any period of holding over or extension of it whether by statute or at common law or by agreement' was not a 'term of years certain' in the true sense such that the security of tenure provisions in ss 24-28 of the Landlord and Tenant Act 1954 could be excluded. Accordingly, the judge's decision, in the instant case, that the defendant had to give up possession of a commercial premises which was subject to such a lease, on the basis that the defendant was not protected by the provisions of part II of the 1954 Act, was set aside.

Keywords: Landlord and tenant - Recovery of possession - Business premises – Claimant authority seeking to recover possession of premises leased to defendant – Lease purporting to exclude security of tenure after expiry of initial fixed term – Defendant arguing that she had security of tenure even after expiry of initial fixed term – Judge rejecting defendant's argument and making order in authority's favour – Whether security of tenure excluded by term of lease – Whether judge erring – Landlord and Tenant Act 1954, ss 24-28.

Summary: The judgment is available at: [2008] EWCA Civ 1414
The instant proceedings concerned, inter alia, a claim made in June 2006 by the claimant authority for possession of a commercial premises, namely 4/4A Rathbone Market, Canning Town, which it had leased to the defendant in January 2004 (see [10] and [11] of the judgment for the material parts of the lease). The lease was for a fixed term 'from and including 1 January 2003 to 28 September 2004', known in the lease as 'the term', which was, according to the same, to include 'any period of holding over or extension of it whether by statute or at common law or by agreement' (the words of extension). A clause in the lease also excluded security of tenure, as would otherwise have been provided for by virtue of ss 24-28 in part II of the Landlord and Tenant Act 1954 (the 1954 Act).

The annual rent payable under the lease was £7,500. The authority's principal ground of claim was that a notice which it had issued to the defendant in July 2005, requiring possession of the premises to be given up within 21 days of issue, had effectively terminated the defendant's right of occupation of the premises. The defendant argued, inter alia, that following the expiry of the initial fixed term on 28 September 2004, she had continued to occupy the premises under a periodic tenancy protected by the provisions of part II of the Act. The judge rejected the defendant's argument and ordered, inter alia, the defendant to give up possession of the premises to the authority (see [13] of the judgment for details of the judge's judgment). The defendant appealed.

The issue was whether, contrary to the judge's conclusion, following the termination of the initial fixed term on 28 September 2004 the defendant remained in occupation of the premises under a tenancy to which ss 24-28 of the 1954 Act applied. The defendant submitted that the judge had erred, arguing that after 28 September 2004 she was a monthly periodic tenant, even though there was no question of the parties having in fact agreed upon a new monthly tenancy; that she had held over on the terms of the lease; and that as the original tenancy was not protected under the 1954 Act neither was it protected when it was held over on the same terms. The authority contended that the defendant was wrong, and that she would, at most, have been occupying the premises after 28 September 2004 as a tenant at will.

The court ruled:

The security of tenure provisions in ss 24-28 of the 1954 Act could only be excluded if the term created by the lease was 'a term of years certain' (see [19] of the judgment).

In the instant case, the words of extension could not be disregarded as meaningless surplusage. The form of words which had been used appeared to focus naturally on the fixed term expiring on 28 September 2004; they had been intended to achieve a legal effect and a meaning should be attributed to them. In that regard, from the alternatives available, it could be said that the words of extension had had the effect of defining 'the term' as including any period of holding over or extension. If they did not mean that it was difficult to see what else they could have meant.
Accordingly, the lease had created a tenancy for a term of years certain until 28 September 2004 plus, by the words of extension, any further period of holding over or extension.

However, a term of that nature could not be regarded as 'a term of years certain' in the true sense. The consequence was that 'the term' created by the lease had not been contracted out of ss 24-28 of the 1954 Act at all, and the judge's decision to different effect was wrong. So far as the authority's 'tenancy at will' contention was concerned, that had to fail in any event given that to succeed on that basis it had to have been shown that the defendant could have been removed at will.

The words of extension meant that the defendant had held over on the terms of the lease so far as applicable; of relevance was the fact that one of those terms was that the defendant was entitled to 21 days' notice of termination of her occupation of the premises (see [22]-[24] of the judgment).
It followed that judgment would be entered for the defendant in respect of her appeal relating to 4/4A Rathbone Market and the aspect of the judge's order which had required the defendant to give up possession of the premises to the authority would be set aside (see [25] of the judgment).
Wheeler v Mercer [1956] 3 All ER 631 considered; Hagee (London) Ltd v AB Erikson and Larson [1975] 3 All ER 234 considered; Nicholls v Kinsey [1994] QB 600 considered.


Robert Chan, Barrister
Published date: 23/04/2009
 
McLean Estates Ltd v Earl of Aylesford

Citation: [2009] All ER (D) 164 (Apr)
Alternative citations: [2009] EWHC 697 (Ch)
Hearing date: 12 March 2009
Court: Chancery Division, Birmingham District Registry
Judge: Judge Purle QC sitting as a judge of the High Court
Representation: Martin Rodger QC (instructed by Aaron & Partners LLP) for the claimant.Keith Rowley QC and Mark West (instructed by Needham & James LLP) for the defendants.

