The Property Law Blog

Property deals - football's saviour?

2010-03-10T13:09:28Z

Not a week goes by at the winding-up court in London without one or more football teams being summoned to answer winding-up petitions from their creditors [far more often than not - HMRC].

However, could property deals be their saviour?

League One football club Southend United and Championship side Cardiff City FC were this morning granted extensions to pay their debts after the High Court heard that property deals could save them from being wound-up.

Southend was granted a 35-day extension by High Court Registrar Ms Christine Derrett, in the Winding-up Division of the Companies Court, after she was told that the club's development partner Sainsbury's would be providing funds which would clear all debts.

Sainsbury's plans to build a store on the site of the club's current stadium with that development providing the funding needed for a new 22,000-seat stadium.

In a separate application, Cardiff City FC was granted a 56-day extension after the court heard that a Malaysian investor was committed to providing substantial funds to clear the £1.9m debt to HMRC.

Last month club shareholders backed plans to sell two plots of land around its stadium to rescue the club from its financial difficulties.

Unfortunately for poor Chester City, which has a 126-year history but was recently kicked out of the Football Conference league, there were no property deals on the horizon to woo Registrar Derrett and a winding-up order was granted.

It has been noted that the Registrars have seemed quite soft on football clubs - however with the threat of kidnap by unhinged mascots ever present in such cases I can see why.

Photo by Karen Blaha via Flickr.

OFT wrong on legal exemptions for Tesco

2010-03-09T15:34:01Z

Here is an interesting letter Estates Gazette recently received from the president of the National Association of Estate Agents on OFT proposals to provide legal exemptions for Tesco to encourage its involvement in the UK property market.

"The Office of Fair Trading's proposals (20 February, p30) to change the laws under which properties are sold in the UK, to favour the involvement of Tesco, both negates and brings into question the OFT's role of consumer protection in the UK.

Under the Property Misdescriptions Act 1991, it is a criminal offence for estate agents to make false or misleading statements regarding properties on the market. The OFT is advocating a change in this law to allow certain corporations, such as Tesco, to be exempt.

This would place the burden of responsibility on the seller to ensure that all information on the marketing of the property is accurate.

Presumably, the OFT will also excuse the supermarket chain the bother of complying with the Money Laundering Act and having to provide an energy performance certificate or home information pack.

For a senior director of the OFT to advocate the sweeping aside of carefully considered legislation - aimed at consumer protection, energy conservation and anti-money laundering - defies belief.

The average homeowner cannot be expected to have the skills to assess the state of their own property, nor navigate their way through the complex regulations that they would need to abide by to sell a property.

The National Association of Estate Agents has always been in favour of protecting consumer rights. But these OFT proposals have been ill-thought-through and do not take into account the complexities of the buying and selling process.

The NAEA has been calling for more stringent regulation of estate agents, to offer additional and necessary protection for consumers - which is why we will be introducing our own licensing scheme for NAEA members later in the year."

Gary Smith, president, National Association of Estate Agents, Arbon House, 6 Tournament Court, Edgehill Drive, Warwick, Warwickshire CV34 6LG

Photo by Jordi Martorell via Flickr.

Cuddle up to Land Registry Act - barrister urges

2010-03-09T15:05:01Z

In the 9 March 1863 edition of Estates Gazette was included this call by barrister Tenison Edwards of Inner Temple for everyone to give the then recently enacted Land Registry Act 1862 a good cuddle:

"Mr Tension Edwards' book is written to meet the opposition which the legal profession have, as he alleges, made to the Act brought in and passed by Lord Westbury.

We must notice, as most important, the objections which Lord St Leonards, the greatest legal authority of the day, makes: 1st, that registration will be attended with great expense both to the public and to individuals; 2nd, that it will cause a full disclosure on the record of every man's dealing with his estate; and 3rd, that no man can safely apply for registration who does not first ascertain that he has such a title as an unwilling purchaser could be compelled to accept.

