What are the key elements of your role?

I am an Associate in the South West Transactional Real Estate team and work with both local and national house builders on a range of commercial property, land and development matters – from land acquisition for residential development through to site assembly for plot sale and affordable housing disposal.

What drew you to Michelmores initially?

Location! I completed my training in Bath, and then joined Michelmores, keen to return to Devon.

What is your favourite way to spend a day in the South West?

A coastal dog walk, a spot of fishing, and a beach BBQ.

What has been the best deal that you’ve worked on?

There have been many! One which springs to mind – the sale of 30 affordable housing units at a site in Plymouth. The title was deduced, enquires replied to, contract and transfer drafted, negotiated and settled in a matter of weeks, and the deal exchanged only two days after the site had been acquired by the Seller. The client was ecstatic!

What’s one thing on your bucket list?

To see the northern lights.

What are you most excited about this year at Michelmores?

Being part of a winning quiz team at the Michelmores Annual Quiz later this week…?!

Meet the Real Estate team

In the summer before my training contract started, I was offered the chance to work in our Bristol office for my first seat, I gladly said yes! Having worked in the Exeter office as a paralegal prior to doing my GDL and LPC, I felt very fortunate to have the opportunity to go and learn in a new office and new environment.

Michelmores’ Exeter office is its head office, and every new trainee spends time there on induction training. Because it’s set slightly out of town and has its own café, it feels rather self-sufficient, it takes a little while to know which teams are on which floors and you always see someone new at lunch or on the stairs.  There’s always something going on, either at lunch or an after-work event and so there are lots of opportunities to get involved and meet people from across the firm. Equally, if you want to clear your head there’s a country park behind the office.

By contrast, the Bristol office is smaller and the layout of the office is a sort of loop and means you can walk a circuit from one end to the other and pass everyone on your way. This did mean that I spent part of my first week walking in circles! From a new trainee’s perspective though, it means that you can learn people’s names quickly, as well as working out where each team sits.

It’s fantastically central, and I’ve loved going out at lunchtimes or straight from work – it’s a very sociable office so it’s easy to suggest getting something to eat or going for a drink. As a trainee in a smaller office I’ve really enjoyed how close-knit the whole place feels.

I relocated to Bristol the week my training contract started, and though work certainly kept me busy I’ve found that living and working centrally means I don’t lose out even in the busiest weeks.

My first seat has involved mainly Agricultural Litigation, with part of the week spent with Specialist Real Estate assisting with Planning. The Specialist Real Estate/Real Estate team is small and growing, and having previously been part of the much larger Real Estate department in Exeter, it has been exciting to get a different perspective.

The central location means there have also been several trips to and from the Court, which is 10-15 minutes’ walk from the office. Sometimes you are there to support supervisors and Counsel at a hearing, or sometimes trainees need to go over to the public desks to file papers or ask the Court to issue a claim form.

These have been some of the most exciting parts of the job so far, though everyone assures you that the Agriculture seat will get you out in the fresh air too, and they were right: no matter how urban it feels popping over the road to a café, or running bundles to the Court, nothing beats a site visit I went on to a riverbank in deepest Devon where all parties (with wellies on) boldly waded into midstream to better make their arguments about causation!

Being in the Bristol office for my first seat has been a great experience. I feel fortunate to get to know people across two offices and to learn as much as I can in the new setting. Hopefully I’ll come away wiser about both the work at the Bristol office and the finest coffee and cake spots in the city centre!

On 5 December 2018 the Supreme Court handed down its opinion in S Franses Ltd v Cavendish Hotel (London) Ltd Supreme Court [2018] UKSC 62, a case on the recovery of vacant possession (or, more accurately, opposing the grant of a new tenancy) under the Landlord and Tenant Act 1954 (the ’54 Act). But does this impact upon the problems encountered by many rural practitioners in dealing with the recovery of development land under the Agricultural Holdings Act 1986 (AHA ’86), including the old chestnut of establishing that the land is required under a bona-fide intention to implement the change of use?

The Legislation

The ’54 Act at section 30(1)(f) provides that a landlord may oppose the grant of a new tenancy to an incumbent tenant, whose original term has expired, where:

“…on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding.” 

The wording of the relevant part of Schedule 3, Case B of the AHA ’86 is:

“The notice to quit is given on the ground that the land is required for a use, other than for agriculture for which permission has been granted [etc.]”.

Where the AHA ’86 is concerned we can be reasonably certain from cases such as Paddock Investments Ltd v Lory [1975] 236 EG 803 that ‘is required’ means that where planning permission is necessary, it must have already been obtained; and that the landlord needs to establish a bona fide intention to develop the land with a reasonable prospect of doing so.

It is still just about open for a landlord to argue that ‘is required’ does not mean that planning permission has to have been obtained at the date of the notice to quit, but this is something of a minority view, yet to find a courageous enough landlord to pursue it!

