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Chattel or part of the land? The naked truth 30 July 2015

I wrote recently about a case in which the court took the view that a lodge in a holiday park was a chattel, meaning that the occupier had a lease only of the land and not of the structure (to use a neutral word) – and therefore did not benefit from the protections given to residential tenants by the Landlord and Tenant Act 1985 (see “Dwelling on the problems” on 26 February 2015).

Now here is a similar case, but with three twists.  The case is Spielplatz Ltd v Pearson [2015] EWCA Civ 804.  First, in this case the court decided that the structure (termed a “chalet” in this case) was part of the land, and therefore the tenant was an assured tenant, with all the benefits that that brings (including the landlord’s implied covenant to repair).  This was in part because a jointly instructed expert had opined that “the original construction would have been intended to be permanent and was not mobile or movable at any point in its life.”  In effect, the structure could only have been moved by demolishing it and rebuilding it elsewhere.

Secondly, this decision was reached in spite of the fact that both landlord and tenant were convinced that the chalet belonged to the tenant (ie that it was a chattel, not part of the land).  Sir Colin Rimer, giving the only judgment in the Court of Appeal, said:

“The [tenants] had likewise believed, and were adamant in their evidence, that they owned the chalet.”

He went on to say:

“The judge observed that whilst, therefore, both parties were denying that [the landlord] had any interest in the chalet, it might be that they were both wrong.”

This gives me an excuse to trot out (once again) my favourite landlord and tenant quote, which is from Lord Templeman in Street v Mountford [1985] AC 809:

“The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.”

(Incidentally, you can read an article about that case, which I wrote last year for Landlord & Tenant Review, by clicking on this link.)

Thirdly, the park in which the structure had been erected was a naturist resort.  From my limited researches, this ought to have nothing whatever to do with the law as to whether the structure was part of the land or a chattel, but I remain nervous about being definitive about that, given that both the Court of Appeal and the writer of the Lawtel summary took the trouble to tell us that the landlord, Spielplatz Limited, ran a naturist resort (near St Albans, should you be tempted to investigate).  I think it must be the same sort of reporting that insists that the age of anyone who is mentioned in a newspaper is provided, despite it rarely being relevant in any way.

In passing, I was hoping to find the usual statement in this sort of decision that the judge had carried out a site visit – which could have made the fact that the chalet was located within a naturist resort a very relevant factor indeed.  It took me back to the classic Peter Sellers’ film “A Shot in the Dark”.  You may recall that Inspector Clusoe has to visit a naturist resort while investigating a murder.  The audience’s sensibilities are, fortunately, protected by means of a strategically placed guitar.

peter sellers

Sadly history does not relate whether the judge in this case made a site visit or, if she did, what (if any) musical instrument she was carrying around with her at the time.  In any event, the judge (Her Honour Judge Lindsay Davies at Luton County Court) deserves plaudits for reaching the conclusion that the chalet was part of the land,despite hearing evidence from both the landlord and the tenant that it was not.

 

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Who owns “Old Flo” ? 27 July 2015

“Old Flo” was the not-exactly-complimentary nickname given by the residents of  the Stifford Estate in East London to the Henry Moore statue “Draped Seated Woman”, which was placed (at considerable expense) in the centre of the Estate in 1962 by the developers, London County Council.  The estate has now been redeveloped by its current owners, Tower Hamlets BC.  The statue is temporarily in the Yorkshire Sculpture Park and Tower Hamlets had plans to sell it.  But is it theirs to sell ?

lh428_stifford_estate_tower_hamlets_315_2_0

This was the issue in the recent High Court case of Tower Hamlets London Borough Council v Bromley London Borough Council (in its capacity as successor to the London Residuary Body) [2015] EWHC 1954 (Ch).

The judge had to consider three questions:

1.  Was the statue a chattel or had it become part of the land and so ceased to be a chattel?  The statue rested on the ground under its own weight, which suggested that it was a chattel.  It is true that there are cases from the past in which items resting under their own weight have nevertheless been held to be part of the land, as mentioned by Scarman LJ in Berkley v Poulett [1977] 1 EGLR 86, who said:

“Nevertheless an object, resting on the ground by its own weight alone, can be a fixture, if it be so heavy that there is no need to tie it into a foundation, and if it were put in place to improve the realty” (emphasis added)

In this case, the judge decided that even if the purpose of the acquisition of the statue was to improve Londoners’ lives generally, there was no intention to improve this particular piece of realty by its being placed in the Stifford Estate.  It could have been placed anywhere.

