litigation « Painsmith Landlord and Tenant Blog

17 February, 2012 • 10:45 0

Security for landlords

From the 1st of this month the Land Registry launched Form LL which allows landlords to register a restriction for free against the title of their home when they do not live at the property. The restriction is designed to help prevent forgery by requiring a solicitor or conveyancer to certify they are satisfied that the person selling or mortgaging the property is the true owner.

Property is usually the most valuable asset people own. It can be sold and mortgaged to raise money and is therefore an attractive target for fraudsters. The properties most vulnerable to fraud are usually empty, tenanted or mortgage-free. To help prevent forgery, absent owners can ask the Land Registry to enter a Form LL restriction on the title.

This is something that landlords that are abroad or far from the tenanted property should consider and agents are asked to consider mentioning this to their clients.

The cynics out there are probably thinking that there is another reason why the Land Registry has released this practise note and it is to do with the compensation they have to pay out when something like this happens however it’s easier to register a restriction than seek compensation when you are abroad.

Filed under: England & Wales, FLW Article, comment, consumer protection, guidance, litigation

13 February, 2012 • 16:55 0

Money Claims- Changes to the rules

From the 19th March 2012 all claims for money only started in the County Court and not already subject to special procedures under the CPR will now be known as “designated money claims”. All of these claims must now be sent to the County Court Money Claims Centre which is based in Salford. The claims will then technically be issued out of the Northampton County Court.

For these money claims the Business Centre in Salford will be the administrative office. When you issue your proceedings you will be required to specify which is your “preferred court” for dealing with matters if the claim gets transferred. The usual rules on transfer will still apply so the claim will if against an individual be transferred to his or her home court. This centre will deal with all matters up to and including the filing of allocation questionnaires. Only at that point will the claim be transferred out.

This is a significant change and reduction in the work which local County Courts will handle in the first instance. Generally for many people issuing money claims themselves it may be easier to simply use Money Claims Online to deal with making the claim rather than paper applications. We wait to see what if any further effects these changes may have on the Courts. You should be aware that if you are contemplating enforcing via the High Court (e.g. by Sheriffs Officers) you may be better advised to issue your claim out of the local High Court District Registry although the rules on financial limits still apply.

Filed under: England & Wales, FLW Article, comment, litigation

13 February, 2012 • 10:24 0

Can Freeholders charge for Consenting to Underletting?

Most long residential leases today contain some provision about underletting. Often the clause in the lease will require the Leaseholder to obtain the prior consent of the Freeholder or their managing agent. It is when this consent is sought that problems can arise.

As ever the starting point should be the lease. Many leases have a specific provision indicating something along the lines of ” not to underlet without the consent in writing of the Landlord such consent not to be unreasonably withheld”. In those circumstances an application should be made to the Landlord prior to each and every subletting. Recently the Lands Tribunal in the cases of Holding And Management (Solitaire) Ltd v Norton and Bradmoss Ltd, Re 10 Meadow Court considered whether Landlords were entitled to make a charge in such situations.

The LVT at first instance had determined that the Landlord could not recover costs. Consideration was given to Section 19(1) of the Landlord and Tenant Act 1927. The Lands Tribunal made clear that in their opinion Section 19(1) allowed a Landlord as a reasonable condition of granting Consent to require payment of their reasonable costs. Further the Lands Tribunal went on to confirm that in its opinion such a charge would then be a variable administration charge and the LVT had power under Schedule 11 of the Commonhold and Leasehold Reform Act 2002 to determine the reasonableness of the charge. The answer is therefore that the Landlord can recover these costs subject as ever to the lease terms.

At this stage the Lands Tribunal has requested submissions as to the reasonableness of the charges proposed in these various cases and we await further guidance. Clearly Freeholders will have to justify each and every charge they make and to be able to explain how the charge has been calculated both as to the particular development and their own organisation. Hopefully some further guidance will be offered as this is an area which many investor leaseholders often feel that Freeholders simply use as a mechanism to charge high fees to simply profit from the freehold rather than to cover any reasonable costs which they may have incurred. A case of watch this space ….

Filed under: England & Wales, FLW Article, comment, legislation, litigation, long lease, procedure

6 February, 2012 • 10:18 0

LEASE INTERPRETATION: WHAT DO COURTS AND TRIBUNALS LOOK AT?

We have over the past few months referred in our articles to the fact that the starting point for LVTs and Courts in leasehold disputes is the lease itself.

Often residential leases were drafted many years ago and are in a format which even to professionals can be difficult to assess but what are the steps that the Court and LVT go through to determine the terms?

Initially they will go through the document. For a long residential lease all of the terms must be in writing. Some terms will be very clear and easily interpreted. This will often be the case in respect of terms over payment of ground rent and insurance. Certainly for any lease which has changed hands over recent years it should be in a format covering all the major areas such as rent, insurance, service charge, repairs etc as conveyancing solicitors should be checking that the lease complies with Council of Mortgage Lenders (CML) requirements. These requirements require these fundamental terms to be covered in a clear and satisfactory manner.

What is often more complicated is the extent of a clause. This can be particularly true of service charge clauses. Many of these clauses are written in a very general manner with some kind of “sweeping up” clause whose function is meant to be to cover everything not expressly stated. Be warned they do not always work!

The general principle is that clauses are given a meaning which a reasonable person would understand and words are given there ordinary meaning. Courts will not tie themselves in knots in carrying out an interpretation even if the natural meaning gives a strange result. If this is the case other remedies may be open to the parties such as rectification if they can fulfil the grounds. The Courts and LVT will not imply terms into an agreement and will expect all the terms to be present in the document relied upon.

If then a clause is still unclear and or could be interpreted in a number of ways generally it will be decided in a way most beneficial to the person not seeking to rely upon that clause. This is due to the fact that the burden of proof will be upon the person relying upon the clause to prove that meaning. It is for this reason that “sweeping up” clauses often do not achieve the desired effect.

Usually the terms are clear but it is vital that proper consideration is given to the terms. Anyone buying a lease (or a freehold) should understand what the rights and responsibilities under the lease are. Certainly as can be seen in the published LVT decisions often in service charges Freeholders and their Agents try and argue that it would be perverse to not allow them to recover management fees, accountancy fees etc and whilst a Panel may have sympathy if the lease does not cover this the hands of the LVT are bound.

Again early consideration of the contractual terms can prevent disputes and if in doubt parties would be well advised to take specialist advice to avoid costly Court or LVT cases.

Filed under: England & Wales, FLW Article, comment, litigation, long lease, procedure

3 February, 2012 • 10:55 0

How to prepare for an LVT Hearing in respect of service charges

For many people having an LVT hearing can be a daunting prospect and there first experience of dealing with a Court or Tribunal particularly in an unrepresented capacity.

For the purpose of this blog post we are specifically referring to applications made under Section 27A of the Landlord and Tenant act 1985 although the principles apply to all LVT cases.

These applications can be made by either the Freeholder or a Leaseholder and the purpose is to determine whether a charge is payable and the reasonableness of the same. In making its determination the LVT will have regard to the terms of the lease and then whether the statutory processes have been complied with.

Whoever makes the application is required to complete an application form. Copies of the forms and guidance notes may be obtained from the Justice department website.

As part of the application you should specify exactly what it is you are seeking. It is important to make this clear so that the LVT is clear what is being sort. Often if the Freeholder this will be the whole of particular years and if the Leaseholder they may wish to object to specific charges. This should be set out clearly and specify which service charge years are being referred to.

The application should have attached to it a copy of any relevant lease and other relevant documents. If it is the Freeholder we would recommend this should include:

• Any and all service charge demands with summaries of tenants rights etc as appropriate
• Copy of relevant lease
• Copy of any Consultation documents etc

If it is the Leaseholder then they should attach:

• Copies of demands received
• Copy lease
• Copy of any consultation notices you have received
• Copies of any correspondence disputing the sums

Remember that the LVT when they first look at the application will want to understand what the claim is about. This will assist the LVT in issuing Directions or listing for a Pre Trial Review (PTR).

If there is an oral pre trial review the LVT will want to use this to identify the issues and then issue clear guidance as to what should happen. It is crucial that both sides consider the case from this point of view. The LVT will not be deciding the case then but making sure all is in order for a hearing.