In Scammell, Densham and Williams Law of Agricultural Holdings (10th edn inc. 1st supplement) at 39.35 the Editor makes it clear that the ’54 Act cases are not directly applicable because under the ’54 Act the landlord is stating an intention for the future which is established at the date of the hearing, whereas:

“It is submitted that the proper approach to this issue under Case B is a two-stage process. First, the landlord must have a settled intention at the date that the notice to quit is given requiring the land which is the subject of the notice to quit (and, in most cases, subject to the planning permission obtained) for the stated purpose. The second stage is that the landlord must establish that such requirement is to be implemented at the date that the notice to quit expires or a reasonable period thereafter.”

The Cavendish Hotel case

Cavendish Hotel does not change the position under either statute as to the time at which the intent to develop is assessed.

Cavendish Hotel establishes the need for a landlord to have a firm and settled intention to carry out the relevant works (as at the date of the hearing) and that the landlord’s purpose or motive for carrying out the works were irrelevant.

The facts of Cavendish Hotel were that the landlord opposed the tenant’s request for a new lease; on the grounds that it intended to reconstruct the premises, and it could not reasonably do so without obtaining possession.

It is fair to say that the landlord had some difficulty in putting forward a development scheme for the site which fulfilled the requirements of section 30(1)(f), whilst also complying with planning legislation and policy.

The first scheme put forward did not receive planning permission, and the landlord’s solicitors were of the view that it was, in any event, not substantial enough to amount to demolition, or reconstruction (etc.), of the premises.

The second scheme put forward by the landlord, and relied upon at the trial of the issue, involved (apparently) contrived internal works, such as lowering the basement floor, moving smoke vents, and substantial internal modifications.

The Judge at first instance found that the works were:

“…designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works’ commercial or practical utility and irrespective of the expense”.

The landlord was not shy of setting out its intentions. Essentially, if pointless works were required in order to get rid of the tenant, then they would be completed. However, rather fatally, as it turns out, the landlord admitted that it would not go ahead with the reconstruction works if the tenant left voluntarily.

Supreme Court judgement

The Supreme Court’s response to this was clear:

“Just as the landlord’s motive or purpose, although irrelevant in themselves, may be investigated at trial as evidence for the genuineness of its professed intention to carry out the works, so also they may be relevant as evidence of the conditional character of that intention. In both cases, the landlord’s motive and purpose are being examined only because inferences may be drawn from them about its real intentions. Likewise, although the statutory test does not depend on the objective utility of the works, a lack of utility may be evidence from which the conditional character of the landlord’s intention may be inferred.”

Effectively, a concession that the landlord would not bother with the works if the tenant left voluntarily, combined with the obviously contrived works, indicated that the landlord had no firm and settled intention to carry out the relevant works.

Further, ground (f) assumes that the landlord’s intention is being obstructed by the tenant’s occupation, and as such, if that intention is only conditional on there being an order (but not if the tenant gives up possession voluntarily), there is not a firm and settled intention.

Impact on Case B

So, does this add to the picture on the “bona fide intention” postulated by Lord Justice Goff in Paddock Investments?

Perhaps it does. We have not, until now, had an authority which covers a situation which is so obviously engineered to achieve vacant possession. The Supreme Court has clearly set out that whilst motive or purpose are not directly relevant to intention to carry out the works, the ‘acid test’ is whether or not the landlord would develop the premises if the tenant vacated voluntarily, that principle must surely be applicable to Case B. However, the extent to which that is ever at issue in a disputed Case B is perhaps less of an issue where landlords almost invariably want to achieve development for obvious commercial gains.

Perhaps an alternative view is that the acid test suggested by Lord Sumption in Cavendish Hotel is THE test for intention to develop, and as such supports the minority argument no planning permission is actually required.

The Court of Appeal has recently handed down its judgement in the appeal of Moore v Moore [2018] – the latest in a series of cases concerning proprietary estoppel. The Moore case was unusual in that the party making the representations was still alive at the time of Trial. This was similar to the situation in the recent case of Davies v Davies [2016] – another Court of Appeal proprietary estoppel case in which Michelmores represented one of the parties. Most estoppel cases arise after the death of the party making the promises. This, of course, is a central consideration of the Court when deciding how the equity is to be satisfied.

The case

The Moore family have farmed Manor Farm, a 650 acre arable holding near Salisbury, for 4 generations. Stephen Moore grew up living and breathing farming on Manor Farm, where he lived with his Father, Roger, Mother, Pamela and sister, Julie.

When Stephen began working on Manor Farm, Roger farmed in partnership with his brother, Geoffrey. Stephen later joined this partnership. When Geoffrey retired from the Partnership, although he had two sons of his own, he decided that (subject to a payment, representing much less than the value of his interest), he would pass his share of the Partnership, including the farm, to Stephen, anticipating that Stephen would also inherit his Father’s share, securing the next generation of the Moore family to farm at Manor Farm. In the event, the property transfers were not completed before a dispute arose between Roger and Pamela on one side and Stephen on the other.

