Legal update

Citation

Waterson, G. and Lee, R. (2003), "Legal update", Property Management, Vol. 21 No. 5. https://doi.org/10.1108/pm.2003.11321eab.001

Legal update

Raja (adminstratrix) of the estate of Raja (deceased) v. Austin Gray (a firm) [2003] 13 EG 117 CAThis case raised the issue of whether it was fair, just and reasonable to impose a duty of care on a valuer who performed the valuation function at several stages removed from the appellant.

The facts of the case were that Mr Raja owned a portfolio of properties some of which he mortgaged to Direct Finance Limited (DFL) as security for a loan. In its turn DFL borrowed money from Midland Bank which it secured by way of a debenture. Both Mr Raja and DFL got into financial difficulty. On 26 September 1994 Midland Bank appointed receivers in respect of DFL’s assets which included a power of sale over the charged properties. The receiver appointed a valuer, the respondent in this action, to value the properties and advise on their sale. The 16 properties were eventually sold for £245,000 which was insufficient to discharge Mr Raja’s debt to DFL. Mr Raja brought an action against the receivers alleging that they were negligent in failing to achieve a proper price. Those proceedings were settled out of court in 1997. Mr Raja was murdered in 1999 and his estate subsequently brought proceedings against the valuer claiming that its negligent advice to the receivers had resulted in the low sale price.

It has never been decided whether in fact the valuer was negligent. The proceedings have been concerned only with the preliminary issue of whether the valuer owed Mr Raja a duty of care. It was assumed in the first instance that the appellant knew that Mr Raja had an equity of redemption in the properties, that they were charged to DFL to secure his borrowings, that the receivers were selling them to discharge those borrowings and that the sale proceeds would therefore directly affect Raja’s interests. Buckley J concluded that the three stage test for a duty of care at common law; i.e. forseeability, proximity and that the duty was fair, just and reasonable had been satisfied. He concluded that the valuer owed Raja a duty of care at common law. The valuer appealed.

It was argued for the appellant that it is not unusual for a debtor to complain that his property has been sold by the receiver at an undervalue and to be awarded compensation if a lack of care can be shown. However, there were two unusual aspects to this case. First it was DFL, not Mr Raja, whose assets were subject to receivership so if the receiver was negligent it would be DFL who suffered loss. Therefore Mr Raja’s action lay against DFL who owed him a duty to obtain a proper price for the properties under the principle established in Cuckmere Brick Co Ltd v. Mutual Finance Ltd [1971] Ch 949. Second, the appellant was just the valuer appointed by the receiver to value the assets which begged two important questions; first, did the receiver owe a duty of care to Mr Raja as well as to DFL? If not, then the valuers did not owe a duty of care to Mr Raja. If the Receiver did owe a duty of care to Mr Raja, did the valuers owe a duty of care to anyone other than their own client, the receiver?

In answer to the first question, Clarke LJ held that the receiver did owe a duty to both Mr Raja and DFL. The receiver was selling not just DFL’s interest in the properties, they were selling the properties themselves. Consequently as the legal and beneficial owner of the properties Mr Raja had an interest in the equity of redemption which should be protected in equity by imposing a duty on the receivers. Thus the receivers owed him a duty in equity of the kind identified in Medforth v. Blake [1999] 2 EGLR 75. (See Property Management Vol. 18 No. 2, 2000, p. 150.)

Clarke LJ also considered whether it is a defence for the receiver or DFL to say that they were not at fault as they entrusted the sale to an apparently competent professional. After consideration, Clarke LJ held that although there is no previously binding authority on this question, it is no defence simply to say that a competent professional has been employed because otherwise Mr Raja would be left without a remedy.

Considering the valuer’s position, Clarke LJ stated that it had no equitable relationship with the borrower. Thus any duty of care must arise at common law. Clarke LJ concluded, after lengthy discussion of the tests for the duty of care as applied in the various cases (including the decision of Judge Jack in Huish v. Ellis [1995] BCC 462 which was overlooked at the trial) that he did not. It was reasonably foreseeable that Mr Raja would or might suffer loss but this was not sufficient to create a legal duty of care as there was no relationship between the appellant valuer and Mr Raja thus there was no proximity. Furthermore, as Mr Raja has a remedy against both DFL and the receiver in equity, it was not necessary for him also to have a remedy in common law against the valuer. Thus it was not fair and reasonable to impose a duty of care on the appellant.