It is vital that parties follow the Directions given. The time scales are there to help all parties. You should read the Directions carefully and make sure you understand what is required. In particular the fact that you need to supply copies of all documents you will look to rely upon for proving your case. Often the Directions are detailed and very specific for the matters in dispute particularly if there has been an oral PTR.

Generally the LVT cannot refuse to admit documents (even if late) but must give everyone ample opportunity to consider. This could result in a hearing being adjourned if there is a late submission and possibly an application being made that such behaviour should result in a costs penalty (the LVT can order costs of up to £500 a party). If a party attends at a hearing and tries to submit late documents the LVT will consider whether it can give a short adjournment for the other party to consider the documents but the hearing itself could be adjourned. The LVT will not be happy with submissions on the day unless there is a very good reason given the effect this can have on the LVT being able to decide the matter.

It is vital that when preparing for a hearing that a proper bundle is prepared. This should include an Index and the documents should all be paginated in order and placed in a folder. These bundles must be supplied in good time to the LVT office so that the Panel has a reasonable opportunity to consider before the hearing. This will assist the LVT in considering the matter and whilst the panel should not draw any adverse inferences from a late submission they are only human. Late submissions and badly prepared bundles will not assist your case! It is worth asking someone to consider your bundle and submissions to see if a person who knows nothing about your case can properly understand the points you are making and can follow clearly the documents and submissions you want the LVT to understand.

Remember that at the hearing often the LVT will raise there own questions and points and so even if the other side has not raised something the LVT may still do so itself. This is particularly true of making sure that demands comply with the various statutory requirements and or consultation when required.

The LVT panel will usually not have met until the day of the hearing but will have been sent out the bundles etc. If they have received these in good time they will be better prepared for dealing with the case. The LVT will normally be proactive in managing the case in front of them and this is assisted by timely receipt of documents in good order. The panel is there to decide the matter and a case is always helped by good preparation on the part of the parties.

If in doubt about anything then you should refer to the Clerk at the LVT dealing with your case. Whilst they cannot give you legal advice they can help with understanding what is required or that you need to do.

LVTs are used to having parties appear in front of them unrepresented and pride themselves on being user friendly. For both Freeholders and Leaseholders they can effectively deal with matters in a timely way particularly with a well presented case.

We are always happy to advise and if necessary represent Freeholders and Leaseholders with all such applications.

Filed under: England & Wales, FLW Article, comment, litigation, long lease, procedure

18 January, 2012 • 21:30 9

All very frustrating, but what are the options?!

Painsmith has recently encountered the Kafkaesque world of the tenancy deposit protection schemes, specifically the DPS and its new rules relating to the release of the deposit following a court hearing.

DPS is currently refusing to release deposits where the courts have not specifically ordered it and they have changed their rules to reflect the same. Under rule 29 (a) DPS will only release the Deposit if the Court Order specifically refers to the Deposit and how much to be paid out to the tenant.

Several of our landlord clients have obtained a possession order on the grounds of rental arrears and are finding it impossible (or very nearly impossible….or just very expensive) to get the deposit released, even where the contract specifically allows for the deposit to be applied against rental arrears.

Of course it is always open for the tenant to agree the release of the deposit to the landlord, but once possession is obtained many tenants lose interest in co-operating with their former landlord.

In the absence of an agreement from the former tenant the landlord is left to apply to the scheme to ask for the release of the deposit. We believe this should simply be a matter of drawing the scheme’s attention to the court order for possession and rent arrears and the clause in the contract, which allows the deposit to be used against rental arrears, where applicable.

However on more than one occasion recently a landlord’s application to the DPS for the release of the deposit has been refused and the applicant referred to clause 29 of the terms and condition ( see above) and informed that if they want DPS to release the deposit to them they must either arrange for the Court Order to be amended or a Third Party Debt Order to be obtained.

Concurrently, courts are refusing to make orders that would satisfy the DPS rules with many judges refusing to address the issue of the deposit on the grounds that it is a matter for the scheme and they do not want to usurp the jurisdiction of the Adjudicator.

You will recall that part of the point of these schemes was to take the matter of deposit handling away from the courts and instead use an alternative dispute resolution, that is the Adjudicator. However landlords find themselves facing courts that refuse to deal with the deposit because it is a matter for the scheme, and the scheme refusing to release the deposit without a court order so the whole thing becomes farcical.

Painsmith has historically been involved in deposit protection reform and we would suggest that between the schemes and the courts there needs to be some clarification.

Filed under: England & Wales, FLW Article, comment, consultations, deposits, Housing Act 2004, litigation, possession

28 December, 2011 • 11:12 3

What should I think about before I buy my freehold? The Cons.

For many Leaseholders getting together with fellow Leaseholders to buy the freehold of the building they occupy is seen as the end of problems with freeholders and controlling their own destiny. Whilst this is of course true before going down this major step leaseholders should consider if and why this is the right route for them.

The motivation for many is to rid themselves of a freeholder who they perceive is not offering good value for money and service and often the fact that all the leaseholders need to act to extend their leases. Undertaking a collective enfranchisement can often be achieved at a similar cost to that of all extending their leases particularly when legal and valuation costs are thrown into the mix. All seems simple and many groups at this stage press on with the purchase.

The issues generally arise sometime down the line when the glow of having purchased has worn off. Simply because you have bought your freehold does not mean that all problems go away. In our experience freehold purchases tend to be driven by a small group of leaseholders who put in enormous amounts of time and effort. Sometimes after the initial euphoria they find that they do not wish to (or can’t) give as much time to the freehold as before. As a freeholder you remain bound by the terms of the leases particularly with regards to service charges and repairs. Whilst often on completion the leaseholders will all have extended their leases (typically to 999 years) the service charge and repairing covenants usually remain the same. The freeholder is still governed by the statutory rules governing residential leases and must comply with all of these obligations including in relation to consultation. This year we have seen a number of LVT decisions reiterating this and making clear that there will be no let off for leaseholder owned companies.

As a result some of the imagined costs savings cannot be achieved as often a managing agent for practicality will still be required as well as having to go through all the processes. Certainly we would always recommend to any group considering enfranchisement that they should look to appoint managing agents to ensure that the day to day running complies fully with all of the legal requirements. We have seen over the past decade the increase in rules and regulations to ensure that individual leaseholders are protected but this has driven up costs as the work involved has increased.

Increasingly we are also being asked to advise both individual leaseholders and freeholds where the parties find themselves in dispute. This can be as simple as someone not having the money to pay the service charge and fellow neighbours having to take Court action to recover monies. The other extreme is in small blocks where the freehold is owned by named individuals and one is looking to sell and one or more of the other Owners will not sign the necessary transfer paperwork causing a sale to fail. Consideration needs to be given as to how you feel you will get on as a collective group and not just with your current leaseholders but potentially with subsequent Owners.

We have seen instances where the repercussions are so great that fresh collective enfranchisement claims have been made. Now with the lower qualifying majority of 50% it is possible that buildings can enfranchise and re-enfranchise again and again. We have seen a situation where the leaseholders of a small block has enfranchised on 3 occasions! The fees spent on such an exercise must be immense for little real gain to the leaseholders individually.

Whilst none of the above should necessarily put anyone off buying their freehold it is important that everyone enters this with their eyes wide open. Under the legislation there are various other routes that can often be adopted such as Right to Manage and undertaking bulk lease extensions either by the statutory route or negotiation. Commercial freeholders are alive to these issues and many will negotiate over items. There can be a benefit in having a completely separate (and we deliberately do not say independent!) freeholder. Whilst for most groups who enfranchise the process is an unqualified success story with many real and perceived benefits as with most transactions there are risks and it is important that all participants understand these.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, long lease

19 December, 2011 • 11:36 0

Mediation: what is it all about?

Mediation and Alternative Dispute Resolution (ADR) have become buzz words used by litigators over the past few years. Sadly however many people have simply paid lip service to these concepts and not properly engaged with them to make the best use of the opportunities which they provide for settling disputes.

Mediation itself comes in two forms. Evaluative Mediation which is where the mediator looks to advise the parties as to the merits and strengths of their case. This is similar to arbitration. More prevalent is Facilitative Mediation. This will be the focus of this blog post.

