Property update

Legal intelligence for professionals in property.This update contains brief details of recent propertylegislation, cases and other developments relevant to those involved in property.

22/12/2011

Alison Buckingham

Alison Buckingham

Partner

Legal intelligence for professionals in property.

This update contains brief details of recent property legislation, cases and other developments relevant to those involved in property.

The following topics are covered in this update:  

   Adverse possession
   Easements
   Housing
   Land registration
   Planning
   Property litigation

 

Adverse possession

Successful interruption required to defeat squatter’s claim

Zarb and another v Parry and another [2011] EWCA Civ 1306

This Court of Appeal case concerned a dispute between two neighbours over the ownership of a strip of land.  The Zarb family (Z) appealed against the decision that their neighbours, the Parry's (P) had acquired title to a strip of land in Z's ownership, by adverse possession. 

The disputed strip of land had been occupied by P and their predecessors in title since 1992.  When Z bought their property in 2000 they queried the location of the boundary with P’s predecessors but nothing was resolved.  P purchased their property in 2002 with the knowledge that there was a potential dispute over the boundary.  In 2007 Z entered the land for an hour or so, cut down a tree and tried to re-erect the boundary fence to the position shown on Z’s title deeds.  P objected and Z then started proceedings for the recovery of the land.

P relied on section 98 of the Land Registration Act 2002 which enables a squatter to defend a claim for possession if both of the following apply:

  • they would have been entitled to apply to be registered as proprietor of the land because they had been in adverse possession for ten years or more; and
  • the squatter reasonably believed that the disputed land belonged to them for the period of ten years of adverse possession ending on the date of the possession application.

The Court of Appeal agreed and dismissed Z's claim for possession of the property.  They found that Z had not interrupted P's possession by attempting to erect the fence on a particular day.  When P bought the property they were made aware of a boundary dispute which they presumed had been settled, and when that earlier claim was resurrected, a surveyor gave an opinion confirming P's belief regarding the location of the boundary.  Therefore it was reasonable for P to believe they were the owners of the disputed land.

Practical points

One judge made a sensible comment in the postscript to this case concerning the dangers of buying a property with an unresolved historical boundary dispute.  She recommended that property lawyers should ensure the dispute is fully resolved before a purchaser proceeds with the transaction.  Boundary disputes are costly and time consuming when they go to litigation so it is far cheaper to try to come to some agreement with the neighbour or insist that the seller does so before committing to the purchase. 

 
Easements

Right of way claimed after licence expired

London Tara Hotel Ltd v Kensington Close Hotel Ltd [2011] EWCA Civ 1356

The Court of Appeal has upheld the High Court's decision in a longstanding dispute between two neighbouring hotels over a right of way and provides a reminder that a right of way can be acquired after 20 years' use provided that the use was “as of right” and not acquired by force, stealth, or with the landowner’s permission.

The London Tara Hotel (LT) owned a service road which provided access to the rear of the hotel and in 1973 the owners granted a licence to use the service road to Kensington Close Limited, who was the owner of the adjacent Kensington Close Hotel (KC).  The terms of the licence were:

  • it was personal to Kensington Close Limited and was for the use of its agents and business visitors, with or without vehicles (but not hotel guests)
  • it was for a term of one year and thereafter from year to year
  • the rent was £1 a year, if demanded, with a proviso that the payment of rent was included to ensure the use of the right of way was only as per the terms of the licence and not otherwise
  • termination was on 4 weeks’ notice or on breach of any of the terms of the licence.

Kensington Close Limited ceased trading in 1978 and KC changed hands a number of times from 1980 until it was sold in 2002 to the current owners.  During that time, the use of the service road as a right of way continued by the various owners of KC, and over the years that use increased to include coaches bringing guests to the hotel as well as commercial vehicles using the road for deliveries.

In 2007, the owners of LT claimed that KC was trespassing by using the service road and applied for an injunction to stop them doing this.  KC argued that they were entitled to an easement by prescription in the form of a right of way over the service road for all vehicles.

The Court of Appeal held that KC had used the service road "as of right" from the time the original licence ended in 1980.  They also agreed with the High Court and found that the use extended to coaches and commercial vehicles.  This was on the basis that a prescriptive right of way is a right for all purposes unless there is evidence to the contrary.

Practical points

The case highlights the problems that can arise when rights of way are not documented properly.  LT could so easily have avoided this situation if they had taken action to regularise the position over the use of the service road with KC within the 20 year period.  They could have negotiated a new licence, complained about the use of the road by coaches and commercial vehicles, or at the very least, demanded payment of £1 to establish that the use of the road was strictly with their permission.

