Steeles Law Head of Planning & Environment David Merson looks at the Coalition’s proposals to revise the planning obligations regime to try and help kick-start stalled development proposals.

It is suggested that some two thirds of approved building projects in the last five years have either been dumped or stalled as a result of planning obligation costs making development proposals uneconomic in the wake of the credit crunch and subsequent recession.

The Secretary of State for Communities and Local Government, Eric Pickles, is therefore sending ‘troubleshooters’ into 13 local planning authorities to see if re-opening and re-negotiating section 106 planning obligation deals could provide a means of getting some projects back on track.

Coupled with this, the Coalition has announced a consultation exercise involving amendments to the Town and Country Planning (Modification and Discharge of Planning Obligations) Regulations 1992 SI 1992/2832.

The proposal will allow planning obligations entered into prior to 6th April 2010 to be re-negotiated in order to unlock development projects which were negotiated in more buoyant economic conditions but which are currently not economically viable.

Section 106 of the Town Country Planning Act 1990 (as amended) allows local planning authorities, usually before granting planning permission, to enter into planning obligations with developers. Those obligations can be voluntarily renegotiated at any time but, under the terms of the Regulations and absent any agreement, can be subject to a formal application process to reconsider the terms when it is five years old. Appeal provisions apply where such an application has been refused.

It is anticipated that the new regime will operate to allow planning obligations entered into on or before the relevant date to be re-negotiated. This provision removes the five-year restriction in the current Regulations from those planning obligations but those more recent planning obligations entered into after that date will not be able to benefit from this change. They must either be re-negotiated by agreement or wait until the expiration of the five-year period and then go through the existing formal modification and discharge procedure.

Developers looking to rely on the revised provisions, if and when enacted, will still need to ensure that the substantive legal test is met and there will, according to the consultation document, need to be strong justification for any change(s) sought. The modified obligation must still be acceptable in that it must still be necessary to make the development acceptable in planning terms.

Note however that local planning authorities cannot be forced to re-negotiate planning obligations. They would be expected to act reasonably and to consider and determine such an application applying proper planning considerations. But they might refuse to do so or they might conclude that there was still clear justification for the obligation to remain unmodified. This would engage the appeal provisions and could also, where the relevant grounds arose, permit an application for judicial review.

Details of the consultation exercise can be found here. The consultation period runs until 8th October 2012.

If you require further information or advice on any issues raised in this article or any other planning & environmental matter please contact David Merson on 020 7421 1720 or [email protected]

Steeles Law Head of Real Estate Michael Fahy and Trainee Solicitor Laura Tanguay consider the Court of Appeal decision of Ener-G Holdings plc v Hormell [2012] EWCA Civ 1059 (31 July 2012) on personal service and ‘permissive’ drafting.

In this case, the Court of Appeal considered an appeal by Ener-G Holdings Plc (“Ener-G”) of the decision of the court of first instance which found that Ener-G’s £2 million claim for breach of warranty was time barred.

Key clauses

The two key clauses in the agreement between the two parties stated:

1. Ener-G must give written notice of any breach of warranty claim to Mr Hormell (the Respondent) by ‘the second anniversary of completion’ (i.e. by 2 April 2010);

2. Proceedings in respect of that claim must be issued and served not later than twelve months after the date of that notice; and

3. Any such notice ‘may be served by delivering it personally or by sending it by pre-paid recorded delivery’.

The facts

Ener-G served its notice for breach of warranty on Mr Hormell in two different ways. First, a process server attended Mr Hormell’s home address on 30 March 2010 to personally serve the notice. Because no one was home at the time, the process server left the envelope in the front porch on a table. Later that afternoon, Mr Hormell found the envelope, opened it, and read the notice. Later that day, a second notice was sent to Mr Hormell by recorded delivery which was deemed received on 1 April 2010.

Ener-G commenced court proceedings in respect of the claim on 29 March 2011. The claim was served by means of personal service and was deemed served on 31 March 2011. Therefore, if the notice delivered by the process server on 30 March 2010 was found to be properly served, Ener-G’s claim was time barred as it would not have been served on Mr Hormell within 12 months of the notice. If, on the other hand, the notice delivered by the process service was found not to be properly served, then the clock for serving the claim would not have started running until 1 April 2010 – meaning that Ener-G’s claim was not time barred.

‘Delivering it personally’

Ener-G argued that ‘delivering it personally’ required that the notice be handed personally to the intended recipient. As this did not happen, the notice delivered by the process server and left on the table was invalid. Mr Hormell contended that it was enough for the notice to have been left at the property (albeit not handed to him in person) and so the notice should be upheld as valid. The Court of Appeal upheld the decision of the court of first instance and ruled that ‘delivering it personally’ required the notice to be handed to Mr Hormell personally, and the actions of the process server did not satisfy this requirement.