2.  What was the history of ownership of the statue?  This required a complicated analysis of various statutes (as opposed to statues) and statutory instruments.  LCC’s assets passed to the Greater London Council when it was abolished.  Some of the GLC’s assets passed to Tower Hamlets in 1981, including the Stifford Estate.  However, the judge held that this did not include the statue, as it was a chattel and not part of that Estate, nor was it “connected property” nor an “estate amenity”, nor did it pass under section 62 Law of Property Act 1925.  So the statue stayed with the GLC.

When the GLC was abolished in 1986, the statue passed to its statutory successor, the London Residuary Body.  Mysteriously, the assets of that body are now (for a reason that is not explained in the judgment, and that I have not yet investigated) vested in Bromley LBC (by Article 3 of the London Residuary Body (Winding Up) Order 1996).

3.  So the statue passed to Bromley in 1996, but does Bromley still own it?  This is where the trail becomes very surprising.  Tower Hamlets had twice lent the statue to the Yorkshire Sculpture Park.  The second occasion was when Stifford Estate was being demolished in 1996, and the statue is still in Yorkshire today.  For this, and other, reasons, the judge held that Tower Hamlets had “converted” the statue, and that it was too late for Bromley to recover it under the six-year period in the Limitation Act 1980 – so its title had been extinguished.  “Conversion” is a tort under which one person deprives another person of his property without consent.  The judge summarised the relevant circumstances as being:

“(a) The conduct of Tower Hamlets must have been inconsistent with the rights of Bromley as owner;

(b) The conduct of Tower Hamlets must have been deliberate, not accidental;

(c) The conduct must have been so  extensive an encroachment on the rights of Bromley as to exclude Bromley from the use and possession of the sculpture (so going beyond mere interference which may found a claim in trespass) …”

He found that Tower Hamlets’ conduct had satisfied the various tests, meaning that Bromley could no longer assert title to the statue.  Which means that Tower Hamlets now owns it.  And, although he did not say as much, it seems that there is nothing that Bromley can now do about it.  But, in any case, Tower Hamlets is now saying that the statue is not going to be sold after all (see this article in The Guardian on 8 July 2015).

 

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Government to end funding for Green Deal 24 July 2015

The Government announced yesterday in this press release that, in light of low take-up and concerns about industry standards, there will be no further funding to the Green Deal Finance Company.   The Green Deal Finance Company, which describes itself as a “not-for-profit” company set up by industry participants and other stakeholders to deliver the Green Deal, says on its website that is no longer accepting any new applications for Green Deals.

The Government says in a new blog article yesterday (artfully entitled “Changes to green home improvement policies announced today“) that the Green Deal’s framework remains in place should other finance providers wish to come forward to enter the market.  If the Green Deal did not work successfully using Government funding, it seems unlikely that any other organisation would wish to step in to fund it.

The Government says that it will work with the building industry and consumer groups on “a new value-for-money approach”.  However, future schemes must provide better value for money, supporting the goal of insulating a million more homes over the next five years and the Government’s commitment to tackle fuel poverty.

This decision has no impact on existing Green Deal Finance Plans or existing Green Deal Home Improvement Fund applications and vouchers.  The Energy Company Obligation (ECO) will continue to run as planned until March 2017, to provide support to low-income households.

This announcement is applicable only to domestic properties, as Green Deals for non-domestic (commercial) properties have never been introduced.

To be honest, this decision has come as no surprise, given the low take-up of the Green Deal and the current (not-in-any-coalition) Government’s obvious disdain for the energy-saving agenda.  Green enthusiasts have had a bad few weeks.  Last month it was announced that the subsidy scheme for onshore wind farms will be closed from next April, one year earlier than planned, and on 10 July the Government said that it is scrapping the rules that will require zero-carbon homes from 2016 and zero-carbon non-domestic buildings from 2019.

You can read an article about the ending of the Green Deal on the Guardian’s website here.

UPDATE: There was a discussion about the Green Deal on Radio 4’s You and Yours today which you can listen to on iPlayer here (starting at about 15:00).  It’s entitled “Bothies, Rail passenger assistance, Choose what you pay” (no mention of the Green Deal).