Abstract: Sale of land – Conveyance. Chancery Division, Birmingham District Registry: The court ruled that the material in question, keuper marl, which was comprised in the land conveyed by the defendants' predecessor to the claimant's predecessor did not fall within the exception of mines and minerals in the governing 1922 conveyance on the basis that on the true construction of the relevant words in the conveyance, the parties had never contemplated that keuper marl had been a mineral within the meaning of that conveyance.

Keywords: Sale of land – Conveyance – Construction – Evidence of circumstances surrounding conveyance – Conveyance between claimant's predecessor and defendants' predecessors excepting and reserving mines and minerals – Land conveyed comprising material known as 'keuper marl' – Whether keuper marl falling within exception in conveyance.

Summary: The judgment is available at: [2009] EWHC 697 (Ch)
By a conveyance dated 30 May 1922 (the 1922 conveyance), the claimant's predecessor acquired from the defendants' predecessors, land within the Knowle Basin, known as Pasture Farm, consisting of approximately 100 acres (the site). Although the 1922 conveyance no longer existed, having been destroyed in a fire, its terms were reproduced in a subsequent conveyance of 5 November 1936 (the 1936 conveyance), which the parties agreed accurately reflected the terms of the 1922 conveyance. By the 1936 conveyance, the land was conveyed by reference to: 'All that messuage farmhouse and land with the outbuildings and premises occupied therewith and known as 'Pasture Farm' in the County of Warwick containing in the whole Ninety Eight decimal nought Eight nine (98.089) acres or thereabouts and delineated by identification purposes only in the plan annexed hereto and thereon edged pink'.

There was a later exception and reservation of the mines and minerals in the following form: 'Excepting and reserving unto the Vendor and his successors and predecessors in title all manorial rights and all mines and minerals in or under the land hereby conveyed with all such rights liberties and powers as may be necessary for winning working carrying away and disposing of the same with power to let down the surface thereof on condition of paying for all damage caused by such letting down to the buildings existing and erected thereon at the date of the [1922 conveyance]'.


The Knowle Basin lay to the south-east of Birmingham between two geographical faults. It consisted of a stratum outcrop of mercia mudstone of the triassic system. In the vicinity of the site, the mudstone was and had sometimes been overlayed by a thin veneer of glacial sand and gravel or in some places alluvium and river-terrace gravel deposits in river valleys, and in 1922 was known as 'keuper marl'. Keuper marl was thought to be, and was, suitable in 1922, the date of the relevant conveyance, for brick making. Though classified as a common clay, it was in its purest form a fine grained rock which could readily be turned into clay. There had been a general hope and expectation in 1922 that recoverable coal might be present underneath the keuper marl in the Knowle Basin, including underneath Pasture Farm. It was subsequently known that there were no recoverable coal deposits. It was therefore suggested by the claimant, who was the current owner of Pasture Farm, that the exception in the 1922 conveyance was directed primarily, if not exclusively, to the mining of coal.


The primary issue that arose for determination was whether the material known as keuper marl fell within the exception and reservation in the 1922 conveyance.


The court ruled:


Unless the meaning was clear from the four corners of the relevant instrument itself, 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 phrase 'mines and minerals' was not a definite term, but was one that was capable of bearing a wide variety of meanings. One possible meaning that had been attributed to the word 'minerals' in established authority had been 'all such substances as are dug out of the earth by means of a mine', which remained a possible meaning in a proper context. Where it was clearly established that, at the date of the grant, a particular vernacular meaning was attributed to the phrase 'mines and minerals' by 'the mining world, the commercial world and landowners,' the court would be predisposed to adopt that meaning.


The vernacular test, however, was not a rigid test to be applied without regard to all the other terms of the instrument in question and the circumstances in which it was used: The court should never overlook the commercial background and apparent commercial purpose of the transaction. One pointer to the parties' intentions might be to consider whether or not the substances in question were exceptional in use, in value and in character. Another pointer was the evidence as to the general state of knowledge of the relevant substance at the date of the grant and the way in which it was then regarded and treated as a commercial matter. A third, significant pointer might be derived from any express powers of working that were conferred by the instrument in question. In considering whether a grant or reservation of mines and minerals included a specified substance, it was irrelevant that the parties did not actually have that substance in mind. The test of their intention was an objective one (see [9] of the judgment).


Only by the clearest words could the owner of mines and minerals under an exception and reservation reserve to himself the right to destroy the surface of the land conveyed and thereby exclude the owner. Those words were not present in the instant case on the basis that the parties had never contemplated that keuper marl had been a mineral within the meaning of the 1922 conveyance. What the parties primarily had in mind had been coal, and the hope that the Warwickshire coalfield would be found to extend at a workable and recoverable depth beneath that land (see [23] of the judgment).


Keuper marl was not within the exception of mines and minerals in the 1922 conveyance.
Waring v Foden, Waring v Booth Crushed Gravel Co [1931] All ER Rep 291 considered; Lonsdale (Earl) v A-G [1982] 3 All ER 579 applied; Coleman v Ibstock Brick Ltd [2008] All ER (D) 217 (Feb) considered.


