Commercial Property Law Update

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1 Commercial Property Law Update vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents Planning Ahead David Bird, Partner vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents 1

2 The amended NPPF New NPPF published in July 2018 Local Plans must be reviewed at least every 5 years. 5 year land supply LPAs can apply for confirmation New viability approach - at plan-making rather than decision making stage Para 61 new Standard Method NPPF para 60. Standard Method the minimum number of homes needed should be informed by a local housing need assessment, conducted using the standard method in national planning guidance unless exceptional circumstances justify In addition to the local housing need figure, any needs that cannot be met within neighbouring areas should also be taken into account in establishing the amount of housing to be planned for. 2

Taken from: https://www.planningresource.co.uk/article/1444689/mapped-consultation-formula-affect-local-assessments-housing-need Using data correct until last month LPA SM No. Current No.

3 Taken from: Using data correct until last month LPA SM No. Current No. Absolute change % change Kensington & Chelsea % Bath & North East Somerset Council % Bristol % Birmingham 3,577 4, % South Oxfordshire % [1] Indicative assessment of housing need based on proposed formula, 2016 to 2026 (dwellings per annum) [2] Current local assessment of housing need based on most recent publically available document (dwellings per annum) David Bird Partner dbird@vwv.co.uk vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents 3

4 Planning Enforcement Time Limits and Certificates of Lawfulness Tom Ewings Solicitor Planning and Infrastructure vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents s171b Town and Country Planning Act 1990 Immunity from planning enforcement Four Year Rule building, engineering, and mining operations AND change of use of a building (or part) to a single dwelling Ten Year Rule all other material changes of use AND breach of condition Exceptions live enforcement notice; second bite rule and deceit (Fidler and Welwyn cases) 4

5 Listed buildings No immunity period for issuing of listed building enforcement notice. Works without listed building consent = criminal offence. 5

6 6

7 Certificates of lawfulness Certificates for existing use ( CLEUD ) and proposed use ( CLOPUD ) 8 week determination period Submit evidence to show continuous breach for requisite time period: Statutory declaration Primary evidence, e.g. invoices, council tax, etc. In theory, low evidential bar, but Risk of enforcement action if application fails Lessons for practitioners Potentially difficult conversations with buyers/investors When to engage the local planning authority, if at all? 7

8 Tom Ewings Solicitor vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents Changing Values Nick Martindale, Senior Associate vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents 8

9 Negligence Basics Duty Breach Causation Loss Standard of Reasonable Care & Skill How negligent do I have to be? Bolam Test - A Claimant must show that the professionals conclusion was one that no reasonably competent practitioner exercising reasonable care could have reached. It s an art, not a science Pinpoint accuracy in the result is not, therefore, to be expected by he who requested the valuation. There is a permissible margin of error, the bracket as I have called it. What can properly be expected from a competent valuer using reasonable care and skill is that his valuation falls within this bracket. Watkins J in Singer & Friedlander Ltd -v- John D Wood & Co [1977] 2 E.G.L.R. 84 at 86 9

10 The Bracket? Helpful summary by Coulson J in K/S Lincoln -v- CB Richard Ellis Hotels Ltd [2010] EWHC 1156 (TCC): Standard residential property: +/- 5% One-off property: +/- 10% Property with exceptional features: +/- 15% The Claimant should be put in the position they would otherwise have been in, but for the negligence. Loss is all about the diminution in value: Price Paid LESS True Value of the Property e.g. Price paid 250,000 - True Value 200,000 = Loss 50,000 Loss 10

11 The SAAMCO Cap What if the loss is larger than the error? e.g. Price paid 250,000 True Value 200,000 Re-Sale Price 150,000 Loss 50,000 or 100,000? Loss 50,000 What about failing to spot defects? Leading Case: Phillips v Ward [1956] 1 WLR 471 Valuation of Manor House 25,000 27,000 Price paid 25,000 Valuer failed to identify defects Cost of repair work 7,000 Valuation if knew of defects 21,000 Loss 4,000 or 7,000? Loss 4,000 11