This type of mediation is a process whereby an independent party tries to assist the parties in reaching some form of agreement. The mediators role is to listen and adapt the process according to the requirements of the parties given it is their process.

Generally prior to the mediation the parties will have chosen the mediator and agreed a mediation agreement and then provided a mediation bundle. The mediators job is not then to rule on the merits or otherwise of the parties position but obviously it is useful for them to have an overview of the respective positions.

Mediation is a completely confidential process. This means that whatever is said should remain at the mediation and it is exceedingly rare for mediators to give evidence at a trial. Also it is not the mediators job to advise upon the settlement or to write the same up. All of this is the job of the parties jointly and they must satisfy themselves as to what they are doing. Usually the mediator will start the process by explaining all of this and then inviting the parties to each have a say.

This process of itself can often be very useful as it allows the parties to explain their position and often to vent emotions they feel. Whilst this can be a difficult process doing this in a controlled environment can of itself help to move the matter forward. Once initial statements have been made the mediator will then consider whether the parties should break into individual sessions. That being said there is no right or wrong as it must dependant upon the wishes of the parties.

The mediator may then move backwards and forwards between the parties. Sometimes inviting them back to joint sessions to discuss matters and also in closed sessions sometimes helping the parties test their cases. The mediator is often best doing their job when they appear to be like a ghost and are saying little!

Hopefully some common ground can be found and the parties can agree something. This will generally be drafted by the parties and they will sign this. Remember this agreement can cover anything not just what a court could or might order. This of itself is one of the great benefits for commercial disputes. A confidential settlement can be reached and relationships maintained.

Mediation does not prevent disputes but it does offer parties a chance to resolve them speedily and effectively. For the process to really work all the participants including the lawyers need to understand the process and the benefits.

If you want advice on mediation or require a mediator we would be happy to help. We have trained mediators who can provide a fixed price service to help resolve disputes.

Filed under: England & Wales, FLW Article, comment, litigation

13 December, 2011 • 15:39 2

Can the freeholder recover costs incurred in pursuing me at the LVT as service charge?

The above question is one which frequently arises when a claim has been made by a freeholder to the LVT to determine the reasonableness of service charges.

Obviously it is always open to the tenant to request that the LVT in determining the application will exercise it’s discretion and make an order under Section 20c Landlord and Tenant Act 1985. If such an order is made the LVT can order that no costs will be added to the service charge accounts or limit the amount/proportion that may be recovered. If the freeholder is generally successful in their application often the LVT will not make such an order and so then the costs may be recoverable.

As various articles have said it is then important to look at the terms of the lease. Unless the lease allows recovery the freeholder will not be allowed to recover these costs.

Recently the Court of Appeal had to consider the interpretation of the lease in Freeholders of 69 Marina, St. Leonards-on-Sea –Robinson, Simpson and Palmer v John Oram and Mohammed Goorun [2011] EWCA Civ 1258 .

In this case the freeholder had brought proceedings in the LVT to determine the reasonableness of the service charge and subsequently looked to recover the costs. Proceedings were issued in the County Court who determined at first instance that the costs were recoverable under clause 3(12) of the lease which said:

“pay all expenses including solicitors’ costs and surveyors’ fees incurred by the landlord incidental to the preparation and service of a notice under section 146 of the Law of Property Act 1925 or incurred in or in contemplation of proceedings under section 146 or 147 of the Act…. and to pay all expenses including solicitors’ costs and surveyors’ fees incurred by the landlord of and incidental to the service of all notices and schedules relating to wants of repair of the premises…..”

The District Judges findings were upheld at first instance by the Circuit Judge but the leaseholders appealed to the Court of Appeal. The appeal was dismissed as the Court of Appeal determined that clearly the Landlord had incurred costs in undertaking repairs etc and under section 81 of the Housing Act 1996 an application to the LVT is a necessary pre condition of the forfeiture process.

An interesting decision making clear that the Court will give a broad interpretation to these clauses to allow Landlords to recover costs

Filed under: England & Wales, comment, legislation, litigation, long lease, procedure, service charges

4 December, 2011 • 16:01 2

Back to Basics 4: Section 21

A section 21 notice is not a notice to quit. Many people that call the helpline refer to a section 21 as a notice to quit even today and it’s not, so stop it!

A section 21 notice is used by the landlord when he wishes to gain back possession of the property at the end of an assured shorthold tenancy, pursuant to a break clause or even where the tenant is in the periodic period of the tenancy. There are two types of section 21 notices that a landlord can serve on a tenant. The section 21(1)(b) notice and the section 21(4)(a) notice.

Although both notices refer to section 21 they should not be confused with each other especially given that have very different notice requirements. If the wrong notice is served and relied upon then it can delay or hinder possession proceedings.

Depending on whether the tenancy is either of a fixed term or a statutory periodic will depend on which notice a landlord will need to serve.

The Section 21(1)(b) Notice – Fixed Term:

A section 21(1)(b) is served during the fixed term of a tenancy. A landlord serving this notice must give not less than two months notice stating that he requires possession. The notice should specify a date “on” which the landlord requires possession. The notice cannot expire before the end of the fixed term unless the landlord is relying on a break clause in the tenancy agreement. Therefore a notice should not be dated to expire before the last day of the tenancy as this would make the notice invalid and whilst it could be dated to expire on the last day of the fixed term there are many out there that believe that dating the notice to expire on the last day makes the notice invalid. We at PainSmith do not.

Other issues that need to be noted are that tenants have 6 months security of tenure and so a landlord can not issue court proceedings on a section 21 until the tenant has been in residence for 6 months. The other issue is that any notice served pursuant to a break clause should comply with the provisions of that break clause and then finally if the notice is served in the fixed term to expire in the periodic period it’s still a section 21 (1) (b) that needs to be served.

The Section 21(4)(a) Notice – Periodic Tenancies:

A section 21(4)(a) is served after the fixed term has expired when the tenancy is a statutory periodic tenancy. A landlord serving this notice must give two clear months notice stating that he requires possession and the day on which the notice expires must be at the end of a period of the tenancy. The section 21(4)(a) notice often causes the most confusion amongst landlords due to the fact that if the wrong date is specified on the notice then it becomes invalid. To avoid this pitfall it is vital that a landlord looks at the tenancy agreement to assess what the tenancy period is.

Some of you are aware that unlike a section 21(1)(b) a date need not be specified on the notice and instead the ‘saving provision’ can be used following the decision of Lower Street Properties Ltd v Jones however, rather oddly we still find some of you are dating the notice. Why complicate things?

Filed under: England & Wales, FLW Article, comment, guidance, Housing Act 1988, litigation, possession, procedure, tenancy agreements

14 November, 2011 • 15:25 2

Is it reasonable to expect tenants to pay large service charges?

The Upper Chamber Lands Tribunal recently considered whether in determining if costs have been reasonably incurred account should be taken of the financial impact on tenants and whether major works should be phased (Garside and others v. RYFC Ltd and others [2011] UKUT 367). The case involved an estate of 5 blocks with 54 flats which as a result of historical neglect had a manager appointed by the LVT after an application by some of the leaseholders.

The Manager appointed set about arranging for outstanding works to be carried out. However a number of the leaseholders became concerned as to their ability to pay due to the significant increase in service charges these works would cause.

The leaseholders agreed that the scope of works was acceptable but queried whether it was necessary to carry out the bulk of the works at once. They suggested that the works should be phased to spread the costs over a longer period. The costs were likely to be in the year 2010 £7,600 or more and it was said that some Leaseholders would be forced to sell their flats.

The LVT rejected the argument that consideration should be given to the individual leaseholders ability to pay in determining the reasonableness of the costs. The LVT determined given there was no argument over the reasonableness of the costs, the specification or the ability of the Manager to recover the costs in advance and therefore in the LVTs opinion section 19 of the Landlord and Tenant Act 1985 only related to the reasonableness of the works and costs and not the ability of the leaseholders to pay.

The leaseholders appealed to the Upper Chamber Lands Tribunal. HHJ Robinson determined that the 1985 Act did not limit what is reasonable. In her opinion “reasonable” should be given a broad meaning in accordance with Ashworth Frazer v. Gloucester City Council [2001] 1 WLR 2180. Thus in her opinion the financial impact and whether works could and should be phased was a material consideration in determining whether costs have been reasonably incurred under section 19 of the 1985 Act.