Neneh Munu, Barrister
Published date: 23/04/2009

William Old International Ltd v Arya and another

Citation: [2009] All ER (D) 165 (Apr)
Alternative citations: [2009] EWHC 599 (Ch)
Hearing date: 20 April 2009
Court: Chancery Division, Manchester District Registry
Judge: Judge Pelling QC sitting as a judge of the High Court
Representation: Issac Jacob (instructed by Barrea & Co) for the claimant. Stephen Boyd (instructed by Needleman Treon) for the defendants.

Abstract: Derogation from grant – Doctrine. Chancery Division: The claimant landowner's claim that the third party electricity provider (EDF) was entitled to insist that the defendants' execute a deed of grant, giving EDF permission to run electricity cables over or under their land, was dismissed as the doctrine of non-derogation from grant was essentially negative in character and was limited in effect to restricting the grantor from acting in a manner that deprived the grantee of the benefit of the transaction. It was not open to the court to extend the scope of the doctrine so that it imposed a positive obligation.

Keywords: Derogation from grant – Doctrine – Scope of doctrine – Claimant purchasing land with benefit of easement securing free passage of utilities through cables lying on defendants' land – Electricity company refusing to connect electricity using cables unless defendants executing deed of grant in their favour - Defendants refusing to execute deed – Whether refusal amounting to derogation from grant – Whether scope of doctrine of non-derogation including obligation to take positive step.

Summary: The judgment is available at: [2009] EWHC 599 (Ch)

By a transfer dated 17 June 2005 (the transfer), a company (PFNL) transferred a plot of land it owned to the claimant company. The transfer contained an express grant by PFNL on behalf of itself and its successors in title, of an easement securing the free passage of various utilities, through pipes and cables that had been or were to be laid within a defined period, on an adjoining plot of land retained by PFNL. The land was sold to the claimant with the benefit of planning permission for the construction of an office. 


In January 2006, PFNL transferred the adjoining plot of land to the defendants. In August 2006, the claimant applied to the electricity supplier (EDF) for electricity connection. EDF sent, in response to the claimant, a plan showing the proposed cable route across the defendants' garden. In October, the claimant sent EDF's plan to the defendants. In November, the defendants expressed concern to EDF that they had not been consulted about the proposed cabling and informed it that they would not allow any cables to laid across their land without their specific consent being obtained.

The defendants requested specific details of EDF's intentions with regard to the supply and the cabling. In March 2007, the claimant entered upon the defendants' land and dug a trench, in an agreed position, across the land in which pipes and conduits for phone and electricity cables were laid. EDF was not obliged to provide a connection to the claimant's building if that required cables to be laid over or under land owned by a party other than EDF or the party seeking the connection. However, it had power and was willing to do so if the defendants granted EDF a separate easement by a deed of grant (the deed). EDF informed the claimant that the deed was required to be signed by the defendants if connection was to be made. The defendants refused to execute the deed and EDF, in those circumstances, would not run a cable or connect the claimant to its network.

The claimant contended that the defendants were not entitled to refuse to sign the deed. The defendants contended that they were not under any obligation to execute it. The claimant brought proceedings against the defendants. It submitted that (i) it had been within the contemplation of the claimant and PFNL at the time when the land was sold to the claimant, that the claimant intended to construct an office building on the land. Therefore, PFNL would have been under a positive obligation to enter into a deed in favour of EDF, in terms satisfactory to EDF, since to refuse to do so would be to derogate from PFNL's grant and that obligation was one that the defendants came under as successors in title to PFNL; and (ii) the defendants had derogated from the transfer of the land to the claimant by alerting EDF to the fact that the land, over or under which the cables were to run, was not owned by the claimant and/or by suggesting that there was a dispute between the claimant and the defendant. Without that information, it was submitted EDF would have made the electricity connection.

The issues were, inter alia, (i) whether the transfer required the defendants to execute the deed originally proffered by EDF or any other form of deed acceptable to EDF; and if the answer to that issue was no, (ii) whether, by their conduct, the defendants had derogated from grant and, in those circumstances, the positive step required, namely, the signing of the deed, was simply the result of the need to correct that derogation from grant.

The claim would be dismissed.

The doctrine of non-derogation from grant was essentially negative in character and it was limited in effect to restricting the grantor from acting in a manner that deprived the grantee of, or substantially all of, the benefit of the transaction. It was not open to the court to extend the scope of the doctrine so that it could be used to impose on a grantor an obligation to take positive steps, such as entering into contractual or proprietary relations with a third party on terms satisfactory to that third party (see [34], [35], [42] of the judgment).

EDF was not legally entitled to insist the defendants execute the deed of grant, as originally proferred by EDF, or any other form of deed. Further, on a fair reading of the correspondence between the defendants and EDF, it did not constitute an outright refusal to permit access, it was a request for information with a refusal of access, pending the provision of relevant information that the defendants were entitled to ask for, and a refusal of consent pending the provision of that information. Accordingly, the behaviour of the defendants was not capable of constituting a derogation from grant (see [49], [53], [54] of the judgment).