Some four years after Geoffrey’s retirement, Roger gave notice to Stephen to dissolve the Partnership.  There was no written Partnership Agreement.

As a consequence, there was a dispute as to whether the Partnership could
be dissolved. Stephen brought a counterclaim in estoppel on the basis that Roger had promised Stephen that the farm would one day be his to enable him to carry on the Moore family farming legacy.

By this stage Roger was suffering from Alzheimer’s. During the litigation the Court decided that he did not have sufficient capacity to take part, so his wife, Pamela, was appointed as his litigation friend, effectively becoming the party in opposition to Stephen.

High Court decision

In the High Court the Judge decided that the partnership between Roger and Stephen, following on from Geoffrey’s retirement, was one for the joint lives of the parties. The Judge was highly critical of Pamela and accepted the evidence of Stephen and his witnesses, including Geoffrey, finding that the estoppel was established. No witness statement for Roger was produced in the proceedings.

The High Court Judge decided that the equity should be satisfied by accelerating Stephen’s inheritance of the farm and the farming partnership assets to enable him to continue the farming operation, which, the Judge found, was always Roger’s intention, At the same time Stephen was required to provide accommodation for Roger and Pamela for the rest of their lives; to cover all of the costs of running their home including utility bills and maintenance, payment of care fees and an ongoing income for life. This was to mirror, as close as possible, what would have happened but for the dispute.

Court of Appeal

In the Court of Appeal Pamela challenged every aspect of the High Court Judge’s decision: 13 grounds of appeal in all, including whether there was an estoppel at all.

The Court of Appeal confirmed the requisite elements required to establish a proprietary estoppel claim; there needs to be representations which were relied upon by a party to their detriment, to the extent that the Court considers that it is unconscionable for the promises to be withdrawn. Where this arises, the Court then needs to undertake an exercise in deciding how to satisfy the “equity” created by the estoppel.

Lord Justice Henderson considered the guidance of Lord Justice Lewison in the Davies case. When considering the broad judgmental discretion to be applied Lord Justice Lewison explained the two approaches:

“One line of authority takes the view that the essential aim of the discretion is to give effect to the claimant’s expectation unless it would be disproportionate to do so. The other takes the view that [the] essential aim of the discretion is to ensure that the claimant’s reliance interest is protected, so that she is compensated for such detriment as she has suffered. The two approaches, in their starkest form, are fundamentally different……… Much scholarly opinion favours the second approach… Others argue that the outcome will reflect both the expectation and the reliance interest and that it will normally be somewhere between the two… Logically, there is much to be said for the second approach. Since the essence of proprietary estoppel is the combination of expectation and detriment, if either is absent the claim must fail. If, therefore, the detriment can be fairly quantified and a claimant receives full compensation for that detriment, that compensation, ought, in principle, to remove the foundation of the claim… Fortunately, I do not think that we are required to resolve this controversy on this appeal.”

The Court of Appeal in Moore, not for the first time, was content not to decide which test was the correct one and instead echoed the sentiment of previous courts as to the fact specific nature of the case.

Court of Appeal decision

The Court upheld the finding of an estoppel in favour of Stephen. Pamela succeeded on only one of the 13 grounds of appeal – that was how the equity should be satisfied.

Lord Justice Henderson decided that the better approach to satisfy the equity was to have “a clean break solution”. He said that Pamela should “be provided with a lump sum which will enable her to rehouse herself comfortably in appropriate accommodation of her choice, to enjoy a reasonable income, and have sufficient capital…to enjoy holidays and occasional luxuries, to provide for Roger (over and above the basic costs of his care), to make gifts to her daughter and grandchildren, and to have a cushion for contingencies”. The Judge said that this lump sum must be raised by Stephen.

The Court did not consider that it had the material to deal with the question of how to satisfy the equity itself.  Instead he decided that a determination as to the lump should be remitted to the High Court, the Judge adding that his “strong inclination … is to direct that the matter be remitted to the same Judge…”.

There are clear parallels between the Moore decision and the Davies case. The Courts are increasingly using the mechanism of a lump sum payment to achieve a clean break between parties, where the party who made the promises is still alive, whether that is paying the party who has relied on the representations or the party who made the representations.

In Moore, Lord Justice Henderson quoted Robert Walker LJ in Jennings v Rice [2002] when considering the clean break option:

“…the court “cannot compel people who have fallen out to live peaceably together”. Although no doubt primarily directed to cases where the warring parties are living under the same roof, the practical wisdom of this recognition applies with the same or scarcely less force in situations where they are living in close proximity to each other and in a relationship of continued financial dependence.”

The High Court has granted an injunction against ‘Persons Unknown’ in anticipation of trespass on vacant land owned by the Claimant, Vastint Leeds B.V (“Vastint”). Crucially the trespass in question hadn’t yet occurred and potentially never will, hence the ‘Persons Unknown’ defendant.

