Communication Apparatus Can Go Anywhere!

The Communications Act, 2003 introduced a regulatory framework for the communications sector.  It also established the regulatory Office of Communications (’OFCOM’).  Annexed to it was a code (’the Code’) enabling communication operators (’Operators’) to install and maintain apparatus on public land and to apply to the courts for an order to install and maintain equipment on private land if the Operator was unable to reach agreement with the private landowner.  Over the years, the Code became outdated and insufficient for the needs of Operators.  Hence, in order to improve communication coverage, capability and capacity, as demanded by the Operators, communities and the general public as a whole, the Code had to be updated.

A new Code has now, through the Digital Economy Act, 2017, been introduced and the powers given to Operators, substantially increased.  It came into operation on 28 December 2017 and applies to any agreement between Operators and landowners entered into after that date.  To accompany the new Code, OFCOM produced a Code of Practice, a set of proposed standard terms to be used in the agreements and, finally, a number of templates for notices, some of which are compulsory under the legislation.

The powers included in any agreement are now extensive.  In addition to entering any land, public or private, to install equipment, maintain, alter and repair it, the Operators may connect to the landowner’s power supply, obstruct access to the land and lop back trees and vegetation interfering with apparatus.  They may also assign or share their equipment with other Operators and conduct street works.  The Code relates, too, to the termination of agreements (landowners can only terminate for specified reasons including the Operator’s non-payment of the agreement fee, or for the purposes of redevelopment), the terms to be included (including the consideration paid) and makes provision for dispute resolution.  Powers are enforced by the courts.

Longer notice periods before an agreement can be terminated, the assignment provisions and the basis of the consideration to be paid by Operators (which has substantially decreased the payments made), have already given rise to negative comment by landowners and their representatives.  It will be interesting to see whether these mutterings lead to disputes.  Watch this space.

‘Wrotham Park’ damages not for breach of contract

Almost a year ago, in May 2017, we looked at the Court of Appeal judgement in Morris-Garner v One Stop (Support) and anticipated a future Supreme Court judgement.  This was given on 18th April ([2018] UKSC 20), having been heard last October.  Lord Reed gave judgement, with whom the majority of the court agreed.  The Supreme Court found the trial judge and the Court of Appeal had adopted the wrong approach in enabling Wrotham Park damages to be applied to a breach of contract and has remitted the case to the judge at first instance to measure the financial loss suffered by the claimant.

In breach of a restrictive covenant in a buy-out agreement, the defendants in the case set up a business in competition with the company in which they had previously had shares.  Despite having threatened seeking an injunction, the claimant delayed considerably in bringing its proceedings and, at the end of the day, merely sought damages for breach of contract.  The Supreme Court has held that if an injunction is denied, Wrotham Park damages may be awarded in lieu of an injunction.  However, if seeking damages for breach of a contact, the claimant must prove loss and the loss must be calcualted.

Damages in lieu of an injunction are awarded under Lord Cairns’  Act.  Lord Reed held “One possible method of quantifying damages under this head is on the basis of the economic value of the right which the court has declined to enforce, and which it has consequently rendered worthless.  Such a valuation can be arrived at by reference to the amount which the claimant might reasonably have demanded as a quid pro quo for the relaxation of the obligation in question.  The rationale is that, since the withholding of specific relief has the same practical effect as requiring the claimant to permit the infringement of his rights, his loss can be measured by reference to the economic value of such permission.”  He then continued “That is not, however, the only approach to assessing damages under Lord Cairns’ Act.  It is for the court to judge what method of quantification, in the circumstances of the case before it, will give a fair equivalent for what is lost by the refusal of the injunction.”

So, the claimant must make a choice on breach of contract - either act quickly and seek an injunction or delay and risk refusal of an injunction (leading to damages in lieu) or seek calculated damages.

25 year plan

We have looked at energy efficiency (December 2007, March 2015 and October 2017), protected species (February 2017), planning (August 2016), flooding (August and December 2013) and the birds and the bees (October 2008).  The amount of legislation attaching to the environment becomes more and more extensive but clearly has not ended yet.

The leaving of the EU has prompted the Government to take a long term view of the UK’s natural environment and has published a 25 Year Environment Plan.  In her Foreword, the Prime Minister confirms “When the United Kingdom leaves the European Union, control of important areas of environmental policy will return to these shores.  We will use this opportunity to strengthen and enhance the protections our countryside, rivers, coastline and wildlife habitats enjoy, and develop new methods of agricultural and fisheries support which put the environment first.”

