commercial property law update - amazon web services › 96924 › 13 › 2741.pdf · commercial...

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vwv.co.uk | Offices in London, Watford, Bristol & BirminghamLawyers & Parliamentary Agents

Commercial Property Law Update


Planning AheadDavid Bird, Partner

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vwv.co.uk | Offices in London, Watford, Bristol & Birmingham - Lawyers & Parliamentary Agents

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


Standard Method

NPPF para 60.

…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.

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LPA SM No. Current No. Absolute change % changeKensington & Chelsea 824 575 249 43.30%

Bath & North East Somerset Council 626 720 -94 -13.06%

Bristol 2420 1450 970 66.9%Birmingham 3,577 4,450 -873 -19.62%

South Oxfordshire 617 725-825 -208 -25.21%

Taken from: https://www.planningresource.co.uk/article/1444689/mapped-consultation-formula-affect-local-assessments-housing-need

Using data correct until last month

[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 [email protected] 314 5382

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Planning EnforcementTime Limits and Certificates of Lawfulness

Tom EwingsSolicitor

Planning and Infrastructure


Immunity from planning enforcement

s171B Town and Country Planning Act 1990

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)

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Listed buildings

No immunity period for issuing of listed building enforcement notice.

Works without listed building consent = criminal offence.


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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?

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Tom [email protected] 925 2020


Changing ValuesNick Martindale, Senior Associate

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Negligence Basics

• Duty• Breach• Causation• Loss


How negligent do I have to be?

• Standard of Reasonable Care & Skill

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

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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%


Loss

• 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 Propertye.g. Price paid £250,000

- True Value £200,000 = Loss £50,000

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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 £150,000Loss £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

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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


Why the Different Approach?

Expert Evidence:• 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

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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 MartindaleSenior [email protected] 314 5350

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Barns, Business Centres and Overage (again)

Mark Hughes, Partner in Commercial Property


London and Ilford Limited v Sovereign Property Holdings Limited

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?

Arodene House

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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

London and Ilford Limited v Sovereign Property Holdings Limited


First Tower Trustees Limited v CDS (Superstores International) Limited [2018]

Enquiries before Contract and Unfair Contract Terms Act 1997

• April 2015 - 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

Dearne Mill Darting, Barnsley

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Enquiries before Contract15.4 – 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”



Enquiries before Contract• Landlord gave Tenant clear asbestos report

• Landlord later received two reports indicating asbestos

• Landlord did not disclose to the tenants



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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




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.”


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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



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

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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


CDS (Super Stores International) Limited v. Place Road Properties Limited

Application for Rectification• Rent and review clause • May 2017 – Landlord sent tracked version

removing rent reduction and revising rent review

• June 2017 - Lease completed with amended clause

• Tenant applied for lease to be rectified • Court granted Order

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Goldman Sachs International v Possession House Trustee Limited [2018]

Lease of current Goldman Sachs Premises

• 25 year lease dated 29 September 1999• Break clause 29 September 2019• Notice 12 months and 1 day

55 Ludgate Hill

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

55 Ludgate Hill


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• Tenant wanted to exercise break option

• Accepted vacant possession required

• BUT applied for a declaration it was not a pre-condition clause 11 must be complied with

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

An emerging trend?

55 Ludgate Hill


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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

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Trillium v. Elmfield RoadRent Review in Lease

• 1985 - 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



• 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

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• Court found that tenants were bound by the Landlord’s interpretation


European Medicines Agency

Doctrine of Frustration

• EMA relocating due to Brexit • 2011 Lease expires in 2039• Landlord’s application to Court for

Declaration that the lease is not frustrated

• Potentially wide implications? 30 Churchill Place in Canary Wharf

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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 [email protected] 7665 0922

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