The other members of the court agreed, no direct duty of care was owed by the valuer to Mr Raja.

Keen v. Tayside Contracts, The Times 27 March 2003 Court of Session Outer House

This Scottish case clarifies the circumstances in which it is possible to recover compensation for psychiatric injury suffered as a result of witnessing some traumatic event.

The pursuer (complainant), a road worker, sued his employer in negligence on the ground that he had suffered post traumatic stress disorder as a result of seeing bodies in a burnt and crushed car at the scene of a road accident. He was present at the scene on the instructions of his employer but had not witnessed the accident or been in any personal danger.

What this decision emphasises is that not everyone who suffers psychiatric injury through the fault of others has a right to be compensated. In this difficult area of law the House of Lords has traditionally been concerned about the possibility of uncontrollable numbers of claims (see McLoughlin v. O’Brian (1983) 1 AC 410). According to the authorities, Alcock v. Chief Constable of South Yorkshire (1992) 1AC 310, Page v. Smith (1996) 1AC 155, White v. Chief Constable of South Yorkshire (1999) 2 AC 455, victims can be classified into two groups.

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  Primary victims are those who:

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  • •

    suffer physical injury or death;

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    persons who were personally involved in the traumatic incident and who had been afraid for their own safety even though not actually physically hurt;

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    rescuers who had been at risk of injury or had reasonably believed themselves to be; and

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    others who had participated in the incident in some way and who had believed that they were the involuntary cause of death or injury to another.

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  Secondary victims are all others who suffer psychiatric damage as a result of the traumatic incident.

Thus as long as the psychiatric damage complained of was the result of witnessing the suffering or death of others and not the result of personal injury or being in fear of personal injury that person is a secondary victim and will be unable to claim damages unless he or she was a rescuer or other participant in the event in some way.

In this case, the pursuer was held to be a secondary victim and the action was dismissed.

Auctions

Marq v. Christie Manson and Woods Ltd (t/a Christie’s) The Times 30 May 2003 CA

This was a novel case in which the court had to consider the liability of an auctioneer who put up goods for auction but when they remained unsold, returned them to the would be seller.

Mr Marq had a valuable painting stolen from his house in 1979. The theft was reported to the police and registered on the Art Loss Register before 1997. In 1997 the painting came up for sale at Christies. Under Christie’s terms and conditions of business the painting was catalogued and advertised for sale at a public auction of Old Masters on 4 July 1997. The painting remained unsold so Christie’s returned it to the person who had given them possession of it, the apparent owner, a Mr Shunemann.

The question for the court was whether the auctioneer, who had acted in good faith and without notice, was liable in conversion or bailment to its owner.

For the claimant it was argued that any unauthorised possession of the goods except the most minimal and passive kind amounted to conversion and that given the extensive rights over the property Christie’s assumed under their contract terms, their conduct amounted to conversion.

Tuckey LJ said that in Kuwait Airways Corporation v. Iraqi Airways Co (2002) 2 WLR 1353 Lord Nicholls had identified three features of the tort of conversion; the defendant’s conduct had to be inconsistent with the owner’s rights, the conduct had to be deliberate rather than accidental, and the conduct had to be so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods.

In this case the first and second features were present but there was a long line of authority that mere possession of the goods by an agent on the instructions of the apparent owner for the purposes of carrying out services such as carriage or storage did not interfere sufficiently with the owner’s title. The authorities on auctioneer cases indicated that where goods were received from the apparent owner and just re-delivered to him when unsold there was no liability on the auctioneer in conversion provided he had acted in good faith and without knowledge of any adverse claim to them. In such circumstances no change is being made to the property in the goods.

On the issue of bailment, Tuckey LJ said there was clearly such a relationship between Christie’s and Mr Shunemann but not between Christie’s and Mr Marq, of whom they knew nothing. The law could not be stretched to found the duty contended for. If the circumstances should have put Christie’s on inquiry then a case of negligence could be alleged.

