Last updateTue, 24 Feb 2015 5pm

Forsters LLP

Forsters LLP

Jamie Swan provides a practical guide to safeguarding construction contracts after Brexit

Since the referendum of June 2016 called for an end to the UK’s membership of the EU, questions as to how so-called ‘Brexit’ will affect the construction sector have been raised and speculation rife. Now that Article 50 has been triggered and the negotiation period has commenced, we are still none the wiser as to what an ex-EU UK will look like. While nothing is certain at this stage we can however start to consider the potential implications that a move away from EU legislation and regulations will have on the construction industry.

Laura Williamson highlights the pros and cons of the proposed register for foreign property-owning companies

Disclosure of beneficial ownership for foreign companies that own property in England and Wales is a developing area of law to watch. The vast majority of UK companies (with some exceptions for listed companies where there is not the same concern about control) have been required to keep a register of people with significant control (PSCs) since April 2016 and, by June 2017, should have submitted their register to Companies House, where it will be made available for public view.

Rosalind Cullis discusses a case which serves as a salutary reminder of the importance of compliance with break conditions

What amounts to vacant possession has, once again, been considered by the High Court in the case of Riverside Park Ltd v NHS Property Services Ltd [2016]. In this instance, the consequences were significant: the court held that the tenant’s failure to give vacant possession meant that it had not satisfied the condition of an option to break the lease, meaning that the tenant remained bound by the lease for the remaining five years of a ten-year term. The case serves as yet another reminder of the attention to detail that is necessary to ensure compliance with break conditions.

The Upper Tribunal has provided clarification on when costs will be awarded for ‘unreasonable’ behaviour. Sarah Heatley explains

The Upper Tribunal (Lands Chamber) has handed down its long-awaited decision in a number of conjoined appeals: Willow Court Management Company (1985) Ltd v Alexander; Sinclair v 231 Sussex Gardens Right to Manage Ltd; Stone v 54 Hogarth Road, London SW5 Management Ltd [2016].

Amy Jackson examines a decision that gives key guidance on how to determine relativity

The Upper Tribunal (Lands Chamber) has recently handed down the much awaited decision on three conjoined cases: The Trustees Of The Sloane Stanley Estate v Mundy & Lagesse; Aaron v Wellcome Trust Ltd [2016]. The cases concerned the lease extension claims of flats in prime central London, primarily considering the question of how relativity should be calculated in such leasehold enfranchisement claims.

Littlestone v Macleish [2016] sheds light on whether landlords’ costs on dilapidation claims are recoverable on a standard or indemnity basis. Rosalind Cullis explains

The Court of Appeal decision in Littlestone v Macleish [2016] has attracted legal commentary, primarily because of the court’s findings regarding offers made pursuant to Part 36 of the Civil Procedure Rules (CPR). Indeed, the majority of the judgment focuses on this issue. Of particular interest to property practitioners, however, will be the court’s interpretation of a clause frequently found in leases of commercial premises, which sets out the circumstances in which a landlord may recover its costs from a tenant. While only six paragraphs of the 43-paragraph judgment are concerned with this subject, such brevity should not detract from the significance of the issue at hand.

Dean Monk examines a case in which a guarantor unsuccessfully sought to avoid liability on the basis the landlord had accepted a surrender of the lease

The case of Padwick Properties Ltd v Punj Lloyd Ltd [2016] involved a bold attempt by a guarantor to delay and/or prevent liability following the tenant’s insolvency.

Zahra Kanani outlines Green v HMRC [2015] which upholds the principle that BPR does not apply to furnished holiday lets and clarifies ‘investment’ activities.

In May 2015, the First Tier Tribunal held that inheritance tax business property relief (BPR) did not apply to a taxpayer’s furnished holiday letting business. The facts of the case were similar to that of HMRC v Pawson [2013]. Although the case does not establish any new points of law, it will be of interest to practitioners advising clients who own furnished holiday lets and shows that they will have an uphill struggle in persuading any court that their business is more akin to the running of a hotel. The decision did, however, bring some further clarity as to where the tribunal now draws the line between ‘investment’ and ‘non-investment’ activities.

Natasha Rees provides an overview of a year in enfranchisement

With appeals on issues ranging from statutory costs to the rights of landlords and tenants in collective claims, 2015 was a busy year in the world of enfranchisement. It ended with two decisions on the seemingly never-ending question of what constitutes a ‘house’ under the Leasehold Reform Act 1967 (the 1967 Act).

