PropertyLaw.guru Blog

EG 20-06-20

News
Retail out, co-working spaces in at London’s Westfield shopping centre - the owner is going to turn the 100,000 sqft  House of Fraser store into a co-working space à la WeWork!! Also use class D2 dance hall experience
IKEA doing residential property development in Enfield - will they come with furniture included?
HofL call for greater scrutiny of pre-pack deals where the business is sold out of administration at a knock-down price to people connected with the old directors, free of problem assets. This has been going on for years and really nothing has been done.
A number of articles commenting on the future of offices post-covid, perhaps more collaboration between the parties 
Also predicting a boost for flex-offices as large corporates slim down on office use, retailers rethink space, logistics & distribution booms, huge problems with hospitality industry, lenders looking more at covenant strength.
HALO supplement with news in property tech and innovations

Legal
p.43 - Summary of the current Govt initiatives to assist landlords and tenants though lockdown and beyond. 24th June is going to be crucial for landlords. - how many tenants will pay their rent - many are refusing to pay all or part. Side letters and rent holidays are being negotiated. Ts are concerned that there is no rent suspension or insurance for covid issues preventing use, unlike insured risk damage. Some are arguing frustration and some arguing force majeure (no chance in my opinion). The Corporate Insolvency and Governance Bill is progressing and the Code of Practice (now released) will promote collaboration. As already reported everywhere forfeiture prevention has now been extended to the end of Sept, and CRAR prevented unless there is 90 days arrears of rent. It predicts what the code is likely to say but this is now known. Points out hat there is still nothing to prevent Ls issuing debt proceedings for the rent. Explores the problems of transparency for landlords unaware of the Ts true financial position.
p.45 The future for office space. Will we ever need to return to the office (or want to)? The demand for space may increase in some cases because of the need to space people out, and the end of hot desking or open plan shared areas. But the barristers writing the article are pining for the return to chambers!
p.46 Covid-19 and buying time in commercial transactions.Looks at the problems of drafting variations allowing delays including - definition of the virus, the problem with the Bill talking about companies being affected by ‘coronavirus’ when clearly as inanimate legal persons they cannot be, whether parties are entitled to claim suspension of performance and how closely you define the trigger carefully rather than general phrases being used.Also what if the problem is not the effect on the tenant or its employees but upon people who cannot provide essential services such as surveys. Also what would the notice requirements be, for triggering and for cessation? What about dispute resolution? Also the impact of ‘force majeure’ clauses in connectedconstruction contracts and property contracts - decisions in each may be different, by different experts. Apparently the City of London’s Website will soon have some drafting on this from the Association of Property Support Lawyers - look out for this!
p.47 Whistleblowing on the pandemic. Employees are becoming increasingly fearless in reporting misconduct by employers - including requiring them to work when being furloughed, claiming funds for non-existent employees, failing to provide safe systems of working, PPE, fraudulent claims of emergency funding, etc. Stresses the importance for compliance and HR teams to prepare for such whistleblowing reports, and whether there is a risk of a claim by dismissed employees for huge compensation for dismissal for making protected disclosures as whistleblowing in known in employment claims 
p.48 Termination of flexible fixed term tenancies - Croydon LBC v Kalonga [2020] EWHC 1353 - flexible tenancies (a type of secure tenancy granted under the Housing Act 1985) without express forfeiture clauses in them cannot be terminated by the landlord for breaches by the tenant, in this case for rent arrears and antisocial behaviour!
p.48 Hart v Large [2020]EWHC 985 - a buyer was able to claim damages from their solicitor and surveyor for not warning them about the need to have a certificate from a consultant certifying that the building had the rebuilt correctly. The surveyors had to spell this out too, so had to pay £374k damages. The solicitors had admitted liability for not mentioning this is in the report on title and had to pay (with the architect who was also liable) £376k in damages. 
p.49 Clarity on Practice Direction 51Z. Arkin v Marshall [2020]EWCA 620 confirmed that the stay of possession proceedings imposed by PD 51Z stays all proceedings leading to the enforcement of possession orders until 25th June 2020, but the decision confirms that it doesn’t just suspend the orders, it suspends all the interim proceedings such as case management directions hearings l(even agreed case management directions - time periods will not run!) eading to the enforcement of such orders. Scary examples of the way in which this PD may have unintended consequences include a tenant trying to give VP in order to exercise a break clause in a commercial lease who isn’t able to get the sub-tenant out and therefore can’t exercise the break! The stay under a new CPR55.29 will continue until 23 August 20 as a Rule. Also on 22 May the FCA told lenders the should not commence or continue proceedings against customers before 31 Oct 20 (even though non-payment in many cases predated CV and is not related to its effects).
p.50 Social value in the era of Covid. General article calling for the property sector to get serious about ’social purpose’, ie social value locally, fairness and inclusion. Good luck with that one!
p.51 Who is the landlord - Lupin v Princes Gate [2020] PLSCS 62. Enfranchisement case. The problem here was the existence of an overriding 999 yr lease of the flat alone (not the building)  granted by the original freehold landlord PG, and the validity or not of s.42 notices served by the tenant of the top floor flat for a lease extension.The original freehold to tenant lease contained a restrictive covenant not to build above the flat, but the reversionary lease granted later by  the landlord to its associated legal entity PGP did not. T served the s.42 on PGP its immediate landlord and sought a new lease with the restrictive covenant. Then T served a notice on PG & PGP together as ’the landlord’, and a second notice on PG as landlord and PGP as third party. Held first notice was valid, the reversionary lease had severed the reversion and under s.140LPA25 the RC was binding on L, PG, so eventually T will get a lease with the RC in it. But the decision has been hotly debated as being wrong. It appears that the RC was not noted on the freehold title by T,when the lease was originally granted and before the sale of the freehold to PG  though the lease had, and so T could not enforce against PG….
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