Case, Legislation and Article Digest
Compiled by Daniel Dovar and Piers Harrison, Barristers, Tanfield Chambers
Legislation
Commercial
Guarantees
EMI Group Ltd v Prudential Assurance Co Ltd [2020] EWHC 2061 (Ch)
EMI was the guarantor of the original tenant HMV’s liabilities under its lease of the former HMV Store on London’s Oxford Street. When it assigned the lease HMV gave the landlord, Prudential, an authorised guarantee agreement – an “AGA”. By the operation of the provisions in the Lease, EMI guaranteed the AGA with a “GAGA”. EMI sought a declaration that the GAGA was rendered void by s. 25 of the Landlord and Tenant (Covenants) Act 1995.
EMI argued that on the true construction of the lease it was obliged to indemnify not just the tenant but any future tenant. The judge ruled against EMI on the construction issue. Alternatively, even if it had not, the offending words would have been excised by s.25 of the Act, so that the guarantee remained in relation to HMV only and was therefore still valid. It was possible to remove words and save the guarantee as long as words did not need to be imported or the lease emasculated by their removal. Secondly, it was not invalidated by the lease providing that the guarantee could be re-imposed if HMV were to assign and then at some future point take the lease back. This was not what the lease, as properly construed, provided for.
A third point concerned s. 24 which requires that, on an assignment of a lease, the tenant’s guarantor is released “to same extent” as the tenant. EMI argued there was not equivalent treatment of guarantor and tenant because Prudential could only require HMV to give an AGA if it was reasonable, but if it decided to demand an AGA from HMV, EMI automatically gave the GAGA. The judge held that the focus of the wording "to the same extent" was on the fact that the guarantor would be released when the tenant was released, not on the terms which required the AGA to be entered into.
Rights of Entry
Rees v Windsor-Clive (As Trustee of the St Fagan's No 1 and No 2 Trusts) [2020] EWCA Civ 816
The Court of Appeal was asked to construe rights of entry in a lease. The context was that certain farmland was let; there was a prospect of development, and the landlord wanted access to the land to carry our surveys and other activities. What was permitted by a right of entry was a question of fact and degree. It was a question of interpreting the clause in question in its context. If it was reasonable to do so the right of entry could include leave equipment on the land for a particular purpose.
One of the smaller issues in the case was whether there was sufficient evidence before a judge on a particular issue relating to bat detectors. Lewison LJ noted that there was material before the judge that showed that the bat detectors were a proprietary product called Anabat, and “even a cursory search of the internet will find the proprietor's website with a product description and picture”. He held that was a matter of which the judge could take judicial notice.
Pubs Code
Ei Group Plc v Clarke [2020] EWHC 1858 (Ch)
The High Court gave permission to appeal against the decision of an arbitrator in a statutory arbitration under Part 4 of the Small Business, Enterprise and Employment Act 2015 ("the 2015 Act") and the Pubs Code etc. Regulations 2016 ("the Pubs Code"). The judge considered that the arbitrator made an obvious error: section 42(3)(b) of the 2015 Act does not require a comparison between the tied lease and the proposed lease to determine whether a particular term would leave the tenant worse off than under the existing tied lease. It was wrong in law to regard differences between the two as a benchmark for assessing whether what was proposed was reasonable.
Electonic Communications Code
Arqiva Services Ltd v AP Wireless II (UK) Ltd [2020] UKUT 0195 (LC)
The UT determined several issues under the Code. The outcome of the legal issues was as follows:
(i) A tenancy at will did not confer rights under the old Code and was not a subsisting agreement.
(ii) In that case the Tribunal did not have jurisdiction to impose an agreement on the parties under paragraph 20 of the Code. That conclusion followed from the Court of Appeal's narrow view of the structure of the Code in Cornerstone Telecommunications Infrastructure Ltd v Compton Beauchamp Estates Ltd [2019] EWCA Civ 1755. The judge noted that this conclusion was at odds with the explanatory notes and wondered whether the Court of Appeal had taken a “wrong turn” in that case, but ultimately felt bound to apply the reasoning of the Court of Appeal.
Rent Review Arbitration Procedure
Eric Wright Group Ltd v Manchester City Council [2020] EWHC 2089 (Ch)
A landlord appealed under the Arbitration Act 1996 from a preliminary award made in a rent review arbitration. It was said that the arbitrator wrongly made the award without permitting the landlord to file and rely on relevant evidence. That this was a serious irregularity, being a failure to act fairly and impartially and giving each party a reasonable opportunity of putting their case in accordance with s.33 of the 1996 Act and that had the landlord been allowed to rely on that evidence, there was a real prospect that the award would have been favourable to them. The appeal was dismissed as the evidence should have been advanced earlier and the parties had already agreed on a submissions-based approach. Accordingly, there was no serious irregularity.
COVID Procedure
TFS Stores Ltd v Designer Retail Outlet Centres (Mansfield) General Partner Ltd [2020] EWCA Civ 833
The stay imposed by CPR PD 51Z applied to appeals as they were proceedings for possession under CPR Pt 55.
Residential
Enfranchisement
Deritend Investments (Birkdale) Ltd v Treskonova [2020] UKUT 164 (LC)On 25 The Upper Tribunal allowed an appeal from a decision of the FTT where the latter had determined relativity outside Prime Central London (“PCL”) by relying on the five non-PCL graphs of relativity in the RICS 2009 report on relativity. The Tribunal endorsed the use of the Savills and Gerald Eve 2016 graphs where there is no transaction evidence, notwithstanding that the subject of the valuation is outside PCL.