Gibson LJ and Keene LJ agreed and the appeal was dismissed

Estate Agency

John D. Wood & Co (Residential & Agricultural) Ltd v. Knatchbull [2003] 08 EG 131

In this case the court had to consider the scope of an estate agent’s duty to keep the client informed about market developments that might affect the sale of the property.

The property in question was the defendant’s mews house in Notting Hill. It had been on the market for about eight weeks and was sold to a client introduced by the claimant, John D. Wood, at £1.5 million, their recommended asking price. The claimant sought its commission. The defendant refused to pay and counterclaimed alleging that the original asking price had been too low and the agent had failed to inform him that a similar house in the same mews had been marketed at about the same time with an asking price of £1.95 million. The defendant alleged that he had therefore been led to sell his property at below its true value.

Judge Heppel QC first considered the asking price. He emphasised that an agent’s advice as to asking price is not a valuation. Nevertheless the agent owes the client a duty of care in giving the advice because failure to take proper care might cause loss to the client. Even if the asking price is too high the client might waste money on prolonged marketing and lose opportunities to sell. On the basis of expert evidence as to asking prices and sales of other properties in the mews the judge concluded that the value of the defendant’s house at the relevant time was £1.7 million. However, on the basis of the evidence that was available to the agent at the time that the asking price was set at £1.5 million, the judge held that the agent’s advice did not fall below the standard of a reasonably competent estate agent as it fell within “the margin of error of about 10 per cent”.

However, as the judge pointed out, the fact was that at the time the claimant advised the defendant that the appropriate asking price was £1.5 million another property in the same mews was on the market for £1.95 million. The vendor should have been given the opportunity to discuss this information with the agent and perhaps revise his instructions. As the judge put it:

The agent has a duty to exercise reasonable care when marketing a property for sale, and if, in the course of doing so, he becomes aware of any significant event in the market that might influence his principal’s instructions, to inform the principal thereof.

As to damages, in negligence cases the vendor’s loss would normally be the difference between what the property actually sold for and its true value. However, in Knatchbull the agent’s fault was the failure to pass on information after the valuation rather than the valuation itself. Thus the defendant’s loss was the loss of the chance to sell for more than £1.5 million. But what was the value of that chance? The judge decided that if a £1.5 million offer had been rejected there would have been a two-thirds likelihood of selling at £1.7 million within the following nine months. Two thirds of the £200,000 difference less the interest earned on £1.5 million over nine months and the extra commission that would have been payable at the higher price gives the amount of damages payable to the claimant for the agent’s negligence.

This leaves the estate agent with the difficult decision as to what information to pass on to the client. Most agents agree that they are under a duty to pass on information they actually know of when marketing a client’s property. However, when discussing what information should be passed on the judge acknowledged that there would be no duty to pass on every trivial scrap of information. The duty would only apply to information “such as would come to light during the exercise of due care while marketing the property” (p. 136). Thus an agent could be liable for failing to pass on, not only information of which he or she is actually aware, but also for failing to pass on information of which he or she as a competent agent ought to be aware. This is a more onerous duty.

The application of the 10 per cent margin of error principle to advice as to the asking price of a property is questionable. The principle has been subject to severe criticism as a test of negligence when applied to surveyor valuation cases. Since the judge acknowledged that advice as to asking price is not a valuation one wonders at the wisdom of applying the same principle to estate agency advice as to asking prices.

Nuisance

Abbahall v. Smee [2003] 1 AllER 465, The Times 28 December 2002

In this case the defendant’s property, a flat comprising the first and second floors and the roof of a property in Kensington, was a flying freehold which she had acquired by adverse possession. There were no covenants governing the relationship between Miss Smee and the claimant company who owned the ground floor which was let to a tenant. Instead their relationship was governed by the law of easements and the law of nuisance and negligence. In the early 1990s the roof had fallen into disrepair, water was leaking into the ground floor and there was a risk of masonry falling onto visitors to the ground floor. The defendant refused to carry out repairs so the claimant company obtained an injunction enabling them to enter the flat to carry out necessary repairs to make the roof safe and watertight. However, the order was silent as to who should bear the costs of the work. The claimant sued the defendant to recover the costs of the work already done and of further work that their surveyor reported was necessary on the ground that she owed them a duty of care.

