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Drawing the line

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Drawing the line

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David Sawtell and Erol Topal consider significant property case law from the first half of 2017, including decisions on long leaseholds and contested beneficial interests

Six months or so into 2017, it is worth pausing to reflect upon some of the more interesting property law decisions so far. We have not seen the appellate courts breaking new ground or establishing new principles; instead, existing rules of law have been developed and nuanced, with their boundaries more clearly delineated.

We have, however, seen a steady stream of decisions making their way through the Upper Tribunal and then into the Court of Appeal affecting the rights and obligations of long leaseholders. This is a trend that is likely to continue as freeholders and management companies attempt to fulfil their repair and management obligations while passing as much of the liability as possible on to tenants.

Marking the boundaries

In Port of London Authority v Mendoza [2017] UKUT 146 (TCC), we learnt that the mere mooring of a vessel continuously in the same place for a long time was insufficient to manifest the requisite intention to adversely possess the riverbed below it.

Meanwhile, in Williams v Onyearu [2017] EWCA Civ 268, the Court of Appeal provided important guidance as to how the equity of exoneration is to operate to protect the share of the non-debtor where property is jointly owned.

In Lea Valley Developments Ltd v Derbyshire [2017] EWHC B22 (TCC), Mrs Justice O’Farrell concluded that, in contrast to the Arbitration Act 1996, which expressly excludes the court from interfering with an arbitration agreement save in defined circumstances, there is no such prohibition on the court participating in determining any dispute '¨under the Party Wall etc. Act 1996 (PWA). '¨The dispute resolution provisions provided '¨by section 10 of the PWA do not oust the inherent jurisdiction of the court.

In Kingsgate Development Projects Ltd v Jordan [2017] EWHC 343 (TCC), we were reminded that interference with a right of way has to be substantial before damages are recoverable. Electrically powered gates, easier to open '¨than their manual counterparts, were not '¨an infringement.

Constructive versus resulting trusts

To add to these, Lord Kerr in the Privy Council’s decision of Marr v Collie (Bahamas) [2017] UKPC 17 (25 May 2017) concluded that the principle in Stack v Dowden [2007] 2 AC 432 is not confined exclusively to a domestic setting. In this jurisdiction we assume there to be a fundamental distinction between a jointly owned home and property purchased for investment; in the latter, Laskar v Laskar [2008] EWCA Civ 347 informs us that resulting trust principles apply.

In Marr, the Privy Council has adopted a diverging view: it held that it is the context of ownership, derived from the parties’ common intention (or lack of it), that is vital. If an unambiguous common intention to share beneficial ownership has been expressed or can be inferred, the court should give effect to it even if contributions are unequal. But if no intention has been formed or the consequences of joint ownership considered, the resulting trust may provide the answer.

Long leasehold management

In London Borough of Hounslow v Waaler [2017] EWCA Civ 45, the Court of Appeal had to consider whether the question of whether an item of expenditure was ‘reasonably incurred’, and hence recoverable as service charges for the purpose of section 19 of the Landlord and Tenant Act 1985, invoked the objective standard of ‘reasonableness’, or the lower standard of ‘rationality’.

The higher standard was preferred: further, part of the context for deciding whether costs have been reasonably incurred is the fact that, in principle, the cost of the work is to be borne by the lessees. It was not right, however, for the First-tier Tribunal to simply impose its own view if what the landlord had done had led to '¨a reasonable outcome.

The Court of Appeal also considered improvement notices notice served by the local authority under section 12 of the Housing Act 2004 in Wood v Kingston upon Hull City Council [2017] EWCA Civ 364. There it was held, in the context of a notice served unusually on two adjoining flats, that the scope of the work is limited to the minimum scheme required to eliminate the hazard.

Where next for 2017?

Housing remains a highly charged political topic. In the Queen’s Speech, we were told that proposals will be brought forward to ban unfair tenant fees (most likely in the form of the draft tenants’ fees bill), promote fairness and transparency in the housing market, and help ensure more homes are built.

What has not been trailed is more significant reform of property and housing legislation. Instead, it is likely that the courts will be left to draw the line between adjoining owners, properties with contested beneficial interests, and landlords and tenants, with the legislation we have already.

 

David Sawtell and Erol Topal are barristers at Lamb Chambers

@LambChambers

www.lambchambers.co.uk

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