Property litigation weekly update — 24 June 2021


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In this week's bulletin the team discuss, the commercial rent moratorium, the new lines drawn for the resolution of boundary disputes, the EE Ltd V LONDON UNDERGROUND case and the debt respite scheme.

Commercial rent moratorium extended by UK government

As our last bulletin "went to press" the news broke that the current moratorium on evicting commercial tenants that have been unable to pay rent due to being closed during that pandemic will be extended by the UK government until 25 March 2022.

The moratorium was expected to end on 30 June 2021, with landlords who have been left out of pocket expecting to start either receiving repayments or commencing eviction proceedings against their tenants on 1 July 2021. However, with certain Covid-19 restrictions remaining in place, meaning that some businesses are still unable to open, the government has advised that the existing measures in place to protect commercial tenants will be extended in order to allow tenants and landlords to come together to reach a solution regarding unpaid rent, without the threat of eviction.

Commercial landlords and tenants will be expected to work together to come to an agreement about how the money owed will be dealt with, including whether to waive some of the money owing or agreeing a repayment plan for the full amount but over a longer term, in order to allow the business to recover. In addition, legislation will be introduced to ring-fence unpaid rent which has built up while a business has remained closed due to the pandemic. Under the legislation, where the parties are unable to come to an agreement about these outstanding sums, they may be required to engage in an arbitration process that will result in a legally binding agreement regarding how they will proceed.

The government has also advised that the restrictions on the use of Commercial Rent Arrears Recovery will continue, as well as the protections from forfeiture for business tenants as set out in the Coronavirus Act 2020. These extensions are expected to be until 25 March 2022. However, the Corporate Insolvency and Governance Act 2020 introduced restrictions on serving statutory demands and winding-up petitions, which are also set to be extended, although this is only until 30 September 2021.

While the extensions to current restrictions applies to all businesses, the specific measures outlined above that will be introduced by new legislation will only cover businesses impacted by closures such as nightclubs and hospitality. When these businesses are able to reopen they will be expected to start paying their rent as soon as possible.

The full details of the legislation are awaited, but it is clear that commercial landlords and tenants will need to come to the negotiating table in order to settle on an agreement that will be satisfactory for them both, as the country continues to build itself back up after the chaos of Covid-19.

New lines drawn for the resolution of boundary disputes

Boundary disputes can be expensive, time-consuming and seriously damaging to relationships between neighbouring landowners. The issue may relate to responsibility for maintenance of a boundary, or understanding where a boundary falls when property title documents are very dated or lost. They can become particularly charged where residential property is concerned, meaning that the financial cost can soar as well as the emotional toll on the parties involved.

The monetary cost of taking a boundary dispute to court can be expected to reach five figures before the parties even step foot in a courtroom, and it may take years to reach that point. With property prices increasing and a particular demand for houses with gardens, ensuring boundary issues are in order can have significant effects on the value of property.

In light of the above, the Royal Institute of Chartered Surveyors (RICS) and the Property Law Association (PLA), with the support of the Civil Justice Council, have joined forces to introduce the new Boundary Disputes Mediation Service (BDMS) which is available to all parties seeking to resolve a boundary dispute, from May 2021. Applying to the BDMS is simply a case of filling in the online form: www.rics.org/bdms

As with all alternative dispute resolution (ADR) procedures, the advantages of the BDMS are that parties can retain control of the dispute and ultimately its resolution, have flexibility to take into account timescales and circumstances of the parties. In addition ADR can save time and money as it can be quicker and less expensive than traditional litigation.

RICS charge a fixed administration fee of £240 (inclusive of VAT) for the appointment of an independent mediator, who will be a lawyer or chartered surveyor. The mediator will then charge a fixed fee of £2,400 per party for an 8 hour mediation session, which includes the hearing and preparatory work. Any additional time is then charged on the basis of an hourly rate agreed between the parties and the mediator before the mediation commences..

It's unlikely that the BDMS fees will be the only cost to a party considering mediation, as they may have taken legal advice at an earlier stage, or consider instructing solicitors if their neighbour has already done so. However, if both parties are truly willing to engage in the process and resolve their issues out of court, it is likely that this method could prove very useful and much more cost effective than litigation. ADR is also known as being useful for repairing relationships between the parties without the acrimonious courtroom setting, which is of particular importance where parties need to continue living side by side.

Whilst the success of the BDMS is not yet known, most involved in such disputes will be hopeful that this new scheme will aid the resolution of disputes without resorting to legal proceedings. RICS will gather statistics on referral and settlement rates, but while it is hoped that the BDMS will be a genuine alternative to litigation, unfortunately some matters will inevitably end up before the judiciary.

Operators granted interim MSV Code rights at critical national infrastructure building in London (EE Ltd v LONDON UNDERGROUND)

Despite concerns raised by the site provider, London Underground Limited, regarding security and the integrity of critical national infrastructure, an order was granted in favour of EE Limited and Hutchinson 3G Limited, allowing them to undertake a multi-skilled visit (MSV) at a high security building in Central London. The decision has implications for site providers facing requests from operators for interim access Code rights to assess the suitability of the site for telecommunications apparatus and highlights that even concerns that may ultimately prevent the grant of permanent rights will not necessarily prevent an MSV taking place.

Read more on our full article here.

The Debt Respite Scheme

 Otherwise known as a 'breathing space', the Debt Respite Scheme came into force on 4 May 2021. By virtue of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020.

There are two types of breathing spaces:

  1. a standard breathing space is available to anyone with a debt problem. It gives a person legal protection from creditors action for up to 60 days. The protections include pausing most enforcement action and contact from creditors as well as freezing most interest and charges on debts;
  2. a mental crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person's mental health crisis, plus an additional 30 days.

In order to be eligible for a standard breathing space, a prospective applicant must not have been on a breathing space scheme in the past 12 months (but this does not include mental health breathing spaces), be on a Debt Relief Order, have an Individual Voluntary Arrangement, be subject to an interim Order or be an undischarged bankrupt.

Many debts qualify for a breathing space namely credit cards, store cards, personal loans, pay day loans, overdrafts, utility bill arrears, mortgage or rent arrears. However, there are some exceptions namely secured debts, debts incurred after a breathing space started, debts incurred because of fraud, court fines, obligations from a Confiscation Order, child maintenance/money owed under an order from Family Court proceedings, a crisis/budgeting loan, student loans, personal injury damages, advance payments and universal credit and Council Tax liabilities that are no yet due.

The effect on a creditor is that if a debt owed is in a breathing space, all action related to that debt must be stopped. It is intended that the break from spiralling credit will give borrowers a chance to work out their financial situation and options that could help them get out of debt.
 
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