The Duty of Care to Trespassers

The Occupier’s Liability Act 1984 stipulates that a property owners’ duty of care extends to anyone present on their land, irrespective of permission. This means that land owners can face prosecution from a person injuring themselves ‘due to the state of the premises or to things done or omitted to be done on them’,  even if that person was trespassing (entering onto the land without permission) at the time of the incident.

This duty cannot be excluded and being in breach may result in an owner having to pay significant sums in compensation (although the Courts may reduce the damages payable if the victim is found to have been contributorily negligent to their own misfortune by trespassing), as well as suffering the consequences of potential negative publicity.

Warnings may act as a deterrent for trespassers but they will not automatically release a land owner from liability for personal injury. For example, in Tomlinson v Congleton Borough Council a trespasser sued the Council after breaking his neck when he dived into a shallow lake on the Council’s land, having ignored a warning sign. This case reached the House of Lords who found in favour of the Council, as the Claimant’s injuries resulted not from the ‘state of the premises’ but rather the inherently dangerous activity the claimant had indulged in.

Owners of vacant land and in particular land scheduled for development (which will often be an unsafe landscape) therefore face the ubiquitous problem of how to prevent trespass when warning signs and other deterrents will not release them from liability, and can too easily go unheeded.

The Case

In Vastint Leeds BV v Persons Unknown, Vastint acted proactively and sought an injunction against ‘Persons Unknown’ from trespassing on their land scheduled for development, to minimise their risk of liability in the event of a trespasser sustaining injury.

Quia Timet Injunctions

The order, known as a ‘quia timet injunction’ (meaning ‘because he fears’) operates in anticipation of an actionable wrong being committed, rather than to remediate an existing breach. The defendants in a quia timet injunction (despite being individually unknown) must be ‘properly defined, appropriate and permissible’, so as to avoid people entering the property lawfully being inadvertently in breach of the order. Vastint identified three specific groups of ‘Persons Unknown’ as potential trespassers; based either on previous trespass or evidence of these activities occurring in close proximity to their development site:

1. Travellers with caravans seeking more than temporary occupation
2. Persons organising or attending illegal raves
3. Persons fly-tipping

In granting this injunction, the Court considered:

Firstly, whether there was a real risk that without this injunction ‘Persons Unknown’ would act in breach of the Vastint’s rights (ie: proof of imminent danger). Land owned by Vastint had fallen foul of trespassers four times in the past seven years, despite considerable preventative measures including regular security patrols, fencing and inspections. Neighbouring properties had also been targeted by fly-tippers and people organising and attending raves.

Secondly, if the danger or injury did occur; would the harm be so substantial and irreparable that a remedy of damages would be inadequate. Due to the nature of the vacant development site it was considered that substantial harm could befall ‘Persons Unknown’ in the event of trespassing and to whom Vastint would then owe a duty of care. The court also considered the more onerous duty of care Vastint owed to its invited visitors and employees in relation to their personal protection against potentially violent or reckless trespassers.

The Outcome

The Court found the test was satisfied and granted the injunction. However, the order was caveated with a requirement that the description of ‘Persons Unknown’ be varied to explicitly exclude certain groups (such as the emergency services) to prevent them falling foul of the law.

This judgment is a step forward for developers and other owners of vacant land in buttressing their sites against trespassers by providing them with legal recourse, and minimising their risk of liability to ‘Persons Unknown’.

The Geo-blocking Regulation (EU) 2018/302 (the “Regulation”) is now in force across the European Union (including the UK). Traders selling goods and services to customers within the EU need to ensure they are aware of the new Regulation, as changes may need to be made to business websites and other online interfaces in order to comply with the Regulation.

The Geo-blocking Regulation

The Regulation came into force in December 2018 in all EU member states. Its aim is to address unjustified geo-blocking: where a trader in one EU member state blocks or limits the access to their online interfaces to customers accessing from other EU member states. It also covers other methods of discrimination which are based on a customer’s nationality, location of residence or place of establishment.

The hope is that this Regulation will encourage cross-border commerce.

Applicability of the Regulation

It is important to note, initially, that there are some activities the Regulation does not cover. These include: audio-visual services (such as streaming films), transport and retail financial services.  In addition, the Regulation only applies to cross-border situations. For example, a UK trader selling to a UK customer would not be caught by the Regulation.

Traders

A trader is defined in the Regulation as any natural or legal person who acts for purposes relating to that persons trade, business, craft or profession. A key point to note is that the trader does not need to be established in the EU to be subject to the Regulation. What matters is whether they offer their goods and services to customers within the EU.

Customers

The definition of customer is a consumer who is a national or resident of an EU member state or an undertaking established in a member state (which means businesses fall under the scope of the Regulation). It should be noted however, that the Regulation does not apply when the customer is not the end user of the goods or services they are purchasing.

Brexit

The impact of Brexit will be quite different for customers and traders. For customers in the UK, at the withdrawal date, they will no longer be able to rely on the Regulation for protection. For UK based traders however, the Regulation will continue to apply to them if they operate within the EU; it does not matter that they are not based in the EU themselves.