Browne v Flower [1908-10] All ER Rep 545 applied; Chartered Trust plc v Davies [1997] 49 EG 135 considered.

Alison Blood, Barrister
Published date: 23/04/2009
 
Mebrom NV v Commission of the European Communities

Citation: [2009] All ER (D) 139 (Apr)
Alternative citations: C-373/07 P
Hearing date: 2 April 2009
Court: Court of First Instance of the European Communities (Sixth Chamber)
Judge: Judges Bonichot (President of the Chamber), (Rapporteur), Schiemann and Makarczyk
Abstract: European Community – Commission. Court of Justice of the European Communities: The court dismissed an appeal against a judgment of the Court of First Instance's judgment upholding a decision of the Commission of the European Communities to change the system for the allocation of import quotas in respect of methyl bromide where, inter alia, it found that the decision had not breached the principle of the protection of legitimate expectation.


Keywords: European Community – Commission – Decision – Decision to change system of allocation of import quotas for methyl bromide - Applicant importer seeking annulment of decision – Court of First Instance dismissing application – Whether Commission in breach of relevant Community legislation – Whether Commission's decision contrary to principle of protection of legitimate expectation – Parliament and Council Regulation (EC) 2037/2000.


Summary: The judgment is available at: C-373/07 P
The applicant was one of eight importers entitled to apply to the Commission of the European Communities for import licences in respect of methyl bromide. It was also entitled to obtain authorisation to import a quota of that pesticide calculated on the basis of its market share in 1991. From 1996 to 2004, the Commission granted the applicant import quotas and accordingly, in 2004, the applicant was able to import approximately 37 per cent of the total quantity of methyl bromide which was imported into the European Community as a whole. In August 2004, the applicant submitted an application for a methyl[#8209]bromide import quota for 2005. In December 2004, the Commission announced, in an email, that, inter alia, the 'import decision' was being prepared and would be notified to each importer as soon as it was adopted. It then decided that, with effect from 1 January 2005, only fumigators would be able to apply for methyl bromide to be imported and to obtain user licences for that purpose.


The applicant subsequently requested notification, pursuant to art 7 of Parliament and Council Regulation (EC) 2037/2000 (on substances that deplete the ozone layer) and also to the notice to importers in the European Union in 2005 of controlled substances that deplete the ozone layer regarding the Regulation (the 2004 notice), of the decision allocating it an import quota for 2005. By the contested decision, the Commission stated, inter alia, that, pursuant to art 4(2)(i)(d) of the Regulation, the eight importers which had hitherto been entitled to import quotas for controlled uses of methyl bromide were no longer entitled to such quotas with effect from 1 January 2005.


The applicant applied to the Court of First Instance to have the contested decision annulled. The court held, inter alia, that the Commission had not breached art 7 of the Regulation in making the contested decision, since that Regulation did not require the Commission to allocate import quotas to importers; that an alert reader would have been able to infer from the 2004 notice that the Commission was going to change its administrative practice; and that neither arts 3, 4, 6 and 7 of the Regulation, nor the 2004 notice, nor the Commission's email of December 2004 had guaranteed importers that they would be allocated an import quota for methyl bromide for 2005 (see [2007] All ER (D) 368 (May)). The court accordingly dismissed the application and the applicant appealed.
It submitted, inter alia, that the Commission had erred in law in that, amongst other things, it should have found that the contested decision had infringed the Regulation and that the Commission had breached the principle of the protection of legitimate expectation.


The appeal would be dismissed.


(1) When interpreting a Community measure, account had to be taken of its context and the objective pursued  (see [59] of the judgment).


On the facts, the Court of First Instance had been entitled to hold that the system for the allocation of methyl bromide import quotas set up by the Commission with effect from 1 January 2005 was in conformity with the Regulation (see [60] of the judgment).


Ekvo v Produktschap voor Vee en Vlees: 327/82 [1984] ECR 107 considered.


(2) Although not set out in detail in the Regulation, the change to the Commission's administrative practice was foreseeable in principle; it was, furthermore, undisputed that the applicant expected changes to the applicable regime from 1 January 2005. In those circumstances, the Court of First Instance had been able lawfully to deduce that the Commission had not, by its practice, created a legitimate expectation that the system for allocation of import quotas for methyl bromide to importers would continue beyond 31 December 2004 (see [92]-[94] of the judgment).
Somaco SARL v EX Commission: C-401/96P [1998] ECR I-2587 considered.


Alison Pryor, Barrister
Published date: 23/04/2009
 
Cheval Bridging Finance Ltd v Bhasin and another


Citation: [2009] All ER (D) 143 (Apr)
Alternative citations: [2008] EWCA Civ 1613
Hearing date: 12 December 2008
Court: Court of Appeal, Civil Division
Judge: Lawrence Collins, Wilson and Longmore LJJ
Representation: Nicole Sandells (instructed by Brightstone Law) for the claimant.The defendant appeared in person.