Permissive rather than exclusive

However, the wording of the clause in this agreement stated that the parties ‘may’ serve the notice by delivering it personally or by sending it by pre-paid recorded delivery. This wording was permissive rather than exclusive, referring to “may” rather than “must” or “shall”, and therefore Ener-G were free to use any method of service and were not limited to the two methods specified. Accordingly, the actions of the process server did in fact constitute good service for the purposes of the agreement and consequently Ener-G’s claim was time barred. The decision of the Court was split 2:1, with Lord Justice Longmore’s dissenting view “that it is counter-intuitive to conclude, when the parties have taken the trouble to spell out [how a notice can be served] that a notice can be served … in any other way the deliverer of the notices chooses.”

Practical guidance

1. Do not leave the service of important documents to the last minute where time is of the essence. Lord Justice Gross commented by saying, “I fear that by leaving service until so late in the day, the Appellant has been the author of its own misfortune.”

2. Be aware that ‘personal service/delivery’ means service to the addressee in person and not just delivery to the addressee’s premises.

3. Avoid using permissive words such as ‘may’ in an agreement if what is really intended is that the parties shall or must do something.

If you require advice on any issues raised in this article please contact Michael Fahy on 020 7421 1720 or [email protected].

Leading East of England law firm Birketts LLP are pleased to announce that Matthew Gowen has joined the firm as a consultant within the firm’s Corporate Criminal Defence team.

Matthew is a practising barrister with 18 Red Lion Court, London, having been called to the Bar in 1992. He will continue with his practice in chambers in addition to working with the firm with immediate effect.

He appears frequently as a leading junior both for the defence and the Crown in serious criminal cases and has also advised on and appeared in cases of regulatory crime, including health & safety and environmental matters. He is a Grade 4 Advocate (the highest rank) for the Crown Prosecution Service.

On his appointment, Matthew said: “I am delighted to be joining Birketts LLP as a consultant. The firm’s sharp strategic focus and its commitment to building and developing its high-quality Corporate Criminal Defence team provides an appealing mix of challenge and opportunity at this stage of my career. I am looking forward to working with the team to develop the firm’s presence and capabilities.”

Laura Thomas, head of the Corporate Criminal Defence team at Birketts, added “We are delighted Matthew will be working with us. Matthew brings over 20 years of experience to the firm and a barrister of his calibre and reputation will help us to continue building and developing our Corporate Criminal Defence practice. His knowledge and experience on a wide range of criminal and regulatory cases will support our significant work in this market. Matthew’s engagement follows our recent appointment of Frank Sykes, ex-HSE Principal Inspector who joined the team as a consultant in May and is already significantly benefitting both existing and new clients with his expertise. There are exciting times ahead for the team!”

Steeles Law Head of Real Estate Michael Fahy and Trainee Solicitor Laura Tanguay consider the High Court decision of E.ON UK plc v Gilesports Ltd [2012] EWHC 2172 (Ch) on landlord’s consent for assignment.

Introduction

This case is a useful illustration of how not to assign a lease. We outline the facts of this case and review what can happen when a tenant assigns its sublease to another party without first obtaining the immediate landlord’s proper consent.

Consent to Assign

It is typical for a lease to provide (as this sublease did) that an assignment may only be completed with the landlord’s prior written consent, such consent usually taking the form of a Licence to Assign. A tenant must therefore make an application to its landlord for it to consider. Under section 1(3) of the Landlord and Tenant Act 1988, landlords must consider and respond to a tenant’s request within a reasonable time frame, and, if consent is refused, provide the tenant with the reasons for such refusal in writing.

The Facts

In this case, an application for the landlord’s consent had been sent via email, which was not in accordance with the terms of the sublease which incorporated section 196 of the Law of Property Act 1925 (as amended by the Recorded Delivery Service Act 1962) for the service of notices (i.e. that notices must be left at the landlord’s last known place of business or sent by Recorded Delivery). The landlord did not respond to the request and so no consent was received by the tenant. Despite this, 11 days after submitting its request, the tenant completed the assignment of the sublease. As consent had not been given, the landlord sought to recover rent from the tenant post assignment. In court, the tenant argued that the landlord had unreasonably delayed in giving consent and it should therefore be deemed to have consented.

Judgment

It was held that service of the tenant’s request by email was not sufficient to trigger the landlord’s statutory duty to consider the application under section 1(3) LTA 1988. The application should have been served in accordance with the provisions of the sublease. Even if service by email had been sufficient, the court stated that 11 days was too short a period to hold that the landlord had been unreasonably in its delay. Unfortunately for the tenant, the bad news did not end there; as the assignment was never registered with the Land Registry (in breach of covenant) and so by virtue of section 7 LRA 2002, the assignment of the sublease became void and reverted back to the tenant. As such, the tenant was still the current tenant (and not the ‘former tenant’) for the purposes of the section 17 notice for rent demanded under LTCA 1995, and therefore, its liability for rent arrears was not limited by this section.