Prohibitions under the Regulation

The following types of activities are covered by the Regulation and traders should ensure that they are complying with the requirements.

Access to online interfaces

One of the key intentions behind the Regulation is market transparency: that is, that consumers should be able to access and, if they wish, compare, goods and services availability and price across the EU.

A trader cannot block or limit the access of a customer to their online interface (e.g. website or other mobile applications) on the basis of their nationality, place of residence or place of establishment. This also covers the inability of a trader to reroute the customer to a different version of their website, which the customer did not try and access, without their explicit consent or because they have to in order to comply with EU law.

By way of example, a consumer in France cannot be geo-blocked from accessing a trader’s website for customers in Italy, even if that trader also has an online interface intended for customers in France. That customer should not be automatically re-routed to the trader’s French website.

Traders should also note that even when a customer does give their consent to be rerouted, they must have easy access to the previous version of the website and that the customer needs to be able to withdraw their consent at any time.

Delivery

Traders can choose which countries they deliver to and there is no obligation under the Regulation to deliver to different member states. However, the trader cannot choose which EU countries they sell to on the basis of a customer’s nationality, place of residence or establishment. An example of how this works in practice is if on a UK website the trader offers delivery to the UK, then a French customer has the right to access the UK website and get the goods delivered to an address in the UK. They cannot though, demand that the product be delivered to France if the trader does not offer delivery there.

Payment

Again, traders can choose which methods of payment they will accept. However, they are not allowed to apply different conditions on payment on the basis of: the customer’s nationality, place of residence or establishment. They also cannot discriminate based on the location of the payment, the place of establishment of the payment service provider or the place of issue of the payment instrument. This applies when the following conditions are met:

• The payments are made electronically by a credit transfer, direct debit or card based payment which falls within the same brand and category;
• Any authentication requirements have been fulfilled; and
• The payments are in a currency which is accepted by the trader.

It should be noted thought, that the Regulation does not prevent traders from withholding delivery of the goods or the provision of services until they have confirmation that the required payment has been made.

Restrictions of passive sales

Traders will need to be aware that if in a commercial agreement there are passive sales restrictions that infringe the Regulation, these will be void automatically. There will be a transitional period in relation to this Regulation, as there are a few instances where passive sales restrictions are permitted and these new rules can in some cases exceed the current framework for competition law.

What next?

If your business does operate across more than one EU territory, or if you are looking to offer cross-border goods and / or services, care should be taken to ensure that you comply with the Regulation.

Keep in mind the restrictions on geo-blocking / automatic re-direction of consumers to territory-specific online platforms.

For more information on the Geo-blocking Regulation please contact Tom Torkar in our Commercial Team.

Usually, non-exempt charities must follow a statutory procedure when looking to sell property or grant a lease (amongst other dispositions). This Michelmores Real Estate Soundbite considers some of these procedures. (Statute does provide for various transactions to which these procedures do not apply, for example, a lease granted by a charity in accordance with its trusts for less than market rent to a beneficiary under its trusts who will occupy the land for the purposes of the charity. Other excluded transactions are not covered further in the scope of this Soundbite).

A non-exempt charity is a charity which is registered with and subject to regulation by the Charity Commission. Under the Charities Act 2011 (CA) a non-exempt charity must obtain an order of the court or the Charity Commission to dispose of land, unless the charity follows the procedure contained in section 119, 120 or 121 of the CA. This is assuming the disposal is not made to a connected person; in which case an order of the court or the Charity Commission will always be required.

The Section 119 Procedure – Sales and Long Leases

Before the trustees of the charity enter into any agreement to sell property, grant a lease for a term of more than 7 years or other disposition of the land, they must obtain a qualified surveyor’s opinion on the proposed disposition. This is sometimes referred to as a “Section 119 Report“.

For these purposes, a “qualified surveyor” will be a fellow or professional associate of the Royal Institution of Chartered Surveyors, specifically with experience of valuing similar kinds of property or land in the same geographical area. The surveyor must be instructed by the trustees and be acting exclusively for the relevant charity.

The Section 119 Report must contain certain prescribed details laid out in statute; these include a description of the land and any relevant easements and the surveyor’s opinion regarding the value. Crucially, the charity must be satisfied that, based on the report, the proposed terms of the relevant disposition are “the best that can reasonably be obtained for the charity”; this generally alludes to best value for money.

If the Section 119 Report recommends that the proposed sale or lease be advertised in a particular way, the charity must also follow this recommendation.

The Section 120 Procedure – Short Leases

The procedure is more straightforward where a non-exempt charity intends to grant a lease for a term of 7 years or less. Before entering into any agreement to lease the property for such a short term, the charity trustees must be advised on the disposition by “a person who is reasonably believed by the trustees to have the requisite ability and practical experience to provide them with competent advice on the proposed disposition”. In practice, this advice does not need to be written and the advisor does not need to be a qualified surveyor (although, generally, a surveyor may still be the best person for the job).

