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Legal Focus
ISSUE 73-16
Legal Focus
ISSUE 73-16
As a lawyer specialising in commercial property,
that have been introduced and, in relation to
have set precedents for a much wider body of
the latter party lose a challenge over the narrow
what are the most common issues that you
dilapidations claims, the introduction of the pre-
corporate law.
restrictions it had sought to impose on the nature
advise on in relation to property? Does the law
action protocol.
of retail business that could be conducted by its In the first of these cases, Marks & Spencer (M&S)
always provide clear guidance on rights of way and boundaries?
You have worked with clients from the U.S., Europe, and Asia business centres – what are
As a large international practice acting on behalf
the key issues that you face in connection to
of a number of well-known real estate investors,
commercial
developers and multi-national clients on their UK
considerations across different jurisdictions?
property
regulatory
and
legal
real estate matters, we see a very broad range of issues. For example, we are seeing more
The crucial challenge is to ensure multi-national
rent reviews as rents rise and landlords seek to
corporates understand the ways in which real
capitalise on the improved market to increase
estate law in the UK may differ from what they’re
their income and secure significant gains in
used to in their home market.
capital value. UK real estate law is fascinating, with all sorts
PROPERTY LITIGATION
Real estate is increasingly being perceived as
of nuances and legislation on the relationship
just another asset. As such, it is being bought
between landlords and tenants that dates as
and sold more frequently, particularly in private
far back as the 12th century. Multi-nationals
equity transactions, and is expected to perform
coming to this country need our help so that they
competitively with other asset classes. This
recognise the implications of these nuances.
means that there is increasingly less scope for relationship issues to influence decisions as asset
Can you tell me about the challenges surrounding
managers are required to deliver performance
rent reviews currently?
growth at the expense of virtually anything else. Landlords in particular are perhaps more inclined
As commercial rents continue to rise, it’s
to fight a case if it delivers an immediate increase
understandable that landlords are keen for rent
in asset value.
reviews to take place on their properties. Not only are they keen to secure a higher income,
Insolvency cases are also increasing as landlords
but the effect of doing so is to secure further
seek to restructure their portfolios by removing
capital appreciation, as investors prize higher-
poor performing tenants and replacing them
yielding assets. That is landlords score a “double
with more financially secure occupiers. With
hit” when they secure an increase on review.
From buying and selling, to leasing and ownership issues,
the collapse of some recognised retail chains,
The incentive on landlords to pursue the review is
property litigation concerns a variety of matters pertaining to
certain landlords are also having to take swift
therefore greater than on the tenant.
action to keep their centres fully occupied and
landlords, tenants and owners of all kinds of property. In dealing
preserve income levels.
tenants.
sought to recover rent it had paid in advance pending the determination of its lease by a
The uncertainties of Brexit will also need to be
break notice. M&S argued that as it had quit the
monitored. A UK exit from the EU could have
tenancy one month later in accordance with the break notice, and it should be refunded the rent it had paid for the subsequent two months. While there was no provision for this in the lease, M&S wanted the courts to rule such a clause was implied, on the grounds of business efficacy. The Supreme Court rejected this argument, setting a high bar for any other corporate wanting to argue that a non-existent contract term should be considered implied.
of caravan owners contest a lease they had signed more than 40 years ago, agreeing to annual service charge rises of 10%. While this rate looked fair at the time, in the context of the prevailing rate of inflation, they argued that this term no longer made any commercial sense, now that inflation is so low, and urged the Supreme Court to construe the 10% figure as a cap. However, their plea was rejected, with the Supreme Court ruling that the contract was very clear and there was no scope to construe the words differently even if that led to unfairness today. broader
to come, but it is too early as yet to anticipate the possible effects. Having acted on one of the UK’s largest personal bankruptcy claims, you also specialise in fields such as finance in addition to your practice in the property sector - what legal remedies did you employ to bring about recovery for your client and what were the complexities involved?
The second case, Arnold v. Britten, saw a number
The
significant implications for regulation in the years
Given our background in general commercial litigation, we’re able to use the full range of legal remedies – the actions we take in these circumstances depend on our clients’ individual needs. We can’t discuss specific cases, but the skills and experience required here reinforces the need for property litigators to be involved in a much broader range of matters. We work closely with colleagues from practice areas across the firm. Property as an asset is traded much more regularly and that requires us to be flexible and collaborative in our approach.
significance
of
these
cases
underlines how influential real estate law can be.
Is there anything else you would like to add?
Have there been any recent changes in
These are really interesting times for property
The Brexit vote, however, could skew rent reviews
regulation in the UK that future property owners or
litigators, many of whom are working hard to
effective between the March and June quarters
investors need to be aware of?
step out of their comfort zones and establish themselves as commercial litigators who aren’t
with these issues, firms engaged in property litigation are a vital
Rights of light cases also raise knotty problems,
this year. Rent review valuers must take note
particularly in the context of the rise in major
of the hiatus in market deals caused by the
A significant change in recent times came in
seen as pure property experts. We’ve seen
asset in ensuring the best outcome.
residential developments in central London
uncertainty about the Brexit vote. In rent reviews
2011, when real estate agreements in the UK
major disputes in sectors such as the care home
where the sums at stake are significant and the
we are required to assume that a letting takes
became subject to competition law for the first
industry, the hotel and leisure business, and retail
cases tend to be fought quite hard.
place on the review date. That is the hypothetical
time – previously, they had not been within the
industry where real estate issues are one part of a
parties to a rent review cannot postpone their
remit of anti-competitive practices legislation.
larger matter. We want to play a full role in these
On this subject, Lawyer Monthly speaks to Michael Madden,
Broadly speaking, property law is relatively
decision until after the uncertainty has passed.
So far, there has been relatively little litigation
cases, working alongside colleagues from our
partner at Winston & Strawn London LLP. Mr Madden advises
settled and the cases that tend to go to court are
The question therefore would be how significant
resulting from this change. However, the case of
other practice areas – that really requires us to
those where significant factual disputes exist. We
would be the hit that a hypothetical landlord
Martin Retail v. Crawley Borough Council did see
think about the bigger picture. LM
do see freehold boundary disputes, or claims for
would take to secure a letting in advance of the
rights of support and in nuisance; however, very
resolution of the Brexit uncertainty?
clients on commercial real estate disputes involving joint ventures, finance, and landlord and tenant disputes. He has
often these can be resolved in the county courts.
an established track record in administrative law and judicial
Landlord and tenant disputes are equally less
with regards to landlords and tenant agreements
common than in the past, with many of the
and what are the types of disputes to arise
review and is one of the UK’s leading rent review lawyers. He
significant legal issues (particularly in relation to
between them?
has consistently been included in legal directories as a leading
resolved. That is not to say that such disputes
Disputes come in all shapes and sizes, but in the
individual in real estate disputes.
do not arise, it is however rare for these cases to
past year alone we’ve seen two real estate cases
make it to trial, due in part to the new procedures
reach the Supreme Court where the judgements
www.lawyer-monthly.com
What would you say is the potential for disputes
Michael Madden Website: www.winston.com
statutory business lease renewals) having been
www.lawyer-monthly.com
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