If you require advice on any issues raised in this article please contact Michael Fahy on 020 7421 1720 or [email protected].

Steeles Law is pleased to announce that the firm is exhibiting at the popular Diss on View business event, presented by Diss Business Forum (DBF) and Hales Group Ltd once again this year.

Steeles Law is pleased to announce that the firm is exhibiting at the popular Diss on View business event, presented by Diss Business Forum (DBF) and Hales Group Ltd once again this year.

We would like to invite all clients and contacts in the Diss area to come and visit us at stand number 7 at the exhibition, which will take place on Friday 14 September, 1.30 – 5.00pm at the Park Hotel, Diss.

Visitors can also book in to attend a networking brunch from 11.30am – 1.30pm before Richard Bacon, MP for South Norfolk and Graham Minshull, Diss Town Mayor open the event at 1.30pm. At the end of the day, there’s another opportunity to combine business with pleasure at a Cocktail Workshop from 5.30pm.

Details of the day and booking forms for both networking events can be found on the DBF website www.dbf.org.uk.

We look forward to seeing you there.

Ed Savory, an Associate in Leathes Prior’s Franchising Team, attended the bfa London & South East Regional Forum. Each quarter, franchisors and advisers in the Franchise Industry meet to discuss the current “hot topics” in the market.

The following issues were discussed:

Updating franchise documentation – how, when & why? It is important to keep documentation under constant review and this does not just mean the Franchise Agreement. In particular, think about marketing materials, website, Franchise Information Memorandum (FIM) and Manual. The risk for franchisors is being sued by a franchisee for over selling the business proposition. This is not helped by any provisions of the Franchise Agreement which are out of date being unenforceable.

Franchisors would be well advised to appoint one person to be responsible for reviewing and updating documentation and, of course, advice from their solicitors should be at hand.

Protection of franchisor Intellectual Property (IP) First of all a reminder was given of exactly what IP is – essentially the brand and the unique franchised business system, all know how as set out in the operations manual. The registration of trademark(s) is an important initial step – remember that the correct class(es) should be applied in order to make the registration fully effective. If your business used a designer (or some other third party) to create the brand then you should ensure that all rights in the design rights have been duly assigned. The franchisee’s employment contracts should also contain relevant restrictions.

Franchisee improvements – embrace or dismiss? Franchise success is about both consistency and constant development. Whilst all franchisees must adhere to the system if any of them have any suggestions for improvements then these should be embraced. Furthermore, the proposing franchisee can act as a guinea pig for trying out a certain idea before full roll-out across the network.

How to educate the general public about franchising The bfa is looking closely at how to educate the general public about franchising – that is business format franchising. The next bfa Chairman (Sir Bernard Ingham retired this year) should be a generally recognisable figurehead. Franchisee membership should also assist.

Franchisee recruitment – what are franchisors experiencing? The evolution of online marketing has meant that most franchises are now using a “mix of media” in order to promote sales both in terms of new franchisees and business generally. The current market trend is that the time taken to recruit is slowing as prospective franchisees are more cautious about taking the leap.

bfa Natwest survey The bfa survey (as previously reported on) shows that the franchising industry in the UK is stable and growing. 80% of franchisees are generally happy, 929 franchises in operation in the UK with franchisees in 40,000 locations with a total turnover of £13.5bn.

Employment solicitor Sam Greenhalgh reports on a recent decision of the Employment Appeal Tribunal (EAT), which considers when it is appropriate to identify a ‘pool’ from which employees are selected for redundancy.

The employer in this case, a golf club, decided to make its club steward redundant in order to save costs. The employer consulted with the employee and subsequently confirmed his redundancy following a number of meetings with him. His duties, which included the management of the bar area, were to be undertaken by other members of the catering and bar staff.

The employee brought a claim for unfair dismissal, which was upheld by an employment tribunal. The tribunal concluded that in making the club steward redundant, without considering whether to identify a pool of employees from which to select for redundancy, was not within the “range of reasonable responses” required for the dismissal to be fair.

The employer appealed to the EAT. The EAT confirmed that there is no requirement to identify a pool for selection in a redundancy situation, and it might be perfectly reasonable for the employer to consider a single employee for redundancy. The tribunal in this case had failed to consider whether, given the nature of his job as a club steward, it was reasonable for the employer not to consider identifying a wider pool of employees from which to select. The employer’s appeal was upheld and the case remitted for a rehearing.