Based on this advice, the charity trustees must satisfy themselves that the proposed terms on which the short lease is proposed to be made are “the best that can reasonably be obtained for the charity”. This is a similar standard to that described above.

The Section 121 Procedure – Land Held for the Purposes of the Charity

In addition to the section 119 or 120 procedure and unless the Charity Commission orders otherwise, where the land to be disposed of is used for the purposes of the charity (usually in accordance with a trust), the charity trustees must also notify the public and invite representations for or against the proposed disposition. The charity trustees must then consider any such representations which are made within one month of the notification, before proceeding to agree the disposal.

It should be noted that public notification is not required if the charity intends to procure replacement land to be used for the charity’s purposes under the same trust; or if the disposal is the grant of a lease for a term of 2 years or less without a premium or fine.

In a previous edition of our Agricultural Lore publication, we reported on the case of Habberfield v Habberfield [2018]] where a daughter inherited her parent’s farm. Since then, two more farming estoppel cases have hit the press: Thompson v Thompson [2018] and Gee v Gee [2018]. These cases demonstrate the Court’s broad discretion when deciding how to satisfy the equity and the Court’s preparedness to award the entirety of a family farm to a child.

Estoppel elements

To bring a successful proprietary estoppel claim the following elements must be established:

• A representation or assurance has been made to the Claimant, raising the reasonable expectation that he/she will be given an interest in land
• The Claimant relies on the representation or assurance
• The Claimant suffers detriment in consequence of their (reasonable) reliance on the representation or assurance
• It would be unconscionable for the promise-giverto resile from the promises or representations made.

Thompson v Thompson

Mr and Mrs Thompson acquired Woody Close Farm (“the Farm”) in County Durham in 1989. It comprised a farmhouse, bungalow, outbuildings, 115 acres of owned land together with 120 acres of tenanted land.

The Claimant, Gilbert Thompson (“Gilbert”), is the youngest of 5 children and the only son. He farmed with his father since finishing school, aged 15, working full time 7 days a week, and at times, up to 18 hours a day. He was paid £20 a week, increasing to £40, when he was 19 or 20 and then later to £70. He also received free board and lodgings. By 1989, Gilbert’s sisters had all left home.

In 1994 Mr Thompson brought Mrs Thompson and Gilbert into the business, creating a partnership, where they each held 1/3 shares (with effect from 1 August 1992). A written agreement was completed, under which Gilbert was required to devote his full time and attention to the business, whereas his parents had discretion as to how much time and attention they devoted.

Mr and Mrs Thompson lived in the bungalow. Gilbert lived there most of his life, moving out permanently in 2003, before moving to the farmhouse in 2013. In 1992 the bungalow was transferred into Mrs Thompson’s name.

The Farm, excluding the bungalow, was shown in the accounts as an asset of the Partnership.

On the death of Mr Gilbert in 2012 his partnership interest passed to Mrs Thompson. In 2014 relations broke down between Gilbert and his mother. Gilbert moved out of the Farmhouse. There was a difference of opinion as to the reason Gilbert stopped working on the farm after this time. Certainly by May 2015 he ceased working there completely. Thereafter, Gilbert’s position was that he was too ill to work on the Farm between July 2015 and January 2017 and when he attempted to return to work in January 2017, he was prevented from doing so.

Gilbert claimed that throughout his working life, representations were made to him by his parents that, on their death, the Farm, including the bungalow, would be his. He claimed that, in reliance on those promises, he worked on the farm all of his life for a very low wage, never purchased his own property and gave up the possibility of a life outside of the Farm. He contended that it would be unconscionable for Mrs Thompson to be able to dispose of her 2/3 interest in the Farm as she saw fit.

Mrs Thompson’s position was that no representations were made to Gilbert about any inheritance.

Gee v Gee

This case concerned a 600 acre farm near Oxford known as Denham Farm (“the Farm”). The Claimant was John Michael Gee (“JM”), the son of John Richard Gee (“JR”) who was the First Defendant. The Second Defendant was JM’s brother, Robert. The farming is undertaken by the family company, which farms the land under a tenancy.

JR has worked on the farm all of his life, taking over running the Farm in the 1970s with the help of employees. JM started working on the farm in the 1970s and worked there until 2016, when he was dismissed.

JM lived in a caravan on site until 1982, when JR had a house built for him on the Farm, which JM has lived in ever since.

JM was paid the minimum wage for agricultural workers set by the Agricultural Wages Board. By 2008/2009 this was £20,000 p.a. – broadly the same as one of the long term employees.

Robert did a diploma in agriculture, but until 2014 was a builder and property developer.

The company comprises 24,000 shares. By 2014 JR owned the entire shareholding (save 1 share owned by his wife, Pamela). The property was held beneficially between JR (7/18), Pamela (7/18) and the company (4/18).