 
Housing

DCLG publishes summary of responses and final directions to the Social Housing Regulator

In November 2011 the Department for Communities and Local Government (DCLG) published: Implementing Social Housing Reform: Directions to the Social Housing Regulator: Consultation: Summary of responses.

The final directions and summary of responses are part of the DCLG’s plans to implement reform of social housing.  The directions are subject to the commencement of certain provisions of the Localism Act 2011 and include the following amended directions:

  • clarification that landlords should take into account the needs of vulnerable household members when deciding their policies on succession
  • that landlords must make a decision about whether to issue another tenancy to the tenant at the end of a fixed tenancy term
  • clarification that there is no requirement to rebase a tenant's rent where they move from a starter tenancy to an assured (or assured shorthold) tenancy.


Housing Strategy for England published

In November 2011 the DCLG published Laying the Foundations: A Housing Strategy for England which sets out Government’s plans for kick-starting the housing sector.

The plans include:

  • support for a new build indemnity scheme led by the Home Builders Federation and Council of Mortgage Lenders to provide up to 95 per cent loan to value mortgages for new build properties in England, backed by a housebuilder indemnity fund
  • consulting on a proposal to reconsider planning obligations which were agreed prior to April 2010, where development has been stalled
  • establishing a new £500 million Growing Places Fund which will support infrastructure that unblocks housing and economic growth
  • launching a new £400 million “Get Britain Building” investment fund, which will support building firms in need of development finance, including small and medium-sized builders, to get going on stalled sites which have planning permission
  • freeing up public sector land with capacity to deliver up to 100,000 new homes with Build Now, Pay Later deals (where there is market demand and where this is affordable and represents value for money) to support builders who are struggling to get finance upfront
  • improving fairness in social housing so that tenants with a household income in excess of £100,000 pa. must pay up to the market rent
  • providing more support for local areas that want to deliver larger scale new development to meet the needs of their growing communities, through locally planned large-scale development
  • providing £100 million of funding for housing associations and councils to bring empty homes back into use and a further £50 million to tackle some of the worst concentrations of empty homes
  • giving communities new powers to deliver the development they want through Community Right to Build.

Practical points

Much has been written about the Government’s new Housing Strategy with most commentators taking the view that it is a question of waiting to see if the package of proposals will actually “kick-start” the housing market, or whether more needs to be done.


New guidance for lenders and housing associations

The Council of Mortgage Lenders and the National Housing Federation have published Guidance for handling arrears and possession sales of shared ownership properties.  The guidance sets out best practice for lenders and housing associations when dealing with mortgage or rent arrears on shared ownership properties.  The guidance includes a model service level agreement between lenders and housing associations, setting out areas of responsibility and service levels.

 
Land registration

Deciding ownership of a general boundary

Drake and another v Fripp [2011] EWCA Civ 1279

The Court of Appeal has held in a boundary dispute, that altering the title plan to relocate the boundary in a different position did not prejudicially affect the title of the registered proprietor who "lost" the disputed land.

The Land Registry makes it clear in Practice Guide 40 that they cannot identify the position of the legal boundary from the title plan and so the vast majority of land is registered with a “general boundary” only.  This means that where there is a physical boundary such as a wall or hedge, that the Land Registry cannot say whether the legal boundary runs through the middle, along one particular side, beyond the near or far side, or whether it includes all or any part of an adjoining roadway or stream.

It is possible to apply to the Land Registry for a “determined boundary” which enables the exact line of a boundary to be determined and recorded on a registered title.  If the alteration of land in the title of a registered proprietor amounts to a rectification of the register then in some cases compensation is payable.

This case involved a dispute over whether the boundary followed a Cornish hedge (as contended by the tenant of the property, Mr Drake (D)) or a post and wire fence (as contended by Mr Fripp (F)).  The two boundary features were some 4-5 metres apart and the disputed land in total, along the length of the boundary, amounted to one and half acres.

The Court of Appeal upheld the decisions of both the High Court and the Land Registry Adjudicator and agreed that the boundary was the fence and not the Cornish hedge.  This resulted in D losing the disputed land, which was ordered to be registered to F.

D had argued that he had been prejudicially affected by the loss of this land, but the Court of Appeal disagreed on the basis that as the boundary was a “general boundary”, once it was established where the correct boundary was, it showed that D was never the registered owner of the land in question and therefore cannot be considered to have “lost” it.