Alex Tamosius explains the implications of Foulser v HMRC [2015]

The First-Tier Tax Tribunal’s decision in Foulser v HMRC [2015] illustrates how far a layman’s understanding of ‘market value’ can deviate from its meaning for capital gains tax (CGT) purposes. The tribunal was asked to determine a historic market value of shares in a private UK company called BG Foods Ltd, in accordance with s17 Taxation of Chargeable Gains Act 1992 (TCGA) (more on which below): the taxpayers’ expert valued the shares at just under £6.5m, while HMRC’s valued them at just over £23m.

Charlotte Ross explores a case concerning forfeiture of a head lease where the court refused to grant relief

When the court is asked to consider an application for relief from forfeiture, it often has the difficult task of balancing the rights of the landlord under the lease with the need to find a proportionate solution which will give the tenant an opportunity to retain its leasehold interest.

Natasha Rees considers a case where precarious rights in leases and the test of the equivalence as set out in the 1993 Act came under the spotlight

It is often the case in collective enfranchisement claims that issues arise about what can be included within the claim. This is particularly the case with larger developments or blocks where tenants are able to use communal areas and gardens. In a recent appeal to the Upper Tribunal an issue arose concerning communal land that was claimed as additional freehold land by the tenants, but which the landlord wanted to retain in order to redevelop. The landlord sought to retain the freehold of the land in question by offering rights over the land instead, which would allow future redevelopment. The decision, known as Snowball Assets Ltd v Huntsmore House (Freehold) Ltd [2015], highlights a problem concerning precarious rights and how these should be dealt with in collective enfranchisement claims.

Zahra Kanani looks at the lessons to be learned from NHS Foundation Trust v Mrs X [2014], which marks a shift in the court’s attitude to ‘the right to life’

The issues that were before the Court of Protection in the case of A NHS Foundation Trust v Ms X [2014] illustrate the difficulties involved in applying legal principles to issues involving care and life-sustaining treatment. Cobb J’s sensitive, empathetic and humane judgment is a sign that the courts are beginning to resist the application of Article 2 of the European Convention on Human Rights (ECHR) (the right to life) and the obligation to preserve life at all costs and moving towards respecting the autonomy of the individuals concerned.

Hannah Kramer reports on a case that has highlighted the risk of a new public procurement exercise having to be carried out in the event of a ‘material’ variation to an agreement

Winchester City Council has been suffering turbulent times recently following the High Court’s recent decision on a judicial review application initiated by one of its own councillors (R (Gottlieb) v Winchester City Council [2015]).

Nikolas Ireland considers the importance of execution formalities on assignment in the context of a recent case

If there is one resounding lesson to be learnt from the recent Court of Appeal decision in Lankester & Son Ltd v Rennie [2014], it is the importance of complying with the proper formalities when assigning a lease. Even where a landlord, tenant and assignee appear to be proceeding on the basis that an assignment has been effected, it is vital to formalise this position through proper completion of the legal documentation.

Huseyin Huseyin delves into the issues to be considered when developing out unusual sites

Any competent developer should be capable of acquiring a greenfield site which is not subject to restrictions or covenants on title and successfully redeveloping for a decent profit.

The Upper Tribunal has recently favoured a more conventional way of working out marriage value for the purposes of an enfranchisement claim. Natasha Rees examines the consequences

Hedonic regression is not the usual topic of conversation among property lawyers and surveyors but it has caused something of a stir in the world of enfranchisement. In a recent decision of the Upper Tribunal in an appeal known as Kosta v Carnwath [2014], the tenant relied on a hedonic regression model in determining one of the few remaining areas of contention between enfranchisement surveyors: relativity.

Dominic Ribet explains how the proposed UK registry of corporate beneficial ownership will work

At the 2013 G8 summit, the UK government announced proposals to increase transparency in relation to both the ownership and control of companies. Prime Minister David Cameron said at the time, ‘We need to know who really owns and controls our companies. Not just who owns them legally, but who really benefits financially from their existence.’

Natasha Rees reviews an Upper Tribunal decision explaining what exactly tenants can include in a claim to collective enfranchisement in addition to the specified premises

It is often the case in collective enfranchisement claims that issues arise about what can be included within the claim. This is particularly the case with larger developments which include communal areas, car parking spaces and gardens. In a recent appeal known as Mark Cutter v Pry Ltd [2014], the Upper Tribunal have clarified what areas can be included in the claim and also whether the freeholder can vary the terms of the rights offered in lieu of purchase at the tribunal hearing.

Will the latest Court of Appeal decision leave tenants at breaking point? Helen Pickard considers the recent case of Friends Life

Break clauses have been in the headlines again.

