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Commercial Property LitigationFROM £116.00
An accessible and concise explanation on the points and issues that must be taken into account in property disputes.
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Listen to Paul McAndrews discuss the issues covered in this publication.
The second edition of Commercial Property Litigation is a fully updated authoritative handbook for property litigators.
It combines an analysis of the relevant substantive law and procedure with practical know-how focusing on common issues and problems faced by the property litigator.
The authors’ explanatory commentary is supported by expertly drafted precedents, checklists, and extracts from key pieces of legislation and procedural rules, which are contained on an accompanying CD-Rom providing easy access to these time-saving precedent materials.
Commercial Property Litigation will ensure that practitioners can be confident of having the relevant knowledge and clear guidance on the practice and procedure on how to deal with these difficult subjects.
New for this edition
- Break Clauses; important recent cases on the construction of break clauses, implication of terms, apportionment of rent;
- Waiver and estoppel after invalid notice is given; duties of the recipient to disclose the invalidity;
- Lease renewals; impact of the recent cases on non-compliance with directions; grounds of opposition and time for establishing intention;
- The single County Court; new procedures on the issue of claims; limitation periods and tenancy renewals;
- Repairing obligations; review of the new Protocol for terminal dilapidations and recent case law since its introduction;
- Assignment/sub-letting/alterations and use; consideration of the impact of The Competition Act 1998 on user clauses and consent to change of use;
- Withholding consent to alienation and the risk of giving it inadvertently;
- The Covenants Act 1995; developments in the law concerning enforceability of covenants;
- Side letters and variation; reconsideration of compliance with s. 2 of the Miscellaneous Provisions Act; Keay v Morris Homes;
- Forfeiture and Possession; the effects of holding over and the risk of creating a new tenancy;
- Abolition of Distress for Rent and the new scheme of Commercial Rent Arrears Recovery;
- Service Charge clauses; the rejection of the contra proferentem rule of construction;
- Updated precedents and forms
- Invalidity of Notices
- Lease renewals
- Dilapidation's and Repairing Obligations
- Assignment and Subletting, Change of Use and Alterations
- Landlord and Tenants (Covenants) Act 1995
- Side letters and Variations of Lease
- Commercial Rent Arrears Recovery
- Service Charge Recovery in Commercial Premises
- Recovery of possession
- Alternative Dispute Resoloution (ADR)
"a reliable source of reference ... should be part of the professional library of every lawyer advising or acting in landlord and tenant matters ... an essential purchase"Click here for the full review
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Phillip Taylor and Elizabeth Taylor of Richmond Green Chambers
The aim of this book is to provide busy practitioners with a practical and straightforward guide through the principal legal issues affecting commercial property law as well as answers to some of the more common questions and problems which arise in the field where litigation appears to be the next option.It is not intended as an authoritative work, there are a number of these in existence, but as a ready and accessible source of reference to the points and issues which must be taken into account when advising and acting for landlords and tenants and other parties involved in property disputes, or in matters which are likely to turn into disputes. Equally important are the precautions which can be taken to prevent or reduce the risk of litigation. Much of the case-law is fact-specific and commonly will turn on the construction of the material lease; as the ‘factual matrix’ is all-important phrases used in different documents executed by different parties but which appear similar will not always be given the same meaning. Nevertheless a review of the authorities often discloses policy considerations which enable the client to be advised of the consequences of his intended actions and as will be seen, the decisions reached by the courts generally reflect the underlying merits of the parties’ respective positions. For example, the courts will not generally allow a party to escape contractual liability by exploiting the requirements of the Law of Property (Miscellaneous Provisions) Act 1989 where to do so would result in injustice.
A landlord who gives active consideration to a request for consent to assignment is unlikely to be found guilty of unreasonable delay even if it takes some time to reach a decision. A tenant who responds promptly to a schedule of dilapidations and appoints a surveyor, and carries out the works so advised, will attract the court’s sympathy where the landlord has been unhelpful, particularly if the repairs are a condition precedent to the successful operation of a break clause. A tenant who complains of breach of landlord’s covenants and withholds service charge would be better advised to pay something on account and enter into dialogue rather than withhold the payment altogether. A tenant who has breached the terms of their lease and is susceptible to forfeiture will be well advised to take steps to remedy the breach or take action to mitigate its effect on the landlord’s reversionary interest. Where such action is taken the court will take some persuading that relief should not be granted.
