Introduction
Welcome to the October 2020 edition of the Property Newsletter from Hardwicke.
Luckily avoiding quarantine, summer was nonetheless a somewhat muted affair, and, despite the time and opportunity to pick up a new skill, hobby or other pastime, all the editor seems to have gained an appreciation for is the differences between “flavours” of hand sanitiser (for those enquiring, he is particularly fond of the versions with aromas of cheap brandy/tequila).
This month Jamal Damachkie dares to explore that most hated of subject for judges (and some practitioners too it has to be said) – the boundary dispute. Thankfully, his is a straightforward and practical approach, unlike the cases themselves.
Laura Tweedy and Katrina Mather give us the latest on the new arrangements for possession claims.
We welcome to the team formally Mark O’Grady and Faisel Sadiq whilst Katrina Mather spins the wheel of questions for us.
Our property #HardwickeBrews have also made a return with our next one commencing on 1 October where Faisel Sadiq, Lina Mattsson, Katrina Mather and Priya Gopal (moderating) will lead the discussion on waiver of forfeiture in the post Covid19 world.
For all things Covid-19 related, Hardwicke’s Covid-19 resources related hub can be found at https://gatehouselaw.co.uk/covid-19/
The next newsletter will be in November 2020.
Carl Brewin – Editor
Activity Report – What we have been up to and what we'll be getting up to over the coming month
Notwithstanding some time off, August was quite busy for John Clargo dealing with, for example, (1) alleged breach of property repairing obligations in a share sale agreement, (2) dealing with land registry entries inhibiting entry of deeds of priority and replacement first legal charge, (3) restrictive covenants limiting density of building, (4) an abandoned trial of a co-ownership dispute involving property in an EU country held in the name of a US corporation and (5) knotweed (it gets everywhere).
Jamal Demachkie has enjoyed a few mini-breaks over the Summer, but has found the time to work on a real mix of old school ‘Real Property’ work: A few easements, a couple of covenants, a ToLATA application or two, and a smattering of leasehold disputes. It’s like being back at first year law school!
Morayo Fagborun Bennett spent July preparing for and then leading Usman Roohani in the Court of Appeal in Sara and Hossein v Blacks, which was heard remotely. She took part in the September Social Housing and Property Hardwicke Brew, trying to keep up with the constantly changing position on possession claims. She has also been providing advice to service providers, a housing association and tenants on reasonable adjustments, PSED and disability discrimination.
Daniel Gatty managed to pick the wettest part of August to go to Devon, but thoroughly enjoyed some time away from his computer even so. Either side of his holiday he has been busy with matters as diverse as (alleged) conveyancing negligence, rescission of an agreement for a restaurant lease and liability for the cost of dealing with dangerous cladding.
James Hall has sadly avoided going head to head with Lina Mattsson at trial in a matter relating to misrepresentation and breach of repairing covenants in a commercial lease of a hotel…by virtue of the matter recently settling at mediation which both were involved in…hopefully they’ll get that chance again soon!
Charlotte John has been back to court in person to conclude a trial concerning the beneficial ownership of 12 properties, alleged forgery, and breach of fiduciary duty. She reports that the experience of wearing face masks around court was novel, but that it was great to be back in court and to take a break from her spare room. She has also successfully secured an order establishing a life interest in a property for her client on proprietary estoppel grounds, together with an award of damages against the personal representatives who had wrongfully evicted her client.
Lina Mattsson has had a busy month settling cases in virtual mediations. Pleased for the parties, she is disappointed missing out on her victory over James Hall at trial (for the record Lina is not at all competitive and her family are wrong for refusing to play boardgames with her!).
In addition to taking part in many of the Property Brews and acting as the family flight booking agent (cancellation clerk), Monty Palfrey undertook the necessary training to qualify as an accredited mediator with the Bar Council. Currently looking for more work in this regard on either side of the fence. Otherwise busy dealing with the various ‘real’ property issues that arise when property owners appear to have little to do during the pandemic but complain about what their neighbours are up to.
Peter Petts has been arguing against novel points raised against an arrears of rent claim: frustration of the lease due to Covid-19, and a no set-off against rent clause being unreasonable. Watch this space for the outcome of the summary judgment application…
Andrew Skelly had a smattering of interesting remote hearings, including a disposal hearing in the TCC for breach of collateral warranty in a construction dispute, and an application under Part 11 for a declaration that the court has no jurisdiction to hear a claim where only a photocopy of the claim form was emailed during the four months after issue. Otherwise, he has been advising as to rights of way over car parks as far afield as Cornwall and Lincolnshire.
