Property litigation weekly update – 13 January 2022 


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Happy new year and welcome back to 2022's first edition of the property litigation weekly bulletin! This week the team discuss, the Public Sector Equality Duty, how the 1925 Restrictive Covenants law still has real world implications and Rent Repayment Orders.

Public Sector Equality Duty

Landlords in the public sector will be familiar with the public sector equality duty (PSED) as set out in s149 of the Equality Act 2010.

The recent decision of the Court of Appeal in TM (by his litigation friend, DM) v Metropolitan Thames Valley Trust Ltd [2021] EWCA Civ 1890 serves as a reminder that the PSED is an ongoing duty and decisions of landlords should be kept under review, particularly where new evidence comes to light during the course of proceedings. The case is complex and this is a link to a detailed analysis.
 
A curious case about pre 1925 Restrictive Covenants law still has real world implications almost 100 years later

On 21 December 2021, the Court of Appeal in Bath Rugby Ltd v Greenwood & Ors v Bath Recreation Ltd [2021] EWCA Civ 1927 overturned the previous High Court decision, concerning the enforceability of a restrictive covenant pre-dating the Law of Property Act 1925 (the 1925 Act).

Background

To refresh the background of this case, from our earlier bulletin on 22 October 2020, Bath Rugby Limited (Bath Rugby) held a long lease of an area in the centre of Bath, known as "the Rec" and was planning to develop the land for a redevelopment of their stadium. Their landlord's predecessors in title had bought the land in 1922 where a restrictive covenant was imposed that would have inhibited the rugby club's development.

Bath Rugby sought a declaration that the 1922 restrictive covenant was unenforceable. They accepted that they had the burden of the covenant, but argued that the benefit had not been transferred to this Claimant, who, as a result, was not entitled to use the covenant to prevent the development of the stadium. The judge at first instance found that the covenant was enforceable. Bath Rugby, joined by their landlord, Bath Recreation Limited, appealed the decision.

The appeal

The crux of the appeal fell on a technical point of law. The benefit of a restrictive covenant passes when it is annexed to the land intended to benefit from it. With pre 1925 covenants, there has to be clear wording (i) showing an intention to annex the benefit to the land, and (ii) clearly identifying what land is intended to benefit. The statutory annexation in the 1925 Act does not apply.

The Court of Appeal disagreed with the High Court's interpretation of this covenant, and in particular that it sufficiently identified the claimant's land as land benefitting from it. The covenant described the land that benefitted from the covenant as ‘adjoining land or the neighbourhood’ and concluded that the wording here, in isolation, was not a sufficient indication of the land intended to be benefited by the covenant.

Moreover, the wording could not provide 'conceptual certainty'. An analysis of the word 'neighbourhood' was considered and defined by the Court, as an 'inherently imprecise term' and does not refer to any particular properties at all, rather a local area. As such, the land was incapable of being conceptually certain, nor sufficiently identifiable, either expressly or by necessary implication, for annexation to succeed.

The outcome

As a result, Bath Rugby were successful in their appeal and won on the basis that 'The 1922 conveyance did not identify the land intended to be benefited clearly or at all'. Had there have been a plan annexed to the covenant identifying the ‘adjoining land or the neighbourhood’ then the situation and outcome may have been very different.

Although the case relates to pre 1925 Act covenants and does not provide any current best practice tips for modern drafting, the commentary provides notable clarification about the annexation of covenants, both pre and post 1925 Act. The commentary also contains an interesting discussion on whether a condition of annexation for such covenants is that the land intended to benefit from the covenant has to be ‘easily ascertainable’, and whether this is in fact the same as being 'sufficiently identifiable'.

A bright and exciting start to 2022 for Bath Rugby and their fans. Now all they need to do is start winning a few games.
 
Rent Repayment Orders, financial penalties for HMO landlords and Defences of insanity

An appeal from the First Tier Tribunal (FTT) in the case of a AA v Rodriguez and others (2021) UKUT 269 (LC) recently came before the Upper Tribunal, the main issue being whether, because of poor mental health, the appellant landlord (the landlord) had a reasonable excuse for controlling an unlicensed house in multiple occupation (HMO) but also whether the landlord should be permitted to rely on evidence which was not before the FTT when the original decision was made.

The landlord rented five bedrooms in his long leasehold property and this was subject to Camden London Borough Council' s (the local authority) additional licensing scheme introduced under Part Two of the Housing Act 2004 which requires any HMO having three or more people comprising of two or more households to be licensed.

The local authority, having told the landlord that he had been operating an unlicensed HMO and that he should therefore apply for license, subsequently gave notice that they were imposing a financial penalty of £3,000. At around the same time, the tenants applied for a Rent Repayment Order (RRO) for the sum of £18,903 on the basis that the landlord has committed an offence, being a person in control of an unlicensed HMO.

The judge having considered both matters decided that the appeal against the financial penalty should be heard before the RRO matter. However, whilst there was a preliminary hearing in this respect at which some medical evidence was produced and at which directions were given concerning mental health issues, the matter went no further as shortly thereafter, the local authority decided to cancel the financial penalty.

At the FTT hearing that dealt with the RRO issue, the landlord landlord's defence was that he had been suffering from significant mental illness at all material times which provided him with a defence of insanity. In the alternative, it was argued that his mental illness provided a reasonable excuse for his failure to obtain a license. If the FTT was not persuaded by either of those defences, the landlord disputed the amount of the RRO sought.

The FTT found that whilst, on the balance of probabilities the landlord did suffer from mental illness, there is insufficient “cogent psychiatric evidence“ before it to conclude that this amounted to a defence of insanity. However, the FTT did find that the landlord had a reasonable excuse, being the statutory defence available to him under the Housing Act 2004, for operating the property without an HMO license for a certain period of time. The amount of the rent repayment order was reduced to £15,159.

The Upper Tribunal, in remitting the proceedings back to the FTT for further consideration of the landlord's defence of reasonable excuse held that as it had been the intention that the hearing of the appeal against the RRO and the financial penalty imposed by the local authority would be co-ordinated, it was not unreasonable for the landlord to believe that the FTT would take the same material into consideration at the RRO hearing as it had done in the preliminary hearing of the financial penalty appeal. However, this had not happened. Furthermore, the FTT‘s decision and approach had not been consistent: the RRO award had been reduced by reason of mental health issues but the reasonable excuse defence had failed.

The landlord clearly did have mental health issues and the inconsistent approach of two differently constituted tribunals as well as a clear discrepancy in the decision made justified the case being remitted back for further consideration.

Insights from around the firm

Positive news

  • 18-year-old Sebbie Hall has carried out a random act of kindness every day since the start of the pandemic in March 2020. Sebbie, who has learning and physical difficulties, has helped more than 2,000 people and now set up the Sebbie Hall Kindness Foundation which has raised nearly £40,000.
  • Hope is on the horizon for the Great Barrier Reef due to the latest success of coral IVF. This discovery indicates potential to repopulate the coral reef and could be used to combat the current threats it is facing.
  • In an effort to increase their population numbers and support the sustainability of ecological conservation arears, fourteen endangered slow lorises have been released into the Bukit Barisan Selatan National Park in Lampung, Sumatra.
  • This week marks 15 years since Apple's Steve Jobs launched the first iPhone – this has been monumental in the technology world and has changed all of our lives!
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