by Ian Macfarlane | Oct 30, 2019 | Uncategorized
In a recent Supreme Court ruling (by a 3-2 majority) it was decided that upon the facts of this particular case, a freeholder was entitled to withhold consent for a leaseholder to apply for planning permission that might reduce the value of a West End property. Why should a tenant be able to act in such a way as to increase the value of his interest in a property but by doing so cause the landlord a equal and opposite consequential loss?
The case is reported as Sequent Nominees Ltd (formerly Rotrust Nominees Ltd) v Hautford Ltd [2019] UKSC 47 and concerned a six-storey terraced building in Brewer Street, London.
The Facts:
A lease of this building was granted in 1986, which included a covenant that the tenant could not apply for planning permission without the landlord’s consent, which must not be ‘unreasonably withheld’. This is a reasonably standard clause.
Between 2013 and 2015, a sub-tenant converted the four floors into self-contained flats and sought the former landlord’s consent to apply for the necessary planning permission. This was refused on the ground that, if the majority of the building became residential, the tenant would acquire the right to compulsorily acquire the freehold under the Leasehold Reform Act 1967. The argument ran that this would necessarily devalue the landlord’s freehold.
The tenant challenged the refusal on the ground that it was unreasonable, however a recent decision of the Supreme Court now finds otherwise, although Lady Arden and Lord Wilson gave dissenting judgments.
Giving reasons, Lord Briggs said the real issue in the case was whether the courts were correct in construing the lease in such a way as to prevent the landlord from having regard to an increased risk of enfranchisement from residential use. He found that the Court of Appeal had made an error in law in ruling that it made no sense to allow the landlord to refuse planning permission to avoid the risk of enfranchisement, because a third party could apply for the same planning permission free of any such restraint and with the same adverse consequences.
‘A down to earth factual analysis of the economic consequences to the landlord of giving or refusing the requested consent… plainly suggests that a refusal is reasonable.’
Ian Macfarlane
by Ian Macfarlane | Oct 14, 2019 | Uncategorized
In January this year Ian Macfarlane wrote about the proposed and outrageous increase in probate fees. I am now pleased to see the government’s recent u-turn on a probate fee increase, which would have seen bereaved families paying up to £6,000 for grants of probate.
Under the government’s proposals, probate fees would have risen on a sliding scale of up to £6,000, depending on the size of the estate. Currently there is a fixed fee of £215 – or £155 with a solicitor. This would have been a massive and unwarranted "stealth tax".
President of
the Law Society, Simon Davis, said: ‘A hike in probate fees would have been a
tax on grief. We campaigned vigorously against the increase on behalf of
bereaved families and are relieved the government has listened to reason.
‘It is
inherently unfair to expect the bereaved to fund other parts of the courts and
tribunal service when they have no other option but to apply for probate.
‘In its review
of court fees government should bear in mind that it is a false economy to
impose charges that go beyond cost recovery. Equal access to justice is a
fundamental part of the rule of law.’
Probate fees
were due to increase in April.
Ian
Macfarlane
by Ian Macfarlane | Sep 17, 2019 | Uncategorized
Ian Macfarlane very much liked the following article by Joshua Rozenberg on 16th September 2019. As ever, Joshua Rozenberg analyses then summarises with excellent precision.
" Why did the High Court of England and Wales and the Inner House of the Court of Session disagree last Wednesday on whether the prime minister had acted lawfully in advising the Queen to prorogue parliament earlier in the week?
Joshua Rozenberg
The first thing to understand is that the
High Court did not decide whether or not Boris Johnson’s advice was lawful.
Lord Pannick QC, acting once again for the businesswoman Gina Miller, had tried
to persuade the lord chief justice of England and Wales, the master of the
rolls and the president of the Queen’s Bench division that the PM’s advice on
suspending parliament was an unlawful abuse of power. It undermined
parliamentary sovereignty, Pannick claimed, by impeding MPs’ ability to enact
legislation dealing with Brexit.
For the government, Sir James Eadie QC
argued that Miller’s claim was simply non-justiciable. ‘The exercise of this
prerogative power is intrinsically one of high policy and politics,’ said
Eadie, ‘not law’.
And the High Court agreed. Both as a
matter of logic and as a matter of law, said Lord Burnett of Maldon, Sir
Terence Etherton and Dame Victoria Sharp, justiciability had to be considered
before the facts. The PM’s decision to suspend parliament for five weeks and
his advice to the Queen ‘were inherently political in nature’, said the judges,
and there were ‘no legal standards against which to judge their legitimacy’.
Arguments that five weeks was too long ‘face the insuperable difficulty that it
is impossible for the court to make a legal assessment of whether the duration
of the prorogation was excessive by reference to any measure’.
The High Court also noted that parliament
could move quickly if it wanted to. This month, it passed the European Union
(Withdrawal) (No 2) Act 2019 in little more than three days. That requires the
PM to seek a three-month extension to the Brexit deadline by 19 October unless,
before then, MPs have approved a deal or have agreed to leave the EU without a
deal. As the High Court observed, enacting that legislation undermined the
underlying premise of Miller’s claim, which was that ‘prorogation would deny
parliament the opportunity to do precisely what it has just done’.
Unlike their counterparts in London, the
Edinburgh judges had no problem in examining the facts. From the summary made
available last week, it was not possible to tell whether the Scottish judges
saw material that Downing Street had withheld from judges in London. But the
evidence was enough to persuade Lord Brodie that there were two main reasons
for Johnson’s advice to prorogue: first, to make it harder for parliament to
hold the government to account and, second, to allow ministers to pursue a
no-deal Brexit policy without further parliamentary interference. Brodie, Lord
Carloway (pictured), and Lord Drummond Young concluded that the PM’s advice was
justiciable, that it was motivated by the improper purpose of stymieing
parliament and that the advice to prorogue parliament was therefore unlawful.