The trial judge held that the defendant owed a “measured duty of care” to the claimant for the disrepair and ruled that her contribution was one-quarter of the cost of all repairs past and future. The claimant appealed.

After reviewing all the case law from Goldman v. Hargrave [1967] 1 AC 645 onwards the Court of Appeal held that the defendant’s duty was not a duty to prevent the ingress of water to the claimant’s property, or a duty to repair the roof, or to pay the claimant a sum equal to the defendant’s share of the cost of the work. It was a duty to make the appropriate contribution to the cost of the appropriate works.

According to their Lordships since both parties benefited from the protection of the roof it was only common justice and common sense that both should contribute to the cost of repair. The court decided that fairness required that the costs should be based on the benefit each party would derive from the works being carried out. That would depend on the circumstances but in a case such as this, benefits could reasonably be apportioned among the various owners by comparing the space which each owned or by reference to the floor areas. On that basis the court took the view that both parties should contribute equally. This is contrary to previous case law which suggested that the resources of each party might be relevant in allocating their responsibilities. However, in this case the court rejected that argument taking the view that if the defendant’s poverty meant that she was living in a place she could not afford it would be unfair to shift the burden of her poverty onto the claimant. Instead her remedy was to move to a place she could afford. To take into account the means of each party in assessing contributions would be wrong in principle and highly inconvenient in practice because respective liabilities would be unpredictable, difficult to assess and liable to change every time an owner left or suffered some change in economic fortunes.

On the reasoning of this decision it seems that if the tenant had owned the roof the flying freeholder could have argued that the owner of the roof owed him or her a measured duty of care to prevent the leaks from causing damage to his or her property and that the costs of repairs should be shared according to the degree of benefit each receives from the repair. Thus it seems that the end result would be exactly the same no matter who owns the roof. At first sight this might seem fair and reasonable but is it a view that is likely to be shared by all?

Dennis & Another v. Ministry of Defence, The Times 6 May 2003

Mr Dennis and his wife live in Walcott Hall, a Grade One listed building built in 1678, together with an estate totalling 1,378 acres which has been occupied by the Dennis family since its purchase in 1963. Unfortunately the house is situated only two miles from the centre line of the runway at RAF Wittering, established in 1916, and currently used as a training and operating base for Harrier jets. The claimants had been complaining to the Ministry of Defence about the noise from the aircraft from 1986 onwards. However, because of the listed status of the property they were unable to benefit from the ministry’s voluntary scheme for minimising noise nuisance in nearby properties.

In 1996 Mr Dennis commenced proceedings seeking a declaration and damages on the grounds that the noise from the jets constituted a nuisance at common law and for infringement of his human rights under Article 8 of the European Convention on Human Rights (guaranteeing respect for family life) and Article 1 of Protocol One (guaranteeing peaceful enjoyment of possessions). Mrs Dennis also claimed for breach of her human rights.

Buckley J found that the noise was indeed a very serious interference with the ordinary use of the property and that this was aggravated by its unpredictability and persistence.

The defendants had argued that the training of pilots was a normal use of the land and that the right to continue the activity had been acquired through prescription.

These arguments were rejected by Buckley J. However he held that despite the nuisance there was a public interest in continuing the activities within reasonable limits which had been met in the present case. He also held that both Article 8 and Article 1 of Protocol One had been infringed by the noise nuisance but that the common law damages he awarded provided just satisfaction for the infringements and thus a fair balance had been struck between the rights of the individual and the community as a whole. He awarded £950,000 damages to cover the period until 2012 when Harrier jet training at the base was expected to be phased out. However, he refused to grant the declaration sought.

LE Jones (Insurance Brokers) Ltd v. Portsmouth City Council [2003] 15 EG 139 CA

This case raises the issue of the liability of non-owners for nuisance caused by tree roots.