Mistakes do occur. When things have to be done urgently or under pressure, or the client wants to keep costs down and cut corners, professional advisers are at risk of error. Perhaps the most fruitful source of error and omission is in the service of notice, whether it be a break notice or a statutory notice, and in theneed to comply with time-limits arising from such service.
Correction of the mistake is not always possible if the time for service has passed and it is too late to serve a further notice. In these circumstances it is important to bear in mind that mistakes can be overlooked by the recipient, wittingly or unwittingly, or waived by his conduct or representations. Waiver often results from lack of communication between the recipient, whether it be the tenant or the landlord, and his agents and advisers, for example through failure to ensure that everyone is ‘on message’ if the decision is taken to challenge the validity of the notice or its service. The importance of communication can also been seen in the context of forfeiture when a decision is taken to place a ‘stop’ on a tenant’s account so as to preserve a landlord’s right to forfeit.
Failure to comply with the strict requirements of a break clause in a lease, for example giving less than the stipulated period of notice or giving notice to the wrong party, is fatal to the successful operation of the clause. But this is distinguishable from errors in the content of the notice which would not mislead a reasonable recipient with knowledge of the lease. In the case of statutory notices contextual errors and omissions will also be subject to the reasonable recipient test but where the notice fails to comply with the statutory requirements as to contents, where it omits particular items or details which the statute says it must contain, it is a question of what place in the statutory scheme that particular requirement occupies and whether it is essential to the working of the scheme.
Ultimately, it is a question of construction of the statute to ascertain what Parliament intended and whether the failure or mistake in question frustrates that intention. In practice, it will often be a question of ascertaining or assessing the degree to which the recipient of the notice is prejudiced by the failure to comply. With this in mind, clients and their advisers should take care to balance the competing benefit of taking a ‘notice point’ against the commercial consequences should litigation on the issue prove unsuccessful.
The matters and issues discussed in this book are not inherently litigious. Serving a break notice, applying for consent to assign, agreeing to vary a deed, adding a guarantor, serving a schedule of dilapidations, are not of themselves the first steps in the process of bringing a claim. Indeed, many of the actions involved are transactional and non-contentious and carried out by practitioners in that domain; although the advice to be given to clients is often based on decided case-law. When things go wrong, however, the dispute which arises is likely to give rise to litigation and the topics contained in this book are those which commonly feature in the reports of property cases.
The fact that there are not more of them is due, no doubt, in large part to the emphasis which is now placed by the courts on alternative dispute resolution (and the introduction of pre-action protocols) following the Woolf reforms of 1999 and the consequence that may follow should ADR be ignored. These are considered in the last chapter.
The authors wish to thank their colleagues in the profession for their help in the preparation of this book, particularly those whose articles are mentioned in the text. We have endeavoured to state the law as at 1 October 2011.
James Fieldsend and Paul McAndrews
Will consent waive the right to forfeit?
5.20 The question of waiver of the right of forfeit is dealt with in Chapter 9 but it also arises in the deliberations of a landlord when application is made for consent to assign or sublet and breach of covenant is known or suspected. A landlord in such circumstances may well be advised that to grant consent will waive, or risk waiving, his right to forfeit as the grant will be treated as an election to affirm the continued existence of the lease. The strict application of this rule has, however, been re-considered:
- In Yorkshire Metropolitan Properties Ltd v Co-operative Retail Services Ltd the tenant had sublet the whole of the demised shopping centre in Rochdale without the landlord’s consent and in breach of covenant. Some 2 years later he sought the landlord’s consent to assign. The landlord put a ‘stop’ on the rent and refused consent to assign and served a s 146 notice. Shortly afterwards the landlord’s agent sent a demand for payment, under the lease, of an insurance premium. The tenant tendered payment by cheque but this was returned. Neuberger J (as he then was) ruled that while the insurance premium was ‘recoverable by distress’ under the terms of the lease in the same way as if it were rent in arrear, it was not reserved as rent and that the strict approach to waiver through demand and acceptance of rent should not be applied to a demand for insurance. Further, the demand had come from the agent, a ‘routine administrative act’ on behalf of a landlord with a large number of properties who had already made it clear he was not accepting rent and whose s 146 notice gave 28 days to remedy the breach (the demand being sent out after 14 days). There had been no waiver of the right to forfeit nor had the landlord acted unreasonably in withholding consent to assign. He could take account of the real prospect that the assignor/assignee could subsequently argue that in giving consent the landlord had indeed waivedhis right to forfeit. Importantly, in such circumstances there was no reason why a landlord could not preserve his right to forfeit by making his consent to the assignment subject to the express reservation of his right to do so:
‘if a landlord gives consent to an assignment expressly stating that it is without prejudice to any accrued right to forfeit which he might have, and this stipulation is accepted by the assignor and assignee, then the landlord will not in fact lose his right to forfeit.’