12 Cost of Repairs? Moore -v- National Westminster Bank [2018] EWHC 1805 (TCC) Valuation 135,000 Valuer failed to identify certain defects Cost of repair work 115,000 Valuation if knew of defects One Expert said 120,000 The other said he didn t know Loss 15,000 or 115,000? Loss 115,000 Expert Evidence: Why the Different Approach? The Judge didn t believe the expert who said the diminution in value was just 15,000 Only other evidence he had was the repair costs of 115,000 The Judge s decision could be supported on two different bases. One, that working out the diminution in value in this case would be too speculative and so cost of repair is recoverable, and the other is that doing the best one can, the diminution in value is represented by the cost of repair. If NatWest s evidence hadn t been so unbelievable, the result might have been different 12

13 Final Thoughts It is a common occurrence in assessing damages based on valuation that the paying party takes a polarised view and does not advance an intermediate position, even as a fall back. The imperatives of advocacy often drive parties to adopt this tactic but it can backfire. Get your expert evidence in order: Be realistic about diminution in value Challenge the costs of repair, in case it s a fallback position Be aware of falling into the principle that loss must be the diminution in value Nick Martindale Senior Associate nmartindale@vwv.co.uk vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents 13

Barns, Business Centres and Overage (again) Mark Hughes, Partner in Commercial Property

uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents

March 2016 Contract Overage of 750,000 First trigger event: Planning approval for a

14 Barns, Business Centres and Overage (again) Mark Hughes, Partner in Commercial Property vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents London and Ilford Limited v Sovereign Property Holdings Limited Arodene House Overage March 2016 Contract Overage of 750,000 First trigger event: Planning approval for a minimum of 60 residential units July 2016 Local Authority granted planning consent 60 flats contravened building regulations Implied term approval for planning and building control? 14

15 London and Ilford Limited v Sovereign Property Holdings Limited Overage Court of Appeal rejected this argument: No definition of satisfactory building regulations approval No timescale or other provision relating to buildings regulations Standard clause re condition and suitability of property London and Ilford liable to pay 750,000 First Tower Trustees Limited v CDS (Superstores International) Limited [2018] Dearne Mill Darting, Barnsley Enquiries before Contract and Unfair Contract Terms Act 1997 April Lease of premises Before exchange, solicitors raised CPSE enquiries Preamble to enquiries: 5- Seller s requirement to supply Buyer all documents, correspondence and relevant details 6 Seller s confirmation to notify Buyer if replies to enquiries becomes incorrect 15

16 First Tower Trustees Limited v CDS (Superstores International) Limited [2018] Dearne Mill Darting, Barnsley Enquiries before Contract 15.4 Q. Seller aware of hazardous substances? A. the Seller has not been notified of such breaches but the buyer must satisfy itself 15.5 Q. Notices of contamination? A. the Seller is not aware of any such notices but the buyer must satisfy itself 15.7 Q. Actual or alleged potential environmental problems? the Seller has not been notified of any such breaches First Tower Trustees Limited v CDS (Superstores International) Limited [2018] Dearne Mill Darting, Barnsley Enquiries before Contract Landlord gave Tenant clear asbestos report Landlord later received two reports indicating asbestos Landlord did not disclose to the tenants 16

17 First Tower Trustees Limited v CDS (Superstores International) Limited [2018] Dearne Mill Darting, Barnsley Enquiries before Contract and UCTA 1997 Tenant discovered and sued for: Cost of asbestos remedial work Cost of alternative warehouse accommodation Landlord denied liability on the basis of the wording in the lease and the contract First Tower Trustees Limited v CDS (Superstores International) Limited [2018] Dearne Mill Darting, Barnsley Unfair Contract Terms Act 1997 Court of Appeal rejected Landlord s argument UCTA 1977 prevents exclusion from liability for misrepresentation if it is unreasonable to do so S11(1) The Reasonableness Test The term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. 17

