Trowers' property litigation weekly update – 6 May 2022
This week, the team report on recent housing association trends and falls in rent arrears, the latest on the case of Fattal v Fattal  and its implications on equitable ownerships and trusts. As well as the recent update on right to light guidance published by RICS.
Housing associations buck trend amongst landlords and report fall in rent arrears during Covid
Two thirds of housing associations ended the pandemic with lower rent arrears than they had at the start, despite the economic hardship faced by tenants and the limited enforcement options for landlords due to the eviction ban.
A report based on 20 housing associations commissioned by PlaceShapers, WHG and the National Housing Federation found the majority had reduced the rent debt owed to them during the pandemic.
The report found that cultural and legal changes resulting from the pandemic had been the catalyst for changes in the way housing associations worked with their tenants.
Lockdown restrictions had provided an opportunity for creativity and innovation within organisations and the situation had encouraged systemic change particularly in working hours and the use of technology.
The restrictions on enforcement meant housing associations were pushed to explore more informal routes to ensure payment of rent, and they found that improved communication with tenants and greater support for those in difficulty had built trust and improved outcomes.
The report highlights lessons for housing associations from the pandemic, finding that schemes built around better management of and support for tenants with financial difficulties would often achieve better results for income management than formal enforcement proceedings for rent arrears.
The big question now is whether housing associations can respond as dynamically and effectively to the cost of living crisis as they have to the Covid pandemic.
A link to the report can be found here.
Trust in your brother? A Fattal mistake
The case of Fattal v Fattal  EWHC 950 (Ch) is a useful summary of the law on equitable ownership and trusts, and a good reminder that failing to pay your brother what you said you would may have serious consequences!
The case concerned two brothers in dispute about the ownership of a penthouse apartment opposite Regent’s Park, London. The claimant purchased the property in his sole name in 1972, although both brothers lived in the penthouse until 1990. At that point, the claimant orally agreed to transfer the property to his brother, the defendant, for £400k.
The claimant argued that he transferred the property to his brother in 2014 in the mistaken belief that his brother had paid him the £400k purchase price. The defendant, on the other hand, contended the brothers were beneficial tenants in common in equal shares from the initial purchase and that he therefore only ever needed to buy out the claimant’s 50% interest. Further, the defendant argued that although he did not recall the specifics of the arrangement, he was sure he had dealt with payment of the £400k through the brothers' shared business interests.
The court had to consider whether the property had been held on a common intention constructive trust by the claimant for the defendant. Such a trust comes about when legal ownership is vested only in one party, but it would be inequitable for the legal owner to claim sole beneficial ownership. Typically, this is seen in cases of cohabiting unmarried couples.
The court will look at a wide range of factors to decide the parties' true intentions, not only considering any financial contributions made by both to the initial purchase and subsequent outgoings, but also the nature of the parties' relationship, the reason for the purchase in one sole name, the purpose of the purchase, and how the parties arranged their finances more broadly. In this case, the court found that there had been no express common intention that the defendant should have a beneficial interest and that no such intention should be inferred from the behaviour of the parties. Moreover, the defendant had not acted to his detriment in reliance of any such common intention.
The court also found no evidence that the defendant had actually paid the agreed sum of £400,000, and was prepared to accept that the claimant was so fabulously wealthy that he had simply not noticed that he had not received this trifling sum. Accordingly, the court granted the primary relief sought by the claimant which was an order requiring the defendant to transfer legal title to the property back to the claimant. The claimant had shown that he had retained sole beneficial ownership of the property and that the defendant held the property on constructive trust for him. Furthermore, the court also found that the claimant was entitled to an account and inquiry, in particular as to the rental income received by the defendant from the property.
New right to light guidance published by RICS
On 18 April 2022, the RICS published new guidance for consumers to deal with situations where their right to light has been impacted at their property. The new guidance provides help for homeowners who have been left with neighbouring developments, extensions, fences, outhouses etc which block light coming into their home.
The new guidance provides tips for anyone affected or in a dispute, to help them claim compensation or to seek to have the interference with their right to light removed. RICS have provided a useful summary of the guidance, which is set out below:
- Hire a professional right to light specialist who can measure the size of your room together with the scale of the proposed scheme to assess the potential impact on the natural light level and prepare formal evidence for use in a dispute case.
- Raise matters first, before construction starts. If a neighbour approaches in advance of work starting, homeowners should try to let them know of any ‘rights to light’ they may have. That way natural light requirements can be taken into consideration before the need for court action arises.
- Even if building work is finished, neighbouring householders can still raise a right to light claim for compensation or alterations, so long as evidence is submitted. If it gets as far as court, judges can award either financial compensation or order alterations to restore natural light.
- Resolving a right to light complaint does not always have to go through the courts, which can take a lot of time and involve significant costs. For example, RICS has set up a Neighbour Disputes Service which involves a neutral expert evaluation, and seeks to provide a quicker and cheaper resolution than more formal routes.
Insights from around the firm
- Webinar: Private residential development briefing – Contractor insolvency
- Ground Rent reform – what does this mean for you?
- Investing in social good
- Building Safety Bill update - April 2022
- Scientists say they have successfully completed a full, gap-free human genome sequence for the first time. Prior to this, around 8% of the human genome code was missing and efforts to complete the sequence have been ongoing for decades and undertaken by scientists globally. The discovery may be hugely significant in enabling scientists to better understand human evolution and how cells are created, which could in turn aid our understanding of how to treat, prevent and cure many diseases.
- A cat who has been missing for over five years has been returned to its owner after being found on a North Sea platform. Dexter the cat was registered as missing on the Scottish mainland more than five years ago, and was found inside a shipping container by the crew of the offshore platform last week. It is unknown how Dexter came to find himself on the platform, but he has now been flown back to Aberdeen by helicopter and reunited with his shocked owner.