The respondent’s property in Portsmouth fronts the public highway and suffered damage from subsidence caused by the roots of a row of plane trees alongside the road. On the recommendations of a consultant the respondent carried out underpinning work and sought to recoup the cost from Portsmouth City Council in proceeding for nuisance and negligence. Hampshire County Council were at the time, 1992, the Highway Authority for the purposes of the public highway. However, Portsmouth City Council carried the functions of the Highway Authority under an agency agreement with Hampshire County Council.

The trial judge found that the damage had been caused by the roots of the plane trees desiccating the clay soil underneath the property and held Portsmouth City Council liable in nuisance and negligence.

The council appealed on three grounds:

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  First they were not the proper defendants because the duty to maintain the highway was vested by statute in Hampshire County Council and that duty could not be delegated. The agency agreement between Portsmouth City Council and Hampshire County Council could not affect the statutory or common law duties owed by Hampshire County Council and Portsmouth. The fact that Portsmouth council was exercising lawful control over the trees at the relevant time pursuant to its contract with Hampshire County Council was not sufficient to found liability.

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  Second, that the respondent had not given the council an opportunity to abate the nuisance.

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  Third, that the underpinning works were unnecessary.

The most important argument centred around the first issue. Aldous LJ referred to Salmon & Heuston on the Law of Torts (21st ed) at p. 67 where the authors discuss liability of non-occupiers for nuisance. They identify four categories; the liability of the creator of the nuisance, the liability of one who authorises another to create or continue a nuisance, the liability of a lessor or licensor who lets premises with a nuisance on them and the liability of an owner for breach of a covenant to repair. Aldous LJ stated that although Portsmouth did not fit into any of these categories the rationale that underlies making occupiers and sometimes non-occupying owners liable in nuisance applies in this case. He stated;

In my view the basis for the liability of an occupier for a nuisance on his land is not his occupation as such. Rather, it is that, by virtue of his occupation, an occupier usually has it in his power to take the measures that are necessary to prevent or eliminate the nuisance. He has sufficient control over the hazard that constitutes the nuisance for it to be reasonable to make him liable for the foreseeable consequence of his failure to exercise that control so as to remove the hazard. Similarly, control lies at the heart of the liability of a non-occupying owner...

After consideration of the trial judge’s reasoning based on a line of cases including Wilchick v. Marks & Silverstone [1934] 2 KB 56 and Heap v. Ind Coope & Allsopp Ltd [1940] 2 KB 476 Aldous LJ held that it was irrelevant that Portsmouth were not occupiers of the highway, what mattered was that they had the right and duty to maintain the trees which included the right to reduce their height so as to prevent damage to nearby properties. The agency agreement gave them sufficient control over the trees in fact and in law to prevent or eliminate any nuisance. It was irrelevant that Portsmouth’s control over the trees arose from the exercise of their contractual obligations to Hampshire County Council, their degree of control made it reasonable to fix them with liability for the nuisance. Aldous LJ went on to say that in most cases occupation will give the occupier sufficient control to found liability in nuisance. However, it does not follow that a person cannot be liable unless he is in occupation of the land or has some legal interest in it. Furthermore, the fact that Hampshire County Council also had a potential liability is irrelevant to the question of whether Portsmouth were liable.

The question of liability in negligence was dealt with very shortly. His Lordship stated that the fact that Portsmouth owed a contractual duty to Hampshire County Council did not mean that they owed no duties in tort to anyone else. On the facts of this case it had been found that the damage was foreseeable, there was sufficient proximity between Portsmouth and the claimant to give rise to a duty of care in tort and it was just and reasonable to impose liability on Portsmouth for the damage caused by the trees.

Portsmouth City Council’s second argument that it was not given an opportunity to abate the nuisance was quickly dismissed. The loss adjuster for the claimant’s insurer had written to the council on 2 September informing it of the problem and that they intended to carry out underpinning work and to make a claim against the council for the costs involved. However, the council did not reply to the letter nor did it ask for time to investigate the cause of the damage or suggest any other means of remedying it. In fact the council gave no indication, that even if they had been given more time, they would have abated the nuisance. His Lordship stated that the burden of showing that the council had not been given sufficient opportunity to abate the nuisance rested with the council and this it had failed to do.

