Overriding
Interest
Highlighting developments and
issues in the real estate industry
Town and Village Green Registrations
The decision of the Supreme Court in R (on the application of Lewis) v Redcar and Cleveland
Borough Council and another [2010] will be an unwelcome one for land owners
Spring 2010
and developers.
In this issue:
In that case the council owned land that had been used as a golf course but was now identified
Town and Village
Green Registrations......................... 1
for redevelopment as housing. Local residents had crossed the course to walk their dogs and for
other general recreation such as jogging for over 20 years. Consequently an application was
made by local residents to register the land as a Town or Village Green.
News and Events............................ 2
New Statutes and Regulations.......... 3
Government Removes Competition
Law Exclusion for Land Agreements... 4
Although the local residents had used the land for recreation, they had always it seems
“overwhelmingly” deferred to the golfing use of the course. The TVG inquiry held that since the
local residents deferred to the golfers they could not be said to be using the land for recreation as
of right and therefore the application to register the land as a TVG should not succeed.
Deals............................................. 5
Cases............................................ 6
However, the Supreme Court took the contrary view. Deference was merely polite behaviour
between different users and did not mean that the local residents were not asserting a right. A
use can be as of right even if there are competing uses which require give and take on each
side. The correct test of whether a use is as of right is how would the use appear to the owner
of the land. The court decided that in this case it would have been obvious to the owner that the
residents did use the land in such a way that amounted to an assertion that they had a right to do
so and therefore the TVG application should proceed.
Clearly this case increases the danger of TVG applications being successfully made in respect of
development sites even where there are competing uses and highlights the need for owners to do
all they can to prevent the accrual of 20 years use.
K&L Gates LLP
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News and Events
• We will be hosting our annual finance
›› With substantial experience both
and banking breakfast seminars on 12,
advising on some of the country’s
based in the Russian, Asian-Pacific and
19 and 26 May. Please contact us for
largest foreign investments and
East and West European markets. We
further details or visit our website.
working with the Polish government,
also hosted a number of successful
the lawyers in K&L Gates’ Warsaw
lunches and dinners over the course
office will provide Polish and
of the conference. Whilst the number
international clients with a broad
of MIPIM attendees this year, at about
range of transactional, advisory, and
18,000, was less than the huge
dispute resolution services.
attendances in the years preceding
• K&L Gates has opened three new
offices this year, bringing the total
worldwide to 36. The new locations
are Moscow, Tokyo and Warsaw.
›› K&L Gates’ entry to Japan strengthens
the firm’s Asia presence to six offices
consisting of more than 80
legal professionals.
›› Bridging the gap between the
firm’s European and Asia presence,
K&L Gates’ Moscow office will
assist domestic and international
companies in a wide range of
commercial activity.
• Nine K&L Gates lawyers travelled to
Cannes in March for the annual global
real estate conference known as MIPIM
(Marché International des Professionnels
year, reflecting market sentiment, was
noticeably more positive than last year.
• K&L Gates sustainable development
group recently gave a webinar
London colleagues representing our real
on LEED and sustainable building,
estate investment, real estate finance
broadcast throughout our US
and projects/construction groups;
and European offices. For further
Felix Greuner and Georg Foerstner
information on green initiatives please
from Berlin; and Bill Reichert from our
contact the editorial team.
team and the global nature of our real
estate practice at K&L Gates, we held
a very well attended breakfast at the
Overriding Interest
the economic downturn, the mood this
d’Immobilier). Our team comprised six
new Moscow office. To promote this
2
Carlton Hotel for clients and surveyors
New Statutes and Regulations
1 April 2010: business rates
On 1 April the non-domestic business rates
1 April 2010: Business Rate
Supplements Act 2009
apply to certain interests arising through a
right to reverter in respect of a determinable
freehold interest in land.
revaluation took effect. Transitional relief
On 1 April 2010 there was the
arrangements were put in place, for England
commencement of a permitted chargeable
For our industry, the key focus is the
only, to phase in large changes to individual
period in respect of which the GLA,
amendment to the rule against perpetuities
non-domestic rating bills, with annual caps
English County Councils, and the Unitary
as the change facilitates the creation of
on both increases and reductions over five
Authorities may impose a business
longer term contractual arrangements. This
years. There are different caps for small and
rate supplement to fund specified local
will be particularly useful for option and
large properties, limiting and phasing in
economic development projects.
promotion agreements which often need
the rate increases across the period 1 April
2010 to 31 March 2015.
6 April 2010: Community
Infrastructure Levy
1 April 2010: carbon
reduction commitment
Local authorities now have the power
The CRC Energy Efficiency Scheme, which
charging a Community Infrastructure Levy
imposes a mandatory cap-and-trade scheme
on new developments. The Conservatives
in relation to energy use by large non-
have said that if they come into power they
energy intensive organisations, commenced
will abolish CIL, but it is likely that they will
on 1st April. In the first compliance year, in
replace it with something similar.
the introductory phase (2010/11), there
is only an emissions reporting requirement,
with allowances only having to be
to fund required infrastructure works by
6 April 2010: changes to the
perpetuity rules
purchased from 2011/12. For more detail
The current legal rules against perpetuities
see our recent Client Alert which is posted
and against excessive accumulations have
on our website.
now changed pursuant to the Perpetuities
and Accumulations Act 2009.
to remain in place for longer than a 21
year period. For example the changes
may provide more of an incentive for a
landowner and developer to co-operate
in achieving a planning consent and then
land sale under an option and promotion
arrangement. Such agreements can now
potentially survive for a much longer period.
