It has been another significant year for real estate court cases - Mathew Ditchburn surveys the highlights of the year’s most important decisions.
Rights of light - Ottercroft Ltd v Scandia Care Ltd
Ottercroft and Scandia Care owned adjacent buildings in High Wycombe. Scandia wanted to redevelop and undertook not to interfere with Ottercroft’s rights of light. However, it built a metal staircase blocking light to Ottercroft’s building.
The court awarded Ottercroft an injunction requiring Scandia to remove the staircase, even though the interference was small and the value of the light lost only about £1,000. The court reasoned that Scandia had acted in a high-handed and unneighbourly manner, deliberately misleading Ottercroft about what it was doing.
The Court of Appeal agreed, making it clear that the courts have a broad discretion whether to order injunctions. They are certainly not bound to do so, but can use them where necessary to do justice and warn others.
Repair - Creative Foundation v Dreamland Leisure
In Folkestone, a mural by the artist Banksy appeared on the side wall on an amusement arcade. The tenant, Dreamland, removed the wall and put it up for auction in New York. Creative Foundation for the landlord claimed an injunction for trespass and conversion (ie unlawfully taking away the landlord’s property). Dreamland argued that it had a repairing covenant in its lease and all it had done was repair the wall damaged by the Banksy artwork by replacing it.
The court disagreed with Dreamland. It said that if there were a cheaper and less invasive way of repairing the property, such as painting it, that should have been done. It also said that if a tenant removes part of the property when doing repairs then the removed part still belongs to the landlord.
Lease renewals - Flanders Community Centre Ltd v Newham LBC
Newham Borough Council let a brick shed to Flanders as a community centre. It was in such poor condition that Flanders immediately had to carry out £14,000 worth of repair works. Consequently, the council agreed a rent of £1 for a seven-year term. The lease also included unusual terms requiring activities at the centre to reflect the diverse local community.
On renewal under the Landlord and Tenant Act 1954, the council wanted to put the rent up to £16,000. The judge said that neither party had provided any expert evidence of comparable properties used as community centres on similar terms. He said that the only good evidence of market value was the old lease and so ordered a new rent of £1.
Dilapidations - Laindon Holdings Ltd v South Essex NHS Trust
An office building in Basildon was let by Laindon to South Essex NHS Trust. Under the lease, the trust could make internal non-structural alterations without Laindon’s consent. It also had a covenant to repair, and repaired the landlord’s old carpet tiles by replacing them
with a sheet of carpet.
When the lease expired, Laindon brought a terminal dilapidations claim, including the cost of putting back in carpet tiles because the trust should have replaced them like for like.
The Court of Appeal held that it was not entitled to that cost. It said that changing the carpet was not a form of repair but a non‑structural alteration, which the trust could make without consent.
Nuisance - Cocking v Eacott
Mr and Mrs Cocking owned a house in Hereford. The house next door was owned by Mrs Waring but occupied rent free by her daughter, Ms Eacott, and her dog.
The dog was prone to excessive barking, and Ms Eacott was prone to shouting abusively at Mr and Mrs Cocking, who sued Mrs Waring for nuisance.
Mrs Waring defended the claim, arguing that a landlord is only liable for their tenant’s nuisance if they authorised or actively participated in it. The court said that she was liable as she was a licensor, not a landlord, and could have evicted Ms Eacott at any time but chose not to.
Noisy works - Timothy Taylor Ltd v Mayfair House Corporation
Timothy Taylor had a lease of an art gallery in Mayfair. Under the lease, the landlord was permitted to redevelop the building, even if the works would obstruct, affect or interfere with the art gallery.
The landlord redeveloped the building, virtually rebuilding it from the first floor upwards. The works were very noisy and interfered with people’s enjoyment of the art gallery. The entire building was also covered in scaffolding, creating the impression that the gallery was closed.
Taylor sued and the landlord relied on its rights in the lease. The court agreed with Taylor and awarded damages: the premises were let for a high-class use at a high rent so the landlord had to take reasonable steps to minimise disturbance, even if it had a right to build.
Break options - Vanquish Properties (UK) LP v Brook Street (UK) Ltd
Brook Street had a lease of premises in London. The landlord was the City Corporation. The lease contained a landlord’s break on 27 September 2016, subject to serving six months’ notice.
The City granted an overriding lease to Vanquish Properties (UK) LP. Vanquish then served a break notice naming the limited partnership as Brook Street’s landlord.
The court held the notice to be invalid. A limited partnership is not a legal entity, but shorthand for the various limited partners. The notice should have been served by Vanquish Properties GP, the general partner capable of holding a lease.
Forfeiture - Pineport Ltd v Grangeglen Ltd
The landlord granted a 125-year lease at a premium of £90,000. Six years later, when the lease had a capital value of £275,000, it forfeited by peaceable re-entry for non‑payment of £24,000 of service charge.
Fourteen months later, the tenant applied to the High Court for relief against forfeiture. There was no strict deadline for applying, but six months was the guide. The court asked whether the tenant had applied with “reasonable promptitude”. This was an “elastic concept”, taking into account the tenant’s personal circumstances, including the fact that he had been in prison. Relief was granted.
Possession - McDonald v McDonald
Fiona McDonald suffered from a personality disorder. She could not work and had lost her council house. Her parents bought a house for her to live in and let it to her on an assured shorthold tenancy (AST). They defaulted on the mortgage, and the bank appointed receivers, who terminated the AST and brought possession proceedings. Ms McDonald relied on the right to respect for private and family life and home under article 8 of the Human Rights Convention.
Although this can only be invoked against public bodies, she argued that the courts were a public authority and so had to comply with the convention and not order possession. The Supreme Court disagreed, as this would just be a back-door route for making the convention directly enforceable between private citizens.
Landlord’s consent - No 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd
The landlord, West India, refused consent to assign East Tower’s lease unless it complied with certain conditions. These included the provision of bank references by the assignee, permitting the landlord to inspect the premises and recover the cost of £350 plus VAT, and giving an undertaking to pay the landlord’s costs of the assignment in the sum of £1,600 plus VAT.
The court said that the first two conditions were reasonable. However, it found that the landlord’s decision really turned on the third condition, which was unreasonable because the sum of £1,600 was excessive in the circumstances. The unreasonableness of that condition cancelled out the other two reasonable conditions, and so the tenant was free to assign without consent.