Property litigation weekly update – 24 June 2022
This week we provide an update on the Government's White Paper: A Fairer Private Rented Sector. We also cover a case in which the Upper Tribunal (Lands Chamber) ordered the removal of telecoms apparatus under the Electronic Communications Code and a case regarding service charges payable by GPs to their NHS Landlord. All of this, together with our usual dose of positive news, quiz questions and insights from around the firm.
White Paper: A Fairer Private Rented Sector
Further to our update in last week's bulletin, the Government has published its white paper, A Fairer Private Rented Sector.
At the heart of these proposals is the plan to abolish Section 21 evictions, deliver a simpler tenancy structure and introduce a new ombudsman for private landlords.
Under the plans, the current structure of assured tenancies and assured shorthold tenancies will be replaced with a single system of periodic tenancies. Under this system, a tenancy will only end if the tenant ends it or if the landlord gives valid grounds for possession (the details of such grounds have not yet been confirmed).
This new system will be implemented in two stages with at least six months' notice being provided before the first implementation date, from which all new tenancies will be periodic and governed by the new rules. All existing tenancies will transition to the new system on the second implementation date. There will be at least 12 months between the first and the second implementation dates.
The White Paper also introduces a new mandatory ground for repeated serious rent arrears. This is in response to landlord's concerns that some tenants' pay off a small amount of arrears, taking them just below the mandatory repossession threshold of two months' arrears - which must be demonstrated both at the time of serving notice and the hearing – to avoid eviction at a court hearing. Following this change, eviction will be mandatory where a tenant has been in at least two months' rent arrears three times within the previous three years, regardless of the balance at the court hearing.
The proposals also include the introduction of a single government-approved Ombudsman, covering all private landlords who rent out property in England, even if they use an agent. Membership will be compulsory for all private landlords. The Ombudsman will have a wide range of powers, including compelling landlords to issue an apology, provide information, take remedial action and/or pay compensation of up to £25,000.
The full details of these reforms will be outlined in the Renters Reform Bill, which is due to be introduced in this session of Parliament.
Crawley Borough Council v (1) EE Limited (2) Hutchison 3G UK Limited LC-2022-000187
Telecoms cases continue to work their way through the Upper Tribunal and the latest of note is, Crawley Borough Council v (1) EE Limited (2) Hutchison 3G UK Limited. It is thought to be the first of its kind and concerns the removal of telecommunication equipment following the service of a Code removal notice by a land owner.
The operator, EE Limited and Hutchison 3G UK Limited, had been occupying Crawley Town FC's Broadfield Stadium pursuant to a business lease. The land owner, Crawley Borough Council, served a s25 notice and after agreeing several extensions, the date by which to apply to the court for a new lease was missed by the operator. The effect of this was that the operator lost its security of tenure pursuant to the Landlord and Tenant Act 1954 and the land owner was able to serve notice on the operator, pursuant to Part 6 of the Code requiring removal of the telecommunications equipment from the site.
The operator responded by serving notice on the land owner to instal its equipment elsewhere on the site but was prevented from doing so on the basis of the Compton Beauchamp case which, whilst currently subject to appeal, held that an operator in situ cannot obtain code rights over the same site.
The operator asked the Tribunal for a stay pending the outcome of the appeal of Compton Beauchamp (the Judgement of which is expected imminently) or, pending the outcome of its application to instal equipment on the nearby site.
The Tribunal did neither and instead made an order that the operator remove its equipment from the site on the basis that the Code did not permit it discretion in these circumstances. It was also noted that in any event, any gap in coverage (which was the main concern of the operator) was due to the Operator's own doing and no-one else's.
The case highlights the importance of meeting deadlines as the consequence of missing them can be fairly onerous.
Stop Press News: Judgment on the appeal of Compton Beauchamp has just landed and will be reported on in next weeks' bulletin. It does not change the outcome of the above case.
Valley View v NHS Property Services Ltd  EWHC 139
A lengthy (170 page) judgment has been handed down in Valley View v NHS Property Services Ltd  EWHC 139 by Edwin Johnson J.
NHS Property Services Ltd (NHSPS), the landlord, has been successful across the five sets of proceedings, thought to be 'test cases' (although Mr Justice Johnson was wary of this classification) which considered whether GP tenants are liable to pay service charge to their NHS landlord.
Prior to 2013, little thought was given to the question of a GPs' service charge liability as GPs were generally reimbursed by Primary Care Trusts who owned a large amount of the care estate and acted as both the NHS Commissioner and the GPs' landlord. Post 2013, when the two roles were separated by way of statutory vesting orders, GPs found themselves being required to pay their landlord (no longer Primary Care Trusts) for providing landlord services, in full and without reimbursement.
As service charge demands began to rise, GPs started to challenge the notion that they were liable to pay the charges and were supported by the British Medical Association ("BMA").
In 2020, five GP practices (funded by the BMA) issued proceedings against NHSPS for the implementation of its consolidated charging policy.
The key issues considered included
Tenancy at will v implied tenancy: The Judge carefully considered the parties' intentions over time and considered the importance of negotiations regarding the tenancies and ultimately held that each of the Claimants were tenants.
Terms of a tenancy implied from conduct: This issue focused on what services the landlord was obliged to provide and the extent of the tenants' obligations to pay the service charge. In both of the proceedings that raised this point, the Judge accepted that the Claimants were taken to have agreed to pay the costs of the reasonable services provided.
Application of charging policy: The Judge reviewed the application of NHSPS' charging policy for each of the five sets of proceedings and whether or not the policy had been incorporated into the tenancies. The Judge later referred to this application when dealing with declaratory relief.
Management fees: NHSPS sought to claim management fees for the services provided and the tenants' rejected this on the basis that there was no express provision in the written leases/that this was not implied by conduct in the implied tenancies. The Judge considered that the management fees were not services in and of themselves but were associated with the service charges and so were recoverable by the landlord.
Declaratory relief: This application by the claimants related to an application for relief that was previously dismissed, and the Judge considered here whether the claimant was entitled to a second bite at the cherry but found that there was no real and present dispute between the parties on this point.
What does this mean for GP practices?
Well, in principle it seems that NHSPS may pursue their GP tenants to recover service charge in line with the terms of its charging policy albeit Mr Justice Johnson stated that each case "essentially depends upon the evidence and arguments in that case" so it is essential that any GP practice concerned about their service charge seeks legal advice to fully understand their obligations relating to it.
It is reported that a second trial is to be listed, in which the court will consider the extent of reasonableness for the charges claimed by NHSPS so there will be further updates to follow.
The full judgment can be found here.
Insights from around the firm
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- Lucky rabbit survives 40 mile ride in car grille: A rabbit that was struck by a car somehow survived a 40 mile trip trapped in a vehicle grille. The driver, Mark Pearson was travelling at about 30mph when he heard a "dreaded thump" near Nefyn, Gwynedd. Mr Pearson checked his rear view mirror but when he saw nothing, carried on driving to work in Bangor. Hours later, a colleague told him he had a rabbit stuck in his bumper. Mr Pearson went "Operation Bugs" mode removing the grille to get the rabbits head unstuck. After some time, the rabbit was freed without any harm.
- Library waives 48 year fine after book returned from Canada: A library in Tooting has agreed to waive an overdue fine of £6170.85 following the return of a book in the post from Canada, some 48 years after lending it out. Tony Spence of Port Moody, British Columbia borrowed 'A Confederate General from Big Sur' in early 1974. By time it was received by the library, the book was overdue by approximately 48 years and 107 days. Fortunately for Mr Spence, the library had no record of the loan and caps fees at £8.50.