Mr Edwards says: 'Every one must admit that certainty of title to land, facility of dealing with it and economy in dealing with it are three objects most desirable ... against which no sound reasons can be urged, except the dictates of blind prejudice and short-sighted self-interest.

'That the Act will not become a dead letter I have no fear.'"

Unfortunately the Act, the first attempt at a system of land registration, was later proved to be seriously flawed and ineffective and, following further attempts in 1875 and 1897, the present system was brought into force by the Land Registration Act 1925 as amended by the Land Registration Act 2002 [well, that is what wikipedia says].

Photo by Neil Howard via Flickr.

Saturday's Estates Gazette preview

2010-03-05T16:25:46Z

This week in Practice & Law we have Ricahrd Hanson, Damian Hyndman and Peter Williams of Evershed warning that in the light of disability discrimination legislation service providers must take positive action to ensure that disabled people can access services.

That is followed by Nora Gillen and Peter Williams [again!] of Eversheds considering the implications for property and investment of upward-only rent reviews being neutralised in Ireland and a close look at the Tory Planning Green Paper in two articles by Michael Gallimore of Lovells LLP and Richard Bull of Winkworth Sherwood respectively.

Total faces pure economic loss claim over Buncefield

2010-03-05T12:44:31Z

A really interesting decision in the Court of Appeal was handed down yesterday on the fallout from the Buncefield oil depot explosion in 2005.

Lord Justices Waller, Longmore and Richards ruled that Shell is entitled to claim for its "pure economic loss" of lost profits after fuel stored at the depot was destroyed in the explosion, which occurred as a result of French oil group Total's negligence.

Total argued that Shell was not entitled to compensation because it was not the legal owner of the pipelines and storage facilities it used at Buncefield and therefore fell foul of the received legal wisdom that only the legal owner of a property can claim compensation for damage to property caused by negligence.

Overturning the March 2009 decision of high court judge Mr Justice David Steel dismissing Shell's claim, the Court of Appeal ruled that Shell was the "beneficial owner" of the facilities, which is sufficient ground to claim damages for loss of business caused by the fire.

With a potential claim by Shell of around £100m I imagine this decision will be flittering its way towards the Supreme Court in the not too distant future.

Photo by James Butler via Flickr.

The high cost of litigating #2 - AIM expulsion

2010-03-04T10:01:46Z

Another story this morning illustrating the damage that litigation can wreak was the news that Mission Capital could face AIM expulsion unless it buys new investment properties before the end of the year.

Announcing a loss before tax of £1m in preliminary results today, the company said its listing would be suspended for up to six months on 31 July and cancelled on 31 December if it failed to implement an investment strategy.

Chairman Philip Goldenberg said: "The board has been actively investigating potential investments, but has not yet identified one which it considers appropriate to recommend to shareholders. It will continue its efforts in this regard and in doing so will be mindful of the foregoing deadlines."

Goldenberg said the sale of subsidiary Karspace Management for £1.3m last July provided an impetus for the settlement of its dispute with former executive directors Neil Sinclair and Emma Sinclair who had sued Mission in early 2008, claiming that they had been ousted in a "sudden and brutal coup".

However, Goldenberg said the company would have "readily agreed" to settle the dispute a year earlier with "far less destruction of shareholder value".

In the year to 30 September 2009 the company saw its asset value per share fall to 1.32p, from 3.19p in 2008.

Photo by destempsansciens via Flickr.

The high cost of litigating #1 - Administration

2010-03-03T15:50:07Z

The news this morning that Cipriani London, the Italian restaurant frequented by celebrities including Sir Elton John and Naomi Campbell, has gone into administration illustrates just how high the stakes can be when you take on the risk of litigation.

The administration follows soon after the family lost a Court of Appeal battle with Orient-Express Hotels, owners of the Hotel Cipriani in Venice, over the Cipriani trademark earlier this month.

The Cipriani family said in a statement: "Cipriani (Grosvenor Street) Ltd, a successful enterprise free of any debt outside the liabilities resulting from the Orient-Express Hotel litigation, is filing for administration to protect its assets."