Energy and Buildings
The Department of Energy and Climate
Change and the Department of Communities
and Local Government have jointly
published the Government’s strategy on
household energy management. The
strategy is important as it contains proposals
which impose wide-ranging obligations on
local authorities and energy companies,
The rule will no longer apply to most
homeowners, and landlord and tenants.
future easements, options and rights of
pre-emption and now applies to far more
Continued on page 4
restricted and specified classes of interest,
principally trust property. It will, however,
Spring 2010
3
Continued from page 3
6 April 2010: Housing
force on 6 April 2010. Pursuant to this,
educational establishments in England
On 6 April regulations were introduced
which update the list of educational
establishments which manage buildings
that are not houses in multiple occupation
(HMOs).
HMOs are licensed by the Housing Act
2004 (HA 2004). Student accommodation
buildings are not HMOs for the purposes
which manage or have control of buildings
that are not HMOs. The previous list
which was contained in The Houses in
Multiple Occupation (Specified Educational
Establishments) (England) Regulations 2009,
has now been revoked.
6 April 2010: Planning
of the HA 2004 (excluding Part 1, which
The following legislation came into force on
deals with housing conditions) if they
6 April 2010 in respect of England only:
are managed or controlled by specified
educational establishments (paragraph 4,
Schedule 14, HA 2004).
The Houses in Multiple Occupation
(Specified Educational Establishments)
(England) Regulations 2010 came into
Tax - HMRC Guidance on
amended option to tax rules
On 16 March 2010, HMRC published
guidance on the changes made by the
Value Added Tax (Buildings and Land)
Order 2010. This Order made changes to
the option to tax rules, such as allowing a
developer to opt to tax if those providing
finance for the construction occupy 10% or
less of any buildings constructed (the 10%
test) and allowing the option to be revoked
during the six-month cooling-off period even
The Town and Country Planning (General
if the taxpayer has occupied the property
Development Procedure) (Amendment)
during that time.
(England) Order 2010 (SI 2010/567).
If you would like further information on
The Planning (Listed Buildings and
any of these important changes, and how
Conservation Areas) (Amendment) (England)
they impact on your business, please
Regulations 2010 (SI 2010/568).
contact a member of the editorial team.
Government Removes Competition Law
Exclusion for Land Agreements
On 12 January 2010, the Department
for Business, Innovation and Skills (BIS)
announced that the Government had
decided to repeal the Competition Act
1998 (Land Agreements Exclusion and
Revocation) Order 2004 with effect from
6 April 2011. From that date onward,
companies will have to consider and take
advice on whether their land agreements
are compatible with competition law in
the same way as they must assess all other
types of agreement.
4
Under the current regime (and since 2000
could infringe competition law if it
when the Competition Act came into
concerned land. The recent inquiries into
force), if a land agreement is found to
the supermarket sector resulted in a clear
restrict competition, the OFT has powers to
conclusion that that assumption was no
withdraw the benefit of the Exclusion Order
longer appropriate.
and the parties can be required to amend
their agreement to remove any infringing
provisions. For all other sectors of the
economy, companies face the possibility
of fines of up to 10% of their annual
turnover for infringing the Competition Act
prohibition on anti-competitive agreements.
The Government considers that competition
The Government also considered that the
law should apply across all sectors of the
existence of the Exclusion Order gave
economy with the minimum exceptions.
rise to the assumption that no agreement
Overriding Interest
The OFT is likely to issue guidance on the
application of the Competition Act to land
agreements in due course. We will report
on those guidelines when they are issued.
Deals
CBRE Realty Trust Subsidiary
We advised a subsidiary of CBRE Realty
Henderson UK Retail
Warehouse Fund
We advised Henderson UK Retail
by Abbey National Treasury Services PLC of
Warehouse Fund on the sale of Junction 27
a retail park asset in Peterborough. Jonathan
Retail Park, Leeds for £56,630,000. The
Lawrence led on the finance aspects,
real estate team was led by Wayne Smith
Melanie Curtis led on real estate aspects
and Robert Fox and was a cross disciplinary
and Claudia Harrison assisted.
effort with Sebastian Charles, Kevin
Greene, Amandeep Lafferty, Feroze Abbas,
and Laura Burrows also working on the
We have exchanged an Agreement
transaction. The retail park was one of the
Conditional Upon Planning, containing
original properties purchased by the Fund.
complex overage provisions, for the charity
Kent County Council
Action For Children. The development
new centre will be purpose built to protect
currently available. As part of the scheme
the developer will also build residential
properties on behalf of housing and care providers, Housing 21 and West Kent
Housing Association. Work is expected to
be completed in Spring 2012.
