Property Cases Roundup

February 15, 2018

By David Williams


[2017] EWHC 197 (TCC)

Mr Stephen Furst QC

This case concerned a dilapidations claim brought by the landlord, against a tenant of commercial premises. The lease contained comprehensive repairing obligations, including a covenant to yield up the property in good and substantial repair. The parties agreed that the repairing obligations had been breached, and that the cost of remedying those breaches was a little over £400,000. However, a dispute arose in relation to section 18(1) of the Landlord and Tenant Act 1927, as to the diminution in value of the reversion attributable to the breaches of the repairing covenants.

The court adopted a two-stage approach, considering first the reduction in value of the premises caused by the failure to undertake repairs in the most economic form, and second, the landlord’s intentions for the premises. The court held that where remedial work had been carried out, the cost of such work was a good prima facie guide for assessing damage to the reversion. Conversely, a failure to carry out repairs tended to indicate that such repairs were unnecessary (Latimer v Carney [2006] EWCA Civ 1417, [2007] 1 P. & C.R. 13).No explanation was offered as to why the outstanding repairs had not been carried out, some six years after the valuation date, and no evidence had been advanced to suggest those repairs would, in fact, be undertaken. Further, there was no evidence to indicate that the outstanding repairs had diminished the value of the reversion by an amount commensurate with the cost of dealing with the remaining defects. Accordingly, the estimated costs of carrying out those works should not be taken into account when determining any diminution in value.



[2017] EWHC 3220 (Ch)

HHJ Paul Matthews

The Claimants in this case were the owners of five beach huts. The owner of the land on which the huts were situated argued that the Claimants were occupying the land as licensees and therefore purported to determine their occupation by giving them only three months’ notice. In response, the Claimants asserted a periodic tenancy. The court held that the huts were chattels, as there was either no annexation, or only a very slight degree of annexation. The basis of this centred on the fact that they could be moved without being seriously damaged. However, the fact that each Claimant had placed a chattel on land belonging to the landowner to improve the enjoyment of the chattel was not inconsistent with the existence of a periodic tenancy.

Ultimately, the question, whether the huts were chattels was not a conclusive factor in determining the nature of the Claimants’ occupation. The huts had occupied the same space throughout their use, with the result that the landowner had been excluded from occupying the land and could not exploit the land in any other way. Accordingly, notwithstanding the fact that the huts were chattels, the Claimants had enjoyed exclusive possession for a term at a rent. In the circumstances, the court decided that the nature of their occupation was consistent with a periodic tenancy, rather than a licence.



 [2017] EWHC B22 (TCC)

 Mrs Justice O’Farrell DBE

 In this case, significant excavation and building works carried out at a property in London had damaged the adjoining owner’s property to the extent that it required demolition and rebuilding. The works were subject to an award under the Party Wall Act 1996 (“PWA”), which provided that the party who had carried out the works must ‘make good’ all damage and ‘make payment in lieu’ of any repairs. Thereafter, the Defendant adjoining owner sought the cost of demolishing and rebuilding its property. In response, the Claimant argued that it was appropriate to assess damages on a diminution in value basis. The Claimant issued part 8 proceedings to clarify the issue. Additionally, the Claimant sought declaratory relief from the court because it was out of time for bringing an appeal in accordance with the time limits prescribed by the PWA. The adjoining owner challenged the court’s authority to hear the claim on the basis that because the PWA provided a ‘complete code’ for resolving disputes between the parties, the court had no jurisdiction to deal with the matter.

Mrs Justice O’Farrell concluded that ‘very clear wording’ would be required to oust the jurisdiction of the court, and the PWA did not contain any such wording. Further, the PWA comprised wide powers of appeal to the courts, suggesting that Parliament had not intended to exclude the court in this way.



[2017] UKUT 377 (TCC)

Judge Elizabeth Cooke

In a decision of the Upper Tribunal, it was held that a purported forfeiture by the landlord, of the tenant’s long lease for non-payment of rent was invalid, because the landlord had failed to comply with sections 166 and 167 of the Commonhold and Leasehold Reform Act 2002 (“Act”).

Shortly after acquiring the reversion to the lease, the landlord, having identified that there was five years’ of unpaid ground rent in the sum of £11, served what he argued was a valid section 166 Notice. Following the tenant’s failure to pay by the specified date, the landlord re-entered the property on the grounds of forfeiture. The Tribunal concluded that a long residential leaseholder is only liable to pay rent if demanded under cover of a section 166 Notice in the prescribed form. Since the landlord had used an old section 166 Notice, which failed clearly to explain the effect of section 167 of the Act, the Notice was invalid.

The Tribunal went on to consider the timing of the alleged forfeiture. The lease provided a right to forfeit for non-payment of ground rent where the tenant had been in arrears for two years. However, this had been extended by section 167 of the Act, which only permits forfeiture if either the arrears exceed £350, or an amount has been outstanding for more than three years. In the present case, neither condition was satisfied. Accordingly, notwithstanding the deficiencies in the Notice, the landlord was not entitled to forfeiture in any event.

In reaching its decision, the Tribunal emphasised that the primary function of section 167 of the Act was to protect tenants, and that forfeiture ought only to be used ‘as a last resort and after extensive warning had been given, particularly where only a trivial amount was outstanding.’

David is a member of the property department at Exchange Chambers.