Effect on Minimum Energy Efficiency Standard (MEES)

I have not yet seen any discussion of how the end of the Green Deal will affect MEES.  As originally conceived (as set out in this undated Government policy document), MEES relied entirely upon the Green Deal.  The obligation on landlords (domestic and commercial) was to have been to carry out any works that entailed “no upfront cost”.  In practice, that would mean works that satisfied the Green Deal’s “Golden Rule” – that the energy efficiency improvements would pay for themselves in energy-savings over their expected lifetime.  No Green Deal – no need to carry out any energy efficiency improvements.

This rather neat policy worked satisfactorily for domestic properties, but could not be extended to non-domestic (commercial) properties because of the absence (now and in the foreseeable future) of any commercial Green Deal system.  This led to the seven year payback alternative for MEES as it applies to commercial properties.

So, in theory, MEES should still be workable for commercial properties even after the ending of the Green Deal.  But I think that MEES for domestic properties still relies entirely upon the existence of the Green Deal.  So without a Green Deal, is there any future for MEES for domestic properties?  I am not sufficiently familiar with how MEES is intended to apply to domestic properties to be sure of the answer to that question, but I have my doubts.  I am also unclear whether the new procedure (taking effect next year) under which a residential tenant will be able to request consent to install energy efficiency measures at a property will make any sense without the Green Deal.

Please let me have your thoughts.

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Making the law in Wales more accessible 22 July 2015

Two initiatives have just been announced to make the law in Wales more accessible: a Welsh legislation website and a Law Commission consultation.

I lamented in my blog article “England and Wales: becoming increasingly different” on 11 February 2015 that it is extremely difficult to identify those areas where the law in Wales has diverged from the law in England.  It is difficult enough for lawyers in Wales, who are aware of the possibility (or sometimes the inevitability).  It is even more difficult for lawyers in England, who may not be aware of it, or may overlook it.

Clearly, important people read my blog articles (or possibly great minds think alike), as there have been two recent developments that aim to improve the position.

First, the Welsh Government, with the help of Westlaw, has developed a Welsh legislation website.

Law Wales

Cyfraith Cymru

This lists relevant legislation – both primary and secondary – in a number of areas in which the Welsh Government legislates, and provides links to the statutes or secondary legislation on the Government’s legislation website (www.legislation.gov.uk).

There are two minor criticisms.  First, I have noticed, on a quick inspection, that all the legislation is shown in English, even on the Welsh version of the website, and all the links to the secondary legislation are to the English version, even where there is a Welsh version.  No doubt that will be addressed in a future upgrade.  In the meantime, access to a PDF of the Welsh version is just one click away.

Secondly, people may not be aware that while primary legislation is updated on the Government’s website to reflect later amendments, secondary legislation is not.  Being directed to the original version of a statutory instrument is of relatively little use unless you are certain that it has not been amended subsequently.

But these are relatively minor quibbles (particularly for an English-speaking solicitor).   Only when the website is used in real research will it be clear whether or not it is helpful.  I will be interested in hear people’s views on this.  At the very least, it is a solution to the previously unanswerable question of where to start looking to see whether Welsh law has diverged from English law in any particular area.

Law Commission consultation

The other development is at an earlier stage but is potentially much more exciting. The Law Commission has just launched a consultation to consider “the form and accessibility of the law applicable to Wales”.  This is an advisory project, which will make recommendations to the Welsh Government.

The Law Commission points out that the law across the whole of the UK can be difficult for professionals and the public to find and understand.  In Wales, the process of devolution has made things even more complicated.

In particular, it can be very difficult to find and understand the law in devolved areas, as a result of changes to the powers of the National Assembly for Wales and the Welsh Government. There is often confusion over where responsibilities lie.  Functions under many Acts of Parliament have been transferred to the Welsh Ministers, but this will not be apparent in the original Act and it could appear that power continues to lie with the Secretary of State.  The picture is made more complicated by the pace at which significant areas of the law applicable in Wales – such as education, health and housing – are diverging from the law in England.

So the Law Commission is now consulting on how to make the existing law applicable in Wales easier to use and understand.  In the consultation paper, it considers:

  • whether the legislation should be consolidated or whether the Welsh Government should go further, and codify parts of the law;
  • what measures the National Assembly of Wales could put in place to ensure it has effective systems for making law;
  • what processes could be established within Government and the Assembly to allow policy and law-makers to take a more considered view of the law as a whole before making new legislation;
  • whether the Welsh language is embedded into the law-making process so that legislation made in Wales is truly bilingual; and
  • how legislation could be made more accessible to the public;  it considers the need for a free, up-to-date and comprehensive online resource, explanatory notes for legislation, Welsh law text books, and other guidance.

