Real Estate Bulletin: Autumn 2015

This quarter we have case law updates on:

• Definitive map – public right of way
• Definitive map – dedication of a highway
• Development – rights of light – damages
• Development – consent covenants

…and landlord and tenant updates on:

• Relief from forfeiture
• Service charge recovery for improvement works

…as well as planning updates on:

• Judicial review – deadline for challenge
• Judicial review – “publication” of development consent order
• Community Infrastructure Levy
• Sustainable drainage

Case Law Update

Definitive map – public right of way

Key points:

• Dating back as far as the seventeenth century, the Inclosure Acts were a series of statutes that enabled ‘awards’ to be made to enclose open fields and common land
• Such awards vested land over which the public previously had rights of access in private ownership, so provision had to be made for rights of way to be created over the enclosed land
• This can cause problems for those wishing to sell or buy land for development

A applied for a public bridleway to be noted on the definitive map, which is a map local authorities are required to maintain showing the location and status of different types of highway, including bridleways.

There was no evidence of the existence of a bridleway on the ground but there had been a local Inclosure Act made in 1816, and in 1841, the Inclosure Commissioner had purported to create a public bridleway. The local authority refused to note the way on the map and A applied for judicial review of this refusal. Ultimately, the Court of Appeal had to look at and interpret the wording of legislation that consolidated the inclosure regime and in particular the power of the Inclosure Commissioner to ‘appoint such private Roads, Bridleways, Footways…as he…shall think requisite’ (the council’s argument was that the Commissioner had no power to create public ways, only private ones).

The Court disagreed with the council and A was successful. Looking purely at the wording of the statute, the natural meaning seems quite clear – the word ‘private’ means just that and applies to roads, bridleways and footpaths. However, the court took a purposive approach to the legislation, taking account of the historical context – in an era before the motor car, carriages and carts were expensive, so public rights of way on foot and on horseback were very important. It would not have made sense for Parliament to provide for powers in relation to private rights but not extend those powers to the creation of public footpaths and bridleways.

Practical implications:

Whilst the issues in the case may not seem to be that relevant today, it is estimated that there are between 500 and 1,000 other footpaths and bridleways created by Inclosure Commissioners which are not currently recorded on the relevant definitive map. Even where there is nothing apparent on the ground, land may be subject to rights which can make life difficult for landowners and developers.

Definitive map – dedication of a highway: Ali v Secretary of State for the Environment, Food and Rural Affairs

Key points:

• There is a statutory presumption that a way over land is deemed to have been dedicated as a highway where the public has used it as of right and without interruption for 20 years
• The landowner can defeat this presumption by providing evidence that there was no intention to dedicate the way as a highway

A owned a property that included an alleyway, with a door, that members of the public used to access shops and businesses. When the door was vandalised, A replaced it with metal gates at either end of the alleyway, at which point the local town council made an application to the county council to modify the definitive map to show the alley as a public right of way.

A objected when the modification order was made and there was a public inquiry. A gave evidence that previous owners had locked the original door and so interrupted access over the Christmas holiday period but local people who used the alley gave evidence that they had found the door closed or propped open and had continued to go through it.

The Inspector at the inquiry found that the door had been locked over Christmas in 2011 but that this was insufficient to rebut the presumption of dedication. A had not made clear to the public his lack of intention to dedicate a public right of way and in any event, the shops and businesses would’ve been closed over Christmas so no one would have been using the alley anyway. The Inspector decided the alley was a public footpath and A applied to the court to quash the decision, but was unsuccessful.

Practical implications:

The case serves as a useful reminder to landowners that they need to take steps to avoid rights of way over their land becoming dedicated, but – depending on the particular circumstances – that temporary, inconsequential interruption may not be enough.

Landowners should consider erecting clear and visible signage as well as physical interruption, but bear in mind that taking such measures may have an unintended consequence – as the erection of the gates did for Mr Ali – by prompting an interested party to make a claim the right of way is a public one that should be noted on the definitive map.

A less confrontational, and arguably evidentially safer, way to proceed is for the landowner to deposit a map at the appropriate council along with a statement indicating what way (if any) the landowner admits to as having been dedicated as highways.