Nikolas Ireland analyses a case requiring the court to balance the competing interests of the parties to a lease

The recent case of Century Projects Ltd v Almacantar (Centre Point) Ltd [2014] has provided food for thought on the balancing act between a tenant’s right to quiet enjoyment and non-derogation from grant and a landlord’s obligation to carry out works. It also serves as a practical application of the guidelines the courts will follow when exercising their discretion to grant interlocutory injunctions.

Charlotte Ross examines a recent Scottish case regarding the refusal of consent to a proposed subletting, and looks at how the English courts would have decided the issues

In the recent decision of Burgerking Ltd v Castlebrook Holdings Ltd [2014], the Scottish Court of Session ruled on the meaning of ‘a respectable and responsible’ tenant. The case concerned a landlord’s refusal to consent to a proposed subletting, and the judgment provides guidance on what a tenant will need to provide in order to establish that a proposed sub-tenant or assignee is ‘respectable and responsible’, particularly where the proposed sub-tenant in question is a new company.

Flood risk investigations are now an intrinsic part of the conveyancing process, but to what extent do solicitors need to advise their clients and what are the implications of forthcoming changes to flood insurance? Hannah Kramer reports

The winter of 2013/14 has proved to be one of the wettest on record for England and Wales, and the extensive flooding across much of the country has dominated the news headlines. At the time of writing, the Association of British Insurers have said that the cost of this extreme winter weather to insurers will be more than £800m, and the Environment Agency are still issuing flood alerts for the South East and South West of England, highlighting on their website that this was the wettest January in 250 years. Unfortunately, the latest flooding continues the trend toward an increased incidence of flooding in the UK in recent years. Many parts of the country experienced flash flooding in 2000, with further flooding affecting 55,000 properties in the summer of 2007 (the same year Rihanna’s aptly named hit song Umbrella dominated the charts for ten consecutive weeks), and the Environment Agency estimates that the cost for all properties affected by the severe flooding in 2012 reached £277m. The forecast for the rest of 2014 looks set to remain wet in some parts of the country, even if the rain holds off, given current groundwater levels in some areas.

Julia Mirza-Begum provides an overview of the main aspects of shari’ah-compliant commercial property transactions

With commercial real estate continuing to provide a popular asset class for Islamic investors, commercial property practitioners are becoming increasingly familiar with the interplay between the English legal system and shari’ah law.

Robert Keylock assesses the implications of Mountstar (PTC) v Charity Commission for charity professionals

The Cup Trust caused a furore after the story broke in The Times in January 2013, and rightly so. Aggressive tax avoidance schemes are not novel material for the British press, but the exploitation of relief on charitable gifts made this scheme particularly newsworthy. It was described by Margaret Hodge MP, Chair of the Public Accounts Committee as a ‘disgusting’ abuse of Gift Aid. Aside the obvious concerns raised in relation to the Gift Aid regime, the Charity Commission’s initial response to the dealings of The Cup Trust and those involved with the tax avoidance scheme called into question the effectiveness, or perceived effectiveness, of the Charity Commission (the Commission) in safeguarding charitable trusts.

Whaley v Whaley poses the question of when a trust fund is a ‘resource’ in divorce proceedings, as Emily Exton explains

The divorce case of Whaley v Whaley [2011] is a stark example of the application of well-established principles in the family courts concerning the treatment of a trust fund as a resource to which one of the parties has access. While no new law was formulated, the case serves as a vital object lesson in the importance of trustees taking a considered and careful stance within the proceedings, and appropriate legal advice at the earliest opportunity. 

Natasha Rees considers a decision that highlights the importance of complying with correct procedures when seeking to recover service charges

The Upper Tribunal recently reached a decision, in an appeal, concerning the strictness with which contractual procedures for the recovery of service charges must be observed, and the degree of flexibility available to a landlord to deviate from those procedures, either deliberately or inadvertently. The decision in Southward LBC v Woelke [2013] highlights how important it is to heed to the terms of the lease when issuing and serving service charges demands. Service charges, which include sums for major works will not be recoverable unless they are demanded in accordance with the lease.

Simon v Byford demonstrates that the courts will not set aside lightly a will because the testator has failing cognitive faculties. Harriet Atkinson and Zahra Kanani analyse the case

There has been a sharp rise in the number of disputes concerning the validity of wills. Increasing property values means estates are getting bigger and, with an ageing population, there are greater numbers of people suffering from diseases such as Alzheimer’s and dementia. It is often wills made later on in life that end up being challenged on the grounds that the testator lacked the requisite testamentary capacity to make the will.

