What do forfeiture, rates and adverse possession have in common? Nothing much, but they are all covered in this week's bulletin from the property disputes team at Trowers. Read on for all this, plus a bit more, as usual.
Rumble in the Jungle
The Manchester Civil Justice Centre was recently regaled with tales of theft and unlawful landlord visitation at the Cumbria Safari Zoo in the case of Cumbria Zoo Company Ltd v The Zoo Investment Company Ltd. The landlord and tenant had enjoyed a long and fractious relationship, which in 2021 had seen the landlord forfeit the tenant's lease by peaceable re-entry. The reasons for the forfeiture included an alleged failure to provide, on reasonable notice, the landlord with access to the lease premises and theft of various items said to be owned by the landlord. The tenant had immediately sought, and obtained, an injunction allowing it to go back into possession. Litigation then followed. The tenant's proceedings appear to have included a claim for relief from forfeiture, but before getting there the Court had to decide whether the landlord's reasons for the forfeiture were made out.
From the Judgement, this does not appear to have been a straightforward exercise. The allegations were factually detailed and arose from a complex history. On top of this, the Judge described how the "dispute between the warring factions" (two big cats squabbling in a bag? – Ed) in the case had led to a tendency towards a "partisan approach" which "aggravated the usual difficulty in relying on the oral evidence of witnesses when it is not supported by contemporary documentation".
The facts themselves are enjoyably colourful, but the Judgement lengthy, so we are not necessarily suggesting reading it as a way of passing a pleasant hour. However, for this readership it serves as a useful reminder in a couple of areas. One is in relation to the form of witness statements, which must comply with the rules set out in Practice Direction 57AC of the Rules of Court. Of particular significance is the need to limit these to an account of relevant facts, and not to include commentary on other evidence, or on matters that are not within the knowledge of the witness. According to the Judge, this case involved wholesale departures from these strictures. The second is that detailed factual disputes are inevitably costly and their outcome uncertain and that however bad the relationship between the parties, it is always worth seeking to mediate or find some other resolution besides a detailed judicial determination. Indeed, one might say the worse the relationship, the more important this is likely to be.
In this case, the landlord was not entitled to have exercised its right of forfeiture for the reasons it purported to do so. The Judge is hoping the parties now find a way to "bridge their remaining differences without the expense of further litigation." We shall see.
Rate of Change
The Valuation Office Agency has undertaken a revaluation of all properties in England and Wales. The new valuations will take effect on 1 April 2023. That may mean changes to your business rates but will also affect the statutory compensation payable under the Landlord and Tenant Act 1954 ("the 1954 Act") where a landlord is opposing a business tenant's lease renewal.
A landlord is entitled to oppose renewal of a tenancy on the basis of various grounds set out at Section 30(1) of the 1954 Act. Most commonly a landlord will oppose renewal because it intends to redevelop the property (Ground (f)). If a landlord opposes renewal under the "compensation" grounds of Section 30(1) of the 1954 Act (i.e. Grounds (e), (f) and (g)), and does not also specify a valid "non-compensatory" ground by doing so it will become liable to pay statutory compensation to vacating tenant. A landlord will be required to pay compensation to the tenant equal to the rateable value of the demised property or double the rateable value where the tenant (and/or predecessor) has occupied the property for 14 years or more.
The Valuation Office current valuations are based on rateable values from 1 April 2015 although they took effect on 1 April 2017. The most recent valuation exercise is based on rateable values from 1 April 2021 but, as above, will only take effect on 1 April 2023. The future valuations are now available on the Valuation Office website. In these topsy turvy times, we are seeing many valuations going down as well as up.
Understanding the compensation position may dictate when best to serve a notice for landlords. The relevant date for calculating compensation is the valuation on the date on which a landlord serves a Section 25 notice or a counter-notice if a tenant has already served a notice requesting a new tenancy. If the valuation is due to go up on 1 April 2023 then, where possible, it may make sense to bring forward service of the landlord's notice opposing renewal to before that date to ensure a reduced compensation bill. If the valuation will go down, then, again where possible, a landlord may instead consider delaying service of the notice until the valuation change has taken effect.
If you are a landlord considering taking possession of commercial property under the 1954 Act, please feel free to call us to discuss your 1954 Act strategy.
Intentionally Adverse
In these dark winter days, a case on adverse possession is always welcome (Calverley Village Day Nursery Ltd v Lynch). So we thought it helpful to consider one such case heard during 2022 and upon which we have not previously commented.
Select Products (Yorkshire) Ltd occupied a commercial property at No. 57 under licence from Mrs Lynch. The adjoining commercial property at No. 55 was owned by Calverley Village Day Nursery Ltd. Mr Lynch and Mr Spence bought No. 57 in 1991 (which then passed to Mrs Lynch) and Calverley bought No. 55 in 2018 knowing that Mrs Lynch and Select alleged they had the right to keep materials on part of the land at No.55. Having litigated on the basis of a number of issues, the trial judge had decided that the Defendants were indeed entitled to part of the land, on the basis of adverse possession.
This finding was appealed, and the appeal was heard in the High Court by Mr Justice Fancourt. The appeal was argued on the basis that in order to succeed the Defendants had to show there was 12 years' adverse possession before 13 October 2003. After that date, the law required different tests to be applied, with potentially different consequences. The Claimants argued that the Judge had not addressed this timeline with sufficient detail. They also argued that the Judge should not have decided that the evidence he found for the Defendant's use of the disputed land was sufficient to establish the necessary "intention to possess".
Fancourt J dismissed the appeal, saying that the Judge had sufficiently addressed the timeframe, and that the evidence of use was, in this case on these facts, sufficient to show an intention to use it as would an owner even though the use had not, for example, involved fencing off the disputed land.
The Judge found during the period from 1991 to 2003 there was an "irreducible minimum" of possession of the equivalent of two parking spaces on the disputed land as a skip had been placed on the disputed land from shortly after its acquisition and remained there since, Mr Lynch stored materials on the disputed land and he and Mr Spence used the land as an informal dumping ground when the skip was full. The use of the land effectively precluded any other use by any other party, and accordingly were the acts of a party asserting its ownership.
Insights from around the firm
- Higher-Risk Buildings under the Building Safety Act
- Private healthcare providers' data sharing obligations
- Reduction of compensation to zero on the basis that redundancy dismissal was inevitable was incorrect
- Working with Our Heritage
Positive news
NHS to offer artificial pancreas to help manage type 1 diabetes
More than 100,000 people, including children, living with type 1 diabetes in the UK are to be offered an 'artificial pancreas' to help them manage their condition more easily. The technology allows those suffering with the condition to go about their daily lives without having to periodically check their glucose levels, eliminating the need to conduct finger prick blood tests. The machine continually monitors glucose levels and automatically provides the individual with more insulin if required.
Lab grown alternative aims to cut use of polluting palm oil
A lab-grown alternative to palm oil developed by scientists has raised hopes of reducing the global dependency on the polluting oil. The WWF estimates that palm oil accounts for around 40% of all vegetable oils in use globally, despite the production of the oil causing very significant deforestation. The alternative, named Palmless, which is created by yeast cells and takes just seven days from start-to-finish to produce, rather than the several years required for a palm tree to reach maturity. The company hopes that the product will begin to be rolled out to replace palm oil in cosmetics and food on our shelves by as early as next year.