Abstract: Practice - Adjournment of proceedings. Court of Appeal, Civil Division: The appeal of the defendant against the judge's refusal to adjourn proceedings regarding repossession of property was dismissed on the evidence and in the light of developments taking place after the judge's judgment.
Keywords: Practice – Adjournment of proceedings – Inherent power of court to adjourn proceedings – Repossession proceedings - Judge refusing to adjourn proceedings – Whether judge in error.


Summary: The judgment is available at: [2008] EWCA Civ 1613
The defendant, B, had lived at a property in London since May 1975. She had occupied the property under a secure tenancy. She purchased the house in her sole name in around 1988 under the right to buy scheme. Some years after purchasing the house she married, whereupon her husband moved in. In September 2003, a 25-year mortgage over the property was taken out in the sum of £210,000. B's husband subsequently left her, which caused her to fear that she would have short-term difficulty meeting the monthly mortgage payments.

A couple, Mr and Mrs H, with whom B had known for some time, told her that they could assist her with her financial difficulties. Mr H told B that he was a practising solicitor who could not only help her financially, but could also draw up the necessary legal documents to protect her interest in the property. In fact, Mr H had been struck off from the Roll of Solicitors. Mr and Mrs H represented to B that they would arrange to pay off the mortgage in its entirety so that she would not have to worry about monthly payments and that they would take over legal title to her home during that period, albeit holding it for her benefit. She, they said, would be able to live in the property rent-free and have the option to re-purchase it.


At the time of the transfer of the property, Mr and Mrs H took out a new mortgage with a new provider. Mr and Mrs H encountered difficulty in servicing that loan, and they turned to the claimant, C, a small commercial lender specialising in sub-prime loans. In February 2006, the Hs obtained a 9-month bridging facility. Meanwhile, during 2006, B sought to arrange to re-purchase the property and was able to arrange for a new mortgage in her name. She instructed solicitors; however, she was not aware of the existence of the mortgage with C, nor that Mr and Mrs H were in arrears with the mortgage of the property until she received a letter from C's solicitors concerning repossession of the property at the end of July 2006. Proceedings were commenced by C against Mr and Mrs H to enforce the mortgage of August 2006.


B was notified of the proceedings and was granted permission to be joined to the proceedings. She separately issued proceedings against Mr and Mrs H.  In C's proceedings, the judge ordered B to give possession of the property and refused B's request for an adjournment to assemble evidence to support an application for relief under section 36 of the Administration of Justice Act 1970, which provided that where a mortgagee brought an action for possession of a dwelling house, the court might exercise certain powers if it appeared to the court that, in the evidence of its exercising the relevant power, the mortgagor was likely to be able, within a reasonable period, to pay any sums due under the mortgage. Such powers included adjournment of the proceedings and suspension of execution. B appealed against the judge's ruling.


The first issue was whether the judge had had the power to adjourn the making of the order for possession in order to await the outcome of the claim brought against Mr and Mrs H, to which C was not joined as a party, either pursuant to section 36 of the 1970 Act or under CPR 3.1. The second issue was whether the judge had erred in law in accepting a concession that B fell within the definition of mortgagor as defined in section 39 of the Act and in dealing with her applications under section 36, or whether he should have held that section 36 did not apply. After the grant of appeal, B succeeded in her separate action against Mr and Mrs H.


The appeal would be dismissed.


(1) Whether there should be a stay, either under CPR 3.1 or the inherent jurisdiction, until the trial of B's action against Mr and Mrs H had become entirely academic as the action had been heard and judgment given for B. Moreover, there was no doubt that the factor which the Court would take into account under section 36 and any application under CPR 3.1 or the inherent jurisdiction would, in the circumstances, be precisely the same, namely, whether there was any prospect that the mortgage debt could be discharged within a short period from the proceeds of the action. That was a very remote prospect on the evidence (see [14]-[15] of the judgment).


(2) It was not easy to see why the second issue could arise on the instant appeal. There was no reason to go behind the concession made that B was a mortgagor for the purposes of section 36 (see [16] of the judgment).


Vanessa Higgins, Barrister.
Published date: 22/04/2009
 
Artworld Financial Corporation v Safaryan and others


Citation: [2009] All ER (D) 02 (Mar)
Hearing date: 27 February 2009
Court: Court of Appeal, Civil Division
Judge: Sedley, Dyson and Jacob LJJ (judgment delivered extempore)
Representation: Michael Driscoll QC (instructed by Dylan Nair Solicitors) for the claimant. Nicholas Dowding QC and Philip Kremen (instructed by Laurence Graham) for the defendant.


Abstract: Landlord and tenant – Lease. Court of Appeal, Civil Division: The court held that a lease had been surrendered by operation of law where, inter alia, after the defendant tenants had left the property a member of the claimant landlord's family had moved possessions into and stayed in the property.