"The administration process will continue while the company pursues any appeal to the Supreme Court in the UK litigation and trademark dispute against Orient Express Hotels at OHIM, the Office of Harmonization in the Internal Market (EU).

"Service will continue as usual at our renowned London restaurant, which will operate under a new name by April 24. Operations around the world remain unaffected."

Photo by Brooke-Lynn via Flickr.

Triumph handed to village green campaigners

2010-03-03T11:06:03Z

The Supreme Court has bestowed a great triumph to a group of local Redcar campaigners this morning, thereby ending their six-year planning battle with council planning chiefs over plans for a major £89m development by Persimmon on green space on the Redcar seafront.

Ruling unanimously in favour of the campaigners and ordering the council to register the land as a town or village green, the court dashed the hopes of the developers as now that the land will be designated as a green space, saving if from development, any house-building would be incompatible with its new formal status as a town or village green.

Reacting to the decision one of the leaders of campaign group The Friends of Coatham Common, Charlie Davis said: "This is amazing. After years of battling to save this green space, where generations of Coatham people have played football and cricket, we have finally won the day.

"We now call on the Council to work with us to make this green space a worthy memorial to our greatly missed late MP, Mo Mowlam. Some people may regard us as NIMBYs, but green space in this highly industrial region should be cherished and protected," he said.

Andrew Lockley, Partner and Head of Public Law at Irwin Mitchell, said: "I pay tribute to the steely determination of the people of Coatham, who have finally triumphed through setback after setback.

"In the process they have clarified the law twice. This victory means that other groups who want to use green space and preserve it from development will find it easier to do so. This is a very good day for local campaigners who care about protecting green space in their community," he said.

Photo by Sebastia Giralt via Flickr.

Grrrr Battle Royal at the Albert Hall - No more

2010-03-02T16:24:48Z

Bad news for all those wrestling fans out there - Local residents have won their legal battle to quash a license approval for boxing and wrestling events to be held again at the Royal Albert Hall in London.

This morning, McCombe J allowed the claim by residents in flats at Albert Court in Prince Consort Road, South Kensington, backed by the freeholder and management company, that the council had failed to properly notify them of the proposed licence changes.

The court heard that, five months before the changes, the council sent out letters notifying nearby residents - selected by computer - of the plans to bring the sports back.

However, while some 107 letters were received by another residential block called Albert Hall Mansions, another letter was sent to a "Bus stop opposite 1 Kensington Gore" and another dispatched to premises in Brixton, no letters were sent to Albert Court residents.

Quashing the council decision, and the hopes of thousands of devotees of the 1991 VHS video of WWE Tagged classic "Battle Royal at the Albert Hall", McCombe J said "the process was simply dictated mindlessly by the database, even though its results could be seen to be bizarre on the briefest glance at the plan itself," he said.

"Mindless" and "bizarre" - sounds like the computer was a wrestling fan.

As an aside, this was the quite excellent round-up of what was in store for those interpid souls who watched the WWE classic from 1991:

"Twenty man over the top rope Battle Royal featuring: The Barbarian, Big Boss Man, Jim Duggan, Earthquake, Ric Flair, Hercules, Marty Jannetty, Brian Knobbs, The Legion of Doom (Hawk and Animal), Shawn Michaels, The Mountie, The British Bulldog, Roddy Piper, Paul Roma, Jerry Sags, Tito Santana, Typhoon, The Undertaker, and Kerry Von Erich."

Photo by nWoSyxx via Flickr.

Could Pompey property deals scupper administration?

2010-03-02T11:28:38Z

Down at the High Court this morning HM Revenue & Customs is challenging the administration of Premier League football club Portsmouth FC.

HMRC says that while "in principle" it supports the administration it wants answers to its "necessary and reasonable" questions before it will abandon its own winding-up petition against the club over a £12m tax bill.

Gregory Mitchell QC for HMRC said "We say serious questions arise that need investigating as to what financial dealings there have been between different owners of the club and between the club and its owners ... which at the moment are entirely shrouded in mystery", he said.

