Overriding
Interest
Highlighting developments and
issues in the real estate industry
Equality Bill
Parliament is currently considering the Equality Bill, a proposed piece of legislation that seeks
to bring together in one statute discrimination law covering the “protected characteristics”
January 2010
In this issue:
of age, disability, gender re-assignment, marriage and civil partnership, pregnancy and
maternity, race, religion or belief, sex and sexual orientation. The Bill has passed the
committee stage in the House of Commons. It is expected to become law early in 2010 and
Equality BIll ................................... 1
to be brought into force in the autumn of 2010.
K&L Gates Events and Initiatives ....... 3
Premises
The Application of Competition Law
Property owners, occupiers, and managers will be particularly interested in Part 4 of
to Land Agreements ........................ 4
the Bill which deals with premises. Under the Bill, a person who has the right to dispose
Deals ............................................ 6
of premises must not discriminate against another as to the terms on which they offer
Cases ........................................... 7
to dispose of the premises, by not disposing of the premises, or in their treatment with
respect to things done in relation to the person seeking the premises. In relation to the
management of premises, they must not harass a person who occupies them or a person
who applies for them and must not victimise a person who occupies the premises in the
way in which they allow the occupier to use the premises or by not allowing the occupier
to make use of a benefit or facility or by evicting the occupier or by subjecting the
occupier to any detriment.
Continued on page 2
K&L Gates LLP
110 Cannon Street
London EC4N 6AR
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Continued from page 1
The Bill contains “reasonable adjustments”
terminating the provision of the service, or by
provisions similar to those in the Disability
person would, but for the provision of
subjecting the recipient of the service to any
Discrimination Act 1995. Under Schedule
an auxiliary aid, be put at a substantial
other detriment.
4 of the Bill, a duty to make reasonable
disadvantage in relation to a relevant
adjustments is imposed on the owner or
matter in comparison with persons who
manager of premises that are let or to let
are not disabled, to take such steps
and on those responsible for common parts.
as it is reasonable to have to take to
Varying requirements are imposed, including:
provide the auxiliary aid.
• A requirement, where a provision,
criterion, or practice of the owner/
manager puts a disabled person at a
substantial disadvantage in relation to
a relevant matter in comparison with
persons who are not disabled, to take
such steps as it is reasonable to have to
take to avoid the disadvantage;
• A requirement, where a physical
feature puts a disabled person at a
substantial disadvantage in relation to
a relevant matter in comparison with
persons who are not disabled, to take
such steps as it is reasonable to have to
take to avoid the disadvantage; and
2
• A requirement, where a disabled
Overriding Interest
Again, there is a duty to make reasonable
adjustments where a physical feature puts a
disabled person at a substantial disadvantage
in relation to the receipt of the service. The
service provider must take such steps as are
Under Section 184 and Schedule 21 of the
reasonable to avoid the disadvantage or to
Bill, where a person proposing to make a
adopt a reasonable alternative method of
reasonable adjustment is a tenant, the tenancy
providing the service.
takes effect as if it permitted the alteration to
take place with the landlord’s consent and that
such consent cannot be unreasonably withheld
by the landlord.
Conclusion
It is anticipated that, despite the forthcoming
general election, the Equality Bill will be
enacted and brought into force, though
Service providers
property owners, occupiers, and managers
Similarly to the DDA, under the Bill, a service
should watch this space as, prior to the
provider must not discriminate against a
Bill becoming an Act, particularly during
person by not providing the service and also,
its progress through the House of Lords,
in providing the service, must not discriminate
amendments may well be made to it.
against a recipient of the service as to the
terms on which it provides the service, by
K&L Gates Events and Initiatives
Brazil Event
In September we hosted two highly
Competitive Dialogue
Workshops
successful breakfast seminars, the first on
K&L Gates has jointly held two successful
an event on behalf of the Brazilian Embassy
the theme of Green Issues - Challenges and
workshops. The first with Lambert
and the Brazilian Chamber of Commerce.
Opportunities and the second on Lessons
Smith Hampton for local authorities on
The event comprised an afternoon of talks
to be Learned from the Downturn. The first
Competitive Dialogue. The principal
followed by a reception. The principal
seminar covered the regulatory regime
speakers were Christopher Causer, a
theme of the event was Renewable Energies.
including carbon reduction commitment as
partner at K&L Gates and head of Projects
well as the anticipated effect on the market
and Neil Logan Green, a partner at K&L
of sustainable development and green
Gates and head of Urban Regeneration.
leasing. Christian Hullmann, a partner in
The second of these events followed a
our Berlin office gave us the benefit of the
workshop format and took place with
German experience. The latter seminar
Cushman & Wakefield. This time the team
covered topics such as how to get out of a
was joined by Sebastian Chals, a partner
property contract, insurance as a solution to
in the Planning department.