Keywords: Landlord and tenant – Lease – Surrender of tenancy – Surrender by operation of law – Defendant tenants renting property from claimant landlord – Tenants leaving property with 15 months remaining on lease – Landlord seeking to recover rent due on remainder of tenancy – Judge holding landlord accepting surrender of lease – Whether lease surrendered by operation of law.


Summary: In September 2004, the defendant tenants took out a three-year lease on a property owned by the claimant landlord. The annual rent of £390,000 was payable in three-monthly instalments in advance. In 2006, having encountered a number of maintenance problems with the property which the landlord had failed to fix as required under the lease, the tenants decided to leave the property.

There were 15 months remaining on the lease. The landlord issued proceedings against the tenants, claiming the rent for the remaining period of the tenancy, plus interest.


At the hearing, the judge made the following findings of fact, inter alia, concerning the tenants' departure and the period thereafter: (i) the landlord had accepted back the keys to the property; (ii) the landlord had redecorated the property in his family's taste; and (iv) the landlord had rehung curtains and reinstated certain items of furniture which had been removed at the tenants' request when they had moved in. The judge further found that a member of the landlord's family had moved possessions into and stayed in the property and that he had done so for his own benefit and not, as the landlord contended, as a caretaker of the property. Holding that the landlord's actions had gone beyond anything which was consistent with the continued existence of the lease, the judge found that the lease had been surrendered by operation of law. The landlord appealed.


The issue for consideration was whether the judge had been correct to find that the lease had been surrendered by operation of law.


The appeal would be dismissed.


In the instant case, the judge had been entitled, from the material before her, to reach the finding that the lease had been surrendered. By entering and living in the house, the landlord had, in effect, taken over and treated it as his own. That was inconsistent with the continuance of the lease. Although the other findings of fact which the judge had made might not, on their own, have constituted unequivocal acts of surrender, they cast a clear evidential light on the nature of the key act of taking possession, namely, the landlord's occupation of the property.


Oastler v Henderson [1874-80] All ER Rep Ext 1738 considered; McDougalls Catering Foods Ltd v BSE Trading Ltd [1997] EGCS 70 considered; Belcourt Estates Ltd v Adesina [2005] All ER (D) 293 (Feb) considered.


Alison Pryor, Barrister
Published date: 21/04/2009
 
Shaw v Doleman


Citation: [2009] All ER (D) 34 (Apr)
Alternative citations: [2009] EWCA Civ 279
Hearing date: 1 April 2009
Court: Court of Appeal, Civil Division
Judge: Mummery, Stanley Burnton and Elias LJJ
Representation: Philip Glen (instructed by Horsey Lightly Fynn) for the appellant.Timothy Fancourt QC and Edward Peters (instructed by MacDonald Oates) for the respondent.
Abstract: Landlord and tenant – Lease. Court of Appeal, Civil Division: The appellant tenant's guarantee liability to the landlord under the authorised guarantee agreement survived the assignee's liquidator's disclaimer so that she remained bound by the tenant covenants as though the lease had not determined.


Keywords: Landlord and tenant – Lease – Determination – Tenant assigning lease – Tenant entering into authorised guarantee agreement with landlord in respect of assignee company – Assignee company wound up – Assignee's liquidator disclaiming lease – Landlord seeking payment of debts from tenant pursuant to authorised guarantee agreement – Judge finding tenant's obligation as guarantor surviving disclaimer –Whether judge erring – Insolvency Act 1986, section 178.


Summary: Section 178 of the Insolvency Act 1986, so far as material, provides: '(4) A disclaimer under this section--(a) operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed; but (b) does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person'.


The lease in issue was of a small retail unit consisting of a ground floor lock-up shop and basement to the appellant tenant and was for a term of 10 years from 12 March 2004 at an annual rent of £16,000, subject to review. The covenants in clause 5 of the lease covered liability to pay insurance, rent, costs incurred by the landlord in securing payment, and interest on any monies outstanding. On 9 August 2005, the tenant entered into an authorised guarantee agreement with the then landlord, the mother of the respondent. The authorised guarantee agreement was made when the tenant assigned the lease to CC Ltd. It was a term of the licence to assign that the tenant would covenant with the landlord in the form of the authorised guarantee agreement.


The licence to assign also contained covenants that guaranteed to the then landlord that CC Ltd would pay the rents reserved by the lease and perform and observe the tenant covenants in the lease. That guarantee was expressed differently from the tenant's guarantee covenant in the authorised guarantee agreement. According to clause 6.1.2 of the authorised guarantee agreement, the tenant's covenant was linked to the vesting in CC Ltd of the term created by the lease and was to remain in force 'for the term  while  the lease remains vested in [CC Ltd]'.


The respondent landlord became entitled to the freehold reversion on her mother's death in 2007, when she was registered as freehold proprietor of the premises. By that time, CC Ltd was in financial difficulties: it had fallen into arrears with the rent, had had a judgment made against it, had vacated the premises and, on 22 August, went into liquidation. The liquidator disclaimed the lease on 31 October 2007. There was then a dispute between the parties about liability for the rent and other payments under tenant covenants in the lease. The landlord sought to make the tenant liable under the authorised guarantee agreement. The tenant contested liability as, on her case, her guarantee under the authorised guarantee agreement had terminated with the disclaimer, which terminated the lease.