Practical points

Boundary disputes are very common and this case is useful as it confirms as law the Land Registry's guidance on this point.  The fact that the effect of an order to redraw a boundary does not automatically bring with it a right for the aggrieved party to make a claim for rectification, may encourage parties to come to an agreement over the boundary rather than resorting to litigation.

 

Actual occupation required to claim an overriding interest

Chaudhary v Yavuz [2011] EWCA Civ 1314

Overriding interests are interests which affect registered land, and despite not being registered against a title, will bind any person who acquires an interest in that land.  The Court of Appeal has held that the use of an external staircase built over an adjoining owner’s alleyway did not amount to actual occupation of that alleyway and so an overriding interest could not be claimed under the Land Registration Act 2002.

An alleyway ran between numbers 35 and 37 Balaam Street; the alleyway was owned by number 35.  The owner of number 37 Mr Chaudhary (C) wanted to extend number 37 and the then owner of number 35 agreed that C could replace a rotten staircase with a metal structure which gave access to the first floor of both numbers 35 and 37. 

C tried to get the owner of number 35 to execute a deed of easement which would grant rights to C over the staircase, but did nothing further to protect these rights such as registering a unilateral notice against number 35.  This was despite the fact that C had removed the internal staircase to number 37 so the only access to the first floor of the property was via the metal staircase owned by number 35. 

Number 35 was then sold to Mr Yavuz (Y) who removed the connection between the stairway and number 37 leaving C effectively landlocked, with no access to the upper floors.

The county court judge decided that C had a right of proprietary estoppel against Y and Y was bound by that right because C and his tenants were in actual occupation of the staircase at the date that Y bought the property.  This meant that C had an overriding interest over Y. 

The Court of Appeal disagreed and held that Y acquired number 35 free of C's rights.  C and his tenants were not in actual occupation of the staircase as the use of a right to pass and re-pass does not amount to actual occupation.  C argued that the actual metal structure itself constituted actual occupation but the court’s view was that the metal structure became part of the land and therefore use of the staircase by C and his tenants was precisely that, use not occupation.

Practical points

This is the first time that the Court of Appeal has considered what is meant by "actual occupation” for the purposes of overriding interests, and usefully clarified that use is not to be confused with occupation.  The decision also highlights the importance of protecting an interest by registration, because as in this case, C could have registered a unilateral notice against the title of number 35.

 
Planning

Time limits for judicial review

R (Macrae) v County of Herefordshire District Council [2011] EWHC 2810 (Admin)

In this case, the High Court had to consider whether the requirement in CPR r.54.5 that judicial review proceedings be commenced promptly, as well as within the three month time limit, remains applicable in cases that do not raise any issue of EU law.

The County of Herefordshire District Council granted planning permission for the construction of a dwelling in a rural area.  The claimant issued a claim for judicial review just two days before the three month period for judicial review expired.  CPR r.54.5 provides that a claim for judicial review must be made promptly and, in any event, no later than three months after the grounds to make the claim first arose.

The issue was whether this claim complied with the requirement for proceedings to be brought promptly following the ECJ’s decision in Uniplex (UK) Ltd v NHS Business Services Authority (Case C-406/08).  In the Uniplex case (concerning EU procurement law) the ECJ held that the promptness requirement is unlawful on the grounds that while the maximum limit of three months to make a claim for judicial review is acceptable, the existence of a shorter but poorly defined requirement of “promptness” infringed EU principles of legal certainty and effectiveness.

The High Court found that the claim had not been brought promptly under CPR r.54.5 and dismissed the claim.  Their view was that EU law and the decision in Uniplex was only relevant in cases where EU rights were asserted and therefore the requirement to bring a claim promptly still applied to cases with no issue of EU law. 

Practical points

Permission to bring a claim for judicial review may be refused on the grounds that the claim was not brought promptly even if within the three month time limit.  This case shows that the courts will strictly enforce time limits permitted to bring a challenge against the decision of a planning inspector on appeal, as they have to consider the effect that a successful challenge may have on third parties.


