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Thursday, 16 October 2014

Closing the Gate on Neighbour Disputes

A recent decision in the High Court* has ruled it's possible to acquire a prescriptive easement to hang a gate over a driveway by occupying the airspace.

The case is arguably more interesting however for the comments made by Mr Justice Norris on neighbours who choose to settle their disputes through litigation.

It concerned a shared driveway used by two neighbouring homeowners - one owned the drive (I'll call them A), the other (I'll call them B) had a right of way over it, and about 35 years ago a previous owner of B's house had erected gates over the driveway.

In the time honoured fashion of neighbour disputes, the case concerned what at first may seem a relatively trivial matter of one of the neighbours, B, preferring the gates to be closed to a greater extent than A did.

Arguments were made on the one side about security and on the other about difficulties in opening and closing the gates, especially from the road when returning home.

This could probably been resolved practically, as Mr Justice Norris indicates, by building electric gates at a cost of about £5,000 rather than pursuing the matter through the courts at considerably greater expense for all concerned.

But when neighbours fall out, reason seems to go the same way.

As far as the law is concerned - the court held that it's possible to acquire a prescriptive easement to hang a gate over a driveway by occupying the airspace, but on the facts B had failed to show a continuous 20 year period of use of the appropriate quality.

Intermittent use could suffice, but even so B's use was not of the character, degree and frequency required to indicate the assertion of a continuous right.

Nevertheless, B had a right to open and close the gates for all purposes connected with the reasonable enjoyment of B's home provided it didn't substantially interfere with the reasonable enjoyment by A of its home.

In the court's view it would not amount to substantial interference for the gates to be closed daily from 11 pm to 7:30 am, on days when A was absent from home and on additional days when there was a greater likelihood of intrusion from revellers.

Anyone reading the transcript of the judgement is left in no doubt however about what Mr Justice Norris thinks of cases like this ending up in the High Court.

He begins his judgement:

"Rather to my surprise I find myself trying a case about a pair of gates in Formby: surprise on at least two counts. First, that anyone should pursue a neighbour dispute to trial, where even the victor is not a winner (given the blight which a contested case casts over the future of neighbourly relations and upon the price achievable in any future sale of the property). Second, that the case should have been pursued in the High Court over 3 days. It is not that such cases are somehow beneath the consideration of the Court. They often raise points of novelty and difficulty and are undoubtedly important to the parties and ultimately legal rights (if insisted upon) must be determined. But at what financial and community cost?"

Instead, parties should first be encouraged to use the more obvious forms of ADR - negotiation and expert determination.

If that fails, then the parties should be directed to engage in mediation.

"I think it is no longer enough to leave the parties the opportunity to mediate and to warn of costs consequences if the opportunity is not taken. In boundary and neighbour disputes the opportunities are not being taken and the warnings are not being heeded, and those embroiled in them need saving from themselves. The Court cannot oblige truly unwilling parties to submit their disputes to mediation: but I do not see why, in the notorious case of boundary and neighbour disputes, directing the parties to take (over a short defined period) all reasonable steps to resolve the dispute by mediation before preparing for a trial should be regarded as an unacceptable obstruction on the right of access to justice."

Saving people from themselves - often the best thing a lawyer can do.

Wednesday, 8 October 2014

In Place of Strife - New Protocols to End Property Disputes

A new protocol has been launched for dealing with tenant applications to assign or sublet leasehold interests in commercial property.

Its authors - Guy Fetherstonhaugh QC and Jonathan Karas QC of Falcon Chambers, and Nicholas Cheffings and Mathew Ditchburn of Hogan Lovells - have published the protocol on a new dedicated website and hope it will be the first in a series of similar "best practice" documents designed to smooth landlord and tenant relations.

The protocol been endorsed by the British Property Federation.

Despite the passing of the Landlord and Tenant Act 1988, and the numerous cases since illustrating how the law should be applied in practice, a great deal of time and money is still wasted in failing to deal properly with applications to assign or sublet.

The protocol aims to achieve improved communication, dispute avoidance and an early resolution of disputes.

The protocol sets out a clear checklist of steps to be taken and what to include with the application, and suggests a timetable for dealing with applications.

The aim is for a tenant to provide enough information in its application to allow the landlord to decide whether it's prepared to grant consent and whether it would be unreasonable to withhold consent - the law says the burden of proof rests with the landlord.

The protocol says a landlord should acknowledge receipt of an application within 5 working days, informing the tenant if it requires more information or more time to consider.

It suggests the ultimate aim should be for the landlord to communicate its decision within 21 days of receiving the application, although what constitutes a reasonable time in every case is a question of fact having regard to the circumstances.

If there's a dispute, the protocol says the parties should consider whether some form of ADR, such as arbitration, expert determination or mediation, would be more suitable than litigation.

The protocol is a best practice guide; it doesn't supplant the law, but ideally it should be incorporated in new leases as a code which the parties agree to follow and that can be taken into account when assessing whether they have complied with their contractual and statutory obligations.

Writing in the Law Society Gazette, Nicholas Cheffings says other protocols are being considered.

One area that springs to mind that might benefit from a protocol is the vexed issue of tenant break clauses.

The jurisdiction of the courts can't be sidestepped in interpreting existing clauses, but a new protocol might be helpful in taking further the suggestions for drafting those clauses espoused in the Code for Leasing Business Premises.