18 Lloyd v Browning [2013] Enquiries before contract and misrepresentation Barn sold by Browning (Seller) to Lloyd (Buyer) Barn sold with planning permission for a conversion Buyer believed planning permission included conversion and extension Seller s original application included an extension but application re-submitted without extension Lloyd v Browning [2013] Enquiries before contract and misrepresentation Contract for sale included provision Buyer could only rely on matters confirmed in writing by the Seller s solicitors Extent of planning permission not discussed in writing Buyer brought claim of misrepresentation 18

Lloyd v Browning [2013] Enquiries before contract and misrepresentation Court considered: Buyer pushed for a quick sale Buyer engaged both Architects

Rectification Rent and review clause May 2017 Landlord sent tracked version removing rent reduction and revising rent review June 2017 - Lease

19 Lloyd v Browning [2013] Enquiries before contract and misrepresentation Court considered: Buyer pushed for a quick sale Buyer engaged both Architects and Planning Consultants Court held: Seller entitled to rely on contract provision Seller not liable for misrepresentation Application for Rectification Rent and review clause May 2017 Landlord sent tracked version removing rent reduction and revising rent review June Lease completed with amended clause Tenant applied for lease to be rectified Court granted Order CDS (Super Stores International) Limited v. Place Road Properties Limited 19

20 Lease of current Goldman Sachs Premises Goldman Sachs International v Possession House Trustee Limited [2018] 55 Ludgate Hill 25 year lease dated 29 September 1999 Break clause 29 September 2019 Notice 12 months and 1 day 110 New Bridge Street Break Clause Break clause subject to Clause 23.2: On the expiration of such notice the term shall cease and determine (and the tenant shall yield up the premises in accordance with clause 11with full and vacant possession) Clause 11 Standard yielding up provision including: Remove alterations & additions Reinstate premises to original layout Goldman Sachs International v Possession House Trustee Limited [2018] 55 Ludgate Hill 110 New Bridge Street 20

21 Tenant wanted to exercise break option Goldman Sachs International v Possession House Trustee Limited [2018] 55 Ludgate Hill Accepted vacant possession required BUT applied for a declaration it was not a pre-condition clause 11 must be complied with 110 New Bridge Street Goldman Sachs International v Possession House Trustee Limited [2018] 55 Ludgate Hill Court found for Goldman Sachs: Clause 11 was a confirmation of tenant s obligation at the end of the term Brackets were significant 110 New Bridge Street An emerging trend? 21

22 Beaumont Business Centres Limited v. Florala Properties Limited Right to Light Florala planned to increase height of its building Beaumont applied for an injunction Florala applied for a summary judgement Deed between Beaumont and previous Landlord for compensation Beaumont Business Centres Limited v. Florala Properties Limited Right to Light Court did not accept Florala s argument Held that Beaumont was entitled to go to trial 22

23 Trillium v. Elmfield Road Rent Review in Lease Lease granted for 25 years with 5 year RPI rent reviews December 2005 parties entered into new lease commencing March 2010 New lease expires in March 2022 Formula based on Initial Rent Rent Review in Lease Trillium v. Elmfield Road Reviewed rent formula included base figure Landlord argued base figure was 2010 initial rent of 1.2 million Tenant argued base figure was 2005 rent of 965,000 23

interpretation Doctrine of Frustration European Medicines Agency EMA relocating due to

24 Trillium v. Elmfield Road Rent Review in Lease Court found that tenants were bound by the Landlord s interpretation Doctrine of Frustration European Medicines Agency EMA relocating due to Brexit 2011 Lease expires in 2039 Landlord s application to Court for Declaration that the lease is not frustrated 30 Churchill Place in Canary Wharf Potentially wide implications? 24

25 Conclusions Don t get so close to the detail of the transaction so that you lose sight of the overall commercial purpose of the agreement. Make sure that your client is aware of its legal obligations relating to disclosure even of adverse matters. Don t complete a transaction without checking all the surrounding circumstances, however much pressure you may be under to do so. Test any mathematical formulae by running the calculation to see whether the outcome is roughly what you expect before you finally agree it. Mark Hughes Partner mhughes@vwv.co.uk vwv.co.uk Offices in London, Watford, Bristol & Birmingham Lawyers & Parliamentary Agents 25

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