September Breakfast Seminars
problematic transactions and issues arising
out of joint ventures.
On 23 November 2009, K&L Gates hosted
Sustainable Development
Taskforce
The firm has established a real estate
sustainable development taskforce whose
purpose is to address clients’ needs and
requirements in relation to sustainable
development, including green leasing,
energy efficient buildings, and other
sustainability issues.
If you would like further information, please
contact Steven Cox at +44 020 7360
8213 or steven.cox@klgates.com.
January 2010
3
The Application of Competition
Law to Land Agreements
The Government is considering a proposal to remove the exemption that has applied to
land agreements since 2000 when the Competition Act came into force
The Law as it Stands Now
Competition Act (Land Agreements Exclusion
Recent Developments
The Competition Act 1998 prohibits
and Revocation) Order 2004 (“the Order”).
There had been no pressure to amend
agreements between two or more
The Order excludes the application of the
the current position with regard to land
undertakings which may affect trade within
Chapter I Prohibition from land agreements,
agreements until last year when in its final
the UK and which have as their object or
i.e. any “agreement between undertakings
report on the UK groceries market which
effect the prevention, restriction, or distortion
which creates, alters, transfers, or terminates
was published on 30 April 2008 following
of competition within the UK. This is known
an interest in land, or an agreement to enter
a two year investigation, the Competition
as the Chapter I Prohibition.
into such as agreement, together with any
Commission (“CC”) recommended that the
obligation and restriction relating to relevant
Order should no longer apply to exclusivity
land [which includes buildings and other
arrangements which restrict grocery
structures and land covered with water].”
retailing. This was on the grounds that the
At the time the Act was passing through
Parliament, the Government recognised
that there was a strong case for excluding
certain agreements relating to land from
For obligations to be excluded they must be
this Prohibition, e.g. commercial leases
accepted by a party to a land agreement
containing covenants and conditions
“in its capacity as holder of an interest” in
imposed for the sake of good
relevant land. For restrictions to be excluded
estate management.
they must restrict the activity that may be
So an exemption was set out in the
Competition Act 1998 (Land and Vertical
Agreements Exclusion) Order 2000,
which was subsequently amended by the
CC had found that, in highly concentrated
markets, agreements that fell within the
scope of the Order were in fact capable of
having an adverse effect on competition in
the groceries sector.
carried out on or in connection with the
The CC also suggested that the Government
relevant land and again must be accepted
may want to consider repealing the
by a party to the agreement in its capacity
Order altogether as it appeared to be an
as holder or an interest in the land.
anomaly in the current competition regime
and that there could be other sectors where
land agreements could be having anticompetitive effects.
4
Overriding Interest
Consultation
The Government’s initial position is that it
In response to this, the Department for
intends to revoke the Order. That would be
Business Innovation & Skills (“BIS”) issued
consistent with the views of the CC and also
a public consultation on the future of the
the general trend of competition law being
Order. Responses to the BIS were due by
strengthened in its application to all sectors
4 November 2009 (see http://www.
of the economy. Two of the arguments for
berr.gov.uk/files/file52383.pdf for the
change are:
full document). The BIS will consider
• One reason for the Order was to avoid
all responses and then make a formal
the OFT being deluged in notifications
recommendation, if appropriate publishing
of agreements by landlords or tenants
a draft revocation or amendment order in
anxious to obtain certainty as to the
2010. The new law, if introduced, would
legality of their agreements. However,
enter into force in 2011. A further period
since 2004, it has not been possible
of up to 12 months would allow businesses
to notify agreements to the OFT for
to consider and amend their agreements
approval. Parties must self-assess
if necessary to comply with the
their agreements.
Competition Act.
• The existence of the Order perhaps
encourages parties to land agreements
to believe that they do not need
to consider whether or not such
agreements they may have are capable
of restricting competition in markets
simply because they relate to land.
January 2010
5
Deals
HERALD
£101m, and in return, USS acquired two
in Germany from defaulted borrowers to
The London office of K&L Gates has recently
retail warehouse park assets in Newcastle
an affiliate based in Luxembourg of the
advised HERALD, the Henderson European
for £50m from HRWF and received £51m
lender, a Swiss fund. The team included
Retail Property Fund, in its acquisition
of units in HRWF. Manchester Fort totals
Andrew Petersen, a partner in the real estate
from Aviva Investors of Stanley Green
325,000 sq. ft. with 36 shops including
finance department, and Duncan Batty and
Retail Park in Cheadle Hume, Cheshire.
anchor tenants such as Boots, B&Q, Next,
Felix Greuner, a partner in the real estate
HERALD is a close-ended Luxembourg
and TK Maxx.