No specific deals were mentioned in court.

However, one of the most interesting deals which Estates Gazette readers would love to have looked at was where former owner Alexandre Gaydamak separated some pretty valuable land from the club when he sold it.

While the land has no monetary value to him, because any future development would have to be tied to the club, it could be his best bet on recouping £28m he is owed, since the property is worth a lot to the current owner as the land combined with the stadium are required for a viable development prospect.

Gaydamak was contracted to sign back the property over to the club for £1 three months ago if conditions, including the payment of a £2.5m debt to Barclays and a £9m instalment on Gaydamak's £28m loans, had been met.

However, both those conditions have not been met and so Gaydamak continues to hold the land.

As I said, no specific deals were discussed and there there seems no reason to believe that the Gaydamak deal would cause concern to HMRC - it just wants questions answered.

Photo by Sylvia aka Supernan via Flickr.

All hail property big-wigs

2010-03-02T10:04:12Z

A hearty congratulations and much bowing, scraping and doffing of caps to some of the property and planning bar who have joined the ranks of big-wiggery in the yearly QC selections.

Those handed silk include Philip Rainey of Tanfield Chambers, Zia Bhaloo of Enterprise Chambers, Katharine Holland and John Litton of Landmark Chambers, Tom Leech of Maitland Chambers, Joanne Wicks of Wilberforce Chambers, Christopher Stoner of Serle Court and Daniel Stilitz and Jonathan Swift of 11 KBW.

Commenting on the appointment of Philip Rainey, Kevin Moore senior clerk at Tanfield Chambers said: "Tanfield Chambers is delighted with this excellent news; it is thoroughly well deserved and caps a fantastic year for Philip following his success in winning both Enfranchisement Barrister of the Year and Real Estate Junior of the Year at the Chambers Bar Awards"

The current Lord Chancellor Jack Straw [who does wear some quite fetching legal garb himself, even if he does often choose to ignore legal advice] will preside over the appointment ceremony, where the rank will formally be bestowed at Westminster Hall on 22 March.

Image courtesy of EssjayNZ via Flickr.

Rule of life #42: Never upset a billionaire

2010-02-26T15:34:34Z

Rules of life are important to me and one I have decided to live by is if you are going to get into an argument, don't get into one with a billionaire - it always ends in trouble.

I was in court earlier today when it was revealed that Michael Cherney, the Russian-born Israeli billionaire, has made an application to the High Court that could see his opponent in a property dispute jailed for breaching court orders.

In July last year, Cherney was granted an injunction against a US businessman with whom he is embroiled in a legal dispute over a series of multi-million-pound property investments in some of London's poshest residential areas.

Frank Neuman was thereby restrained from disposing of or dealing with approximately £5m in assets on the ground that there was an arguable case that the assets belong to Cherney.

He was also told to disclose information as to the present location of certain assets.

However, earlier this month, Cherney's lawyers issued a committal application against Neuman alleging that he has deliberately been "dealing" with the assets in contravention of the order and has failed to comply with the disclosure orders.

If the allegations are proved the High Court has powers to either send Neuman to prison for up to two years, suspend the sentence as a warning, or fine him.

Never upset a billionaire, never upset a billionaire...

Photo by Simon James via Flickr.

Bureaucrats do away with justice

2010-02-26T14:41:48Z

This article on tribunals eroding owners' legal rights to defend their property appeared in the 26 February 1910 edition of Estates Gazette:

"It is gratifying to learn from the proceedings at the anual meeting of the Incorporated Association for the Protection of Property Owners that this very useful organisation is increasing in membership and influence.

Mr Boyton MP was elected to the Presidency. He laid stress upon the modern tendency to deny the property owner access to the Law Courts, and to substitute for legal jurisdiction the bureaucratic authority of Government officials.

This inclination to create irresponsible tribunals would never have reached its present dimensions had owners of realty been better organised and represented in Parliament."

