Property litigation weekly update - 17 December 2020
In this week's bulletin and in the run up to the festive break, we take a look back and comment on our top 5 property cases of 2020, alongside the recent insights from our colleagues around the firm and some positive news.
Duval v 11-13 Randolph Crescent Ltd  UKSC 18 – absolute prohibitions on alterations
In first place is the Supreme Court's landmark decision in Duval v 11-13 Randolph Crescent Ltd, which swept away years of established practice of landlords granting licences to alter to a tenant notwithstanding that it would breach an absolute prohibition against alterations.
The case concerned whether a landlord of a block of flats was entitled to give permission to a tenant to carry out works that would otherwise fall foul of an absolute prohibition against alterations contained in their lease. The landlord had also covenanted that, subject to payment of the landlord's costs, the landlord would enforce covenants in the other leases at the request of its tenants. The landlord was willing to grant the licence despite the absolute covenant but one of the other tenants opposed the works.
The Supreme Court upheld the decision of the Court of Appeal that the landlord could not put itself in a position (by consenting to the proposed structural works) where it would later be unable to comply with a request from another tenant to enforce the covenant. Accordingly, consent could only be granted if the other tenants agreed.
The effect of this judgment is widespread as covenants such as these are set out in thousands of residential long leases across the country in a variety of forms and until this decision it had been relatively common practice to see licences to alter being granted even where the relevant prohibition was absolute.
Beaumont Business Centres Limited v Florala Properties Limited  EWHC 550 – rights of light
Second is Beaumont Business Centres Limited v Florala Properties Limited, a rare reported case on rights of light.
Beaumont was the tenant of an office building. Florala was the freehold owner of the adjacent building and had built into the lightwell separating the two buildings. Beaumont issued proceedings for an injunction and damages in nuisance for wrongful interference with their rights of light.
The High Court made a declaration that Beaumont was prima facie entitled to an injunction but if Beaumont wanted to pursue an order for one, Florala's tenant would have to be joined into the proceedings. Alternatively, Beaumont was entitled to negotiating damages in lieu in the sum of £350,000.
Whilst the case did not establish any new legal principles, the High Court's judgment highlighted a few key points that are not always fully considered in rights of light claims:
- To establish a claim in nuisance, claimants need to establish that the property has been made substantially less comfortable and convenient than before, due to the reduction in light;
- Valuation evidence of the damage to a building's value should be provided, rather than the standard mechanistic practice of valuing claims based on the amount of light lost;
- An injunction is the starting point as a remedy, but negotiating damages in lieu of an injunction can be awarded at the Court's discretion.
Alexander Devine Children's Cancer Trust v Housing Solutions  UKSC 45 – restrictive covenants
In Alexander Devine Children's Cancer Trust v Housing Solutions, the Supreme Court was for the first time asked to rule on section 84 of the Law of Property Act 1925, which confers a power on the Upper Tribunal to discharge or modify restrictive covenants. The relevant ground was whether the restrictive covenants, by impeding a reasonable user of land, were contrary to the public interest.
The key issue was whether the deliberate nature of the breach of the restrictive covenant had been properly considered by the Upper Tribunal when it had exercised its discretion to modify the covenant on condition that £150,000 be paid to the affected neighbouring landowner by way of compensation.
The Supreme Court recognised that the question of land use represented a dilemma, on the one hand to seek to ensure that 13 new affordable homes which had been built were not put to waste, and on the other hand to ensure that terminally ill children in a hospice on the neighbouring land could enjoy, in privacy, use of the hospice grounds without being overlooked or detrimentally affected by the new houses which had been built in breach of restrictive covenant.
The Supreme Court held that the developer (and in turn the housing association that the developer had since sold the homes to and which pursued the appeal to the Supreme Court) could not be rewarded for presenting the Upper Tribunal with a fait accompli by developing the land and, after the event, seeking to modify the restrictive covenant on the ground that it would be contrary to the public interest if these houses were to go to waste. Given the availability of alternative unburdened land to the developer, a different outcome would have been unlikely even if the developer had applied under s84 before undertaking the works, because this would not have satisfied the public interest ground.
