Property litigation weekly update – 10 September 2021
In this week's bulletin, we cover yesterday's Government announcement to extend existing and introduce new insolvency restrictions.
We also cover two recent cases, one involving noise nuisance and the other landlord disrepair. Scroll down further for insights from across the firm and some positive news stories.
Commercial Rent enforcement restrictions
On 9 September 2021, the Government announced its intention to extend the moratorium on taking insolvency action against tenants with unpaid commercial rent arrears. This appears likely to apply to 31 March 2022. This is to allow time to legislate for the proposed scheme that allow parties who have not been able to resolve their differences over any such arrears to appoint an arbitrator to do so for them. No details have been given concerning the shape of any such arbitration scheme or the arbitrator's powers. It is difficult to envisage any principled basis upon which any judicial power could extend beyond specifying the time over which the debt should be repaid, but until the legislation is unveiled, nothing is certain.
The announcement also introduced two new winding up proposals, both intended to be temporarily in place to 31 March 2022. One is to lift the amount of unpaid debt necessary to prove debtor insolvency from £750 to £10,000. The second requires a creditor to give the debtor 21 days to make payment proposals before it may proceed with issuing a winding up action. The drafting of the statutory instrument suggests that the 21 days could run in parallel with the service of any statutory demand (which must also give 21 days' notice), so this may not add any further time delay to a creditor seeking to use a statutory demand to evidence insolvency. Of course, one can proceed to wind up without prior service of a statutory demand, so these new provisions will cause delay to such a case. In addition, whilst there is no explicit requirement for the creditor to act reasonably in considering any proposals that the debtor might make, any subsequent winding up petition must summarise the reasons why the proposals are not acceptable. This leaves the door open for a debtor facing a winding up petition to argue that the legislation requires the creditor to act reasonably and that it has not done so. The Court has the power to dispense with the requirement that the creditor seek the debtor's proposals, or to shorten this 21 day period. In most cases it is unlikely to be cost effective to seek the Court's permission to do this, but one can see how the Court might be inclined to make such an order where there have been prior attempts by the creditor to arrive at a sensible compromise.
The Government's announcement is here.
Jones and Another v Ministry of Defence
This High Court case considered whether the use of a RAF airfield constituted a noise nuisance to a nearby property. Whether or not noise constitutes a legal nuisance depends upon a number of factors, including the nature of the locality and the history of use of the land in question, whether the use of the land itself is reasonable and otherwise lawful and the reasonableness of the noise maker's approach.
Here, the airfield had been used by the RAF since 1951 as a runway for trainee pilots. The Joneses owned nearby land they had intended to develop to create a holiday park. Before their ownership and until about 2003 the land had been used as a reservoir. Whilst the Joneses had obtained planning permission in 2004/5 to construct holiday units and had erected two units as show homes in 2006, sales had not been successful and the plans were shelved. The Joneses therefore moved in to one of the show lodges they had constructed on the land and used some of the existing buildings which had been associated with the reservoir for commercial lets. They had also been unsuccessfully trying to sell the land since 2016. The Joneses alleged that there had been an increase in use and noise at the airfield since 2007 and this blighted their land to the extent it constituted an actionable nuisance.
The court held that the effect of the change of use in the Joneses' land was an important issue. It was noted that in the Supreme Court case of Lawrence v Fen Tigers there had been an argument that a claimant who builds on or changes the use of their property after the complained about activity has started should have reduced rights to complain about that activity as they were said to be "coming to the nuisance".
From 2010, the Joneses had been complaining about nuisance. As a result, routes of the aircraft and height requirements had been changed. Pilots had been instructed not to fly over a children's nursery based at one of the commercial units on the site.
It was accepted the noise was very loud, annoying and that it was likely some tenants and holidaymakers had been put off as a result. The court found the noise did therefore interfere with the current use and enjoyment of the Joneses' land. However, whilst the locality was described as agricultural and sleepy, the jet noise over the past 70 years was considered as "part of the environment". It was also held that the defendant had taken all reasonable steps to ensure noise was kept to a minimum. It was therefore held that there was no nuisance. In making this decision, the fact that there had not been an increase in use of the airfield was a significant factor. As a matter of fact, the Court held it had decreased. The judge also held that the airfield would not have been an interference with the previous use of the Joneses' land as a reservoir.
In conclusion, as the flights were not a nuisance before the change of the use, were a reasonable use of the land and carried out in a reasonable way, there was no nuisance and the claim failed.
The case is a useful reminder that it can be difficult to complain about a longstanding noisy activity, which only becomes a nuisance due to a change in the claimant's use of its own land. The outcome here may have been different if the flight noise would also have been a nuisance when considering the original use of the claimant's land, if the activity had changed or increased, or if the activity was not otherwise a reasonable use, taking into account the locality (which here was held to take into account the historic use of the airfield). It is also of note that the use of the airfield for training pilots (which is now only done at this site in the UK) was held to be in the public interest.
Jalili v Bury Council
Many landlords, particularly those in the social housing sector, will have faced a deluge of cases in recent years for disrepair claims brought by their tenants. In Jalili v Bury Council the tenant's claim for disrepair had been settled before proceedings had been issued, and the only issue the parties could not agree was the extent to which the landlord should contribute to the tenant's costs.
The parties' respective experts had listed the repair works that needed to be completed. The tenant's expert costed these at an open market rate of £3,915 whilst the landlord Council's expert costed them at £740, on an "in-house" basis. The Council, not surprisingly, chose to carry out the list of works as prepared by their own surveyor which the tenant seemed to accept (as no objections were raised). The tenant also accepted an offer of damages in the sum of £1,000.
As the parties could not agree on costs liability, this issue went to a costs assessment hearing at the Manchester County Court. As the matter had settled before proceedings were issued, liability for costs was governed by paragraph 11 of the Pre-action protocol for Housing Conditions Claims ( England) which states “if the tenant's claim is settled without litigation on terms which justify bringing it the landlord will pay the tenant's reasonable costs”.
Civil Procedure Rule 26.6(1) provides that where the cost of repairs or other works to premises is estimated to be no more than £1,000 and the value of any damages is no more than £1,000, the case will be allocated to the small claims track.
The Court accepted the Council's argument that as the tenant had accepted the lesser works valued at £740 and did not pursue a claim for specific performance, the case would have been allocated to the small claims track and therefore other than fixed costs of £260 plus some fixed costs for disbursements (for example, a maximum of £750 for an expert's report) no additional costs were recoverable.
Whilst County Court decisions are not binding on future judges, the approach taken in this case should provide some comfort for landlords settling disrepair claims.
Insights from our colleagues around the firm
- Webinar: Welcome back to Trowers Tuesdays
- Building Safety Bill: Essential Guide
- Podcast: What's next for Judicial Review? A guide to the reforms to date and the potential impact
- Survey of Modular Housing in the UK
Positive news stories