It was common ground that the Landlord and Tenant (Covenants) Act 1995 had released her from liability as a tenant following the assignment of the residue of the lease to CC Ltd, and her liability under the authorised guarantee agreement was limited to the period during which CC Ltd was bound by the covenants. The tenant argued that CC Ltd had ceased to be bound by the covenants in the lease on the disclaimer and termination of the lease. The landlord's case was that the tenant's guarantee liability continued by virtue of the express terms of the authorised guarantee agreement, construed in the context of the deeming effect of section 178(4) of the Insolvency Act 1986, and explained in Hindcastle Ltd v Barbara Attenborough Associates Ltd[1996] 1 All ER 737. The judge held that the terms of the 1995 Act, and the disclaimer of the lease by the liquidator of the CC Ltd, did not affect the liability of the tenant to the landlord under the guarantee. Accordingly, he entered judgment for the landlord in the sum of £16,921.87 and costs. The tenant appealed.


She argued her guarantee liability, under the terms of the authorised guarantee agreement, was limited to 'the liability period' and the judge had misconstrued the definition of that expression in the authorised guarantee agreement. 'The liability period' had expired when CC Ltd ceased to be bound by the covenants in the lease, namely when the liquidator disclaimed the lease. Further, section 178(4)(a) of the 1986 Act determined the liability of CC Ltd under the lease and the parties had chosen that as the contractual event that would bring 'the liability period' to an end. Accordingly, there was no liability on her under the guarantee terms of the authorised guarantee agreement anymore than there was under covenants in the lease. The landlord argued that section 178(4) of the 1986 Act applied to a guarantor under a separate document, such as the authorised guarantee agreement.

 Thus, immediately before the disclaimer, the tenant was liable under the authorised guarantee agreement guarantee for the payment of rent to her. That liability was not affected by the disclaimer, as it only determined the rights and liabilities of CC Ltd. When considering the surety liabilities, the deeming effect of section 178(4) of the 1986 Act was that the tenant's liability under the authorised guarantee agreement continued as though her liability under the lease was notionally still continuing.


The appeal would be dismissed.


It was impossible to determine the full meaning of 'the liability period' in the authorised guarantee agreement without regard to the statutory provision that dealt with the effect of disclaimers on liabilities for the performance of the tenant covenants. The duration of 'the liability period' of the tenant's guarantee under the authorised guarantee agreement was linked to whether CC Ltd was bound by the tenant covenants of the lease. On the disclaimer, the determination, by virtue of section 178(4)(a) of the 1986 Act, of CC Ltd's liability under the lease was subject to the qualification in section 178(4)(b) that, except for the purpose of releasing CC Ltd from liability, the disclaimer had no affect on the liability of any other person.

In the instant case, the tenant had been such a person with a guarantor liability. She remained liable as guarantor, if CC Ltd was bound by the tenant covenants. It was clear from case authority that, although the lease was determined, and CC Ltd had ceased to be liable to the landlord under the tenant covenants, CC Ltd was, so far as other parties, such as the tenant, were concerned, still bound by the tenant covenants as though the lease had not determined. Accordingly, 'the liability period' of the tenant's guarantee and her liability to the landlord had not been terminated (see [36] and [40] of the judgment).


The tenant's guarantee liability to the landlord under the authorised guarantee agreement survived the disclaimer (see [40] of the judgment).


Hindcastle Ltd v Barbara Attenborough Associates Ltd [1996] 1 All ER 737 applied; Stacey v Hill [1901] 1 KB 660 considered.


Gareth Williams, Barrister
Published date: 09/04/2009
 

R (on the application of Hague and another) v Warwick District Council


Citation: [2009] All ER (D) 269 (Jan)
Alternative citations: [2008] EWHC 3252 (Admin)
Hearing date: 15 December 2008
Court: Queen's Bench Division, Administrative Court
Judge: Collins J
Representation: Robin Purchas QC (instructed by Brindley Twist Tafft & James) for the claimants. Ian Dove QC (instructed by Sharpe Pritchard) for the defendant.


Abstract: Town and country planning - Green belt. Queen's Bench Division, Administrative Court: Where the claimants applied for judicial review of the Secretary of State's inspector's decision to amend a green belt boundary so as to include land in their ownership which had been excluded when the boundary was established, the application would be allowed and the decision quashed.  In the circumstances, it could not be said that the earlier judgment to exclude the land was one which could not reasonably have been reached.


Keywords: Town and country planning – Green belt – Amendment to boundary - Exceptional circumstances – Original green belt designation excluding land owned by claimants – Secretary of State's inspector deciding to amend boundary so as to include land – Claimants applying for judicial review of inspector's decision – Whether exclusion of land by error constituting 'exceptional circumstance' justifying boundary amendment – Whether claimants' land excluded by error.