Brie Stevens-Hoare KC has emerged for a couple of in-person conferences and a site visit but has otherwise been in too many zoom meetings. There seems to be an explosion of boundary issues and disputes about conditional contract going on for Brie. She says she’s also enjoyed revisiting rights of first refusal.
Cameron Stocks has spent a large part of his month appearing virtually in the FTT arguing all things cladding related with reasonableness challenges, applications to vary leases and dispensation from consultation requirements. When not in the tribunal, Cameron has had an influx of private client crossover work with disputes as to the entitlement of an executor/beneficiary to grant an easement and whether an assent breaches a qualified covenant not to assign.
Laura Tweedy has been loving getting back to some work after maternity leave and lockdown with two small children. She recently attended an “in person” landlord and tenant/trespasser injunction and has also been busy giving seminars and writing articles on the changes to property and landlord and tenant matters following Covid. Laura is still tentatively on maternity leave but happily taking occasional cases if you would like to contact her.
John de Waal KC has been working on a large dilapidations claim involving a substantial loss of rent claim of £1.3 million.
Events
#HardwickeBrews
Our next HardwickeBrew will take place from 11:00 – 11:45 on 1 October where Faisel Sadiq, Lina Mattsson and Katrina Mather and Priya Gopal (moderating) will lead the discussion on waiver of forfeiture in the post Covid-19 world. For more information and to book a place, please click here.
J2J Property Seminar Programme 2020/21
The Hardwicke Property Team are delighted to introduce Hardwicke’s J2J Property Seminar Programme for 2020/21.
All the seminars in this programme are aimed at junior property practitioners wishing to build up their knowledge of some of the issues that come up regularly in practice or more senior practitioners looking for a refresher.
The full programme is set out below. All these seminars will take place online via Zoom at 10am and will last for 30 – 45 minutes. If you feel that all/any of these sessions would be useful, please do feel free to mention to colleagues.
Anyone wishing to attend any of the events should then please email events@gatehouselaw.co.uk to be added to the mailing list as we will be sending out formal invitations to each event before each session.
Laying the Foundations Programme
6 October 2020: How to avoid common pitfalls which arise in dealing with mixed use developments
3 November 2020: Change of use
8 December 2020: Acting for lenders in mortgages claims
12 January 2021: Residential service charges – tips and tricks for dealing with disputes
9 February 2021: Planning for property lawyers – what you need to know
9 March 2021: Insolvency for property lawyers – beware the elephant traps
13 April 2021: How to manage TOLATA claims
11 May 2021: Probate and private client for property lawyers – an essential guide
Lina Mattsson: Did you see? You may have missed...
Lodha Developers 1 GSQ Limited v 1 GSQ1 Limited, 1 GSQ2 Limited [2020] EWHC 2356 (Ch), 2020 WL 05503608, 28th August 2020
Breach of contract for sale of land – Termination – Forfeiture – Liens – Unilateral notices – Impact of Covid 19 on contractual obligations
The facts
Cs, the developers of a luxury residential development in London, successfully applied for summary judgment for (i) a declaration that a sale and purchase agreement had been validly terminated by Cs and (ii) an order for the removal of unilateral notices. The claim also included a claim in respect of a deposit and stage payment said to be forfeit, but that head of relief was not the subject of the application for summary judgment.
Ds were SPVs controlled by Mr Kostyantin Zhevago a citizen of the Ukraine who was until 2019 a member of the Ukrainian Parliament.
The contract was for the purchase of a penthouse apartment and various other apartments for a total of £106 millions. The contract provided for stages payment. Ds failed to make the last payment. There had been some informal discussions about the payment being deferred until March 2020. By April 2020 no payment had been made and by letter dated the 29th April 2020 Cs gave notice terminating the contract and requiring the removal of the unilateral notices against the title.