Comment

There is no requirement to follow a selection process in a redundancy situation, in circumstances where an individual’s role is no longer required and they are the only person carrying out that role. Provided the employee is properly consulted with prior to confirming the redundancy, the dismissal will be fair. However, it might still be necessary as part of the consultation process to consider whether it is appropriate to ‘bump’ another employee, making them redundant instead in order to retain the services of the employee whose role is no longer required.

If a number of employees carry out similar duties, then it will be more appropriate to identify a pool of employees from which to select for redundancy.

A copy of the judgment is available here

Steeles Law Head of Real Estate Michael Fahy and Trainee Solicitor Laura Tanguay consider the High Court decision of Kettel v Bloomfield [2012] EWCA 1422 (Ch) on the right to use car parking spaces and the landlord’s ability to reallocate spaces.

The Claimants in this case held leasehold interests in eight flats in a development known as City Walk. Each lease granted the tenant the right to park in a designated parking space.

The freehold owner of City Walk obtained planning permission to build a new housing block; the location of which would be in the same spot as the parking spaces. The landlord therefore wrote to each tenant to explain that their parking spaces were being reallocated and promptly fenced off the area.

The tenants did not consent to their parking spaces being moved and sought an injunction to restrain the landlord.

Type of ‘right’

The first question considered by the court was the nature of the right granted. Did the parking spaces form part of the property demised by the lease, or did the tenants merely have easements to use the spaces? The distinction was important as the extent of the rights granted determined the extent of the landlord’s limitation in developing the land. If the spaces formed part of the demise, the landlord would be prevented from building on them or even in the airspace above them.

The court held that the terms of the lease did not amount to a demise of the car parking spaces.

The case law on whether or not a right to park a car can exist as an easement is far from clear. The rule established in the case of Batchelor v Marlow [2003] 4 All ER 78 stated that a right to park a car could not be an easement if it left the servient owner without any ‘reasonable use’ of his land. However, the subsequent decision of Moncrieff v Jamieson [2008] 4 All ER 752 criticised the ‘reasonable use’ test and held that the correct test should be whether the servient owner retains “possession and control” of the land subject to the reasonable exercise of the easement.

However, the court in this case confirmed that it was obliged to apply the ‘reasonable use’ test as set out in Batchelor. It was held that the rights did not deprive the landlord of all reasonable use of the land – the landlord could cross the space, enter the space to maintain or resurface it, lay conducting media under the space and install overhead projections such as wires. The rights were therefore upheld as easements.

Movement of the spaces

None of the leases expressly stated that the landlord could move the spaces and the court held that no such right could be implied. The court looked to the case of Greenwhich NHS Trust v London & Quadrant Housing Association [1998] 1 WLR 1749 in confirming that the landlord could not unilaterally extinguish an easement by providing an equivalent easement.

Remedy

The landlord argued that damages were an appropriate remedy as the loss was, in his opinion, trivial given that the tenants would be given spaces new only yards away. However, because the landlord had not made the offer of new spaces in a way that would be binding, the court held that it had sought to escape the burden of the rights granted and consequently allowed the injunction.

Practical solutions

If a tenant has a right to park in a designated parking space there is no right to reallocate the space, even if the new space is only a short distance away and equally as convenient. The safest course of action is to grant parking rights in relation to spaces ‘designated by the landlord from time to time’

If you require advice on any issues raised in this article please contact Michael Fahy on 020 7421 1720 or [email protected].

Following a previous article by Jean Parkinson published in the Solicitors Journal which outlined the proposals to crackdown upon residential squatters, the bill has now been passed.

As of 1 September 2012 it will become a criminal offence to squat in a residential property, whether it is vacant or not, with those found guilty at risk of a maximum six month term of imprisonment, a fine of £5,000, or both.

Whilst many will argue that it places pressure and further stigma upon those who might be vulnerable and in need, the rights of homeowners have firmly been placed to the fore in providing them with a better set of armoury with which to protect their properties.

If you require further information or advice on any issues raised in this article please contact Jean Parkinson on 020 7421 1720 or [email protected]

4myschools are at the Festival of Social Enterprise on Tuesday 11th Sept- looking to share the benefits of sustainable social enterprise locally for schools, teachers and children.

We are looking to find a franchisee to run their own values based businessfor Norfolk schools and teachers.

Speakers at the event include Nigel Kershaw CEO Big Issue, Cliff Prior CEO UnLtd, Sara Burgess the CIC Regulator.If there is anybody interested in Social Enterprise in Norfolk then this is the place to be.

We would be delighted to share our experience with anybody interested in making a difference through social enterprise.

see: www.festivalofsocialenterprise.co.uk for more details

Venue: The Forum Norwich – Please come and have a chat with us.

Kind regards

Mark