 

Interestingly, some of the issues that are raised are equally relevant to English law (and English/Welsh law, by which I mean the law that applies in both countries).  So it seems to me that for that reason, and also because English solicitors need to have access to the law in Wales, lawyers in England need to look at the consultation document and respond to it.  Don’t think it’s only of relevance to lawyers (and others) in Wales.

The consultation is open until 9 October 2015 – which seems a long way off, but will arrive only too soon.  The consultation papers (in England and Welsh), and summaries in both languages, are available on this page of the Law Commission’s website.

 

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Effect of registering a notice at the Land Registry to protect an agreement for lease 21 July 2015

What is the effect of registering a notice at the Land Registry to protect an agreement for lease?  That was the question answered as a preliminary issue in A2 Dominion Homes Ltd v Prince Evans, decided on 15 July 2015 and so far reported only in summary on Lawtel (subscription needed).

The facts were simple, although the surrounding circumstances are more complicated.  A landowner (L) entered into an agreement for lease with a housing association (H) for the grant of 33 long leases of flats in a block of flats.  The price exceeded £3m and there was a deposit of £1.25m.  H’s solicitors registered a unilateral notice to protect the agreement for lease, as one would expect.

But here is the twist.  Before the leases were granted, L charged the property to a bank (B).  It was agreed that B’s consent was needed to the grant of a lease.  But was B’s consent necessary to the grant of the 33 leases that L had already agreed to grant to H?

No, said Robert Englehart QC, acting as a judge in the Chancery Division.  Curiously, there appears to be no authority one way or the other, but the reason for registering a notice is to confer priority for the purpose of section 29 Land Registration Act 2002. If B’s consent were needed to the grant of the lease, that would mean that the arrangement between L and B would have priority over the earlier, and protected, arrangement between L and H – which is exactly the opposite of what section 29 provides, once a notice has been registered.  So B’s consent was not needed.  H’s notice protected not just the agreement for lease, but also the lease that is to be granted at completion pursuant to the agreement.

This has to be the correct answer, from the point of view of land registration law.  And – happily – it’s the fair answer as well.  According to the Lawtel summary, the judge was also heartened to see that the view was supported by comments in Megarry & Wade “The Law of Real Property” (paras 17-057 and 17-058, since you ask, although I haven’t looked at them yet) – which may not be surprising, given that one of the editors of that work is Charles Harpum, who (as law commissioner at the time) played a significant role in devising the system of priorities in the Land Registration Act 2002.

Click here for the Lawtel summary (subscription required)

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An avalanche of claims against solicitors 15 July 2015

In the last few weeks we have seen a surprising number of cases in which conveyancing solicitors have been alleged to have been negligent.  I have summarised six such cases below.

What can we learn from them?  As seems so often to be the case, it is difficult to see any trend, and equally difficult to establish any simple system to ensure that errors of the kind demonstrated by these cases are eliminated.  Checklists help, of course, as does robust supervision.  Both are easier to talk about than to implement.  And the use of checklists throws up its own problem: people assume that conveyancing can be dumbed down into box-ticking, which is assuredly not the case.

Fryatt v Preston Mellor Harrison [2015] EWHC 1683 (Ch)

F, a developer, was negotiating for an option over a piece of land owned by a company.  For reasons that are unclear, the transaction was restructured into an option over the shares in the company.  The buyer’s lawyer (an experienced legal executive) did not alert the buyer to the additional risk this would entail, as he (the lawyer) did not appreciate that this would give the buyer no interest in the land during the option period (in fact he registered a notice against the property at the Land Registry). The company went into liquidation so the option over the shares was valueless and the liquidator sold the land to a third party.

The court held that the solicitors had been negligent.  However, the claim failed on the issue of causation, for two reasons.  First, the buyer could not show that he would have restructured the transaction if he had understood the risks of taking an option over the shares rather than over the property; secondly he could not show that he would have exercised the option as the development appraisal figures showed that he could not have carried out the development at a profit.

