Property litigation weekly update – 4 June 2020

This week's edition provides details of the government's proposals for landlords and tenants to engage collaboratively in rent discussions, the non-ACM cladding scheme, guidance published on the Corporate Insolvency and Governance Bill, and some positive news, along with further insight from around the firm.

News flash: Government to publish new code of practice for high street landlords and business tenants on rent payments

A press release was published by the government on Friday 29 May 2020 confirming a new code of practice is in development in recognition of the challenges landlords and business tenants are facing as a result of the coronavirus pandemic regarding the payment of rent.

The government has set-up a working group with currently seven leading bodies in the commercial rental sector and discussions are currently underway to introduce a new UK-wide code of practice, intended to encourage "transparent discussions" between high street landlords and business tenants, whilst specifically:

  • Offering guidance on rent arrears payments and the treatment of sub-lettings and suppliers;
  • helping to "ensure no one part of the chain shoulders the full burden of payment"; and
  • enabling a sector-wide collaborative approach between landlords and business tenants.

The working group is expecting to seek input from the wider business community.

The new code will supplement the government's package of measures intended to assist the commercial sector in dealing with the repercussions of the coronavirus pandemic, including the Coronavirus Act 2020 which includes provision to prevent a business from being removed from their premises if a payment is missed until 30 June 2020 (or later, if extended), and the Corporate Insolvency and Governance Bill published on 20 May 2020 and which had its second reading in the House of Commons yesterday, which will place a temporary ban on the use of statutory demands and winding up petitions where a business cannot make payment due to coronavirus.

Chief Executive of the British Property Federation, Melanie Leech, commented on codifying this good practice that "fair collaboration among lenders, property owners and tenants is vital to the UK's recovery and it will ensure that viable businesses in distress as a result of coronavirus are supported, to protect both people's jobs and the local authorities, savers and pensioners who own the majority of our town centres".

The new code will be of temporary effect and is expected to be published before the next quarterly rent payment date on 24 June 2020.

Corporate Insolvency and Governance Bill – guidance published

The Corporate Insolvency and Governance Bill looks rapidly set to become law later this month, its progress can be followed here. Last week we reported on key aspects of the Bill including the introduction of a new moratorium which aims to give companies "breathing space" from creditors, a restructuring plan and prohibitions on supplier termination clauses.

On 1 June 2020, the government published guidance in the form of factsheets providing a more detailed explanation of each of the measures in the Bill. These can be read in conjunction with our latest Covid-19 insolvency update.

New £1 billion government building safety fund to remove dangerous cladding from high rise residential buildings

On 11 March 2020 the Chancellor made the welcome announcement, as part of his Budget (which seems a very long time ago now!), that the government would provide £1 billion in 2020-2021 to support the remediation of unsafe non-ACM (Aluminium Composite Material) cladding on residential buildings 18 metres and over in both private and social housing sectors.

The government published the prospectus for the fund on 26 May 2020. In the private sector, where eligible, the Building Safety Fund will meet the capital costs of removing and replacing unsafe non-ACM cladding systems on high rise residential buildings where such costs would otherwise be passed to leaseholders. In the social housing sector, where providers qualify, the government will meet the capital cost of the remediation to high rise residential buildings regulated as social housing.

The sting in the tail is that the fund will not be available for any remediation work on buildings with non-ACM cladding systems in scope that had been committed to, or where work had started on site, prior to the Budget announcement (i.e. before 11 March 2020). No doubt many leaseholders at schemes where the landlord has been proactive in the aftermath of the Grenfell tragedy to carry out remediation work before 11 March 2020 will feel aggrieved that the fund is unlikely to assist them.

Further details of the registration prospectus for the Building Safety Fund can be found on the government website or contact us if you have any questions.

The closing date for registering interest in the fund is 31 July 2020.

Possession appeals – case update: Hackney London Borough Council –v- Kevin Okoro [2020] EWCA Civ 681

The Court of Appeal have considered whether a tenant's appeal against a possession order was subject to the automatic 90-day stay imposed on possession proceedings by Civil Procedure Rule Practice Direction 51Z.

PD 51Z was introduced on 27 March 2020 as a means of protecting public health and ensuring that the courts are not overwhelmed during the pandemic. Its effect was to stay all proceedings for possession brought under CPR Part 55 for a period of 90 days i.e. until 25 June 2020 previously reported here and here.

The Court of Appeal held that the stay imposed by PD 51Z also applied to appeals even though the procedure for appeals is contained in CPR Part 52 (and not Part 55). PD 51Z applied to all proceedings brought under CPR part 55 and, therefore, it was held that this included every stage of those proceedings, including appeals (albeit not those to the Supreme Court).

Insights from around the firm

In positive news this week

  •  SpaceX Nasa Mission: US Astronauts Doug Hurley and Bob Behnken have docked with, and entered, the International Space Station. This is the first crew outing launched from American soil into orbit since the retirement of the US space agency (Nasa) shuttles nine years ago.
  • An endangered seahorse native to the UK has taken advantage of the lockdown to recolonise in Dorset. Conservation charity The Seahorse Trust has recorded the highest number of native seahorses found in a single dive in Studland Bay since 2008. Before now a single seahorse had not been seen at the site for two years.
  • The 2019/20 Premier League season will resume on 17 June. There have been no games in the top-flight since early March as all sport was put on hold due to the pandemic. A number of the remaining games will be broadcast on free to air television.

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