Parkes v Wilkes [2017] EWHC 1556 (Ch), 29 June 2017

Extension of leases - power of trustees - court’s power under TOLATA

The claimant and the defendant had jointly purchased the freehold of their building via a collective enfranchisement. They signed a declaration of trust to hold the freehold interest in trust as tenants in common in equal shares. Seven years later, the defendant refused the claimant's request to agree to a 999-year extension of her lease at a peppercorn rent. The claimant asserted that the reason for their acquiring the freehold had been to allow for such extension. The trial judge dismissed the claim and held there was no evidence of such common intention. Birss J dismissed the appeal on the facts, but confirmed that that court has wide powers under s 14 of the Trusts of Land and Appointment of Trustees Act 1996 including the power to order the extension of a property lease to 999 years at a peppercorn rent if such an extension was the common intention of the trustees of the freehold interest or the purpose of their trust.

The question of jurisdiction was answered by examining what the trustees could properly do. Under s.6, trustees had all the powers of an absolute owner of the property. Given that an absolute owner could grant a new lease, so too could the trustees. Accordingly, the court had jurisdiction to make an order to that effect.

London Sephardi Trust v John Lyon's Charity [2017] EWCA Civ 846, 29 June 2017.

Enfranchisement- Valuation - Statutory interpretation

In short, when acquiring a freehold under the Leasehold Reform Act 1967 (as amended) the value will be determined on the assumption that the freehold interest is subject to any extended lease, as opposed to only unextended leases. The Court of Appeal ploughed through the different statutes and numerous amendments and concluded that the 1986 Act had expressly preserved an advantage for a certain class of buyers which had not been taken away by subsequent amendments and statutes.

Lea Valley Developments Ltd v Derbyshire [2017] EWHC 1353 (TCC), 16 June 2017

Party Wall etc. Act 1996 - Measure of damages - Reinstatement

The claimant and defendant owned adjoining freehold properties consisting of flats. The claimant obtained an award under the Party Wall etc. Act 1996, which included excavation works. The works damaged the defendant’s property so badly that the building had to be demolished and rebuilt. The award contained the standard condition to: "make good all structural or decorative damage to the Adjoining Owner's property occasioned by the works … If so required by the Adjoining Owner, make payment in lieu of carrying out the works to make the damage good, such sums to be determined by the Agreed Surveyor".

The parties could not agree on, amongst other things, the basis on which damages should be assessed. The claimant sought a declaration that it should be based on the diminution in value. The defendant argued it should be the cost of reinstatement. The Court held that compensation should be assessed according to the principles of damages for torts to land. The starting point at common law was set out in CR Taylor (Wholesale) Ltd v Hepworths Ltd [1977] 1 W.L.R. 659: a claimant should be placed in the position he would have been in had the tort not occurred, and damages were to be reasonable. A large number of factors might be relevant to determining whether reinstatement or diminution in value was the appropriate approach, and there was no rule which prohibited the award of damages on either basis. The Court therefore refused to make a declaration as to the factors to be taken into account when making the assessment where the court had no agreed facts on which to proceed. Seeking to enumerate all the relevant factors in the abstract was likely to be unhelpful and confusing.

Freehold Restrictive Covenants – s.84(1) applications

Upper Tribunal (Lands Chamber) has been busy granting s 84(1) (aa) of the Law of Property Act 1925 applications to modify restrictive covenants on the basis that the restrictions impeded a reasonable user of the land without securing the desired practical benefits to the objectors:

  • James Hall and Co (Property) Ltd v Maughan [2017] UKUT 240 (LC): the Tribunal modified a restrictive covenant which prohibited use of a property for any purpose other than carrying on the business of hotelier and licensed victualler, and specifically prohibited its use as a shop.
  • Dean v Freeborn [2017] UKUT 203 (LC): the Tribunal modified a restrictive covenant preventing the construction of more than one property per plot on a development to permit the building of an additional property on one of the plots.