Service Charges
Point West GR Ltd v Bassi [2020] EWCA Civ 795
The Court of Appeal gave important guidance on the proper exercise by the FTT of its power of review. The primary purpose of the power to review is to avoid an unnecessary appeal to the UT, where the FTT has made an obvious error of law. In this context an "error of law" would undoubtedly include a case in which the FTT had reached a factual conclusion which had no evidence to support it; or which was contrary to the only reasonable conclusion on the evidence. But as the UT held in Vital Nut Co Ltd v HMRC [2017] UKUT 0192 (TCC) , a review is not an occasion on which the FTT can reconsider the whole case. The purpose of the review is clarificatory. The process is intended to give the FTT a second chance to provide adequate reasons for its decision without the inconvenience that might be involved were the Upper Tribunal to allow a reasons challenge and then have to remit the case. The FTT should refrain from seeking to justify its decision on other, even better, grounds or from seeking to defend its decision in advance from an attack that is anticipated in an appeal.
But if, having considered the grounds of appeal the FTT is satisfied that that one or more of the grounds are likely to succeed, it may set aside its decision (or part of its decision) and re-decide the matter. That may require the FTT to promulgate a decision based on different grounds in relation to that part of the decision that it has set aside.
Retirement Lease Housing Association Ltd v Schellerup [2020] UKUT 0232 (LC)
The terms of the subject leases did not permit the recovery of the notional cost of providing accommodation for a resident warden in an apartment owned by the landlord
Right to Manage
Assethold Ltd v 63 Holmes Road (London) RTM Co Ltd [2020] UKUT 228 (LC)
This was an appeal against a dismissal of a landlord’s challenge to the RTM company’s claim to acquire the right to manage. An appeal was allowed as the FTT had given the landlord no opportunity to respond to the RTM Company’s evidence and had not considered further argument put by the landlord. Further the RTM Company had been wrong to tactically fail to disclose documents which it knew it would later deploy in advance of its case. That was a failure to further the overriding objective. Whilst the appeal was allowed, the UT was sceptical as to whether there was any substance to the landlord’s case and so gave them 14 days to put forward their submissions on their substantive case.
Eastern Pyramid Group Corp SA v Spire House RTM Co Ltd [2020] UKUT 199 (LC)
Section 86 of the Commonhold and Leasehold Reform Act 2002 states that a notice of withdrawal must be given to the landlord and each qualifying tenant of a flat contained in the premises. In this case the UT held that as a matter of construction such a notice was given to the landlord. It was not given to each qualifying tenant as it should have been but that failure did not invalidate the notice (Natt v Osman [2014] EWCA Civ 1520 applied and followed).
Q Studios (Stoke) RTM Co Ltd v Premier Grounds Rent No. 6 Ltd [2020] UKUT 197 (LC)
The premises the subject of the RTM claim were a purpose-built block of studio accommodation containing 292 studios. The studios were let on 250-year leases to lessees who sub-let them to students. The main question was whether the studios were “flats”. Fancourt J held that each studio was a flat. Whether a particular unit was a "flat" depended on what, objectively, the premises were constructed or adapted for use as and did not entail the question of whether it was the occupier's home.
Forfeiture
Marchitelli v 15 Westgate Terrace Ltd [2020] UKUT 192 (LC)
A lessee of a flat appealed against a finding that she was in breach of covenant in respect of the flat lease by reason of permitting the use of the flat as a brothel. The UT held that there was evidence sufficient to establish that the lessee's flat was being used as a brothel but that the FTT had made no express finding that the lessee had permitted or suffered the use of the property for prostitution. A determination of a breach under s.168(4) required the same degree of transparency as the requirements laid down for a valid s.146 notice in Akici v LR Butlin Ltd [2005] EWCA Civ 1296. The matter was remitted to a differently constituted panel to consider the unanswered questions.
Rent repayment order
Rhodes v Mannering [2020] UKUT 207 (LC)
The appellant lessees appealed the refusal of the FTT to make a rent repayment order on the grounds that the property was a house in multiple occupation requiring a licence under the Housing and Planning Act 2016, and that the respondent was committing the criminal offence of managing or being in control of it when it did not have a licence. The appeal succeeded as the FTT failed to make its own decision on the evidence as to whether an offence had been committed. The matte was remitted to the FTT.
Break Clauses
GKN Aerospace Services Ltd v Duncan Investments Ltd [2020] 7 WLUK 56
On a proper construction of the lease, the tenant had served a valid break notice.
Company Law
Houldsworth Village Management Co Ltd v Barton [2020] EWCA Civ 980
A member of a tenant owned management company of a residential blcok sought details of the register of members of that company under s.116 of the Companies Act 2006 in order to call a meeting, with the aim of removing the directors and managing agents. The company resisted providing the details on the basis that the request was made for an improper purpose, in particular that the removal of managing agents was not a matter dealing with corporate governance. It was said that was motivated by the member as a leaseholder rather than as a member of the company. The Court of Appeal disagreed, given that the company’s purpose was to manage the block, it was not possible to create a clear dividing line between member and leaseholder.
Possession Proceedings
Jarvis v Evans [2020] EWCA Civ 854
Under the Housing (Wales) Act 2014, a landlord must be licensed under that Act to be able to serve a notice under s.8 of the Housing Act 1988. In this case, the fact that the landlord was not licensed meant that the s.8 notice served was invalid.