The Judge said that a wide consideration had to be given of all the issues including the urgency of the works. These were all matters of fact and judgment for the LVT to determine. She did emphasis that the LVT could not alter a tenants contractual liability to pay whatever the hardship.

The lesson here is that if Leaseholders are faced with consultation over major works and they are concerned over the ability to pay they must raise this. This would be a legitimate matter to raise and for the person undertaking the works to have regard to and whether the works can be phased. Certainly something all property managers should be alive to particularly when drawing up specifications of works.

Filed under: England & Wales, FLW Article, comment, litigation, long lease, service charges

24 October, 2011 • 10:04 4

The Tenants Bankrupt!

We have come across two decisions from earlier this Summer dealing with the problem of what to do when faced with a Tenant who is made bankrupt or enters into a Debt Relief Order.

Generally anyone who is made bankrupt or obtains a Debt Relief Order is subject to certain moratoriums on proceedings and the recovery of money which they owed prior to the Court Order making them bankrupt etc. This means that landlords can find themselves with a tenant who has run up arrears which they then cannot recover save for making a claim in the insolvency process under which it is likely they will only recover a small proportion of the monies.

In Sharples v. Places for People Homes Limited (bankruptcy) and Godfrey v. A2 Dominion Homes Limited (debt relief order) the Court of Appeal gave consideration as to whether a Landlord may bring Possession proceedings relying on arrears as a ground for possession not withstanding that the Tenant was subject to some form of insolvency procedure.

The Court determined that Landlords could bring proceedings relying on the rent arrears in the usual way if the ground could be made out then the insolvency of itself would not prevent the court making an Order for Possession in these circumstances. What the Court did say is that the Court could not make a monetary Judgment and nor could it suspend any Order on terms requiring the arrears to be paid.

Whilst often a Landlord may be best advised to rely on Section 21 if at all possible obviously this is not always available. Landlords will therefore still have the option of Section 8 proceedings.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, possession, procedure, rent

18 September, 2011 • 17:53 4

Homelessness and what this means to Landlords…..

We are often faced with questions from Landlords and Agents about information they have received from Tenants about homelessness and the advice given by local authorities.

Often a Landlord/Agent will have had a good relationship with a tenant but for whatever reason the Landlord requires back the property. Assuming therefore that the Tenant occupies under an assured short hold tenancy generally (subject to the appropriate rules) the Landlord can obtain back possession by serving a valid Section 21 Notice upon the Tenant. This is a non fault ground and the Tenant should vacate at the expiry of the Notice.

Many tenants, particularly those in receipt of state benefits, will approach the Local Authority to see if they can access any form of social housing. Generally local authorities owe duties to people such as those with children or who suffer from some form of disability or illness. All too often these people will receive advice that they should simply remain in the property until such time as the Landlord has applied to the Court, obtained a Possession Order and then looked to enforce the same. The Tenant then finds themselves in the invidious position of having to explain this to the Landlord/Agent and explaining that if they do not comply with this advise then the Local Authority is likely to owe them no (or at best a limited ) duty to rehouse.

This of itself can lead to what previously was a good relationship breaking down but the Tenant often has little choice. Whilst arguably Local Authorities do not have to wait until an Order is made or a bailiffs appointment fixed for most this is the policy they have adopted. The duty potentially arises to rehouse if they believe that the Landlord does have a genuine intention to obtain back possession but most in our experience will not enter into dialogue with the Tenant or the Landlord/Agent until the Court progress is underway. Sadly this policy is difficult for a Tenant to challenge.

With the changes to Housing Benefit it is likely that Agents and Landlords will come across this far more frequently. It is perhaps worth trying to understand the position Tenants find themselves in. If they remain in the property the Local Authority may rehouse them (although some do not even properly assess the Tenants rights and claim until the proceedings are underway) but if they simply leave then the Tenant will receive no support. For Landlords and Agents the way forward is perhaps to engage with local authorities and Councilors to get them to look again at the policy although sadly given the shortage of accommodation most Local Authorities are unlikely to change their policies.

Filed under: England & Wales, FLW Article, comment, guidance, legislation, litigation

6 September, 2011 • 17:36 5

Squatters

On the 2 September 2011 Judge Fiona Henderson ordered Camden City Council to comply with a freedom of information request made by a member of the Advisory Service for Squatters. Judge Henderson when making the order stated that it was in the public interest to release the information, adding that there was a strong public interest in bringing empty properties into use, that squatting not was itself a crime and there was not a direct link between squatting and crime.

The council has 28 days (29 September) to comply with the Information Tribunal.

In response Mr Grant Shapps the Housing Minister, said rather than trying to prevent the anti-social and unfair practice of squatting, this judge is instead insisting that Camden City Council publish a ‘squatter’s road map’ – which in other areas has led to the numbers of squats doubling. I think this is madness, really. It’s clearly opposite to the expressed direction of [Government] policy.”

The Government has a £100 million fund to help councils bring empty homes back into use. About 80,000 homes are vacant across the capital, many of them under local authority control. Mr Shapps said: “I also want to shut the door on so-called ‘squatter’s rights’ once and for all, and end the misery, expense and hassle that far too many people have had to endure for too long, which is why we are consulting on making squatting a criminal offence.”

We have at PainSmith noted that squatting appears to be on the increase where landlords and even tenants have gone away on holiday. Obtaining a possession order can take a few weeks and as such precautions should be taken which could include hiring a house sitter or even having a friend visit your home every so often. If however squatters do get in and they refuse to leave upon a reasonable request then proceedings should be initiated.

Reasonable force is only an option for a Protected Intending Occupier, that is a tenant under the Rent Act 1977 or Housing Act 1988 and Displaced Residential Occupiers that is homeowners who are being prevented from occupying the property by squatters. For anyone else, including landlords, force is simply not an option despite what you might read elsewhere!

Filed under: England & Wales, FLW Article, comment, litigation, possession, regulations

31 August, 2011 • 12:12 0

Section 8: Back to Basics

From time to time it is important to go over old ground. It can be easy to lose track or just need a quick reminder of the basics of possession cases.

Section 8 notices, as I’m sure you are all aware, can be used as a vehicle to gain possession of the property whilst at the same time obtaining the rent arrears that may have developed. There are a number of different situations that can trigger the requirement of a Section 8 notice which could be scrutinised in an incredible amount of detail. With regards to this blog entry, I am going to focus more specifically on the mandatory and discretionary grounds and how they differ in the courts eyes in particular with relation to the more common grounds for possession i.e. grounds 8,10 and 11.

The Housing Act 1988 s.7(3) stipulates that when the court feels that any of the grounds listed in Pt 1 of Sch.2 of the 1998 Act are satisfied then possession must be granted for that property. If this is compared to Pt 2 which substitutes the phrase ‘must be’ with the far less convincing ‘may be’ then it starts to become clear why having mandatory grounds is infinitely more desirable that simply pinning hopes on discretionary grounds. As a general rule we as a firm only advise issuing proceedings on mandatory grounds unless the evidence is particularly strong on discretionary, as we have found that judges tend not to be too receptive to the idea of handing over possession of the property to the landlord and making the tenant potentially homeless, unless there is overwhelming evidence against them or the mandatory grounds have been met.

The most commonly used of the grounds for possession are 8, 10 and 11. Ground 8 is mandatory whereas 10 and 11 are discretionary. If for example the tenant at this point pays some of the rent arrears to the landlord, enough to just about drop below the 2 month minimum requirement (if it was a monthly rental period) to claim ground 8, it would mean the claim would be resting on discretionary grounds which, as explained earlier, are far from reliable, particularly in matters involving rent arrears. The discretionary grounds in cases such as this service the role of supporting the mandatory ground and are normally too weak by themselves to satisfy possession criteria. As soon as the mandatory ground is lost the case for the landlord is generally lost along with it.

This is not always the case. However, if a mandatory ground can be relied upon it is preferable to do so rather than assuming possession will be granted on discretionary.