The battle then is getting people to adhere to a protocol.

Wednesday, 1 October 2014

12 Things Every Retailer Must Do Before Signing A New Lease

The RICS has produced a handy checklist of things for retailers to think about before signing a lease.

It's not exhaustive, but it covers the main points. Here's the list reproduced below with the RICS comments, plus a few extra comments of my own in italics.

1. Have you checked the payment frequency of your rent/fee? – is it weekly, monthly, quarterly; in advance or in arrears?  If your business can only support payments monthly in advance, ask the landlord, as often they will agree to this. 

2. Have you negotiated on the rent? - Research other rents and look at whether you will have any disadvantages compared with other shops close by, such as:

Is your sales floor split level?
Is your lease going to be longer than the standard
Is your shop set back from the others?

Your rent will be used as evidence against other businesses when they have a rent review or lease renewal, and vice versa.  If tenants don’t negotiate, it can result in a vicious circle of ever-increasing rents that can be damaging to local economies.

3. Have you asked for a rent free period?  The longer the lease, usually the longer the rent free period granted.  These are more likely to be granted if there are repairs necessary to the shop before you can fit it out, or where the property has been vacant for a long time.

4. Who is responsible for insurance? –What about the plate glass in the shop front? What about buildings insurance?  If you take on a pop up shop it may be that these costs are included in the rent, but a lease may state that you are responsible.

5. Have you agreed a ‘schedule of condition’? - Agreeing one limits your liability so that you do not have to put the property back into any better state of repair than it is at the start of the lease.  A small outlay could save you thousands of pounds at the end of the lease.

[If a new build, will you be getting any warranties from the contractor and professional team? 

Will defects be excluded from your responsibility, with the landlord made responsible for putting them right within the defects liability period? 

Does your lease include the structure or is it "internal" only? 

Make sure you have all the rights you need, for example over roof airspace if you want to affix antennae. 

Does the landlord reserve a right to erect scaffolding? If so, ensure your signage rights are preserved.]

6. Does your lease specify the use that you want?  Do not rely on what the landlord says; it is what is in the lease that matters.

[Is it any retail use or specific? Is there flexibility to change the use with landlord's consent, not to be unreasonably withheld?]

7. Is your 'use' allowed under planning permission? This is different to the use in the lease, so make sure you can operate under planning legislation.  Even if it says you can under the lease that is no guarantee that you can under planning law.

8. Have you checked that you are able to make alterations? Make sure there is a provision in your lease allowing this, particularly if they are extensive. This should all be included in your lease.

[You may need a licence for alterations for fit out. Do you have to reinstate at the end of the term? Consider your requirements for signage and colour scheme too - can you change these without having to get landlord's consent, for example if your corporate branding changes?]

9. Will you be able to assign or sublet the lease? Your circumstances may change over the term of the lease so this provision will make sure you have increased flexibility. Otherwise you end up committed to a property that you no longer need, for the remainder of the lease.

[You will probably be required to guarantee the obligations of your immediate assignee (an authorised guarantee agreement). Consider too whether you want to be able to assign to group companies. What about concessions or franchisees? Group company sharing?]

10. Do you have to pay a service charge? If there is a service charge, make sure you will benefit from those services, and if you won’t, don’t agree to that part of it.  Try and agree a cap on the level of service charge to minimise your outlay. [Does the landlord agree to adhere to the Service Charge Code?]

11. Don't forget to budget for business rates. Check if you eligible for small business rates relief and consider if it is worth appealing as the valuation may be too high.

12. Will your lease contain a break clause? These can be notoriously difficult to exercise if you don't comply with the conditions [see these past posts!]. Make sure you get expert advice on what the break clause conditions should be and get those agreed before signing the lease.

[Better still, insist on there being no pre-conditions to exercising the break clause - this is a crucial commercial part of the deal that you won't want watered down or, worse, jeopardised altogether].


Friday, 26 September 2014

Say My Name

Back in July I reported on the row over plans to change the name of London skyscraper, Heron Tower, to the rather less redolent Salesforce Tower, after the US software firm occupying 17% of the space.

After protests from the other tenants, the matter was referred to the City of London Corporation, but then later withdrawn.

The building will now be plain old 110 Bishopsgate, a consequence of its shape failing to evoke either a kitchen utensil or a vegetable.

Nevertheless, CMS report that the Corporation, perhaps mindful of the possibility of many more frequent and contested building name changes as tenants come and go, has approved additions to its “Naming and Numbering Advice Note”.

The Corporation generally prefers names relating to owner, use, local history or geography.

If it's asked to give approval for a building to be named after one commercial occupier amongst many, the Corporation will now consider the extent to which that one occupier is the dominant occupier, and how likely it's to remain so in the future. 

If a building's to be named after one tenant, the Corporation will expect the tenant to occupy over half the building's floor space, and to have a lease with a term of at least ten years remaining. 

The planning and transportation committee hope this new approach will avoid the need for frequent and potentially confusing changes to a building’s authorised address.

It might still be a good idea though for tenants occupying less than half the floor space to try and secure a landlord’s obligation to maintain a generic rather than a tenant specific name, or at least an obligation to consult and take into account all tenants’ views before applying for a name change.

Probably too late for the fish though.