Mr Zhevago’s case was that although he had the money for the third stage payment ready to be made, because of changes in tax legislation in Ukraine he would have had to declare his money in a public document, and he had been advised that he should therefore avoid paying the money until after March 2020 to avoid adverse political and public attention. To make such a large payment without fear of subsequent tax penalties, it was the practice to obtain an approval from the Ministry of Finance in Ukraine which normally only took 7 to 9 days but on 11th March, Ukraine was put into lockdown as a result of the Covid 19 pandemic, initially until 31st March but on the 25th March extended to the 24th April. Mr Zhevago’s case was that as a result he only received approval on 20th May about 2 days after the Ministry again began to issue them. He had then promptly offered to pay the last payment to complete.
The decision
Ds defended the application for summary judgment on three grounds. First, Ds argued that Cs were in breach of Clause 9.1 and were therefore not entitled to serve a notice to terminate the contact, as doing so was relying upon their own breach. Clause 9.1 provided that Cs must measure the apartments “as soon as reasonably practical after such measurement is capable of being taken” and notify Ds of these measurement. Ds then had a right to terminate the contract if the measurement were not within 90% of the agreed square footage. The Master assumed for the purpose of the application that Cs were in breach of Clause 9.1, but held there was no nexus between the obligation on Ds to make the payments under Clause 3 and Cs’ compliance with Clause 9 such as to make latter a condition precedent to the former, whether as a matter of construction or as an implied term.
Secondly, Ds argued that the court had equitable jurisdiction to grant relief from the termination of the contract and loss of the right to specific performance and this was a triable issue. The Master disagreed. He found that under the contract time was of the essence in respect of the stage payment. Although those precise words could have been but were not used, the right of Cs to treat the contract as discharged if the third stage payment was not received in due time was spelt out both in Clause 3 and in Clause 25. It was significant that in both clauses, a period of grace was built in, so the seller’s right of termination was triggered not simply by the buyer’s failure to make the payment on or before the due date but also during the further period permitted. It was unfortunate for Mr Zhevago that the difficulties he was already facing in Ukraine were exacerbated by the impact of Covid 19, but that could not affect the contractual rights of the parties. For those reasons, Ds did not have a real prospect of successfully seeking specific performance of the contract.
Finally, the Master held that a purchaser can only assert a lien over money where a purchase goes off by reason of some default on the part of the vendor. Even though Ds might be entitled to recover all or part of the moneys paid under the contract there was no reason why Ds should be elevated to the rank of a secured creditor. The unilateral notices should therefore be removed.
Lessons learnt
The case makes it clear that there is a very important distinction between (i) the equitable jurisdiction to grant relief from forfeiture of a deposit or similar and (ii) the extent of the equitable jurisdiction to grant relief from the termination of the contract and loss of the right to specific performance. The latter is very restricted and subject to limited exceptions. The case is also a clear statement that the impact of Covid 19 on the parties’ ability to perform a contract cannot affect the contractual rights of the parties.
“Hardwicke Unrobed” - Get to know us better
Each month, a member of our property team has to spin ‘the Wheel of Questions’ and answer the first three questions that come up. This month, Katrina Mather tried her luck with the wheel.
Where do you most hope to visit?
Japan. I was meant to have travelled to Japan this year but the flight out was the day after the FCO travel guidelines changed to advise against all but essential travel so we had to cancel. I’ve rebooked for next year – along with Barbados, Malaysia, Vietnam and Cambodia. Fingers crossed travel will be more widely permitted next year!
Of what are you most afraid?
Driving. I learnt when I was 17 and moved to London before I passed my test. Fast forward 10 years and I have now passed but have an adult level of healthy fear with a greater appreciation for the dangers and risks. I’ve been taking my Corsa Cobra out regularly while working from home to build my confidence. In case you’re wondering, the Corsa Cobra is a top of the range hot-hatch, 1.2 litre engine and red (that means it goes faster, obviously) obtained from ‘Bob the Mechanic’ for the princely sum of helping with some admin!
What’s the one thing a parent taught you that completely changed your life?
To say ‘yes’ to opportunities. Without that approach and mindset it is very unlikely I would have had got the scholarships that ultimately led to the bar training course, pupillage and finally tenancy.
Want to try for yourself?
Click on the wheel below!
Contact Us
If you would like to discuss any of the topics in this newsletter, please contact a member of our Practice Management Team:
James Duncan-Hartill, Senior Practice Manager
Patrick Sarson, Practice Manager
To find out more about our Property Team and their work, visit the property page on our website. To view a copy of our privacy statement, please click here.
The Property Newsletter is edited by Carl Brewin. Comments or queries about this newsletter? Please get in touch with him!