With discretionary grounds, on the making of an order for possession, the court can postpone the order for as long as the court sees fit. In this period the court will normally issue certain conditions with regards to the payment of the rent arrears as well as any other conditions that the court deems applicable. If these conditions are followed, the court can discharge or rescind the possession order if it sees fit. Can you see the pattern here? The level of discretion available to the court is illustrated by the repeated use of the term ‘if the court sees fit’. The only discretion available to the courts when it comes to mandatory grounds is a delay from the usual 14 days to a maximum of 6 weeks in cases of exceptional hardship, but this in itself has a high threshold in which to satisfy.

In light of the above costs need to be considered and proceedings against a tenant to gain possession is not an insignificant sum. To risk this sum on the courts discretion, particularly when the order for possession would result in the tenant being made homeless, may not be the best course of action.

This blog has been drafted in response to a comment. Thank you for your continued support Valerie.

Filed under: England & Wales, comment, costs, Housing Act 1988, legislation, litigation

26 August, 2011 • 11:56 0

More on service charges….

Peter recently asked what is the best way to recover Insurance Premiums having written to the Lender and not received any reply and should he go to the County Court or the LVT?

The situation is not clear cut. Both methods could be adopted and both have pluses and minuses.

Leasehold Valuation Tribunal (LVT)

You could apply to the LVT for a determination of the reasonableness of the charge. The LVT will normally issue Directions and there will be a hearing. At the hearing the panel will review and use their own expert knowledge to assess the reasonableness whether the Tenant attends and disputes or not. There is no procedure for a default ruling if the tenant does not take part and thus the process can take longer than obtaining a Judgment. The benefit is that if you fear a defence or problems there are no real costs sanctions and if you wish to deal with the matter yourself some people find the process easier than the Courts

County Court

You are entitled to apply for a monetary Judgment. You can today do this on line via the Money Claims website https://www.moneyclaim.gov.uk/web/mcol/welcome. The Court will then issue the claim and serve this upon the Defendant. They will then have 14 days to indicate if they wish to defend. If no defence you can seek a Judgment in default but if defended you will then have to deal with the tenants defence and if it relates to the reasonableness of the charge the matter is likely to be transferred to the LVT to rule upon. Assuming the amount claimed is less than £5000 this matter will be dealt with as a small claim and generally no legal costs (or just a very small amount ) are recoverable save where the tenant has lodged some form of counter claim for more than £5000.

Once you have a Judgment from the Court or a determination from the LVT the mortgage lender should then pay or you can take steps to forfeit the lease.

Please remember which ever route you follow ( and my personal preference would be the Court since you can obtain a default Order) you must ensure you have strictly complied with the terms of the lease and statute governing service charges. If in doubt it is always best to check as otherwise you could find that the sums are not payable. In particular I would highlight that the LVT may say that the sums are reasonable but may not be payable yet if the Landlord has not complied with the Lease terms etc. Generally the Courts will expect freeholders to fully understand the lease and the law governing these matters!

This blog has been submitted in response to a comment from a reader. Thank you for your continued support Peter.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, long lease

23 August, 2011 • 13:23 0

The Swimming Pool

In Grimes v Hawkins the High Court held that a Claimant that dived into a private pool and became tetraplegic did not have a claim against the homeowner.

It turned out that the Claimant was an 18 year old girl who had been invited to a party at the Claimants house. The Claimants were away and their daughter stated that she invited 5 people but in fact 20 turned up.

The court determined that the Claimant was a lawful visitor and that she also had consent to use the pool. The Claimant had been swimming in the pool and had dived into the middle when the unfortunate accident occurred.

The Claim was brought both under the Occupiers’ Liability Act 1957 and in common law negligence. Thus the defendant owed a duty to the Claimant to take such care as in all the circumstances of the case was reasonable to see that the Claimant was reasonably safe in using the premises for the purposes for which she was invited or permitted by the occupier to be there.

In its discussion the court held that there is always risk in swimming and diving, in any pool. Even where an expert diver dives into a purpose built diving pool his dive is not free from risk. Much depends on the diver’s technique, the angle of entry and so on. It is well known that diving always carries with it a risk of injury (particularly to the head or neck) if the dive is badly executed, or carried out in water that is too shallow to accommodate it. None of this is specialist knowledge. Every adult of normal intelligence knows it. The Claimant in this case knew it.

Accordingly the pool was not unsafe for diving. The court had no doubt that some mature adults faced with a group of young adults in high spirits, some of whom had had too much to drink, would send them all home rather than allow any of them into a swimming pool. But that is not to say that the duty owed to the Claimant under the Occupier’s Liability Act 1957 required the Defendant to put the pool out of bounds that night. The Defendant was not required to adopt a paternalistic approach to his visitors, all of whom were adults, all of whom were making choices about their behaviour, exercising their free will.

The court therefore did not accept that it is incumbent on a householder with a private swimming pool to prohibit adults from diving into an ordinary pool whose dimensions and contours can clearly be seen. It may well be different where there is some hidden or unexpected hazard but there was none here.

The court therefore held that Defendant was not in breach of his duty to the claimant under the Occupier’s Liability Act 1957.

We thought this case would be interesting for our readers as we often get asked about a landlord’s liability when a pool is included in the demise. We hope that this case reassures most of you.

Agents and landlords are however advised to ensure that the tenancy agreement includes clauses which places a positive obligation on the tenant to ensure that all children near the pool are monitored and the pool is used appropriately.

Filed under: England & Wales, FLW Article, comment, legislation, litigation

23 August, 2011 • 12:34 0

Service charges: what do you need to know?

Over the past two decades the rules dealing with service charges have changed completely and there now exists a fairly comprehensive set of rules which as can be seen in cases reported from the Leasehold Valuation Tribunal (LVT) can catch out the unwary.

The starting point for all Property Managers and Leaseholders must be the actual Lease itself. It is no good to say “Well good practice is this…” if the lease does not allow or includes a particular mechanism this must be followed. One of the things which many leases contain is some sort of Certification mechanism. If this is included In the lease unless and until this process is followed in full the service charge will not be payable and unless done in a reasonable period of time may not be payable at all! As to what is reasonable this will always depend upon the actual circumstances but usually a common sense interpretation will be given.

Next are the various statutory rules governing service charges and the collection of these. Some of the main items can be summarized as:

1. All demands must contain a Summary of the Leaseholders rights. Without this no valid claim has been made.
2. Leaseholders are entitled to inspect accounts and all receipts and invoices.
3. Leaseholders are entitled annually to a copy of the insurance policy.
4. Any works which will cost any one leaseholder more than £250 must be subject to a detailed consultation following a set formula
5. If there are any costs associated with works and if for any reason the sum cannot be demanded within 18 months details of the amount etc and the fact it will be claimed must be notified to the leaseholder.

The above gives a brief synopsis of some of the major pitfalls that lie in service charges and the recovery.

Today most disputes about residential service charges even if begun via the Court will normally be actually adjudicated on by the LVT. This is a specialist property Tribunal. The LVT has jurisdiction to deal with most disputes as to the reasonableness of service charges and can make set offs although it does not have jurisdiction to deal with breach of covenant claims. Generally the process before the LVT is similar to the County Court although not always as formulaic. The LVT will issue Directions and then list a matter for hearing. At the hearing there will usually be a panel of a Chairman (usually a lawyer), a Surveyor and sometimes a third lay member. The panel will often inspect the property before the hearing and then go on to hear evidence before usually retiring to then give a written decision within about 6 weeks of the hearing.

Parties should be aware that on occasion even if issues are not raised by a party the Tribunal may raise them such as the service of appropriate consultation notices and Summary of Rights and Obligations. Property Managers should always have available these documents when they attend an LVT and be able to show that they have complied. Without it the consequences can be significant as the LVT seems to be taking a tough line on compliance. What is often said to be the real benefit of the LVT is that generally it has no powers to award costs. In certain circumstances it can award a party its costs up to a maximum of £500. It is also able to order that a particular party should pay to the other side any fees paid to the LVT and also to adjudicate on whether the costs may be included as a future service charge expense. It is worth noting that many commentators believe it is likely that the jurisdiction of the LVT will be increased and the rules on costs will be changed probably giving the LVT powers to award up to £5000 per party.

