Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Foxtons to Appeal in OFT case

Well, as we suggested might happen here, Foxtons is going to appeal the decision of the High Court in the light of the Supreme Court ruling in the Bank Charges case. The Times has reported this (slightly badly) here.

However, it is questionable whether the implications are as important for other agents as the Times suggests given that the Foxtons decision arguably had little impact on agents whose clauses were drafted in plain and intelligible language.

Filed under: England & Wales, Northern Ireland, Scotland, ,

Building Regulation Consultation

The Department of Communities and Local Government has today (just in time for Christmas!) published a new consultation regarding the authorisation of self-certification schemes under the Building Regulations. Essentially as the Regulations have become more complex they have become difficult to police effectively. This was recognised back in 2002 and was dealt with by licensing certain organisations (such as CORGI, FENSA and OFTEC) to ensure that their members carried out work to the appropriate standard. Therefore where work had been carried out by a member of an approved organisation it could be assumed that it complied with the Regulations and it would not need to be inspected by the relevant local authority’s building inspectors.

Over time this system has got a bit mixed up due to slightly differing standards applied to and adopted by various licensing organisations. This has led to suggestions that work done by one organisations tradesmen is of a lower standard than another which also causes an unfair competition model.

In an effort to resolve these issues the Government has already suspended the certification of new bodies and now plans to provide new criteria for certifying approved bodies. Existing bodies will have to be recertified under the new criteria.

The consultation itself is on the nature of these criteria, the new application process and the consumer protection aspects. The consultation closes on 19 March 2010.

Filed under: England & Wales, , ,

Mobile Homes Act Changes

On 16 December the Department of Communities and Local Government published its response to its supplementary consultation relating to changes to the Mobile Homes Act 1983. The supplemental consultation relates to the proposal to shift the fact-finding role in the making of possession orders form the Courts to the Residential Property Tribunal.

This is an interesting idea as it has previously been put forward by the Law Commission in their report Housing: Proportionate Dispute Resolution who suggested that some or all residential tenancy possession matters be moved from the Courts into a tribunal system. This was heavily opposed by District Judges themselves who seemed determined to guard this power. The Government appears to be trying to cover both bases in this consultation by leaving the power to make possession orders with the Courts but reducing their workload by moving the actual consideration of facts to a tribunal. Leaving aside the patent silliness of separating these functions and the concomitant duplication of effort this causes this might also be an indication of an attempt to adopt the Law Commissions proposals by the backdoor by shifting functions progressively into the tribunal system.

The consultation has been a bit of a blow for the transfer policy. 18 groups responded and there was an overwhelming rejection of the idea of separating the jurisdictions, largely for reasons, which have been outlined above. The Government has accepted this and will not transfer any part of the termination process at this time.

The consultation also asked about transfer of repairing cases to the RPT. Although the responses were again substantially against such a decision the Government has rejected the consultees views this and will now look to transfer repairing cases to the RPT. This is a surprising decision to say the least. The Government has justified it by making a clear split between the two roles. The RPT will consider on the facts whether the lack of repair of a mobile home is detrimental to the site to such a degree that termination of the agreement is appropriate. If it considers that this is the case then an application will be possible to the Court who will consider whether it is reasonable to terminate the agreement. No application will be possible to the Courts without an RPT decision. The Government seems closed to the fact that legal aid is unavailable for tribunal cases, to the probable increase in costs for all sides, to the potential for satellite litigation, and to the fact that the RPT is not fully integrated into the tribunal arrangements created by the Tribunals, Courts and Enforcement Act 2007 and therefore has an appeals system that does not function particularly effectively.

It is proposed that these changes will go forward on 6 April 2010, presumably by way of a Statutory Instrument making changes to the Mobile Homes Act. It is disappointing to see that the Government will be making changes that have not received much support in a manner which will allow for the minimum of Parliamentary debate.

Filed under: England & Wales, ,

Electronic Disclosure

It is a general requirement of legal proceedings that all documents relevant to a case be disclosed. A failure to do so at the appropriate time can have serious negative costs implications. This is generally well understood but the part that is less carefully considered is just how wide the disclosure obligation is, and just what that can mean in the modern information age.

Agents, landlords and tenants communicate in a wide variety of ways. They frequently email one another; send text messages, and even use twitter, Facebook and other social networking systems. In addition, it is now common for telephone calls to be recorded and all post to be scanned as electronic documents.

Rule 31.4 of the Civil Procedure Rules defines a document as “anything in which information of any description is recorded”. This definition is wide enough to cover all of the above categories of communication. In any case where disclosure is required, such as a disrepair claim by a tenant, it would potentially be necessary to disclose all such communication between the parties where it concerned the matters at hand. Many agents can do this easily for letters, some can do it in relation to emails, few are able to do so in relation to text messages and other forms of electronic records. It can also be difficult to generate the information quickly and in a reasonably accessible format.

When keeping data in electronic formats it is important to also consider the need for future searching of that data. Leaving all emails in an email application does not deal with the necessity of backing it up and leaves you at the mercy of the (often poor quality) search functionality of the email application you use. Printing out all emails and placing them on a paper file removes the ability to search these documents save for the tedious, error-prone, and expensive method of reading everything.

It is important for businesses who wish to make use of the power of electronic systems to understand that the prodigious amounts of data these systems produce must be kept, logically organised, and made available for searching in connection with litigation. While it is always unattractive to spend money on data management systems during an economic downturn it should be remembered that it is always best (and a lot cheaper) to organise data before it is generated and that software companies are feeling the squeeze too and may well be prepared to offer attractive deals.

Filed under: England & Wales, ,

Service Charges….or not

The Court of Appeal in Morshead Mansions Ltd v Di Marco distinguished between service charges payable under a long lease and the liability of a member of a company to pay that company under its Articles of Association.

The claimant company owned the freehold and undertook the management and administration of the block of 104 flats. All the flats were under long leases, with each lease containing provision for the payment of service charges. The leaseholders also owned a share in the company.

Under the company’s Articles of Association, the company was permitted to establish and maintain capital reserve, management funds and sinking funds to pay or contribute to fees costs and other expenses for such things as maintenance of the block and the provision of services. The Articles allowed the company to require the shareholders to contribute to such reserves or funds in a manner approved by the shareholders at a general meeting.

At the general meeting, the shareholders approved the establishment of a recovery fund for the purpose of raising some £400,000 to redecorate the exterior of the block and to finance the provision of services. It was resolved that each leaseholder would contribute £4,000.

The defendant was a leaseholder and a shareholder in the company and refused to contribute to the recovery fund. The company issued proceedings to recover the funds and the defendant contended that such funds were service charges as defined by s.18 of the Landlord and Tenant Act 1985, and that the company was not entitled to summarily decide to collect service charges which could be recovered under the terms of the lease.

The Court held that there was a distinction between the liability of a tenant to his landlord to pay a service charge, to which s.18 of the Landlord and Tenant Act 1985, applied, and the liability of a member of a company to pay similar sums under the Articles; the claim bought by the company related to the company’s right to recover money owed by the defendant as a member of the company and had no bearing on his position as a leaseholder, s.18 of the 1985 Act was irrelevant.

The key point to note here is that it is important for companies to be clear as to which of the two positions they are seeking to recover monies under and equally, leaseholders need to make sure they are not shareholders of the company if they plan to contest such payments.

The Government has recently consulted on default Articles for Right to Manage companies such as that in the Morshead case and we have previously posted on this issue.

Filed under: Uncategorized, ,

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