Cornerstone Telecommunications Infrastructure Ltd v University of the Arts London  – Telecoms Code agreements
In at fourth is a telecoms case in which the Upper Tribunal considered whether the prejudice caused to a site provider should hinder the imposition of a full Telecoms Code agreement.
An application was made for a site belonging to the University of Arts in Elephant and Castle in London. The University accepted that its building was suitable but noted that as part of ongoing redevelopment in the area, it was bound to give vacant possession of the site as and when a new building had completed. Granting rights to the telecoms operator would provide them with security of tenure and prejudice the existing agreement that University of Arts had entered into.
Despite the "stiff test" noted by the Tribunal at paragraph 21(3) of the Telecommunications Code, the Tribunal found that the prejudice imposed on the site provider would outweigh the public benefit derived from ordering an agreement and that this could not be properly remedied through compensation.
The case was a rare piece of good news for site providers in this year's spate of Telecoms cases, demonstrating that there will be occasions where the imposition of a Code agreement would prejudice site providers beyond a point that can be compensated.
Capitol Park Leeds Plc v Global Radio Services Limited  EWHC 2750 (Ch) – vacant possession as a break condition
Finally, at fifth place, a case considering whether the tenant had failed to correctly exercise their break option by failing to give vacant possession as was required.
The Tenant served a break notice and commenced dilapidations works (including the removal of various features of the property and/or landlord fixtures) but had not yet started replacement and making good. Works then stopped while the parties attempted to negotiate a financial settlement in lieu of the remaining works. Agreement was not reached, and the tenant vacated the Premises without reinstating the elements and fixtures it had removed.
The Court ruled, firstly, that the landlord was not estopped from relying on the alleged failure to give vacant possession even though the works had stopped following a discussion about a temporary stop during negotiations. The Judge held that there had been no agreement and therefore no estoppel.
Secondly, the Court ruled that the tenant had failed to comply with the condition to give 'vacant possession' of the 'Premises'. The Premises was a defined term including all fixtures and fittings, but the tenant had handed back an empty shell of a building which was dysfunctional and unoccupiable. The Judge held that the tenant had failed to deliver up "the Premises" as defined under the Lease, thereby causing a substantial impediment to the landlord's use of the property. The tenant had not therefore given vacant possession.
This case acts as a good reminder for tenants that, as well as taking too little when giving vacant possession, there is also the potential danger of removing too much.
Insights from around the firm
- Report: Positioning cities for inclusive growth
- Building safety insight – The Accountable Person
- The Housing Revenue Account ring fence – 'new' guidance
- Twenty-one "everyday heroes" had their portraits displayed in Coventry shop windows after being recognised for their community work as part of the #OurCovHeroes campaign, following more than 100 nominations from friends and neighbours. They include those who helped the homeless and a food business owner who delivered free meals for NHS staff. Everyone nominated will have a bauble featuring their name on Christmas trees in Coventry city centre.
- A 93-year-old care home resident, former GP David Handford, has spent lockdown creating hand-drawn Christmas cards to raise money for charity. He has designed, drawn and painted the cards and has so far sold 600 cards in three designs, raising £250 for the Royal British Legion and the Willow Trust.
- A high street lettings agency for homeless people, Rentstart, has opened in Surrey. Around 450 individuals approach Rentstart, which is a charity, each year looking for emergency accommodation or suitable private rented housing. The charity says the idea behind opening a prominent high street address was to create somewhere clients felt valued, respected and part of the community. Rentstart takes on tenancies so it can sublet to those in need rather than allowing homes to go on the private rental market. Thirty private landlords now let directly through the charity, with Rentstart offering guaranteed rent, on-going tenancy support and grants for property improvements.