It is vital that all Leaseholders and Property Managers give careful consideration as to the lease and the rules. In particular Owner Managed blocks (e.g. where the Leaseholders have purchased their own freehold) do need to be aware that these rules apply equally to them and there is no opt out simply because in effect the freeholders and leaseholders are one in the same. If in doubt you should look to take advice at an early stage to prevent problems later!

Filed under: England & Wales, FLW Article, comment, litigation, long lease, regulations

9 August, 2011 • 21:32 0

Yes, they’re back…

in court arguing over a deposit again!

Suurpere entered into an assured shorthold tenancy agreement with the landlords Nice and Anor for a period of 6 months on the 9th January 2009.

For a number of reasons the relationship between the parties began to deteriorate and the landlords served a Section 21 and issued possession proceedings on this notice which was in fact defective.

The landlords did not lodge the deposit with a scheme pursuant to Section 213 of the Housing Act 2004 until the 20 July 2009. On the 10 August 2009 the tenant issued for this breach, which included the landlords’ failure to provide the “prescribed information”.

On the 14 August 2009 the tenant left the premises allegedly due to the landlords unlawful harassment. The deposit was returned to her in full on the 1 September 2009. In their defence the landlord’s confirmed that the tenant had received her rent in full and that their failure to register the deposit was a “innocent technical breach”.

The county court judge applied the decision in Draycott and held that because the landlord had registered the deposit before the tenant issued proceedings, the sanctions in Section 214 (4) (3 times the penalty) did not apply. The tenant therefore appealed.

The landlords claimed that pursuant to the Hashemi case because the tenant “vacated” on the 14th August 2009 the court had no power to make an order under Section 214 (4).

However, the Appeal court held that in Hashemi the date on which the tenancy ended was clear but in this case the tenant did not accept that her tenancy had been determined because she brought a claim for wrongful eviction, claiming that she was forced to vacate as a result of the landlord’s harassment. Therefore Hashemi did not apply.

The tenant relied on Tiensia and argued that due to the landlord’s failure to register the deposit with a scheme and provide the requisite information in the prescribed form she was entitled to an award of a sum of money equal to 3 times the amount of the deposit. The Court of Appeal agreed with this and awarded 3 times the deposit because the tenancy had not been lawfully determined.

Filed under: England & Wales, FLW Article, deposits, Housing Act 2004, litigation

15 July, 2011 • 12:24 0

Read the Lease!

In Akorita v Marina Heights (St. Leonards) Limited a long leaseholder refused to settle service charge demands because the freeholder failed to comply with a term of the lease when submitting the demand.

Akorita’s main argument was that service charges are only payable when the amount to be paid has been properly certified by the freeholders surveyor, in this case no such certificate had been provided.

The clause in question read:

“To reimburse to the Lessor a sum (hereinafter referred to as “the Service Charge”) equal to one seventh (or such other proportion as may be determined by the Lessor’s Surveyor depending upon the number of Units eventually using the access drains or other communal parts) of the costs expenses outgoings and matters mentioned in the First Schedule hereto the Service Charge to be due and payable on demand and the amount of the Service Charge to be ascertained and certified by the Lessor’s Surveyor acting as an expert and not as an arbitrator once a year up to the Thirtieth day of June in each year (or if such ascertainment shall not take place on the Thirtieth day of June then the said sum shall be ascertained as soon thereafter as may be possible as if such sum has been ascertained up to the Thirtieth day of June aforesaid) commencing on the Thirtieth day of June”.

The Upper Tribunal held that on the proper construction of the above clause it is a condition precedent to any liability of Akorita to make payment either on account of service charge or by way of a final balancing service charge payment once Marina Heights has obtained a certificate. Therefore in the absence of a certificate Akorita had no service charges to pay and until the certificates are obtained the liability will remain nil.

Given that Marina Heights had lost the appeal the Tribunal also made an order preventing them from recovering any costs through any future service charge demands pursuant to a clause in the lease. This decision was also no doubt based on the fact that Marina Heights had insurance cover for the costs.

I think the title says it all and its Friday so no sermons.

Filed under: England & Wales, FLW Article, litigation, long lease

12 July, 2011 • 10:02 0

Should they have got away?

In R v Q a legal loophole, no tenant will be pleased to hear about has been revealed.

Q either owned or managed a property on behalf of his niece. The Property was divided up into bedsit style accommodation and it was accepted that Q wanted the tenants to leave.

Q had served a 2 month Notice to Quit however this notice was defective and the tenants refused to leave until Q obtained a court order. Upon the expiry of the notice Q’s son visited the property along with 5 men and threatened the tenants with a knife and subjected them to other types of abuse which included turning off the utility supplies.

The harassment by Q’s son continued but there was no evidence to show Qs involvement in any of the activities. It was crucially for this reason that the case was dismissed by the Crown Court. However the local authority pursued the matter up to the Appeal Court.

The Court of Appeal considered the primary question to be whether Q was guilty of an offence under section 1 (3A) of the Protection from Eviction Act 1977 on the footing that he was vicariously liable for the acts of his son. The Court held that no because on its true construction section 1(3A) requires the actual participation of Q and in this case there was no room for vicarious liability.

S1(3A) reads:
Subject to subsection (3B) below, the landlord of a residential occupier or an agent of the landlord shall be guilty of an offence if—
(a)he does acts likely to interfere with the peace or comfort of the residential occupier or members of his household, or
(b)he persistently withdraws or withholds services reasonably required for the occupation of the premises in question as a residence,
and (in either case) he knows, or has reasonable cause to believe, that that conduct is likely to cause the residential occupier to give up the occupation of the whole or part of the premises or to refrain from exercising any right or pursuing any remedy in respect of the whole or part of the premises.

The court held that the phrase ‘does acts’ suggests a requirement of actual participation by Q and more importantly that there is a requirement of knowledge or having reasonable case to believe that Q’s son would take the action he did for Q to be found guilty under the above section. Neither of these elements had been established by the prosecution and therefore the Appeal was also dismissed.

The Court of Appeal emphasised that with this decision they were not suggesting that offenders may not on appropriate evidence, be convicted as a secondary party in a joint enterprise or incitement, or indeed as a co-conspirator. However without the evidence linking the landlord to the harassment the decision in this case will no doubt be followed by the lower courts.

Filed under: England & Wales, FLW Article, comment, litigation

22 June, 2011 • 09:14 0

Trespasser

In Eaton Mansions v Stinger, Stinger appealed against a High Court decision that he had trespassed on the roof of a building when he installed some air conditioning units.

Eaton Mansions is the long leaseholder and Stinger was the sub lessee (it has now sold its interest). In 1980 Stinger had been granted permission to install air conditioning units. In 2007 and 2008 Stinger then installed further air conditioning units without obtaining the consent of Eaton or the head landlord Grosvenor Estates.

Numerous meetings were held by all three parties and their representatives about the consent for the new units, correspondence also went back and forth but Stinger still proceeded to install the units and claimed that Eaton had unreasonably withheld consent. Eaton argued that it had not unreasonably withheld consent because it was likely that Grosvenor would have refused consent and that would have then put Eaton in breach of their lease with Grosvenor.

When looking at the facts and the terms of the lease itself the Court of Appeal held that Stinger had in fact no right to install anything on the roof with or without the consent of Eaton because there was no provision in the lease for such an installation. The court also held that it would have been unreasonable for Eaton to refuse consent if Eaton was aware that Grosvenor would have consented to the units. But here Stinger knew that consent from the freeholder had not been obtained and yet Stinger still demanded consent from Eaton and then went ahead and installed the units in any event.

Grosvenor had indeed entertained Stingers proposals for the units but at best they were only prepared to offer an irrevocable licence for the units. They did not in their conduct indicate that a licence would be forthcoming and as such Eaton were entitled to be cautious when dealing with the matter.

It was therefore held that Stinger had not shown that Eaton had unreasonably refused consent for the new units and as such the appeal was dismissed.

Many agents are now managing blocks of flats such as this and are not familiarising themselves with the lease when making a decision on the running of the building. The lease is the contract between any freeholder and leaseholder and it must be referred to prior to any decisions being made to avoid expensive litigation such as this. It was due to the fact that Stinger obtained consent in 1980 that it automatically assumed that it was entitled to consent in 2007 when the lease made no provisions for such units.