- In Mount Eden Land Ltd v Folia Peter Smith J applied similar reasoning and ruled that a landlord could indeed preserve the right to forfeit by expressly reserving it on the grant of consent to assign or sublet. Other than waiver by acceptance of rent, it was a question of fact in each case to see whether the act relied upon as amounting to waiver was so unequivocal, that when considered objectively it could only be regarded as having been done consistently with the continued existence of the lease:
‘Bearing in mind the fact that the landlord had a statutory duty to comply with the request for licence to underlet I do not see how the response to that on a “without prejudice” basis could be regarded as a waiver. The suggestion of [the solicitors] is that the landlord faced with that has to do nothing which would be quite extraordinary. That would have a very serious effect on the ambit of the [1988 Act] where there were breaches of covenant. On that basis a landlord faced with an application when there are breaches is enabled to do nothing and so frustrate the purpose of the  Act.’
But, contrary to the statement in Yorkshire Metropolitan Properties that the reasonable landlord could refuse consent if he perceived a real danger that the assignor/assignee would argue subsequently that it amounted to waiver of the right to forfeit, the reasonable landlord in the Mount Eden v Folia case could not refuse consent (or refuse to deal with an application for consent) to assign or sublet merely because of that risk.
Construction of Service Charge Clauses
11.3 The question of contractual interpretation has been previously considered in Chapter 4 in relation to repairing covenants. If the same principles apply to the construction of service charge clauses it is clear that there is no role for the contra proferentem canon of construction. Lord Neuberger MR (as he then was) returned to this theme in the later case of K/S Victoria Street v House of Fraser (Stores Management) Ltd where he said as follows:
‘There is a respondent’s notice on behalf of Victoria seeking to uphold the judge’s decision on the further ground that the contra proferentem rule should apply, so that any uncertainty concerning the interpretation of paragraph (F) should be resolved in favour of Victoria, since the paragraph was introduced at the request of the HoF defendants and it favours them. Like the judge, we consider that there is no need to resort to the rule in order to resolve the issue of interpretation in favour of Victoria; such rules are rarely if ever of any assistance when it comes toconstruing commercial contracts. Quite apart from raising abstruse issues as to who is proferens (and, in particular, whether the issue turns on the precise facts of the case or hypothetical analysis), “rules” of interpretation such as contra proferentem are rarely decisive as to the meaning of any provisions of a commercial contract. The words used, commercial sense, and the documentary and factual context, are, and should be, normally enough to determine the meaning of a contractual provision.’
11.4 But in an earlier decision the Court of Appeal adopted the rule, asserting that any ambiguity or lack of clarity will be resolved in favour of the tenant where it concerns the landlord’s right to payment. In Gilje v Chalgrove Securities Laws LJ stated:
‘The landlord seeks to recover money from the tenant. On ordinary principles there must be clear terms in the contractual provisions said to entitle him to do so.The lease, moreover, was drafted or proffered by the landlord. It falls to be construed contra proferentem … At the end of the day, I do not consider that a reasonable tenant or prospective tenant, reading the underlease which was proffered to him, would perceive that clause 4(2)(1) obliged him to contribute … Such a construction has to emerge clearly and plainly from the words that are used. It does not do so.’
Referring to this decision in McHale v Earl Cadogan and reviewing theauthorities, Rix LJ stated:
‘I readily acknowledge that it is the policy of the authorities not to bring within the general words of a service charge clause anything which does not clearly belong there. To put the matter another way, service charge provisions have been construed restrictively.’
This passage was cited in Arnold v Britton where Davis LJ, with whom Richards and Lloyd-Jones LLJ agreed, went on to approve and agree with the statement of Morgan J in the court below, that a service charge clause in a lease was not subject to any special principle (of construction) but that such a clause which is designed to be a service charge clause:
‘can be taken not normally to be intended to provide to a landlord a profit over and above the cost of the services provided (or, for that matter, a loss). Such a clause, if it potentially gives rise to such a result, must therefore be closely read to see if the wording requires such a conclusion. That is what Rix LJ was, as a matter of description, indicating: and that is simply a facet of the ordinary process of construction, having regard to the presumed commercial objective of such a clause used in the particular case. But ultimately it all depends on the meaning of the language, set in context and having regard to the commercial purpose.’
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