In a summary of the Government’s goals and targets, the Department for the Environment, Food and Rural Affairs (DEFRA), looks at how it will produce clean air and water, assist plants and wildlife to thrive, reduce the risks from environmental hazards, use resources more sustainably and efficiently, conserve and enhance the beauty of the UK’s natural environment, mitigate and adapt climate change, minimise waste, manage exposure to chemicals and enhance biosecurity.

No one would doubt the need for such aims but those currently suffering from, for instanc, coastal erosion in such places as the Isle of Wight, Norfolk and Yorkshire, from tree cutting council programmes in such places as Sheffield and reduced rubbish collections by many local authorities, may doubt the effectiveness of such plans.

Actions not words might be the phrase upon which to concentrate but perhaps the proposals re money-back schemes on handing in plastic bottles might be, at the very least, indicative of things to come.  The Prime Minister has promised “By implementing the measures in this ambitious plan, ours can become the first generation to leave [the] environment in a better state than we found it and pass on to the next generation a natural environment protected and enhanced for the future.”  Only time will tell.

Within the Boundary?

Boundary disputes between neighbours, whether the lands are registered or not, are common and can become contentious.  Costs escalate as each party instructs its lawyers and surveyors.

Practising as a chartered surveyor, John Lytton, 5th Earl of Lytton, chairs the RICS professional panel dealing with boundaries and party walls.  He steered the very successful Party Wall etc Act, 1996 through Parliament introducing a statutory procedure for resolving party wall disputes.  He has attempted, on several occasions, to do the same for boundary disputes but his Bills have, to date, failed in their passage through Parliament (as do most private member Bills).  He is presently attempting again with his Property Boundaries (Resolution of Disputes) Bill which had its first formal reading in the House of Lords in July 2017.  The second reading is yet to be scheduled.

If successful, the Act will introduce a procedure commenced by one land owner serving upon a neighbour notice making clear where the land owner purports the boundary between the two lands to be.  The neighbour has 14 days in which to accept or object to the proposal.  If an objection is made, a dispute will be deemed to have arisen.  As with the Party Wall Act, the parties can then jointly appoint a surveyor to resolve their dispute or, alternatively, each appoint their own surveyor.  The two party surveyors will then appoint a third surveyor to resolve the dispute.  If either party issues court proceedings, it shall not be entitled to recover costs.  If proceedings have already been issued, they will be stayed pending outcome of the statutory procedure.  The Bill also relates to disputes re rights of way.  Full details are contained in the Bill and its procedure through Parliament can be viewed on the UK Parliamentary Bills website.

In the meantime, readers may be familiar with ‘Property Protocols’.  The authors include two QCs and a junior barrister from Falcon Chambers and two partners from Hogan Lovells.  They have recently been joined by David Powell FRICS and have published their Boundary Disputes Protocol.  Whilst without any formal recognition, it is supported by the Property Litigation Association and a link to the Protocol and accompanying Guidance Notes appears on the PLA website.

An end to conflicts of interest?

Conflicts of interest have, for years, been something about which solicitors have been concerned.  They will not act for a client if to do so would or could be perceived to put them in conflict with their own interests or duties owed to another party.

In March 2017, the RICS, after consultation with its members, produced a Professional Statement re conflicts of interest.  Launched at MIPIM 2017, the Statement is to apply globally to all members of and firms regulated by the RICS.  Its provisions are mandatory and came into force on 1 January 2018.

It states “An RICS member or regulated firm must not advise or represent a client where doing so would involve a Conflict of Interest or a significant risk of a Conflict of Interest; other that where all those who are or may be affected have provided their prior Informed Consent.

A Conflict of Interest might arise where the duty owed by a RICS member or regulated firm to one client or another party in a professional assignment conflicts with

  • the duty owed to another client or party in the same assignment (’a Party Conflict’);
  • the interests of the same member or regulated firm or individuals within that firm involved directly or indirectly in the same assignment (’an Own Interest Conflict); or
  • the duty owed to one client to provide material information conflicts with the duty owed to another to keep the same information confidential (’a Confidential Information Conflict’).

All identified Conflicts of Interest must be managed in accordance with the Professional Statement.  Regulated firms are to have in place effective systems and controls to ensure it and its employees comply.  Additionally, all decisions made as to whether or not to accept the assignment, to obtain Informed Consent or of measures taken to avoid a Conflict of Interest must be recorded.