Proposed incinerator did not comply with the Habitats and Species Regulations

R (Cornwall Waste Forum, St Dennis Branch) v Cornwall Council [2011] EWHC 2761 (Admin)

In a case which has received much publicity, the High Court quashed planning permission granted by the Secretary of State for an incinerator in Cornwall, on the grounds that Cornwall Council did not comply with the requirement to undertake appropriate assessments under regulation 61(1) of the Conservation of Habitats and Species Regulations 2010 (Regulations)

The challenge by Cornwall Waste Forum was based on the threat that the proposed incinerator would have on the nearby protected Special Areas of Conservation.  The Forum claimed that the planning inspector was wrong to leave the question of an appropriate assessment to the Environment Agency who had granted an environmental licence for the incinerator.

Under the Regulations an appropriate assessment is required of a competent authority, and in this case there were two competent authorities: the Secretary of State and the Environment Agency.  The Environment Agency in issuing the licence had decided that no appropriate assessment was needed.

The High Court quashed the planning permission for failure to comply with the Habitats Regulations in undertaking an appropriate assessment.  The court held that the Forum had a legitimate expectation that as part of the planning enquiry the inspector should consider the question of who could provide an appropriate assessment.  The Secretary of State should have undertaken appropriate assessments bearing in mind that an issue had already been raised in relation to the impact on the Special Areas of Conservation.

The Secretary of State has been granted leave to appeal.


 
Property litigation

Damages for trespass of airspace

Stadium Capital Holdings (No. 2) Ltd v St Marylebone Property Company plc and another [2011] EWHC 2856 (Ch)

This case concerned the assessment of damages for trespass of an advertising hoarding into the airspace of an adjoining owner.

Stadium Capital Holdings (SCH) owned a development site in Hampstead.  The adjoining premises were owned under a leasehold title by St Marylebone Property Company (SMPC).  In 1976 SMPC obtained planning permission to erect an advertising hoarding on the boundary wall and granted a number of lucrative licences to advertising companies to display advertisements on it.

In 2004, SCH’s predecessor gave notice to SMPC to remove the hoarding as they considered the hoarding to be trespassing into the airspace of the development site.  SMPC removed the hoarding but SCH (who had bought the site in 2008) claimed damages for trespass from the date of the expiry of the notice to remove the hoarding to the actual day of removal, calculated by reference to the sums received by SMPC during that period.

The High Court dismissed SMPC’s claim that it had acquired the space by way of adverse possession and ordered that SCH should receive £313,972 in damages for the trespass.   SMPC appealed on the basis that the assessment of damages was excessive as that sum was the total fee income it had received from the use of the hoarding.

The Court of Appeal allowed the appeal finding that the amount awarded was excessive.  They remitted the case back to the High Court for assessment of damages using the more common the hypothetical licence fee approach.

The High Court at a further hearing, assessed damages based on the amount that hypothetical parties would have negotiated as a reasonable licence fee for the hoarding and awarded SCH a reduced amount of 50% of the advertising revenue.

Practical points

This case is a useful reminder of how the courts’ assess damages for trespass, and that an aggrieved party is still entitled to damages even if they have not suffered any actual loss.  A common way of assessing damages is on a hypothetical basis which looks at the amount the parties would have agreed if they had negotiated a licence at the outset.

 
New criminal offence of squatting in residential property

In October 2011 the Ministry of Justice published:  Options for dealing with squatting: Response to Consultation.  Following the recommendations the Government has confirmed that it intends to make squatting in residential property a criminal offence.

For an offence to be committed a person must do all of the following:

  • is in a residential building as a trespasser, having entered it as a trespasser
  • knows or ought to know that he or she is a trespasser
  • is living in the building or intends to live there for any period.

The Government have made it clear that the offence will not apply to anyone who is in a property legitimately, which would include:

  • tenants, lodgers or occupiers who originally occupied the property with the owner’s permission, but for whatever reason are refusing to leave.  A common example is a tenant remaining in a property after their tenancy has ended, or a co-habitee refusing to move out.
  • persons who genuinely thought they had the owner’s consent e.g. an unsuspecting tenant renting a flat from a bogus letting agent.
  • workers or students who are occupying commercial or academic buildings by way of protest.
  • gypsies and travellers who occupy land ancillary to residential buildings.

The penalty for squatting will be imprisonment up to 51 weeks and/or a fine.

Practical points

Although squatting in commercial property will not be made a criminal offence the Government has stated that criminalising squatting in residential properties is a “first step” so the offence may be extended to non-residential property at some time in the future.

The Government intends to look at what improvements can be made to the existing powers of enforcement available where squatting takes place in commercial premises.  Currently squatters in commercial buildings can be sued through the civil courts and also prosecuted for criminal offences such as criminal damage and burglary.

 

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