Guy Abrahams assesses Buzzoni v HMRC, which indicates the court’s current attitude towards reversionary lease schemes

The case of Buzzoni v HMRC [2012] concerned a scheme designed to reduce inheritance tax by taking advantage of the principle identified by the House of Lords in the Ingram case (Ingram v Commissioners of Inland Revenue [2000]).

Fiona Smith finds much to praise in the 2013 edition of a distinguished classic

Williams, Mortimer and Sunnocks’ ‘Executors, Administrators and Probate’ is a staple of most private client practitioners’ libraries and the latest 2013 edition is no exception. A comprehensive analysis of the law as it applies to wills and the administration of estates, and comprising almost 2,000 pages of text, references and statutes, it is an essential volume for anyone specialising in this area of practice.

Emma Gosling considers some recent cases

It has been an eventful year for residential service charge litigation. There have been a number of cases that have helped to clarify the law, and in some instances, changed our understanding completely.

Helen Pickard examines the ramifications for developers and certifying architects of a recent High Court decision dealing with their liabilities to original and subsequent purchasers

The recent High Court decision in Hunt v Optima (Cambridge) Ltd [2013] relating to a defectively built block of flats is of importance to property practitioners for a number of reasons. It deals with the liabilities of both the developer and its certifying architect to original and subsequent purchasers for defective works, as well as damages for breach of the developer’s repairing obligations as landlord. It also deals with the relevant limitation period for bringing a claim and how to quantify the damages payable. The decision has important ramifications for professionals employed by a developer who provides documentation they know purchasers will rely on, and it highlights the need for property lawyers to ensure there are necessary warranties and assignments of rights from the original purchasers.

Dominic Ribet reports on whether the amendments to IHT legislation contained in the recent Budget will lead to any unintended consequences

The 2013 spring Budget saw George Osborne take aim at hitherto uncontroversial arrangements that used liabilities (debts) to reduce the value of an estate.

European Urban St Pancras 2 Ltd v Glynn confirms that a right to park cars on land can be a legal easement. Nikolas Ireland examines the case.

The county court judgment in the case of European Urban St Pancras 2 Ltd v Glynn [2013] provides important confirmation that a right to park cars on land can constitute a legal easement, even where the use is extensive, and that such easements can be acquired through the prescriptive doctrine of lost modern grant.

Hannah Kramer examines whether the DECC’s proposals will create a simplified CRC

On 10 December 2012, the Department of Energy and Climate Change (DECC) published their response to the March 2012 consultation on proposed changes to the CRC Energy Efficiency Scheme (CRC) and confirmed that the CRC is here to stay, albeit with some modifications. The consultation sought to address stakeholders’ various criticisms, which argue that the CRC is overly complex, creates a significant administrative burden and associated costs, and fails to reflect the organisational and operational realities of different trust and corporate structures. Notably, the landlord and tenant rule, which treats landlords who provide energy to their tenants as responsible for that energy supply, has been criticised for failing to reflect the reality of the commercial rental market.

A recent case has demonstrated that the courts will not construe a contract so as to re-write an unfavourable bargain, as Nikolas Ireland finds out

The High Court judgment delivered on 3 December 2012, on appeal in the case of Arnold v Britton [2012], serves to demonstrate how the High Court these days goes about construing a badly drafted document and how important the background circumstances can be in deciding what was intended.

Elizabeth Small and Anthony Goodmaker discuss a recent ruling on whether TOGC rules can apply to the grant of a long lease

Tax professionals were very excited by the decision in Robinson Family Ltd v HMRC [2012] as this marked a fundamental shift in how the majority of us had considered that the transfer of a going concern (TOGC) rules had operated.

Oliver Wright reports on the Bill as it currently stands

On 5 November, the Growth and Infrastructure Bill had its second reading in the House of Commons.

Robert Keylock provides an update on the usefulness of discounted gift plans after Watkins v HMRC [2012]

When the tax on pre-owned assets came into force in April 2005, many advisers raised a quizzical brow at the Treasury’s benign treatment of certain life assurance products, which unexpectedly slipped through the fingers of parliamentary draftsmen wholly unscathed. In spite of that, recent case law in the context of discounted gift plans (DGPs) highlights that despite falling outside the gifts with reservation of benefit legislation and the tax on pre-owned assets, DGPs will not always provide an answer to the estate-planning prayers of taxpayers.