Development – rights of light – damages: Scott v Aimiuwu

Key points:

• The way courts approach claims for interference with property rights has changed following a recent Supreme Court decision that reviewed and revised the basis on which remedies (injunctions or damages) will be awarded
• This case is the first to have come to court since then
• The decision, whilst only at county court level, may be of comfort to developers

The parties were next door neighbours. Mr and Mrs A built a substantial extension to their house in Potters Bar. The extension interfered with the light to four windows in the flank wall of Mr and Mrs S’s house. The windows were to secondary accommodation comprising a garage/workshop and a utility room and bathroom.

Mr and Mrs S objected during the course of the building works, but did not bring a formal claim until the extension was almost finished, when they sought an injunction requiring Mr and Mrs A to reduce the size of the extension by 92 m2.

They were unsuccessful in getting an injunction but the court awarded damages of £31,499 instead.

Practical implications:

In the decision in Coventry v Lawrence, the Supreme Court criticised the way the courts had in recent times been too ready to grant injunctions (including those requiring the demolition of completed, pre-let properties) when damages would have been an adequate and appropriate remedy.

Against this context, the county court judge in this case decided that it would be oppressive and punitive to order demolition works to a house.

Other factors the judge took into account were that only secondary accommodation was affected and that Mr and Mrs A were under the misguided impression that because they had planning permission for the extension, they were entitled to proceed (ie they were not acting with flagrant disregard to Mr and Mrs S’s objections).

Developers still need to act reasonably when schemes interfere with adjoining owners’ rights and should always take expert advice on the nature and extent of the impact of the works on neighbouring buildings, but this decision may be of some comfort that they cannot be held to ransom for a share of the profits. On the flip side, aggrieved neighbours should consider taking urgent action to bring proceedings for an injunction if they feel damages would not be a sufficient remedy.

Development – consent covenants: Re Cook’s Application (21 Shawfield Park)

Key points:

• When a seller sells part of its land, such as a building plot at the bottom of the garden, it is common to impose a covenant that the buyer cannot build on the land without getting the plans and drawings approved by the seller
• There is a lot of case law on whether a buyer is required to obtain approval from subsequent owners of the seller’s retained land
• A recent case looks at what happens when the original seller has died

Mr and Mrs C owned 21 Shawfield Park. They wanted to build a bigger house on the site, which was subject to covenants preventing them erecting any buildings or making any alterations or additions without getting the plans and drawings approved in writing by the seller. The covenants were imposed in 1962 for the benefit of the seller, Mrs L, who at the time owned 23 Shawfield Park, but who had sold No. 23 some time ago and who had subsequently died in any event.

Mr and Mrs C applied to the Upper Tribunal for the discharge or modification of the covenants so that they could get on and build a larger dwelling.

They claimed the covenants had become obsolete with the death of Mrs L because they could no longer serve their original purpose. The current owners of No. 23 objected and argued instead that the covenants had become absolute as they could never be satisfied.

Mr and Mrs C were successful.

Practical implications:

Nowadays, when a seller sells part of its title and imposes covenants against building without consent, you would expect it to be clear from the drafting exactly whose consent the buyer needs and, better still, whether that person needs to behave reasonably in giving or refusing consent. However, it’s not uncommon to find titles subject to historic covenants that may not be as well-drafted – as demonstrated by the fact that there is so much case law on the subject! Each case will turn on the wording of the covenant in question and the intention behind imposing it in the first place, but this decision gives some guidance on the approach that can be taken where the original benefiting party has died.

Landlord & Tenant – relief from forfeiture: Magnic Ltd v Ul Hussan & Anr

Key points:

• A properly drafted commercial lease will contain a right for the landlord to forfeit the lease in certain circumstances, including if the tenant is in breach of covenant
• The court has the discretion to grant the tenant relief from forfeiture and revive the lease if, in general terms, the tenant remedies the breach and if the court is satisfied the tenant will comply with its obligations in the future
• The court will try to balance the advantage to the landlord in getting rid of the tenant against the disadvantage to the tenant of having the lease terminated

UH was the tenant of a ground floor shop in Essex. His son was the subtenant, who operated a takeaway business from the premises in breach of planning and in breach of the terms of the lease. Landlord (M) forfeited the lease in 2009. In 2010 the possession proceedings were compromised under a consent order. UH would be awarded relief from forfeiture if he obtained planning permission for the takeaway business but if he couldn’t get planning permission, his son would surrender the sublease and the business would cease trading.

UH did not comply with the terms of the consent order and on 14 January 2011, the court granted M an order for possession and for his costs. This order was subject to the proviso that if UH paid M’s costs by 28 January and the business ceased trading by 11 February, UH would be awarded relief from forfeiture.