JR transferred all his property and the company shares to Robert in November 2014. At the same time, Pam transferred her share in the property and her company shares to JM. Since then Robert has managed the farm. JM said that since he was 30 years old until recently, JR repeatedly assured him that he would inherit the’ lion’s share’ of the farm. This stopped because JR took against him, influenced by Robert and Robert’s wife.

JM said that he relied on those representations to his detriment by working long hours for low wages and had given up the chance to better himself by working elsewhere. JM recalled 6 specific instances where representations were made, including being told by JR that he could use some of the land as collateral to buy out his siblings and being told that he could not build a new dwelling on the Farm until it was his.

JR and Robert denied that any representations were made and argued in any event, JM had not suffered any detriment. JM was offered a directorship in the company in 2012, but turned it down. JR and Robert said that this was inconsistent with having been promised the farm.

The Outcome – Thompson

In Thompson the Judge determined that promises had been made by Mr and Mrs Thompson. Gilbert had relied on those promises and dedicated his whole life to the Farm, which had an effect on his lifestyle in terms of working hours, financial independence and ability to buy or live in his own house. This was in spite of the fact that Gilbert was unable to give evidence of specific promises that had been made.

Mrs Thompson is still alive and the promise was that he was to inherit the Farm on his parents’ death. The Judge awarded Gilbert the Farm and the bungalow, the interest in which he would receive on Mrs Thompson’s death. The gift was not accelerated.

The Judge outlined that the equity could be satisfied by giving Mrs Thompson a life interest in her two thirds share in the partnership with a gift over to Gilbert of her share on death. Mrs Thompson was given a right to occupy the bungalow for life.

The Outcome – Gee

In Gee the Judge found that over a 20 year period representations were made that JM would succeed JR, but with some provision for Robert and their sister.

The Judge accepted representations were made and although not frequently repeated or a stock phrase, they were a material consideration in him staying on the farm. Whilst the representations did not detail the shareholdings and the land holdings, it didn’t render them ‘insufficiently certain to be relied upon’.

The Judge found that JM was constantly on call and was expected to work as and when required. As an employee, he should have been paid overtime. Whilst JM was provided with his house, that benefit was not enough to compensate him for detrimental reliance on the representations. If JM had left and set up on his own account, he would have been running a viable farming enterprise today.

On the offer of directorship, the Judge said it was meaningless because the practical management of the company was not going to change and the offer did not involve the shareholdings or land ownership.

The award in this case was more nuanced than that which we have seen previously. The Judge awarded JM a 52% shareholding in the company and 46% of the land, which he suggested should be effected through a series of transfers.

Conclusion

What both cases demonstrate is the breadth of the Court’s discretion when determining the remedy in estoppel cases. The Courts are not afraid of awarding successful Claimants the entirety of a family farm, when it is justified.

Despite the recent run of successful farming estoppel cases, it remains extremely difficult to predict the outcome of such cases. Each one turns on its own facts and the credibility of witness evidence is crucial. It remains to be seen whether either of these cases will be appealed.

Douglas Hawthorn has contributed an article to the December edition of Corporate Rescue and Insolvency on the new Model Law on recognition and enforcement of insolvency-related judgments (MLIRJ). As a speed-read, the MLIRJ is intended to compliment the Model Law on Cross-Border Insolvency (MLCBI) (enacted in the Great Britain under the Cross-Border Insolvency Regulations 2006 (CBIR)), but also to patch a perceived gap in that Model Law, namely, to provide a framework for the recognition and enforcement of insolvency-related judgments. Readers might recall that in Rubin v. Eurofinance SA [2012], the Supreme Court concluded that the CBIR extended only to procedural matters, and could not be used as a means to recognise or enforce insolvency-related judgments. The MLIRJ fixes that, but also, under Article X, makes clear that Article 21 of the MLCBI could be used as a means to recognise or enforce cross-border insolvency-related judgments. You can read a copy here with LexisNexis’ kind permission.

What is an ACV?

Assets of community value (ACVs) are areas of land which, in the opinion of the local authority, has a use which furthers the social wellbeing or social interests of the local community. This can include historic use or use that is realistically anticipated in the next five years.

Properties that have been listed as ACVs include pubs, parks, nature reserves, car parks and sports stadiums (Manchester United Football Club’s stadium, Old Trafford, was listed in 2013).

How is an ACV listed?

Under the Localism Act 2011, ACVs must be formally listed by the local authority. Areas of land can be nominated by the community as an ACV, but the local authority has complete discretion to list areas of land as ACVs.  When listing an ACV, the local authority must notify the property owner; the owner may seek a review of the local authority’s decision.

Listed ACVs will usually retain their place on the list for five years. It is important to note that listing an ACV does not create any private rights and is purely to provide a public benefit.

Buying and Selling an ACV

Community interest groups (CIGs) have a right to bid for any ACV which is proposed to be sold.

An owner of a listed ACV must notify their local authority of their intention to sell the ACV. This notification triggers a period of six weeks during which CIGs can ask to be treated as a ‘potential bidder’ for the ACV. If no request is made by the end of the six weeks, the owner can sell the ACV to another party.