The Supreme Court’s ruling on the meaning of a ‘house’ will come as relief to large estate owners, as Natasha Rees explains

Enfranchisement practitioners have been waiting impatiently for the outcome of two appeals in the Supreme Court known collectively as ‘Hosebay’. The appeals, brought by two central London Landed Estates, The Day Estate and the Howard De Walden Estate, were challenging a Court of Appeal decision that a property used for commercial purposes could qualify as a ‘house’ for the purposes of the Leasehold Reform Act 1967. In a decision given on 10 October 2012, the Supreme Court unanimously allowed both appeals.

Amanda Bottaro explains the effect of forthcoming changes in legislation and why property lawyers need to keep a close eye on the approach taken by parish councils

Many practitioners will be aware that the law relating to chancel repair liability is due to change in October 2013 and may have optimistically assumed that it will no longer be relevant after this date. Perhaps regrettably, this is not entirely the position.

Xavier Nicholas reviews the proposals for CGT and an annual charge in relation to property held by ‘non-natural persons’

As promised in the Budget in March, HMRC has released its consultation paper on the proposed changes to the taxation of UK residential property owned by ‘non-natural persons’. Since the Budget was announced there has been speculation that the changes might be watered down in response to lobbying from professional bodies. Many will be disappointed, therefore, to find that the consultation paper does not deviate significantly from the original proposals and asks as many questions as it offers answers.

When is a house reasonably so called? A recent judgment throws some further light on the issue, as Natasha Rees finds out

Enfranchisement practitioners are waiting with bated breath for the outcome of two appeals in the Supreme Court known collectively as ‘Hosebay’. Both appeals concern the definition of a ‘house’ under the Leasehold Reform Act 1967. It is expected that the Supreme Court will hear both appeals in July this year and that a decision will be reached by September. It is widely hoped that the Supreme Court will clarify the law in this area.

Emily Exton and Katherine Harper provide an update on the Court of Appeal decision in Barrett v Bem

In January this year, the Court of Appeal set down its judgment on Barrett v Bem [2012], a bitter family legal battle that Lord Justice Lewison described as ‘troubling’.

Lucy Barber looks at a case relating to excluded tenancies under the Leasehold Enfranchisement Act 1967

There has been much litigation over the last few years as to what is meant by the word ‘house’ in s2 of the Leasehold Reform Act 1967. The question arose once again in the recent case of Hertsmere Borough Council v Lovat [2011] where the Court of Appeal had to decide what was meant by ‘house’ and ‘adjoining land’ for the purposes of s1AA(3)(b) of the 1967 Act.

Magnus Hassett examines three recent high-profile court decisions and what they mean for landowners and their advisers

The tragic facts behind the three occupiers’ liability cases discussed in this article led to plenty of media interest. However, for practitioners, the cases primarily serve as a useful reminder of some key principles, in particular that:

Lucy Barber reviews a recent case where the court was required to consider whether the owners of houseboats held as tenants or as licensees?

In the normal course of property transactions, when buyers purchase a freehold the buyer will assume, quite rightly, that they are also purchasing the ground upon which the house is situated. It is a long-established principle that when you buy the freehold of a property, you own the ground beneath it and the airspace unless these areas are expressly excluded.

Ruth Atkins asks whether exclusivity agreements are worth the effort, or whether they simply serve as a distraction from negotiating the main transaction

The process associated with buying or taking lease of a property can be expensive and time consuming, and a seller may withdraw at any time prior to exchange of contracts with limited or no financial consequences. Some buyers and tenants look for a means of protecting their position during the due diligence period in order to lessen the chances of being gazumped and to provide some comfort that their abortive costs will be covered if the seller withdraws. This issue is particularly relevant in a vibrant market, with many bidders competing for a limited pool of prime assets.

Natasha Rees examines a case that considers the status of a tenant where the lease is assigned in parts without the knowledge of the landlord

On 2 November 2011, the Court of Appeal gave judgment in Smith & anor v Jafton Properties Ltd [2011]. The judgment relates to a legal issue arising out of a collective enfranchisement claim under the Leasehold Reform Housing & Urban Development Act 1993. Although it is primarily concerned with qualification under the 1993 Act it considers in some detail the status of a tenant where a lease is assigned in part and contains a useful analysis of the common law position relating to privity of estate.

Barrett v Bem sets an unusual precedent as Emily Exton explains

After a seven-year legal battle the will of Martin Lavin has recently been upheld by the court, in Barrett v Bem [2011], despite it having been signed by Mr Lavin’s sister to whom he had left his entire estate (valued at £300,000).

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