The third issue raised on behalf of Portsmouth City Council was that the underpinning work was not necessary and thus the claimant had unreasonably failed to mitigate its loss as the council had never been asked to abate the nuisance by undertaking tree management measures. This argument was rejected by his Lordship who held “... The judge was entitled to conclude that the claimant acted reasonably in taking the course that it did. It is trite law that the onus is upon a defendant to show that a claimant has failed to take reasonable steps to mitigate his loss...” This the council had failed to do, as even when given the opportunity to abate the nuisance it had concentrated on the issue of causation rather than abatement and had continued to dispute that the trees had caused the subsidence and damage right up to and including the trial.

The appeal was unanimously dismissed. The conclusion is therefore, that while it is necessary to have some legal interest in the land in order to found an action in nuisance, it is not necessary to have a legal interest in the land to become liable in nuisance.

Occupiers liability

Donoghue v. Folkestone Properties Ltd [2003] 2 WLR 1138, The Times 10 March 2003

The facts of the case were that Mr Donoghue, an experienced scuba diver trained by the Royal Navy, decided after a night in a local pub to strip off and dive into Folkestone Harbour at about midnight on 27 December 1997. Unfortunately he struck his head on one of a number of wooden beams just under the surface of the water. He broke his neck and was rendered tetraplegic. He sued the owner of the harbour, Folkestone Properties claiming that they had been in breach of a duty owed to him under the Occupiers Liability Act 1984.

The trial judge found in favour of the claimant but reduced the damages awarded by 75 per cent for contributory negligence. Folkestone Properties appealed.

The Occupiers Liability Act 1984 provides that an occupier owes a duty of care to a “non visitor”, usually a trespasser, if the occupier; is aware of the danger, is aware that the other person is or is likely to be in the vicinity of the danger, and the risk is one against which, in all the circumstances of the case, he may reasonably be expected to offer the other person some protection. However, their Lordships held that these conditions which must be satisfied in order to create a duty under the 1984 Act, must be considered in the light of the characteristics and attributes of the individual claimant and the circumstances prevailing at the time when that individual suffered his injury. The circumstances material to the existence of the duty might therefore change with the seasons or the time of day. Thus the vital question was whether the defendant could have been aware that the claimant, a mature adult who was a professional diver would walk onto the slipway at midnight in the middle of winter to dive into the harbour in the vicinity of the wooden beams which were just below the water. Their Lordships held that no duty was owed to the claimant because the defendant had no reason to anticipate that the claimant or anyone else would be swimming from the slipway at midnight in midwinter. However, they added that the defendant might have owed other trespassers a duty to erect a notice on the slipway warning of the dangers of shallow water and hidden obstructions.

Covenant for quiet enjoyment

Goldmile Properties Ltd v. Lechouritis [2003] 15 EG 143

This case was concerned with the relationship between the performance of the landlord’s repairing obligations under the terms of the lease and the consequent interference during the six month period necessary to complete the works with the tenants peaceable enjoyment of the demised premises.

The demised premises comprised a ground floor and basement restaurant in a seven storey building the whole of which was owned by the landlord the building as a whole being occupied by a number of different tenants. The lease, as it says in the judgment was in familiar form “including the traditional eschewal of all punctuation, however convoluted the clause”. The landlord’s repairing covenant was referred to in clause 5.3 and Part IIA of the 5th schedule to the lease as requiring the landlord to “use its reasonable endeavours to provide [for the] repairing cleansing maintaining renewing replacing amending decorating putting and keeping in substantial repair and condition the roof external and any party walls and other load bearing members of the structure of the building and such other parts of the building and the common parts as are not the responsibility of the tenants of the building...”. Clause 5.1 of the lease, on the other hand provided “that the tenant paying the rent...reserved and performing and observing the several covenants and stipulations on the tenant’s part herein contained shall peaceably hold and enjoy the demised premises during the term without any interruption (except as herein provided) by the landlord or any person rightfully claiming under or in trust for it...”

