Trowers' property litigation weekly update


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In this week's bulletin we have three cases covering the full range of property litigation issues, including acquisition of easements by prescription, a claim of unjust enrichment arising from an abortive property development venture, through to an Upper Tribunal appeal that granted unconditional dispensation from the section 20 consultation requirements. Alongside these we have included our usual dose of positive news, weekly quiz questions and insights from around the firm.

Prescriptive easements: Can the use of a right of way be permissive even when the user isn't aware of the permission?

The recent First-tier Tribunal (Property Chamber) case of Phlipott v Bovisand Park Limited examined the issue of prescriptive easements and permission for use. A prescriptive easement over land will arise where a person has used the easement for 20 years freely with the knowledge of the owner of the land but crucially without their permission. If permission is given then the user simply has a permissive license to use that path or route, but not a permanent legal right capable of registration.

Phlipott v Bovisand Park concerned a resident of a housing estate who applied to the Land Registry to register an easement to walk through the neighbouring caravan park to access the coastal path on the basis that he had used the right for 20 years without permission. The owners of the caravan park argued that they had given permission to all the residents of the estate via an informal agreement (in writing) with the Residents Association which also allowed the caravan park residents to walk through the estate. The user claimed no knowledge of this permission.

The claim ultimately failed because it could be shown that the user had not accessed the route for 20 years as claimed. However, the judge also examined the point of law. It was held that a landowner must communicate permission – it cannot simply decide to grant permission by thinking about it. The permission can be as a matter of principle granted to a group of people, either by putting up a sign or as here, by contacting a representative of the group. It was relevant here that the Residents Association had written to the landowner saying that 'all residents' had agreed to the mutually beneficial exchange of rights.

Despite the user not being aware of the permission, the Judge commented that a landowner against whom a right was being asserted must be aware (or have the opportunity to be made aware) that a right is being asserted. If they are comfortable that permission has been given to that user, they have no reason to prevent their use or warn them off, so they cannot be said to have 'willingly' abstained from preventing the user.

This gives some comfort to landowners that they do not have to ensure permission has been communicated to every new member of a group of users. However, it would be wise, where permission has been given to a group, to put up signage so as to be completely clear that the right is permissive.

Unjust enrichment claim fails following abortive property development joint venture

The recent decision in Chowdhury v Ali [2022] EWHC 2924 (Ch) is an unusual case involving a summary judgment appeal resulting in the ultimate failure of a claim for unjust enrichment. However, the broader context is far more common, where creative legal arguments are deployed to pursue a claim following an abortive property development joint venture.

The case involved two business partners, who owned restaurants together, and a property jointly. Ali advanced £200,000 to Chowdhury for the purposes of an investment into a property development in London. Half of the sums advanced by Ali had been raised as part of a £200,000 loan obtained from Lloyds Bank, secured against the jointly owned property. The development did not progress and at trial in the original proceedings Ali was awarded £200,000 in damages and £135,000 in interest by way of repayment of the investment.

In 2017 the jointly owned property was sold. The proceeds of sale were used to settle the Lloyds Bank loan and the balance was then split between Ali and Chowdhury evenly. Chowdhury considered that this was unfair and brough a claim for unjust enrichment, on the basis that the money Ali had recovered in the earlier proceedings should have been used to pay off the Lloyds Bank loan. On appeal, the High Court granted summary judgment and dismissed Chowdhury's claim. The crucial issue was that the test for unjust enrichment requires the enrichment to be at the expense of the claimant, which it was not because Chowdhury had not raised any of the funds himself.

It is not unusual for business partners and associates to enter into property development joint ventures without fully documenting the agreement or considering in what circumstances the funds put into that venture should be repaid. The key takeaway from this case is a reminder that in order to avoid subsequent disputes it is much better to fully document and agree what will happen if the development is unable to proceed.
 
Service charges: Upper Tribunal grants unconditional dispensation from the section 20 consultation requirements under the Landlord and Tenant Act 1985

In LB Lambeth v Kelly & Others [2022] UKUT 290 (LC) the Upper Tribunal (Lands Chamber) has ruled that dispensation from the section 20 consultation requirements can be granted, even if the Tribunal has already determined the sum that is due.

When qualifying works are being undertaken by a landlord involving service charges of more than £250 per leaseholder, section 20 of the Landlord and Tenant Act 1985 and the accompanying regulations require a landlord to follow a strict consultation procedure. If the landlord fails to comply with the statutory requirements, service charges are capped at £250 per leaseholder unless the landlord applies to the First-tier Tribunal (Property Chamber) and obtains dispensation.

In Lambeth v Kelly, the section 20 notice had been served on one of the leaseholders at the property address, rather than their correspondence address, and only after the works had been carried out.

The First-tier Tribunal decided that there had been a failure to consult and therefore the costs were capped at £250. Since no application for dispensation was made until after the Tribunal's initial ruling, the Tribunal further concluded that it was not open to the landlord to subsequently apply for dispensation.

The landlord appealed to the Upper Tribunal, which ruled:

  1. A Tribunal has jurisdiction to determine an application for dispensation from the consultation requirements, notwithstanding that an application as to reasonableness and payability of the service charge has already been determined.
  • On a dispensation application, the Tribunal is required to consider whether "it is reasonable" to award dispensation. Where the Tribunal is unable to identify relevant prejudice, dispensation should be granted. As the leaseholder had provided no evidence of prejudice, unconditional dispensation was granted.

As well as demonstrating that a dispensation application can be made even after the sum due has been determined by the Tribunal, this case offers a reminder of the central importance of the question as to whether prejudice has been caused to the leaseholders by a failure to consult.

Insights from around the firm

Positive news

  •  Life-saving medication is, for the first time, delivered in utero.
    Last year, doctors in Ottawa injected an enzyme critical to healthy heart function into the umbilical vein between a foetus and her mother. In the long run, this treatment could herald a suite of foetal treatments which obviate the need for lifelong medical care for those with diseases such as haemophilia and spinal muscular atrophy.
  • Galapagos penguins get new nests

    As part of a conservation effort funded by National Geographic, the Galapagos Conservancy, and others; Dr P. Dee Boersma and her colleagues have dug  total of 120 nests into the black rock of the islands. The nests provide the endangered penguins of the Galapagos Islands with shelter and a place to raise their chicks away from predators.
  • Sunglasses showing live subtitles of conversations launches

    British firm, XRAI, has launched the XRAI Glass, sunglasses which listen in to conversations and then project subtitles onto the lens. Designed with the hard-of-hearing in mind, the XRAI Glass could provide for a significant increase in the quality of life of those who would benefit from being able to read the conversations in which they take part. In addition, those who wish to interact with people who do not speak the same language can receive a live translation of conversations spoken in nine languages.

    The XRAI Glass has the potential to improve the lives of those who have a hearing disability as well as those who need to interact with individuals from other cultures.
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