The government made no application to
suspend the Scottish ruling pending its appeal to the Supreme Court this week.
Mishcon de Reya, Miller’s solicitors, emailed the government legal department
demanding that parliament should therefore be recalled immediately. Opposition
MPs turned up at the Commons chamber to make the point that they had been
prevented from representing their constituents.
It makes much more sense for everyone to
wait for a definitive ruling from the UK Supreme Court. Nine justices will sit
tomorrow to hear appeals by both Johnson and Miller. There will be plenty of
time for MPs to discuss Brexit if the justices uphold the Court of Session
ruling within the next few days.
But should they? Drummond Young said the
Scottish courts had jurisdiction to decide whether any power, under the
prerogative or otherwise, has been legally exercised. Pannick, while accepting
that there were areas in which the courts must proceed with caution, failed to
persuade the High Court to go that far.
If the PM was less than candid in what he
told the Queen and the public, there are two ways in which he can be held to
account. One is political: it involves MPs and ultimately the voters. The other
is judicial: it involves the courts and ultimately the state.
As the High Court put it last week, the
constitutional arrangements of the United Kingdom have evolved to achieve a
balance between the legislature, the executive and the judiciary. ‘This is
territory into which the courts should be slow indeed to intrude by recognising
an expanded concept of parliamentary sovereignty,’ the judges said.
This was not a cop-out: it was a shrewd way of preserving judicial independence. Unless the justices decide that prorogation is nothing to do with them, we can expect newspaper headlines, yet again, condemning them as ‘enemies of the people’. "
by Ian Macfarlane | Jun 25, 2019 | Uncategorized
Ian Macfarlane liked this recent article by Jemma Slingo in the Law Society Gazette (24 June 2019):
“A US
investment manager has emerged as the backer of the revived Mastercard consumer
claim. Innsworth Litigation Funding, which is owned and funded by New
York based Elliott Management Corp, will fully finance the £14bn claim, it
announced today.
The case has been brought by
former financial services ombudsman Walter Merricks CBE on behalf of consumers
alleged to be victims of ‘illegal card fees’.
The damages claim is the
biggest claim in UK legal history and the first to be brought under the
collective action regime introduced by the Consumer Rights Act 2015.
In 2016, Merricks brought
proceedings against Mastercard seeking £14bn in damages on behalf of 46 million
UK consumers for alleged losses caused by excess interchange fees.
The claim was thrown out by
the Competition Appeal Tribunal (CAT) in July 2017. However, in April of this
year the Court of Appeal revived the claim, setting aside the refusal
to permit collective action.
The Court of Appeal found
that the distribution of damages is a matter for a trial judge to consider
following the making of an aggregate award, contrary to the findings of the
CAT. It concluded, therefore, that it was both premature and wrong for the
CAT to have refused certification by reference to the proposed method of
distribution.
Mastercard has since applied
to the Supreme Court for permission to appeal against the decision.
Ian Garrard, managing director
of Innsworth Advisors, which advises the litigation funder, said: ‘The
development of a class action regime in the UK provides Innsworth with an
opportunity to grow its investments in litigation, on high value and large
scale cases such as this where its resources can best be put to work.’
The mammoth competition claim
was initially financed by litigation funder Gerchen Keller Capital, now owned
by Burford Capital. However, Innsworth has been funding the case since
Merricks appealed the CAT’s decision.
Innsworth refused to say what
share of the damages it will receive if the litigation is successful.”
by Ian Macfarlane | Jun 20, 2019 | Uncategorized
In 2016 the Lands Tribunal, following application by Millgate Developments Ltd, which had already completed the works but without covenant approval, ordered the discharge of the covenant in question which prohibited development, imposed in favour of adjoining land.
Unfortunately
for Millgate, the beneficiaries of the covenant, the trustees of a local children's
hospice charity, decided to enforce the covenant and made application to the
Court of Appeal.
The Court
found that, when assessing the public interest, it was necessary to look at how
the situation had arisen. Millgate had been aware of the covenant and could
have sought a release or modification of the covenant from the easily
identifiable beneficiaries or, alternatively, applied under Section 84 for it
to be discharged or modified before it started building. However, the company
intentionally ignored the covenant preferring to present to the tribunal a
completed block of social housing which, it was hoped, would outweigh the
breach.
The Court
also found that the tribunal had paid insufficient attention to the
availability of an alternative solution, namely a commuted payment, in
assessing the public interest. If the tribunal had refused the discharge of the
covenant, the commuted sum would have been paid and the social housing would
have been delivered via that route, thus preserving the integrity of the
restrictive covenant and satisfying the public interest in the provision of the
social housing. That is the decision that the tribunal should have reached.
Crucially,
the Court also found that the public interest test must be passed before the
judge considers whether or not he (or she) should exercise the statutory
discretion to discharge or modify a covenant, the public interest is not a
factor in that part of the decision. The Court ruled that, as Millgate had not
passed that test, the exercise of judicial discretion did not apply.
In a withering statement, they found that, had it been required to exercise its discretion, it would still have found very much against Millgate because of its "deliberately unlawful and opportunistic conduct", which was "directed to subverting the proper application of section 84 without good reason". It had "acted in a high-handed manner by proceeding to breach the restrictive covenants without any justification or excuse".
The Court of Appeal has therefore sent a strong message to developers not to build on land in breach of a restrictive covenant and then present the court with a “fait accompli” and challenge the judge not to order demolition but allow them to compensate the frustrated covenant holder, instead.
https://www.casemine.com/judgement/uk/5c04f9ed2c94e04b404ff329
https://www.geldards.com/millgate-developments-ltd-case.aspx
Ian Macfarlane
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