Informed Consent can only be sought where the member or regulated firm is satisfied that proceeding, despite the Conflict of Interest, is in the interests of all those who are or may be affected, is not prohibited by law and the conflict will not prevent the member or firms providing competent and diligent advice to those who may be affected.

Will the Professional Statement see an end to conflicts of interest?  We wait to see.

Leases on houses to be banned in England and so much more!

Faced with a housing crisis, the Government has consulted upon its intentions and issued a press release, dated 21 December 2017, stating it will ‘crackdown’ on what it sees as ‘unfair and abusive’ leasehold practices.  The proposed measures will relate to England only.  Will they make a difference?  Only time will tell.  It could, however, be some time before progress is made.  Legislative steps will need to be taken and the Government has said it will be consulting with the Law Commission.

Interestingly, the Law Commission’s latest programme was also issued at the end of 2017 without the emotive language used in the Government’s press release.  Amongst its proposals, it lists matters it will be addressing in the law on residential leasehold.  Its residential leasehold project will start by addressing three issues it says have been ‘identified as priority areas’ by the Department for Communities and Local Government i.e. commonhold, enfranchisement and regulation of managing agents.  Sadly, for the Government, these ‘priorities’ appear some was away from the list of items on which it intends to ‘crackdown’.

The Government has its guns pointed at the grant of leaseholds for ‘almost all’ new build houses - it intends to ‘ban’ them.  The Government press release states ‘changes will also be made so that ground rents on new long leases - both houses and flats - are set to zero”.  It is also to be made cheaper and easier for existing leaseholders to buy their freehold and support is to be given to leasehold owners when faced with onerous leasehold terms.

Whilst not common outside the UK, the sale of residential properties on long leasehold terms (rather than freehold) is frequently encountered in England.  Government statistics show there were 4.2 million residential leasehold dwellings in England in the private sector in 2015/6 with 1.4 million relating to leasehold houses.  Communities Secretary, Sajid Javid said “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.”  Those advising owners of historic buildings and estates are keeping an eye on what the Government means by ‘new-build’ - there are some people who fear the proposed new measures will apply to new leasehold interests regardless of when the property was built.  We wait to see.

What is a ‘trade process’?

The Chancellor is due to present his Autumn Budget on the 22nd of this month.  The market anticipates he will make changes to stamp duty and pension tax relief but will leave capital allowances alone.  We wait to see what is announced.

Capital allowances, a form of tax relief for both income tax and capital tax purposes, are intended to encourage businesses to invest in capital equipment (e.g. upon plant and machinery - see below) at the business’s own premises.  The phrase does not include the construction of a building or other structures nor works involving the alteration of land.

Enhanced allowances are available for the use of certain energy efficient products and the Government Department for Energy and Climate Change’s explanatory pamphlet published in October 2014 is well worth a read.

The expenditure must be made by the claimant in relation to its own business conducted at its own premises.  This is something to bear in mind and discuss with advicers if a landlord makes a contribution to, for instance, a tenant’s fit out costs on taking new premises.

The rules surrounding capital allowances are detailed and complicated but very basically, “plant and machinery” is widely defined to include air-conditioning, heating, lifts etc. used “in connection with services mainly and exclusively as part of manufacturing operations or trade precesses”.  The phrase ‘trade processes’ led to a perhaps surprising Court of Appeal decision in Iceland Foods Limited v Jane A Berry (Valuation Officer) [2016] EWCA Civ 1150 in which it was decided that a retailer selling frozen foods did not use refrigeration plant in a ‘trade process’.  The court held “Retail warehouses undertake a trade but not normally any trade process, certainly not so far as keeping the shop or the equipment therein at an appropriate temperature is concerned.”

Leave to appeal to the Supreme Court was granted in April 2017 so watch this space.

‘MEES’ - it’s all the rage!

In our newsletter of March 2015 we reported on the then forthcoming minimum energy efficiency standards in relation to both residential and commercial property rentals.  Enforcement all seemed a long time in the future but April 2018, when the Regulations become effective, is now just around the corner and ‘MEES’ is talked about everywhere.

Just by way of a reminder, from 1 April 2018 landlords of privately rented commercial and non-commercial properties in England and Wales will be unable to grant a new or renewed tenancy if their properties do not have an energy perforance certificate (’EPC’) recording a rating of at least an E.  EPCs give an energy efficiency rating of anything from A (most efficient) to G and are required whenever a property is constructed, sold or rented.  From April 2020, all rented domestic properties must meet the minimum E rating (whether there is a change in a tenancy or not) and the rule will also apply to non-domestic rented property from April 2023.  Despite updated Regulations having been published in June 2016, there will be many landlords caught out by the implementation of MEES.

