Property litigation weekly update – 27 May 2022
This week, the team reports on the recent case of EE LIMITED and HUTCHISON 3G v 100 NOX S.A.R, the latest Levelling Up and Regeneration Bill and its implications for rental auctions, and an update on Enfranchisement Reform
Levelling Up and Regeneration Bill for proposed rental auctions scheme for vacant high street premise
The UK Government has committed to introducing rental auctions for vacant high street premises in the first draft of the Levelling Up and Regeneration Bill which was first introduced into Parliament on 11 May 2022. The proposals will see local authorities be given the power to contract for tenancy on behalf existing landlords for properties deemed to be of 'high street use' and arrange for rental auctions to take place to find new occupiers with the aim of rejuvenating beleaguered high streets.
The Bill sets out several criteria that must be satisfied by local authorities in order to be able to contract for tenancy; namely, a need to show they are of 'high street use', that the premises are unoccupied and have been vacant for at least 12 months (or unoccupied for at least 366 days in a two-year period), and that there is some 'local benefit' to seeking to find a new occupier. Should these criteria be satisfied, local authorities may then issue a letting notice on the landlord and the process of rental auction can begin. The draft Bill proposes that the local authority that served the notice can enter into a tenancy contract with the bidder at auction. The tenancy contract provides that the landlord agrees to grant and the bidder agrees to take a short-term tenancy of the property. The contract has effect as if it was entered into by the landlord of the premises and not the local authority.
Local authorities will also have power to designate entire streets in its area as a 'high street' in this instance if it considers that the area is important to the local economy due to a concentration of high-street uses of premises.
Forming part of the Government's wider 'levelling up' agenda, the proposals are part of long-running efforts to rejuvenate town centres, however, the plans have been met with some controversy. Notable criticism includes the risk of unintended consequences, such as landlords with properties nearing the 12-month vacant threshold quickly converting the property to residential usage, and questions over whether already stretched local authorities will have the capacity and be equipped with the correct resources to enact these complex proposals.
The Bill is currently at its second reading in the House of Commons.
EE LIMITED and HUTCHISON 3G UK LIMITED v 100 NOX S.A.R.
We previously reported on a case dealing with interim rights of access for operators under paragraph 26 of the Electronic Communications Code. On 13 May 2022, the Upper Tribunal heard and handed down judgment in a further case on interim rights.
When will interim rights be granted?
Interim rights will be granted if there is a "good and arguable" case that the conditions under paragraph 21 of the Code can be made out. In particular, an operator must show that, on the balance of probability (1) any prejudice caused to the relevant person is capable of being adequately compensated by money and (2) that the public benefit likely to result from the making of the order outweighs the prejudice to the relevant person (and the Tribunal is to have regard to the public interest in access to a choice of high quality electronic communication services).
Here, the operator sought an order allowing their contractors to access the roof of 100 New Oxford Street, London to assess the suitability of the building by carrying out an intrusive survey. Typically, the intrusive survey includes removing parts of the roof structure to assess whether it is suitable to host the proposed equipment.
The operator identified the respondent, the registered proprietor of 100 New Oxford Street, as being 100 Nox SARL, a company registered in Luxembourg. Their notice under paragraph 26 of the Code, however, was addressed to the Mayor and Burgesses of the London Borough of Lambeth, with the proposed agreement annexed to that notice listing the parties as being CTIL and 100 Nox SARL.
A response was not received to the notice and so proceedings were issued by the operator on 23 March 2022.
It was initially suggested, in the operator's Statement of Case to the proceedings, that correspondence had been sent to the respondent at its Luxembourg registered address and that a response was received denying access. However, the suggestion that a response was received was later withdrawn, with the claimant suggesting that it had been "pleaded in error".
The respondent did not attend the hearing.
Decision and what this means for you
The Upper Tribunal found that "there is no evidence that the respondent is aware even of the claimant's wish to visit its rooftop, let alone of these proceedings". The Claimant's application for interim rights was therefore refused. The Upper Tribunal's decision was based on the following factors:
- The fact that the respondent did not appear to have any knowledge of the proceedings. Although checks to verify both the respondent's registered address and property's registered proprietor appear to have been carried out, there was no evidence that any other investigations had been undertaken. The Upper Tribunal noted that a site visit, to establish who was in occupation and how communication usually passed between landlord and tenant, might have been sensible;
- The notice under paragraph 26 of the Code did not correctly identify the respondent. Whilst the Upper Tribunal accepted that the proposed agreement annexed to the notice did identify the respondent as a party, the Judge said "a representative of the respondent who had seen that the notice was not addressed to the respondent might easily have concluded that the notice was simply a copy sent to it for information, and might not have read as far as the notice itself";
- It was unclear whether the notice identified the correct respondent. The Upper Tribunal noted the overall lack of evidence and indicated that it was unclear whether the respondent was in sole occupation of the roof space, if at all. Additionally, there was no evidence on who was in occupation of the stairs and lift, which the Upper Tribunal presumed would be the method of gaining access to the roof;
- There was no evidence as to why the claimant needed to carry out an intrusive survey. Accordingly, the Upper Tribunal could not consider whether the conditions of paragraph 21 of the Code (summarised above) were met.
This case provides a sage reminder of the importance of getting notices right and reinforces the importance, in any case, of scrutinising the detail to ensure absolute compliance. Please do not hesitate to contact Emma Barnfield or Charlotte Brasher if you would like to discuss any telecoms related queries.
Enfranchisement reform update
Many leaseholders and landlords have been waiting with bated breath for proposed reforms to enfranchisement rights. Since the Law Commission's comprehensive 2019 consultation and 2020 report, there has been an expectation of wholesale legislative changes to the extent and exercise of the right to buy freeholds, extend leases and obtain the right to manage. However, in reality the approach has been more piecemeal and less immediate than thought. The Government announcement in January 2021 setting out the intention to abolish marriage value and extend lease extension rights to 990 years was met with jubilation from leaseholders and dismay from landlords.
Since then, there has been little development other than a further consultation as to qualification for enfranchisement from the Department for Levelling Up and a commitment to this area of reform in the Queen's Speech recently.
Whilst this is very slow moving, the reactions, especially of leaseholders, has been to wait for the rights to be reformed. The prospect of a cheaper and easier claim in the future, however, soon becomes a finely balanced decision as lease terms diminish and premiums increase during the wait.
Without any solid prospect of legislation, many leases will now be getting towards the crucial 80-year mark, at which point action must be taken by leaseholders to avoid increased premiums under the current regime.
If you have any questions or would like further information on enfranchisement and reform please contact our enfranchisement specialist, William Bethune.
Links to insights from around the firm
Hope that Scottish wildcat kittens born in an animal park could save the species:
Eight kittens from the critically endangered Scottish wildcat species have been born at an animal park in Aviemore, Scotland. The Saving Wildcats programme was created to breed the species in captivity with the cats then being released into their more natural habitat in the Cairngorms.
It is hoped that once ready, the new wildcats will be released into the Cairngorms next year with GPS collars to allow scientists to monitor their movements and habits with the aim of using this information to tackle the key problems behind the declining population and prevent extinction.
Carbon emissions from Isle of Man TT to be offset:
The Isle of Man Government has announced a plan to make the world-famous motor racing event carbon neutral. The announcement comes after a similar project was undertaken after the 2019 TT to offset the footprint of the races alone, but this year the environmental impact of the spectators will also be included in the effort.
The total carbon output of the event, which begins at the end of this month, is estimated to be around 5000 tonnes and will be offset with projects such as rewilding and reforestation across the globe.