Lawtel transcript (subscription needed)

 

Orientfield Holdings Ltd v Bird & Bird LLP [2015] EWHC 1963 (Ch)

Solicitors acting for a buyer of a very high value property (£25m) in St John’s Wood, London NW8 obtained a “Plansearch” report, which revealed details of proposed transactions in the vicinity including the development of a school nearby.  Inexplicably the firm did not mention this proposed development to the buyer, or provide a copy of the report to the buyer.  This was held to be negligent.

In the event, on discovering the existence of the development the clients failed to complete the purchase, and then sought to recover the half of the deposit that had been forfeited from their solicitors.  They were successful.  The judge said that there had been no requirement to obtain the Plansearch report but, once it had been obtained, there was an obligation to reveal its contents to the client.  Failure to do so constituted negligence —

“… if in fact a solicitor acquires information that may be of importance to a client, then it is the duty of the solicitor to bring that information to the attention of the client.”

BAILII transcript (free)

 

LSC Finance Ltd v Abensons Law Ltd [2015] EWHC 1163 (Ch)

This was a mortgage fraud case.  The solicitor who acted for the borrower failed to spot that she was not who she claimed to be.  The lender was left with a forged mortgage and claimed against the solicitor on the basis that he had undertaken (in standard form) to obtain a first legal charge over the property.  One of the key issues in the case was whether this was sufficient to pass the risk of forgery from the lender to the solicitor.  The court held that it was sufficient – on the facts of the case, which included the particular wording in the lender’s form of undertaking.

In addition, the solicitor was held liable for breach of warranty of authority, in that he was saying that he was acting for the real borrower when he was not.  Again, this was decided on the particular facts in this case.

Obviously, verifying a person’s genuine identity can be very tricky, especially where – as in this case – it appears that the scam involved a man passing off as his wife someone who looked very much like the photograph of his wife in her passport.  No-one likes to enquire in too much detail.  But in this case the solicitor had the opportunity also to check the signature on the mortgage against previous signatures, which he either did not do, or was wilfully blind to the difference.  In the end the fraud was picked up by the Land Registry, which did spot the difference between signatures on the mortgage and on an earlier transfer.

BAILII transcript (free)

 

Luffeorm Ltd v Kitsons LLP  (2 July 2015, Queen’s Bench Division)

Kitsons were acting for the buyer of a public house as a going concern.  The contract proffered by the seller’s solicitors contained no provision restricting the sellers from carrying on a competing business in the neighbourhood after the sale, which the conveyancing partner failed to point out to the client.  Astonishingly, the court held that this constituted negligence, with no explanation as to why this should be the case (particularly as the clients were experienced business people).  In the event, fortunately for the solicitors, the court was not convinced that the buyer would have acted any differently had the advice been given, so no damages were payable.

BAILII transcript (free)

 

Royal Mail Estates Ltd v Maples Teesdale [2015] EWHC 1890 (Ch)

This is a very curious case in which Royal Mail Estates entered into a contract to dispose of land to a company that had not yet been created.  Maples Teesdale, which was purporting to act for the company, signed the contract as agents.  The effect of section 36C Companies Act 1985 (relevant at the time) was that the agents became liable under the contract, “subject to any agreement to the contrary”.  The contract contained the normal provision “The benefit of this contract is personal to the buyer.”  Maples Teesdale argued that this was an agreement to the contrary for the purpose of section 36C.

The court disagreed.  For the exception to apply, there has to be an agreement between the parties by which they intended to avoid the effect of section 36C.  This was not the effect of the wording in the contract in this case.

BAILII transcript (free)

 

Giambrone & Law group action case [2015] EWHC 1946 (QB)

This judgment was handed down last week.  It is 152 pages long and far too long to summarise here.  In brief, it concerns the failure of an Italian law firm (with an office in London) adequately to protect the interests of UK buyers of properties in a proposed development in Southern Italy.  Either the due diligence, or the contractual protections negotiated, or both, proved to be insufficient and the buyers lost their 50% deposits when building work ceased.  The solicitors were held to be liable in relation to certain matters, although claimants will still need to prove their cases individually – and the solicitors say they will be appealing.

You can read about it in this article from the Lawyer (which will require registration first) —

Giambrone claimants win case but face fight for damages payout

The reference to the fight for damages relates to the indemnity insurer taking the view that all the separate claims relating to the sale of properties in this development are to be treated as one event under the insurance policy, which is limited to £3 million.  Virtually all of this amount has already been paid out to claimants in an earlier action who have already settled, so there is no money left to settle the claimants in this action.

BAILII summary (free)

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