The Govenment Department for Business, Energy and Industrial Strategy has this month, October 2017, published guidance for landlords of both domestic and non-domestic properties.  Both are available on the Gov.UK website and are well worth detailed consideration.  They explain the regulations, relevant improvements which may be made to property in order to increase its energy efficiency rating, any exemptions, enforcement and the appeal system.

The effect of MEES on the rental market has obviously yet to be felt and there will be many questions still to be answered.  What happens, for instance, if a tenant makes an application for a new tenancy of its commercial property protected by the Landlord and Tenant Act, 1954 but the property has an energy efficiency rating of only F or G?  We wait with interst to see how the courts deal with this potential legal conundrum - will they force the landlord to conduct works or award the tenant damages for its lost right to a new tenancy?  Watch this space!

Proposal to further limit costs in the civil courts

The cost of litigation in the civil courts in England and Wales has long given cause for concern not least amongst the judiciary itself.  It was one of the matters addressed by Lord Woolf’s 1999 Reforms and the present Civil Procedure Rules incorporate fixed recoverable costs for fast track cases and costs budgeting for multi-track cases.  Nevertheless, “Transforming Our Justice System”, published in September 2016 by the Lord Chancellor, Lord Chief Justice and Senior President of the Tribunals, states “More needs to be done to control the costs of civil cases so they are proportionate to the case, and legal costs are more certain from the start.  Building on earlier reforms, we will look at options to extend fixed recoverable costs much more widely, so the costs of going to court will be clearer and more appropriate.”  The Rt Hon Lord Justice Jackson was asked to prepare a supplemental report to that presented by him re costs in 2010 and in July 2017, he proposed extending fixed recoverable costs to some multi-track cases.

Looking at cases issued in some of the new Business and Property Courts (see our Newsletter for August 2017), in which the claim is less than £250,000, LJ Jackson has suggested the adoption of an initial pilot scheme in which the total costs will be fixed at a maximum figure of £80,000 and the civil procedure adopted will be severely limited.  If the pilot scheme is successful, it will, potentially, be extended to all business and property cases claiming less than  £250,000.

This maximum costs cap will, of course, relate only to the recoverable costs payable to the successful party.  It will not prevent lawyers agreeing higher actual costs (incorporating their fees and disbursements paid, for instance, to counsel and any expert witnesses).  As LJ Jackson recognises, these costs are payable pursuant to a contract between a client and its lawyers although it will, he feels, incentivise lawyers to keep actual costs as low as possible or risk the client going to a cheaper competitor.  Whether it will or not waits to be seen but look out for an order of fixed costs in future civil cases.

Changes at court

Judicial concern about ‘Brexit’ and its effect upon the competitiveness of UK jurisdictions and dispute resolution systems in the face of international competition led to the establishment of the Brexit Law Committee.  The Chancellor of the High Court, Sir Geoffrey Vos, stated in June that the Committee would develop strategies with Government for maintaining and enhancing the utilisation, after Brexit, of English law and UK legal services, including all forms of dispute resolution.  Speaking to the Faculty of Advocates, he said the elephant in the room is “the competition the UK jurisdictions and English and Scots law face from other jurisdictions keen to attract commercial business away from the UK“.  Nevertheless, he continued, English law will remain a popular choice if not ‘the gold standard’ but “we cannot, however, just rest on our laurels“.  IT and the court system itself will need to change.

The first visible change was the launch, on 4 July, of the Business and Property Courts of England and Wales at which the Lord Chancellor, the Rt Hon David Lidlington MP stated “We’re here in this magnificent building in the heart of The City [Rolls Buildings] … and I suppose what we see here is the dignity and authority of our historic law courts married to the cutting-edge technology of the digital age.  And  what we’ve got, as a result, is a set-up that is state-of-the-art; that is specialist; that meets the challenges of handling litigation in the 21st century.”

Fine words and sentiments but is it what the law practitioner sees?  Sadly, often it is not.  The court administration will need to change if stories of lost and mislaid files, long and unnecessary adjournments and wasted costs are not to continue to circulate.

But the newly named courts herald reform and, says the Lord Chancellor, “bring a welcome clarity to the focus and range of legal services that the UK offers at the highest level.  A more integrated system of business and property courts will mean judges can be cross-deployed to maximise the benefit of their particular qualifications.”  These courts will not just be located in London but will be in other cities, too.  We wait with interest to see how they develop.

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