The works involved required scaffolding to be erected at the front of the building and for this to be hung with protective sheeting while repairs were done to the front of the building. The works themselves created a great deal of dust both outside and inside the restaurant premises, and the sheeting hung from the scaffolding made the restaurant premises dark and dingy; indeed, it was said in the law report that from the outside the restaurant looked as though it was closed, which presumably did not do a great deal for the profits of the business. However, before the works commenced the landlord had sent details of the proposed works to the tenant together with the costs (since the tenant would bear a proportion of these through payment of the service charge) and in response to the tenant’s representations had put off the commencement until after the Christmas holiday period so as not unnecessarily to interfere with the restaurant’s busiest season of the year, and had also agreed to spread the contribution to be made by the tenant to the cost of the works over the period of a year.

Nonetheless, there was obviously substantial interference with the tenant’s business over the period of the works, and in the event the tenant sued the landlord for breach of the landlord’s covenant for quiet enjoyment. At first instance, in Stockport County Court, the judge found for the landlord on the basis that the landlord had taken all reasonable steps to minimise the degree of interference caused to the tenant’s business; on appeal to Manchester County Court, Judge Tetlow found in favour of the tenant, broadly on the ground that the landlord, while he/she may well have taken all reasonable steps to minimise such interference had not taken all possible steps to do so. The landlord then appealed to the Court of Appeal.

Curiously, although one would imagine that the sort of thing that happened in this case is not particularly uncommon it would appear that there was no direct legal authority governing the case. In the Court of Appeal the court restored the decision of the judge at first instance: where two provisions in a lease appear to conflict the task of the court is to read each in such a way as to give equal weight to each of them. When the two parties had originally signed the lease this construction would, in the view of the court, conform most closely with what would have been apparent to both of them at that time, to wit, “that the tenant’s enjoyment of the demised premises might [from time to time] be made temporarily less quiet and less profitable by the carrying out of structural repairs. It would similarly have been clear that the lessor’s rights and obligations were neither to ride roughshod over the lessee’s entitlements nor to be unreasonably impeded by them...”. The key question, in short, was whether or not the evidence indicated that the landlord had behaved reasonably, an approach which also sat comfortably with the law of nuisance.

On a not entirely unrelated topic, see also Long v. Southwark LBC [2002] 47 EG 150, where although the principal point at issue was whether the landlord local authority was in breach of its obligation under the terms of the tenancy agreement to take reasonable steps to keep the state and common parts clean and tidy and to keep the facilities for the collection of refuse in good repair and proper working order (the case revolved around the adequacy or otherwise of the rubbish disposal arrangements), the Court of Appeal had also to consider whether the noise of other tenants using the rubbish disposal facilities late at night and the smells occasioned by rubbish lying around uncollected due to the inadequacy of the rubbish disposal arrangements infringed the landlord’s implied covenant for quiet enjoyment.

It did not, said the court, approving dicta of Lord Hoffman in the earlier case of Southwark LBC v. Mills [2001] AC 1; [1999] 3 EGLR 35; [1999] 45 EG 179, where he had said “In the grant of a tenancy it is fundamental to the common understanding of the parties, objectively determined, that the landlord gives no implied warranty as to the condition or fitness of the premises. Caveat Lessee...”

Covenants restricting alienation

Mean Fiddler Holdings Ltd v. Islington LBC [2003] 19 EG 120

The question at issue in this case was whether the respondent tenant of commercial premises, previously run as a night club, had been in breach of its obligation under the lease “not to share ...the occupation of the property or any part or parts thereof whether as a licensee or otherwise...” by, as it says in the headnote, “offering the [use of] the club to external promoters, who staged club nights and who took full responsibility for admission revenues, advertising and administration” although they were not provided with keys to the premises but were simply allowed to enter them one hour before the commencement of each event for the purpose of setting up equipment and so on. The case had arisen in connection with compulsory purchase proceedings, and the Lands Tribunal had held that this method of organising events did not contravene the terms of the lease, a decision which was upheld by the Court of Appeal.