If a request is made, a moratorium period will commence and last until the date six months after the local authority was notified about the owner’s intention to sell. During the six month moratorium, the CIG can raise capital and prepare a bid to purchase the ACV; the owner cannot exchange contracts on or sell the property to anyone other than a CIG during this period. It should be noted that the owner is not obliged to accept the CIG’s offer nor sell the ACV to a CIG on any terms. If, after the six month period, no acceptable bid is made by a CIG, the ACV can be sold by the owner to any other party.

ACVs in the Courts

Recently, the Court of Appeal ruled that use of land for community benefit need not necessarily mean “lawful use” when a local authority considers listing an ACV.

In Banner Homes Ltd v St. Albans City and District Council and Another [2018] EWCA Civ 1187, the land in question was privately owned but used by the community for recreational games and activities which, in law, amounted to trespass. The Court clarified that the context must always be considered when listing an ACV. In this case the owner knew about the community use for 40 years and never previously objected before the local authority’s decision to list the land as an ACV, so the fact that the use was in-fact trespass did not prevent the local authority from listing the ACV.

Update

Since the Court of Appeal decision in Banner Homes, St. Albans City and District Council have refused a number of further applications for planning permission at the same land.

In its most recent decision, regarding an application to change the use of the field to a horse paddock, the Council refused planning permission primarily on the basis that the land is located within the metropolitan green belt.  Contrasting the Court of Appeal decision, the Council were of the opinion that the proposed change of use was not inconsistent with the listing of the site as an ACV.  The ACV status would not itself have prevented a grant of planning permission in this case.

This is an interesting decision, as it shows that the ACV status of the land was not a conclusive point in deciding whether or not to grant planning permission.

Even by the standards of most lawyers, Compulsory Purchase Orders (CPOs) are technical and complex. The relevant law is fragmented across numerous Statutes, and is then further layered with additional regulations and guidance.

The historic appetite for CPOs shows that their use goes in cycles – sometimes popular, sometimes not. Well CPOs are coming back into vogue, driven by a desire to build new homes, and by a raft of new legislation including the Housing and Planning Act 2016 and the Neighbourhood Planning Act 2017.

Further evidence that the rise of the CPO is firmly on the Government’s agenda is provided by the proposals in the Letwin Report – the output of a review panel looking at improving the build out rate of planning permissions.

The recent budget on 29 October included reference to the Letwin Report (which was released on the same day). One of the key long-term boosts to build out rates is the proposal to give local authorities statutory powers to compulsorily purchase the land designated for large sites (over 1,500 units) at prices which reflect the value of those sites once they have planning permission, but at a hugely reduced residual development value (due to diversity rules in the Report).

The Government has promised to respond to the Letwin Report by February 2019. However, we suspect that the adoption of these proposals is likely to be very dependent on the way that the economic wind is blowing in February. If the economy needs a Brexit-related boost then the view could be taken that the opening up of some new large scale developments might just be the boost that the economy needs?
In the meantime the prospect of statutorily enforced maximum land values is something that will be keeping landowners awake at night.

For more information on this topic please contact Mark Howard.

Crossrail 2 is a proposed new railway, using a tunnel through London to link the rail networks in Surrey and Hertfordshire. It would connect the South Western Main Line to the West Anglia Main Line, via Victoria and King’s Cross St Pancras, with the intention to alleviate severe overcrowding that would otherwise occur on commuter rail routes into Central London by the 2030s.

The current proposals anticipate submission of an application for planning consent in 2020. However, the new rail route is already the subject of safeguarding, and this may have the effect of effectively prohibiting certain types of development along the route. Clearly, this is causing some concern among real estate investors and developers. Worse still, the safeguarded route has yet to be finalised, and this is causing additional uncertainty over development proposals and the tenanting of buildings on safeguarded (or potentially safeguarded) sites.

The Crossrail 2 scheme is intended to be delivered by an Act of Parliament, rather than as a nationally significant infrastructure projects (NSIPs).

Until the draft legislation is published there will not be any certainty on the final proposals. It is at that point that the companies affected by the project can begin to negotiate protective provisions in an effort to minimise the real impact on them.

So uncertainty is currently the order of the day. We are seeing an increasing number of clients approaching us for advice on the impact of Crossrail 2 on maintaining or expanding their real estate portfolio. At this stage of the process, we are often left with little scope for meaningful advice other than to highlight worst case situations and potential impact on value – so as to provide at least some certainty in deal negotiations.

Mark Howard is a Partner at Michelmores LLP Solicitors.  He has acted for a number of clients in relation to infrastructure schemes, including Crossrail. He has commented upon and drafted legislation, negotiated with scheme promoters, drafted Petitions to Parliament, and dealt with House of Commons Select Committee to secure protective provisions for affected clients.  He acted as a Parliamentary Agent for the previous Crossrail scheme.