Summary: In 1982, the original designation for a green belt around Kenilworth in Warwickshire was established, excluding a triangle of land with development on either side owned by the claimants. When the question of redefining the green belt subsequently arose, the relevant council positively argued before the Secretary of State's inspector that the triangle ought to be included. The inspector held that there was no logic to the existing boundary and that it was not unreasonable to assume that it had been based upon a purely administrative convenience in that it followed what was then the boundary of the Urban District Council (UDC).

Concluding that the continuing exclusion of the triangle could be properly characterised as an incongruous anomaly, he held that 'exceptional circumstances' existed for amending the boundary, as required by the relevant guidance, 'PPG2: Green Belts'. In particular, he held that, if the correction of a past mistake was not regarded as an exceptional circumstance, there would be no opportunity through PPG2 to put matters right in the instant case. The claimants applied for judicial review of the inspector's decision.


The application would be allowed.


(1) The reason behind the guidance was that green belt boundaries were to be chosen initially on the basis that they were to be permanent, so far as was possible, and that those who had to live on land within or outside such boundaries knew where they stood. It was important that the green belt policy was acceptable, in terms of the public, because people would know that it was intended to be a once-and-for-all indication as to where the boundaries ought to lie. That did not mean it could not be changed, either for the purposes of inclusion of land originally excluded, or exclusion of land originally included. However, for such a change to be justified, there had to be exceptional circumstances. Moreover, those exceptional circumstances had to necessitate the change in question. That was not to say that there was a two-stage test; it was a one-stage approach which could be succinctly stated in that the 'change must be necessary in all the circumstances' (see [5] of the judgment).


(2) Establishing that the original exclusion of land had been by error had to be sufficient to justify amendment to a boundary, because otherwise a clear error would be perpetuated, and that was not what was required, or should be required, by the relevant policy. There did not have to be some event meaning that something was changed by subsequent action of some sort or another to justify a decision to include what had been excluded, or indeed to exclude what had been included.
If one looked at the site in question in the instant case and applied the policies which determined whether land should be within the green belt, they all pointed in favour of including it.

The problem, however, was that the assumption had to be made that the original decision was one which could only be put down to choosing a boundary for no reason other than administrative convenience. There was no evidence which supported that as being the only reason. The fact that it had been chosen because, among other things, it was the old UDC boundary, did not mean that it was an incongruous anomaly to have picked it out as the correct boundary. There were other reasons why it should have been regarded as appropriate, not least the fact that there was development on either side of the triangle. Thus, in the circumstances, it could not be said that the earlier judgment was one which could not reasonably have been reached. It was true that the inspector had taken the view that the land ought to be included within the green belt, but that was not the test for deciding whether there were exceptional circumstances which necessitated change (see [30] to [32] of the judgment).


The decision to include the claimants' land in the green belt would be quashed.


Katie Green, Barrister
Published date: 08/04/2009
 
Thompson and another v Collins and another


Citation: [2009] All ER (D) 67 (Apr)
Hearing date: 6 April 2009
Court: Court of Appeal, Civil Division
Judge: Ward, Keene and Lawrence Collins LJJ (judgment delivered extempore)
Representation: Ian Pennock (instructed by Beetenson & Gibbon) for the claimants.Jonathan Rodger (instructed by Wilkin Chapman) for the defendants.


Abstract: Boundary – Conveyance. Court of Appeal, Civil Division: The claimants' appeal against a recorder's decision, in respect of a boundary dispute between the parties, would be dismissed as the recorder had not erred in law or in fact and could not be said to have been biased in reaching his conclusion.


Keywords: Boundary – Conveyance – Boundary not clear from description in conveyance – Recorder determining matter on the evidence - Defendants' solicitor contacting recorder directly to arrange case management conference - Claimants alleging errors of fact and law - Claimants further alleging bias on part of recorder - Whether claimants' grounds of appeal made out.


Summary: The claimants and defendants were neighbours. A dispute arose between them in respect of the boundary between their respective properties. On 30 June 2008, the recorder sitting in the county court declared that a brick wall and fence marked part of the boundary line while the remainder of the boundary was marked by a bay tree and hedges. The recorder ordered the rectification of the register, awarded the defendants their costs of the action, and invited the parties' legal representatives to agree the boundary. The parties failed to agree and the solicitor for the defendants contacted the recorder personally to ascertain the appropriate next step. The recorder took the call and arranged a case management conference for the final resolution of the dispute. The defendants' solicitor then informed the claimants' solicitor of the contents of the call. The claimants appealed.


They argued that recorder had erred in law and in fact and had been guilty of bias by taking the defendants' solicitor's call.


The appeal would be dismissed.


It had been unfortunate that the defendants' solicitor had contacted the recorder directly but it was unlikely that a fair minded and informed observer would have been unduly suspicious of the conversation that had taken place. There had been no basis for the claimants' suspicions and there had been no error of fact or law in the recorder's decision. He had been entitled to reach the conclusion that he had, on the evidence before him.


Porter v Magill, Weeks v Magill [2001] UKHL 67 considered.


Gareth Williams, Barrister
Published date: 06/04/2009

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