On 8 February, just three days before the deadline for the business to cease, UH submitted an appeal against the possession order and the order was stayed pending the outcome of that appeal. The stay was lifted on 31 May 2011 because UH’s appeal had been dismissed and the takeaway business ceased trading on that date. There was a dispute about whether, despite the grant of the stay, the takeaway business should have ceased trading by 11 February 2011, so M went back to court in 2012 for a declaration that the lease had finally been forfeit because UH had not complied with the conditions for relief. UH cross-applied for relief.

The county court held the lease was forfeit and dismissed UH’s claim for relief. UH appealed. The Court of Appeal held that the county court judge had got it wrong on a number of counts: firstly, UH had carried on trading beyond the deadline of 11 February because he genuinely, but mistakenly, believed the stay allowed the business to continue; secondly the judge had placed too much weight on his opinion that UH had deliberately and persistently breached the terms of the lease and the court orders; and thirdly the judge had not given enough consideration to the windfall that M would gain from the forfeiture of the lease (the lease was a long lease and terminating it would have allowed M to re-let at a market rent) compared to the significant detriment UH would be caused by the loss of the lease.

Practical implications:

The decision is a reminder that the court has a wide discretion when it comes to awarding relief to tenants. The court will take all the circumstances into account, including the tenant’s behaviour and intent, but will also carry out a balancing exercise between the commercial interests of the landlord and the tenant.

Landlord & Tenant – service charge recovery for improvement works: Waaler v Hounslow London Borough Council

Key points:

• There are statutory controls on what and how much landlords of residential portfolios can recover by way of service charge
• A recent case serves as a warning that, when it comes to making improvements (as opposed to repairs) landlords need to consider alternative, cheaper options and must take account of the financial impact on tenants

W owned a flat in a block owned by H. H wanted to carry out a major works project across its estate. The works included replacing the flat roof on the block in which W lived as well as installing replacement windows because the panes of glass in the windows were too heavy for the hinges. Replacing the windows also meant that some external cladding had to be replaced and underlying asbestos had to be removed.

In 2004, H served a notice of intention to carry out works. The notice stated that W’s share of the cost of the works was estimated at just over £61,000. The works were completed in 2006. In 2012, W received a service charge demand for just over £55,000. W made an application for a determination of her liability to pay.

The First Tier Tribunal found that the sum was payable, but gave permission for W to appeal to the Upper Tribunal. W’s appeal was based on four grounds, one of which was whether H’s decision to replace the window units (and therefore the consequent replacement of cladding and removal of asbestos) was reasonable. On this ground, W was successful, with the Upper Tribunal finding that it was not reasonable for H to have replaced the windows with new units – this amounted to an improvement rather than a repair so, before going ahead with the works, H was required to consider whether there were alternative, cheaper options and to consider the financial means of the tenants who would be required to pay.

Practical implications:

The statutory framework for the recovery of service charges for works does not make a distinction between repair and improvement, and the reality on the ground is that any distinction would be blurred, but the Upper Chamber took the view that they should be treated differently, as landlords are generally obliged under the terms of the lease to carry out repairs whereas they have a discretion as to whether they carry out improvements. In that respect, the decision in this case introduces uncertainty, which is never good. H has been given permission to appeal to the Court of Appeal, so hopefully there will be clarification from a higher court, but in the meantime, landlords may find it harder to recover service charges and will be under an increased burden to show that, in the case of improvements, they have considered other alternatives and have taken account of an individual tenant’s ability to pay.

Planning – judicial review: R (Blue Green London Plan) v Secretary of State for the Environment, Food and Rural Affairs

Key points:

• The Planning Act 2008 introduced a system of unified development consents for nationally significant infrastructure projects
• Decisions on applications for development consent can be challenged by way of judicial review within a specified time limit
• The courts do not have jurisdiction to extend the time limit

DEFRA published the development consent order for the Thames Tideway Tunnel on 12 September 2014. The order granted consent for the construction and operation of a waste water scheme (or ‘super sewer’) by Thames Water Utilities Limited. BGLP applied for judicial review of the order on the basis that the government had not complied with its obligations under the Environmental Impact Assessment regime in relation to public participation.

Under section 118 of the Planning Act (as it was at the time of this case), challenges could be made within ‘six weeks beginning with the day of which the order is published’. BGLP made its application on 24 October 2014, which was one day after the deadline expired.

It argued that time started to run the day after publication of the order but the court disagreed.

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.