Poor lambs. Property not better represented in Parliament??

And at a time when the only MEN who could vote had to be over 30 and either own or rent a house that is an incredible claim.

Photo by Ludovic Bertron via Flickr.

Saturday's Estates Gazette preview

2010-02-26T14:30:28Z

Following a superinjunction the great legal news story that I had waited all week to run received a bloody and undeserved end.

However, on the bright side Practice & Law still managed to get in our interview with Bob Kidby and Michael Stancombe of Lovells without any overt censorship, a warning from Gillian Sproul and Nick Marshall of Mayer Brown International LLP that land agreements will no longer be excluded form UK competition legislation from April 2011, and a consideration of the implications of Barratt Homes Ltd v Dwr Cymru Cyfyngedig (Welsh Water) by David Shakesby and Neil Bromwich of Osborne Clarke.

Straight-jacket ruling on guarantees "bad news" for landlords and tenants

2010-02-25T12:12:57Z

A very important ruling in the High Court earlier this week on the enforceability of a guarantee given by a former tenant's guarantor following an assignment of a lease [what a mouthful] has really got real estate lawyers going.

The facts of Good Harvest Partnership LLP v Centaur Services Ltd can be briefly stated: Centaur acts as guarantor for a company taking an underlease of business premises. Company allowed to assign underlease on proviso that Centaur enters into further guarantee under new underlease. Property owner sues Centaur to recover unpaid rent, pursuant to the guarantee.

Centaur argued at court that the guarantee was void and unenforceable by reason of the Landlord and Tenant (Covenants) Act 1995 which provides for tenants and others to be released from their obligations when a lease was assigned.

Newey J ruled in favour of Centaur and found that if a guarantor was required to enter into a further guarantee when the lease was assigned, it would frustrate the operation of the Act in that it would, if valid, impose on the guarantor obligations equivalent to those from which the Act was designed to secure his release.

The comments on this case have flown in thick and fast with the snappiest being Roger Cohen, joint head of real estate disputes at Berwin Leighton Paisner LLP, who said "this is a bad decision for both landlords and tenants. It will make it harder for deals to be done.

"This legal straightjacket can and should be removed on appeal," he said.

But other very interesting comments have also come in from Leona Briggs, head of real estate litigation at Osborne Clarke who acted for the landlord and Arthur Lovitt, head of real estate at international law firm Pinsent Masons and can be seen below.

Image by Brian aka Shallowend via Flickr.

]]> Leona Briggs, head of real estate litigation at Osborne Clarke, said "This could be worrying news for landlords, particularly in the current economic climate - essentially landlords can no longer rely on the guarantees given by the former tenant's guarantor following an assignment of the lease.

"The only guarantees that landlords can now rely on are ones given by the current tenant's guarantor, or the former tenant which could easily be a shell company or other undercapitalised entity.

"It is important that landlords review the covenant strength of their former tenants following an assignment as their guarantee may be all that landlords have to fall back on.

"If landlords receive an application for consent to assign they should ask for a direct guarantee for the potential assignee from a party other than the current tenant's guarantor.

"As a result of this decision landlords may find that, in the case of default by their assignee tenants, the strength of the covenants provided in AGAs that they had to fall back on may now have substantially weakened.

"While this is bad news for landlords, it does mean that former guarantors that entered into AGAs on assignment may now no longer need to worry about contingent liabilities and the ghost of previous guarantees coming back to haunt them," she said.

Arthur Lovitt, head of real estate at international law firm Pinsent Masons said that while the case "causes another problem for landlords in their attempts to preserve income in these difficult times ... it may not always be good news for tenants.

"Landlords will now be more likely to insist that an entity which previously would have acted as guarantor takes the lease in its own name so that any guarantee of its successor's obligations will work.

"Landlords will have to look at applications for assignments differently. A tenant whose obligations have been guaranteed may find a landlord has legitimate grounds to object because any contractual right to a guarantee from the existing guarantor of the new tenant's obligations will not be effective - even if willingly offered," he concluded.