HERALD
Melanie Curtis, a partner in the London
Office has recently advised HERALD, the
Henderson European Retail Property Fund,
in the sale of Stanley Green retail park in
comprises a 140 residential unit mixed use
We have recently advised Kent County
scheme in a prominent site in North London.
Council on their new library and history
The team comprised real estate partners
centre. Christopher Causer (projects partner)
Piers Coleman and Sebastian Charles and
led a K&L Gates team including Steven
real estate associate Lucinda Bayliss.
Cox (of counsel, real estate), Peter Davis
RREEF
carefully controlled conditions. The
and display many more archives than are
Trust in connection with its £14m refinancing
Action For Children
in Cheadle Hume, Cheshire. The retail park
comprises 91,000 sq ft of retail space
and the sale price was £47m. HERALD’s
investment focus is on Eurozone countries.
(tax partner) and Laura Burrows (projects
associate) who advised the Council on
We have recently acted for RREEF on
this transaction. Maidstone will be home
the sale of a 24 acre retail regeneration
to one of the most innovative library and
scheme in Sheffield for £26.5m. The team
history centres in the country. Kent has a
comprised real estate partners Wayne Smith
wealth of documents, photographs, images,
and Melanie Curtis, construction partner
maps and records about the history of the
Kevin Greene and associate Laura Burrows.
county, but to make sure they survive for
future generations they need to be kept
Spring 2010
5
Cases
Tenant’s guarantors
Sale Deposits
Repairs
A landlord sued the guarantor of a former
Where there were linked house sales, the
A residential landlord and tenant were
tenant for rent arrears under a guarantee
first from A to B and the second from B to
in dispute over the landlord’s failure to
it gave in respect of an assignee of the
C, and the sales did not take place because
repair the property. The landlord later
lease. It was held that since there was
of the default of C, it was held that B could
retook possession of the property for other
no exclusion from the anti-avoidance
only recover one deposit from C and that
reasons and a compromise was agreed
provisions in the Landlord and Tenant
B had to give credit for the amount of the
in connection with improvements to the
(Covenants) Act 1995 for a guarantee
deposit in reduction of the damages it
property made by the tenant. A subsequent
by a tenant’s guarantor in respect of an
recovered from C.
damages claim by the tenant for the
assignee, then any such guarantee must be
void and the claim failed.
Comment: It was also said that no
contractual interest was payable as it was
Comment: The compromise agreement
Comment: This decision has been appealed
a case of non-completion, as opposed to
could have, but did not, preclude the tenant
but in the meantime landlords are likely to
delayed completion.
from still taking action.
Ng - v - Ashley King (Developments), ChD
Henley - v - Bloom, CA
Option Agreements
Easements
An agreement which gave a developer
Where a landowner whose land was
an option to buy freehold land but which
subject to a right of way had built a parking
contained no real cut-off date and imposed
space making the right of way unusable and
only limited duties on the developer in
the neighbouring landowner with the benefit
Good Harvest Partnership LLP - v - Centaur
relation to planning matters was said not to
of the right of way had not complained,
Services Ltd, ChD
require the implication of an expiration date.
a claim by the neighbouring landowner’s
The agreement was said to work perfectly
successor in title to relief in respect of the
well without it.
interference was held to be barred.
Comment: The exercise of the option by the
Comment: There was estoppel by
developer 20 months after the making of the
acquiescence, and also no damages could
agreement was held to be valid.
be recovered by the successor.
Chantry Estates (South East) - v -
Lester - v - Woodgate, CA
require additional security from assignees
to make up for the loss of the original
guarantor. On a new letting, landlords may
want to insist that the guarantor joins in the
lease as joint tenant rather than surety, so
that it can be required to give an AGA on a
future assignment.
Anderson, CA
6
disrepairs was held to be valid.
Overriding Interest
Arbitrations
Unfair Contract Terms
In a rent review arbitration, the Arbitrator
A term in a residential sale-and-leaseback
determined that a tenant’s removal of a
agreement under which the landlord/buyer
floor in a property constituted a “tenant’s
retained 30% of the purchase price which
improvement” that fell to be disregarded
was to be paid in full to the tenant/seller
and, despite evidence of differential rates,
only after the expiry of a 10 year lease to
valued the property using a single uniform
the tenant but was to be kept by the landlord
rate. It was held that the tenant’s appeal
if the tenant defaulted on the lease was held
against the Arbitrator’s decision was out of
not to be an unfair term.
time and that, in any event, the Arbitrator
had properly dealt with the evidence
before him.
Comment: It was said that the weakness
of the tenant’s challenge was decisive in
relation to the rejection of its application out
of time.
Comment: The retention was said not to
be a deposit and was also not caught by
the Unfair Terms in Consumer Contracts
Regulations 1999.
UK Housing Alliance (North West) -vFrancis, CA
Squirrel Films Distribution - v - SPP
Opportunities Fund, ChD
Spring 2010
7
For further information contact:
Steven Cox steven.cox@klgates.com Milton McIntosh milton.mcintosh@klgates.com T: +44 (0)20 7360 8259
Bonny Hedderly bonny.hedderly@klgates.com T: +44 (0)20 7360 8192
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