Business tenancies

Zarvos v. Pradhan [2003] 26 EG 180

Briefly, the question at issue in this case was whether or not the landlord, who sought to deny the tenant the right to a new lease of restaurant premises (which he had previously occupied and run as a restaurant himself) under S.30 (1) (g) of the Landlord and Tenant Act 1954, had a genuine intention of starting up a new restaurant business at the premises if and when he was able to recover possession.

The Court of Appeal upheld the decision of the judge below, which hinged on the inadequacy of the landlord’s financial resources, and on the basis of which the judge below had found that the landlord did not have any realistic prospect of being able actually to implement his expressed intention to set up a new restaurant business at the premises.

The court approved dicta of Upjohn LJ in Gregson v. Cyril Lord Ltd [1963] 1WLR 41; (1962) 184 EG 89, as follows:

The question whether the landlords intend to occupy the premises is primarily one of fact, but the authorities establish that to prove such intention, the landlords must prove two things. First, a genuine bona fide intention on the part of the landlords that they intend to occupy the premises for their own purposes ... Secondly, the landlords must prove that in point of possibility they have a reasonable prospect of being able to bring about this occupation by their own act of volition ... In my judgement [the test under the second heading] is essentially an objective test, that is to say would a reasonable man, on the evidence before him, believe that he had a reasonable prospect of being able to bring about his occupation by his own act of volition? This, of course, is a question of fact to be determined on all the evidence which is before the court ...

As to the question of what may qualify as works of “demolition” or “reconstruction” for the purposes of S.30(1)(f) of the 1954 Act, see: Ivory Grove Ltd v. Global Grange Ltd [2003] 26 EG 179 (CS) which apparently involved the substantial refurbishment of hotel premises in order to bring them up to 3 or 4 crown status in accordance with the criteria laid down for this standard of accommodation by the English Tourist Board.

In the words of the rather brief case summary, the proposals should be considered as a whole, and although the majority of the proposed works apparently related to works of fairly superficial refurbishment and redecoration there was also a:

... bedrock of engineering works [which] were substantial even though they formed only a fraction of the scheme [as a whole] These included the installation of a lift shaft, some underpinning and strengthening works to the basement, and the construction of two conservatories. The schedule of works therefore qualified under both limbs of S.30(1)(f), in that those works amounted to works of demolition and reconstruction of a substantial part of the premises, as well as being substantial works of construction.

Residential tenancies

North Devon Homes Ltd v. Brazier [2003] 22 EG 141

This is a most interesting case, for anyone involved in residential property management. The court had to consider the relationship between the power to grant an order for possession under the Housing Act 1988 on the grounds that the tenant was in breach of a requirement of her tenancy agreement that she should not cause nuisance, inconvenience or harassment to neighbours, which it was accepted on the facts that she had most certainly done, since she “was involved in persistent antisocial behaviour, that included shouting, causing noise, using foul language, making rude gestures, and causing nuisance and annoyance to her neighbours”, and the fact that the majority if not all of this antisocial behaviour could be ascribed to a paranoid psychotic condition which ranked as a long-term disability for the purposes of the Disability Discrimination Act 1995. The 1995 Act requires (inter alia) that a person with such a disability should (in principle, at least) not be treated less favourably than would a person without such a disability, and on this basis the court (in the person of David Steel J) decided that the granting of a possession order against the appellant in the County Court below had been inappropriate as being contrary to the provisions of the 1995 Act. The suggestion that the meaning of the relevant words of the Act merely required that the landlord should treat persons in the position of the appellant no differently to how it would treat persons not suffering from such a disability and who were causing similar problems in relation to their neighbours was not accepted by the court, relying on an earlier employment case, Clark v. Novacold Ltd [1999] ICR 951, decided by the Court of Appeal. Hmmm! Interesting!

Sooner or later, presumably, such a case as this may very well end up in the House of Lords, or even in the European Court of Human Rights, since these two Acts of Parliament may not only conflict with each other but also with the provisions of the European Convention of Human Rights and the more recent UK legislation which incorporated the vast majority of the Convention into domestic UK law, in this case as seen from the point of view of the aggrieved neighbours, of course.

The law is stated as it is understood to be up to 1 July 2003.

Geoffrey Waterson, Rosalind LeeLegal Editors