Filed under: England & Wales, FLW Article, comment, licensing, litigation, long lease

6 June, 2011 • 21:35 2

Does it form part of the structure or not?

In Grand v Gill, the landlord had a damages and costs award made against him for disrepair.

Grand entered into an assured shorthold tenancy on the 21 November 2004. The tenancy continued thereafter on a statutory periodic tenancy. Grand occupied the property with her daughter who is now over the age of 18.

Grand made a claim against her landlord, Gill, who had a long lease interest in the property, for harassment, personal injury, breach of the quiet enjoyment covenant and disrepair.

The main concern here was the disrepair. Grand’s daughter began sleeping in the lounge due to the damp and mould in her room. There was a problem with water ingress due to a damaged roof and poor guttering. However these issues did not form part of the landlord’s demise. Finally the gas-fired boiler broke down frequently and worked inefficiently. Damages for the disrepair amounted to £5,250 with damages for the breach of quiet enjoyment standing at £350.

Grand appealed. Grand’s legal representative argued that the award for the damp failed to take into account the fact that Gill was not just in breach of his obligations in relation to the heating problems which contributed to the damp, but also the omission to repair damaged plaster.

Expert reports had been obtained and they concluded that there was damaged plasterwork in the lounge due to penetrating dampness. The report suggested that Gill needed to hack off the damaged plaster and replace. Gill did not undertake these works. If this plaster formed part of the structure of the property Gill was indeed liable for this both pursuant to the terms of the agreement and Section 11 of the Landlord and Tenant Act 1985.

The Court of Appeal held that plaster is an essential part of the creation and shaping of the ceiling or partition wall, which give a dwellinghouse it’s appearance and shape. Plaster is a constructional finish to Walls and ceilings, to which the decoration is applied. Plaster is not a decorative finish and Gill is accordingly liable.

The damages were not referred back to the lower court because they were minor in the grand scheme of things. Therefore the court assessed damages in a summary manner at £750 to replace the £600 that was awarded for the damp.

The issue of whether plaster is structural, and therefore part of the section 11 obligations, or decorative and not has been floating back and forth in the higher courts for some time without a clear answer. In the judgement itself many cases are considered but this is the first case where the issue seems to be clarified and landlords are now held accountable for damaged plaster. In many cases this is irrelevant because the landlord assumes an obligation in the lease for plaster work among other things. However, this is not always the case.

While the damages were not increased by much it is the general principle that matters. The concept that anything which is to act as a support for paint or other decorative material is structural could be applied to a number of other areas and could have far reaching effects.

Filed under: England & Wales, FLW Article, disrepair, litigation, long lease

5 May, 2011 • 07:39 0

Changes to Court Procedures

The UK coalition government has published proposals to reform the way cases are handled in the county courts. In respect of housing litigation, the proposals include retaining the £1000 small claims limit to housing disrepair cases and the provisions of the protocol mandatory for rent arrears and mortgage possession cases.

The deadline for responses to the consultation is the 30 June 2011.

The protocol for rent arrears applies to social landlords, such as local authorities and housing associations, not to private landlords.

The protocol reflects the guidance on good practice given to social landlords and private registered providers in the collection of rent arrears. It recognises that it is in the interests of both landlords and tenants to ensure that rent is paid promptly and to ensure that difficulties are resolved wherever possible without court proceedings.

Its aim is to encourage more pre-action contact between landlords and tenants and to enable court time to be used more effectively. The protocol requires specifically for the landlords to contact a tenant as soon as possible after the tenant’s rent arrears accrue, to discuss the arrears, the tenant’s financial position and his or her entitlement to benefits.

The protocol no doubt leads to suspended possession orders in order to allow the tenant the opportunity to repay the arrears however, given the current problems we have with court backlogs this is a welcome consultation as it is hoped that it will assist with reducing the number of claims issued.

Filed under: England & Wales, FLW Article, comment, consultations, litigation, possession, rent

28 April, 2011 • 15:03 1

Mobile Homes and Article 8!

In Murphy v Wyatt the Court of Appeal Wyatt brought in a mobile home to replace a dilapidated caravan after her partner Mr Barrett died. The caravan was located on just under 2 acres of rough pasture which the Wyatt’s partner used for his livery business. The landlord served a notice to quit in 2009.

Mr Barrett entered into a oral weekly tenancy in 1975 and in 1979 he moved a caravan onto the plot and began sleeping in the same from time to time. His relationship with Wyatt began in the mid-80s and in 1989 Wyatt moved in with Mr Barrett. In 1996, Mr Barrett then ceased using the land for his livery business.

Mr Barrett then sought a certificate of lawful use for the caravan in 2002 in order to claim Housing benefit. Upon Mr Barrett’s death in 2002 Wyatt continued living in the caravan and paid rent with Murphy’s consent.

The caravan was then replaced in 2007 with a mobile home. Wyatt failed to obtain planning permission and failed to obtain Murphy’s consent. The mobile home was on the same original location but was slightly larger than the caravan. Again the certificate of lawful use was obtained.

The issue before the Court was therefore did Wyatt have security of tenure under the Mobile Homes Act 1983.

The court held that Wyatt did not and found in favour of Murphy. The reasoning for the courts decision was that the 1983 Act could not apply to a tenancy where planning permission was sought after the tenancy term began. The court held

“it would be a little surprising if the 1983 Act protected an occupier, who, after entering an agreement, brought a caravan onto the premises and lived in it, simply because there was nothing in the agreement which precluded his from doing this, unless there has always been planning permission for such a use…”.

The court also held that they did not believe that the 1983 Act could apply to more land than the land on which the mobile home is to be sited plus any garden or other amenity land. If the Act applied to land other than the pitch that was for the tenants use this would run into “serious conflict” with the legislation protecting business and even agricultural tenants.

Wyatt sought permission to appeal but was refused. The court did however state that if any further applications for possession of this site are made the courts may need to consider Article 8 of the European Convention on Human Rights.

Whilst we can not fault the court for its reasoning it is unfortunate that the issue of Article 8 was dealt with so swiftly and briefly. With the influx of cases recently suggesting that Article 8 is only applicable to social landlords there are fears among private landlords that the scope of Article 8 is going to be extended and some certainty would have certainly been welcome.

Filed under: England & Wales, FLW Article, comment, legislation, litigation, planning, tenancy agreements

20 March, 2011 • 23:40 0

Cancellation Notice

In a recent case in Watford County Court an agent sought his commission for the successful sale of a property in October 2009.

The Defendant defended the claim on the basis that no Cancellation
Notice in the prescribed form pursuant to the Cancellation of Contracts in a Consumer’s home or Place of Work etc Regulations 2008 had been served.

In response to this defence the agent was relying on schedule 3 of the Regulations which excludes certain contracts from the Regulations. One such contract is for the sale or rental of immovable property.

However, the court held that the contract entered into by the parties was not a contract for the sale or rental of immovable property but one of marketing and as such schedule 3 did not apply.

The court also held that this was a commission contract and therefore caught by the Regulations. Therefore where no Cancellation Notice had been provided then pursuant to clause 7(6) the contract is unenforceable.

The agent’s case was dismissed.

Thank you to Mr Kennedy who brought this case to our attention.

Filed under: England & Wales, FLW Article, consumer protection, fees, legislation, litigation, regulations

18 March, 2011 • 23:07 2

Unlawful Eviction

We very rarely get asked questions about the possible consequences of an unlawful eviction where there has been violence. This is possibly a good thing or possibly a situation that agents stay clear of.

However, some recent cases have prompted this article only to provide some guidance to those that face such a situation.

In Boyle v Musso, Mr Boyle, began withholding rent due to some disrepair at the property. Rather than carrying out the repairs pursuant to the landlords section 11 repairing obligations, the landlord attended the property with another man and assaulted Mr Boyle.

The landlord was convicted of assault occasioning actual bodily harm and upon failing to reply to Mr Boyle’s civil claim for unlawful eviction also had a default judgement entered against him.