department in Berlin, together with Christof
Fund, launched in 2005, with a focus on
RREEF
retail warehouses, shopping centres and
The London Office has won a pitch to act
Unanimis Consulting
for RREEF Spezial Invest GmbH to handle
The London office has recently acted for
the asset management of the Prince Bishops
Unanimis Consulting, a digital advertising
Shopping Centre, Durham. The 155,000
network, in relation to space they took at
sq. ft. shopping centre comprises 43
17 Gresse Street, W1. The company, which
shops in two uncovered malls and includes
is part of Orange France Telecom, took two
a 400-space multi-storey car park. The
separate 10-year leases on the top two
scheme is anchored by a number of well
floors of the seven story block at £578,451
known tenants such as Bhs, Boots and
pa. Unanimis secured one year rent free
New Look, Next, River Island, Monsoon,
period and will get an additional 10 months
HMV, and Superdrug. Real estate lawyers
rent free if it does not exercise its break
Paul Alger and Tansy Leeke will handle the
option in December 2014. Nick Wargent,
assignment on instructions from our contacts
a partner in the corporate department acted
Henderson Global Investors
at RREEF in London.
on the transaction together with Chris Major,
A cross disciplinary team of lawyers
Hatfield Phillips
city centre retail investments in Eurozone
countries. Its recent acquisition in Cheadle
Hume, marks its first venture into the UK.
The retail park comprises 91,000 sq. ft.
of retail space and the purchase price
was £35,620,000. The five units are
let to B&Q, Comet, Halfords, Next, and
TK Maxx. Real estate partner Melanie
Curtis led a cross-disciplinary team of K&L
Gates lawyers who advised HERALD on
construction, planning, environmental, and
tax issues related to the acquisition.
at K&L Gates advised Henderson UK
Retail Warehouse Fund in a £100m
property swap transaction with Universities
Superannuation Scheme. HRWF acquired
Manchester Fort Shopping Park from USS for
6
Hupe, also based in Berlin.
Overriding Interest
The London and Berlin Offices have
recently represented Hatfield Phillips, as
Special Servicer in the successful workout
of defaulted €35.5m credit facility and
sale of a seven-property portfolio located
a partner in the real estate department.
Cases
Business Tenancies
Agreements for Lease
Development Sales
A landlord objected to the grant of a new
An agreement for lease was conditional
The sale agreement for a contaminated
business tenancy on the basis of section
upon the obtaining of a planning permission
development site provided for the sale price
30(1)(g) of the Landlord and Tenant Act
free from unacceptable conditions. Planning
to be calculated on the basis of the notional
1954, i.e., that it intended to occupy
permission was obtained in time but a copy
of the decision notice was only served
value of the site clean and with services less
the property itself and it undertook to the
Court not to use the property for any other
after the tenant had sought to rescind the
purpose for two years. The Court refused
agreement. It was held that the tenant
the landlord’s claim, however, on the basis
could not rescind after the permission had
that its intentions were short-term.
been obtained.
Comment: It was found that the landlord
Comment: The tenant knew of the decision
was highly likely to sell the property within
and could have made its own enquiries as
five years.
to the detail.
Patel - v - Keles, CA
Gregory Projects (Halifax) - v - Tenpin
Trespass
the estimated cost of decontaminating the
site and providing services. The actual costs
substantially exceeded the estimated costs.
The Court held that the parties were bound
to use the estimated costs in determining
the price.
Comment: It was said that, if the parties had
wanted to adopt the actual costs, they could
(Halifax), ChD
easily have done so.
Persimmon Homes (South Coast) - v - Hall
Where a garage subject to a tenancy was
Estate Agents
sold by the landlord for development and
An estate agent introduced a potential
the buyer subsequently cleared the garage
purchaser to a property who viewed four
Professional Negligence
of the tenant’s possessions and demolished
times but did not initially buy. A year
Due to a dispute over fees, a firm of
it without first serving notice to quit on the
later, the potential purchaser approached
surveyors failed to remind a client of
tenant, the buyer, but not the landlord, was
the owner of the property direct and
the date by which she had to make
subsequently bought the property. It was
an application in order to protect her
held that the estate agent was entitled to
enfranchisement claim which, as a
a commission.
consequence, she missed and lost her claim.
liable for trespass and wrongful interference
with goods.
Comment: The landlord had not authorised
the buyer’s tortious actions.
New - v - Gromore, ChD
Comment: It was said that there was a
causal link between the introduction and the
ultimate purchase.
Charania - v - Harbour Estates, CA
Aggregates (South Coast), CA
It was held that the firm’s retainer had not
been terminated and that they were under a
duty to advise the client of the deadline.
Comment: It was said that inexperienced
clients had to be reminded of
forthcoming deadlines.
Littlewood - v - Radford, CA
January 2010
7
For further information contact:
Steven Cox
steven.cox@klgates.com
T: +44 (0)20 7360 8213
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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