Property litigation weekly update – 18 November 2021

This week we cover the return to "business as usual" in relation to residential possession claims, Covid-19 valuation issues in enfranchisement claims and the latest Court of Appeal decision on right to manage procedural requirements. 

Residential possession claims – a return to "business as usual"?

A few weeks ago we reported on the suspension on the Coronavirus Act 2020 in respect of notice periods for residential notices, which are now back to the usual pre-pandemic notice periods.

This was followed by the end of the "Overall Arrangements for Possession Proceedings" on 1 November 2021, as confirmed in an announcement from the Master of the Rolls on 3 November 2021. This marked the end of the two-stage possession process, under which all cases had been listed for review before being given a substantive hearing date, and of certain types of cases being given listing priority.

The latest step in the return to 'business as usual' for residential possession claims will be in the form of an amendment to Practice Direction 55C, which had made temporary provisions in relation to residential possession proceedings due to the pandemic.

Under the amended Practice Direction, the pandemic-specific procedural rules will apply to all claims issued before 1 December 2021, including the need for a reactivation notice for stayed claims and specific evidence requirements relating to the effect of the pandemic on the Defendant and their dependents.

For claims issued from 1 December 2021 until 30 June 2022, the requirement for Claimants to file and serve a statement setting out its knowledge as to effect of the pandemic on the Defendant (and confirming pre action protocol compliance) is to remain, but claims should otherwise progress.

Given that some County Courts are presently issuing listings for the first hearing of mandatory possession claims to take place almost 6 months from the claim first being submitted to the court, it is hoped that these moves will collectively speed up the time that it takes to get possession claims before the Court.
Enfranchisement valuation – evidence required to adjust the deferment rate due to market conditions of the pandemic

In Llangewydd Court Ground Rent Estate v Ralph & Anor [2021] UKUT 251 (LC), the Upper Tribunal has ruled on the potential impact of Covid-19 on the premium payable in an enfranchisement claim for the freehold of a house under the Leasehold Reform Act 1967.

One aspect of enfranchisement valuations considers the applicable deferment rate used to assess the value of the freehold reversion. The Court of Appeal case of Earl Cadogan and Cadogan Estates Limited v Sportelli [2007] 1 EGLR 153 previously set authoritative guidance on this rate.

In Ralph, the appellant argued that the elements making up the deferment rate in Sportelli are no longer appropriate due to the Covid-19 pandemic and its impact on the residential property market.

The Upper Tribunal held that '“compelling evidence” is required to shake Sportelli' and the First-Tier Tribunal was correct to rely on the guidance in that case. In confirming that substantial evidence would have been required to steer away from Sportelli, the Tribunal recognised that Sportelli involved multiple experts in a variety of fields whereas the evidence in Ralph was provided by a valuer with no expertise in investment forecasting nor economics.

It appears that in order to take advantage of the disruption to the property market in terms of enfranchisement valuations, a more comprehensive challenge would need to be mounted. However, with the prospect of forthcoming reform to enfranchisement valuation rules and as noted by the Upper Tribunal in Ralph, there may not be any long-term advantage in undertaking such a challenge.

If you would like further information or advice on enfranchisement please contact our enfranchisement specialist, William Bethune.
Court of Appeal rules on right to manage procedural requirements

In Eastern Pyramid Group Corp SA v Spire House RTM Co Ltd [2021] EWCA Civ 1658 the Court of Appeal has confirmed how to deal with failures to comply with the right to manage procedure contained in the Commonhold and Leasehold Reform Act 2002.

Spire House RTM Co Ltd served a claim notice seeking to exercise the right to manage the building on the landlord. In its counter-notice, the landlord claimed that the notice was not compliant with various provisions of the 2002 Act. This resulted in the RTM company withdrawing its first notice and serving a second notice to remedy the defects. As the notice of withdrawal had not been given to the qualifying tenants, as is required by section 86 of the 2002 Act, the landlord asserted that the withdrawal was ineffective and the first, faulty claim notice remained in force. By virtue of section 81(3) of the 2002 Act no subsequent notice can be given while an earlier claim is still in force and so the landlord claimed that the second notice was invalid.

In dismissing the appeal and upholding the earlier findings of the Upper Tribunal, the Court of Appeal ruled that a realistic and pragmatic approach needed to be taken when determining the significance of different steps in a procedural scheme laid down by statute. Accordingly, the Court of Appeal concluded that the notice of withdrawal had been valid, even though Spire House RTM had failed to serve it on the qualifying tenants. The Court distinguished between a failure to serve the notice of withdrawal on the landlord, which would have invalidated the notice, but service on qualifying tenants was simply for information purposes and therefore the failure to do so did not invalidate the notice.

The Court of Appeal's decision demonstrates that breach of a statutory requirement as set out in primary legislation will not always invalidate the notice and represents a continuing pragmatism from the Courts and an attempt to avoid impractical outcomes.
Insights from our colleagues around the firm

Positive news

  • The Environment Act has been passed into UK law which establishes legally binding environmental targets that will be overseen by the independent Office for Environmental Protection. It is hoped that the new legislation will protect our environment for future generations and halt the decline in species by 2030.
  • Golden retriever, Finley, has broken the world record for "the most tennis balls held in the mouth by a dog" holding a whopping 6 tennis balls in his mouth. On his Instagram page, Finley wrote "This of course wasn't easy, and certainly felt like forever and a day to accomplish! Thank you to all my friends and fans who have been following my tennis ball journey since the beginning".
  • The controversial conservatorship of pop star Britney Spears' financial and personal affairs has ended after 13 years to the celebration of #freebritney supporters around the world.

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