The judge noted that Mr Boyle had healed relatively quickly but he was left suffering from depression and panic attacks. The judge therefore found that Mr Boyle was left with serious and debilitating continuing anxiety as a result of the attack and awarded:

£15,000 for trespass to the person, to include injury to feelings;
£2,000 damages for finding that the dispute was for withholding rent;
£4,000 for breach of the quite enjoyment covenant;
£750 for loss of belongings;
and then finally the return of the deposit and three times the amount of the deposit for failing to register it with a tenancy deposit scheme.

In Strydom v Fowler, Mr Fowler fell into rent arrears. His landlord issued possession proceedings but while Mr Fowler was on holiday he changed the locks. When Mr Fowler forced his way into the house he found his landlord standing there with an iron bar. Mr Fowler ran away, but broke his heal when climbing over a gate. Mr Fowler therefore counterclaimed for breach of the quite enjoyment covenant and trespass.

The court awarded the landlord rent arrears and damages for dilapidations totalling £2,600. The court then went to assess Mr Fowler’s claim and stated that when making an assessment the court considers the difference of the value of the property occupied and unoccupied and reached a figure of £12,500. However the court then considered Mr Fowler’s actions and held that he had been unreasonable when failing to respond to the landlord for 5 weeks and failing to respond to the text messages the landlord had sent him in an attempt to resolve the situation.

The court therefore awarded Mr Fowler:

A reduction of the £12,500 to £2,500;
£3,000 for breach of the quite enjoyment covenant; and
£1,250 for trespass.

Whilst each case is decided on it’s own merits the courts are taking quite a hard line with landlords that decide to take matters into their own hands without consideration for the tenants rights. Whilst the landlord will often feel aggrieved about the length of the legal process when attempting to obtain possession they are reminded that the figures displayed above are a possible consequence of a heat of the moment decision.

Filed under: England & Wales, FLW Article, comment, disrepair, litigation, Unlawful Eviction

7 March, 2011 • 17:22 2

Enforcement of possession orders

Landlords and their agents often breathe a collective sigh of relief following a successful court hearing for a possession claim. The hearing often represents the apex of many months of preparation and relief that the tenants, in contravention of their agreed obligations, will finally be ordered to leave and make good their breaches. However relief at this stage is premature. Tenants, even if they remain after the date a court orders them to leave, still have rights and there is a further process to embark upon to remove the tenant and pursue them for their debts.

Firstly evictions of tenants in England and Wales can only be carried out either by county court bailiffs or, if proceedings are in the High Court, high court sheriffs. The warrant can only be applied for once the date for possession on a court order has passed. Bailiffs will then attend the property to evict tenants and in most cases are successful in doing so, although police officers and further court proceedings for contempt of court can be necessary.

Pursuing debts:

If you have a money judgment against a tenant who subsequently fails to pay what is ordered, you have three options:

1. Pursue your former tenant(s) for the monies owed. However, further costs, delays and court proceedings may not be a viable option.
2. Drop the matter entirely and write off the lost monies against your tax liabilities.
3. Wait for a few months before doing anything. Your judgment remains valid for the next 6 years and the financial status of the former tenant(s) may change in that time.

Pursuing debts in England and Wales are inherently difficult and this should be borne in mind before undertaking the time and further costs incurred in pursuing the debtor. The first step is to find a forwarding address for the tenant. If the tenant has left no forwarding address then enquiry agents can be instructed to ascertain their whereabouts.

Once a forwarding address has been obtained the following enforcement options are available:

An attachment of Earnings:

Apply to the court for an order permitting the regular deductions from the debtors monthly/weekly wage.

Third Party Debt Order:

Apply to the court for an order which permits the release of funds by a third party. The third party is usually a bank or building society.

Charging Orders:

This option is only available if the Debtor has property and usually ideal where you have a Guarantor. The charge does not extract money from the Debtor or the Guarantor but secures the debt against property which is then discharged when the property is sold, just like a mortgage.

Bailiffs/Sheriff:

The Bailiff or Sheriff is instructed to attend the Debtor’s home and seize goods if the Debtor does not agree to pay the debt or enter into a dialogue with regards to a payment plan.

Partial Settlement:

Sometimes debtors are prepared to make a single lump sum part payment in full and final settlement of the outstanding debt which may be more economic than accepting small instalments over a lengthy period.

Given the inherent problems with recovery, it is in the landlord’s best interest to obtain a guarantor where possible to maximise the chances of recovery. Where a guarantor is not a possible option then landlords are advised that taking a commercial view on recovery can be the most pragmatic and cost effective option.

Filed under: England & Wales, FLW Article, comment, costs, litigation, rent

18 February, 2011 • 10:09 11

Meanwhile back at Deposit protection HQ….

While we await the outcome of Potts v Densley & Pays in the High Court, followers of deposit protection litigation might be interested in a case with similar facts to Potts, but a different outcome in the county court.

Gemma Shepley v Majid Yassen, Tameside County Court, Thursday 13th January 2011 (Unreported), has been spotted and commented on by Nearly Legal.

To recap, in Potts v Densley & Pays the main issue is, can the tenant sue for the usual penalties where the landlord has protected the deposit after the end of the tenancy but before the court hearing and failed to provide the prescribed information?

The Shepley v Yassen facts mirror Potts: the deposit was not protected during the tenancy, and after the end of the tenancy the tenants issued proceedings (in May 2010) for the usual remedies. The deposit was protected in August 2010 with DPS. But the prescribed information was never served on the tenants.

The (County) court held that protection after the end of the tenancy was not acceptable. The cases of Draycott and Tiensia were distinguished on the basis that in those cases the deposits had been protected late but had still been placed into schemes before the tenancy ended.

NL comments that this “seems to be absolutely correct. If a landlord can put the deposit into protection after the tenancy has ended then it makes a total nonsense of the legislation and almost encourages a “wait and see” attitude.”

Painsmith agrees. Currently no-one is sure of their position when a deposit is protected after the end of the tenancy and this is disconcerting for both landlords and tenants. With the Potts v Densley & Pays judgment still not handed down, landlords, tenants and lawyers are indeed having to wait and see, whether we want to or not. A High Court decision that deposits cannot be protected after the end of the tenancy would be welcomed.

Filed under: England & Wales, FLW Article, deposits, Housing Act 2004, legislation, litigation

16 February, 2011 • 13:49 0

Consultation Works

Where landlords of long leases (more than 21 years) wish to carry out works they must consult the leaseholders before they are entitled to a contribution towards these works. If the consultation process is not followed pursuant to s.20 Landlord and Tenant Act 1985 the landlord’s ability to recover monies is capped at £250 per leaseholder. The landlords can apply for a dispensation from these consultation requirements however this is subject to the LVT’s approval.

In Daejan Investments Ltd v Benson and others, Daejan sought to recover some £270,000 of service charges from five leaseholders in respect of the works to the common parts of the building containing their flats. However, unfortunately for Daejan, the LVT found that that it had failed to comply with the consultation requirements.

Specifically the LVT held that Daejan failed to:

1. set out a summary of the observations received and the landlord’s response to the initial notice;

2. ensure that the estimates were available for inspection at a place for the period specified in the notice;

3. give 30 days to enable leaseholders to make observations on the estimates.

The LVT held that it would be wrong to grant the landlord dispensation from the consultation requirements because it considered that the leaseholders had been prejudiced by not seeing the full estimates and having a shortened opportunity to make observations. This is despite the fact that the leaseholders had not identified what comments they would make, if any, if given the opportunity. Daejan appealed to the Upper Tribunal (Lands Chamber).

The Upper Tribunal dismissed the appeal and held that the LVT had to focus on the scheme and the purpose of the consultation requirements and any financial prejudice to the Landlord was irrelevant. However, the Tribunal confirmed that the extent to which the leaseholders were prejudiced or disadvantaged was relevant and a common sense approach should be applied when making any findings.

Daejan appealed unsuccessfully to the Court of Appeal. The Court of Appeal reiterated most of what was said by the LVT and emphasised that following the consultation process in the proper manner was the essence of the statutory scheme and curtailing consultation was a serious failing that could cause significant prejudice.

Whether or not and in what circumstances the LVT will grant dispensation, retrospectively or otherwise, is not clear following this judgment. However, where there has been no prejudice to the leaseholder due to a minor breach or where works have been carried out in a genuine emergency dispensation may be possible.

Filed under: England & Wales, FLW Article, legislation, litigation, long lease, procedure

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