Commercial Leases Update 2018-19

Hi, My name is Rachel Coyle on today's webinar is to do with commercial leases update. You'll be encountering some cases which I will be of use to you. One of the myths in the context of marine mortgages, however, which is the first case. So it might be that you might want hold on a little bit as we move on to the other cases that might more relevant. But if it is an interesting case, so I do hope you find it interesting if not relevant to your practice. So it turned into PowerPoint. Slide to is a case of Close Brothers LTD. A. I s Marine to LTD in liquidation and another 2018 England and Wales High Court Division people teen in the Alberti. In this case, the first defendant was a company. Lastly, in liquidation, which purchased a British registered wind farm support vessel, Social went eight of Hartlepool well 3.2, while many pound he granted a ship mortgage whereby the shares in the vessel were mortgaged to the claimant. To secure the terms of the loan agreement for £2.247 million The first defendant, however, departed on the mortgage instalments on the vessel was repossessed by the claimant he was. So he used a shipping broker. That's it. Sighing agents were grace price of £1.7 million. The second defense argued that the best have been sold isn undervalue, as is all too, the claimants. Improper behavior. They're looking at the issues Jervis care identified them. Aziz. How can a bank compliant its duty to excise usable care to obtain a proper price? The distressed asset when there is a singular lack of winning bias? And how can the bank and if it were to come to court workouts? The tree market value where slow market means there are no riel comparatives. But the after that, the court found, approached with If we look at power points Night free, which consider just the outcome, is the following. The answer is that is that the court approach this with a healthy date of commercial realism? A little bit of common sense. Both cannot be expected to can drool values in a weak market, and it could be seen that this is the theme that runs through the entire judgment. The court does not have to ask itself whether the bank is done enough unless and until it is shown that the castle was sold at an under by you at all in a distressed market or depressed market. This is not straightforward. Banks need to be well armed with evidence from a specialist broker. So the registrar, in this case except it that ship valuation is a difficult operation covering a wide and intimate knowledge. The rather market, which have been known to fluctuate rapidly and significantly that opinions between respectful brokers can do Barry the best guidance on fight is indeed obtained by compiling the cell prices are comparable vessels, but the experts could not do it. In this case, the market was too quiet and there were no sales that would diner comparable at all. So instead the bank text. But by analyzing data, face of asking prices, valuations and sale price and applied what's called the correction factors. That is especially so for X amount, where she was larger than this one that was so awful. Why mount the power or payload is lower? Where's this form was signed? The higher that that fool using those comparatives and correction factors that how would a. That is how price is worked out. So the court actually said said that actually, this is not a bad way of assessing what's the by should be in a depressed market at all. And actually, the judge accepted the evidence registrar except to the evidence without hesitation. So, on the basis of the experts figures, the vessel was sold for price that was within the bracket except values. No strike did not consider whether the bank of satisfy its due to take care because it wasn't considered necessary, considering that finding would never less simply Boyens of doubt. The banks brokers were found to have acted entirely reasonably on the banks because in sending the vessels particulars to a large and carefully selected client list, and they did find a buyer in actually very tough market. The Boston case is a reminder to ensure all suite of London documents are tightly drafted and executed because in this instance, the corporate borrow I went into liquidation in the course of court proceeding. What judgment could still be obtained against its main shareholder and director under personal guarantee? The court therefore determined that the vessel happy sold for a price that was in unacceptable ambit. Bearing in mind the burden of proof to establish a sale at Undervalue is still in any event on second dependent. What else was we considered as well is that of the expertise of the expert in nothing had the expertise in marketing a vessel of similar type. The fact that his opinion was backed by recording data, his uses, Majin it and sensible. We had a very sound knowledge of the general market conditions relating to the Roman class of vessels. At that time, the second develops. Experiments, by comparison, was less persuasive. The expert was not created broker. He did not maintain a database of comparable vessels. He did not look for comparables. You would start at the market to get rabbit information, really was very vague about it. And despite acknowledging that fast was worth what someone would pay for it here, given no consideration to stay the market time, his instructions have not being provided to the court. So what lessons can we learn from this case? Well, when a case turned on a decision over expert evidence, the court can be in an invidious position of choosing between two competing with honest professional people, but it has to find a base didn't watch on which to choose between them. And often it could be the smallest detail that makes all the difference in cases with allegations such as sales at an undervalue. The case law establishes that the burden is on the borrower on a mortgage will only bound in default of the cell price was quote clearly on the wrong side of the line. What type was for evidence often falls down where it is too theoretical on does not pay attention to the available evidence on, rather than sales and market conditions at that given time. See the case of Mike Lumina by way of example in 2000 for the England Well cough appeal Civil Division 282 Well, of course, repeal considered that the virus and figure put forward by the expert on behalf of the mortgage all had an aura of on reality about it, given the lack of any offers received at that level. So it's an interesting case, so turning, then just PowerPoint slide number war. This is not the shipping case return more so pure real estate property type cases this is the case of paler paler start up. This is the case of Palo Alto LTD. And others and l Know Estates LTD. In the lung registration chamber, the 2018 UK up a tribunal to 31 in the TCC in July this year. Laughter is 2018. This case is all about whether or not it could be a pope perpetually renewable lease granted by mistake whether it should remain a perpetually renewed lease. So the open traveling in this case has agreed to correct a lease where one party taking advantage of the others estate to create a perpetually ring your police commercial leases often contain an option to renew A. His option allows a talent to renew, at least for a further term on the same or similar terms and conditions. However, both the further time granted I'm number times it can be renewed are usually limited for good reason. So what were the facts in this case? In this case, the talent of an office unit had a yearly grant to £3120 was inadvertently secured a lease which could effectively last forever. He was a landlord's practice to grant short leases in a simple bomb. Lieutenant was offered a one year term until that, if he wanted at least 13 which it did, police would need to be drafted by sisters on a talent for no known reason. Do not want to involve solicitors, so the parts agreed the tenant would take a lease for a term. One year would have the option to renew it. Lieutenant amended the draft lease and send it back. Robin. Clause of Human Stated what you find on the slide. Tanzi's granted prepared in one term with an option to renew at the end of the term or further one year. On the same provides ozone agreements that are hearing containing clean your country. New such tenancy return. There are one year Have you got that wrong? The least Fourth completed. The turned applied to him. Agitated I'm registry to register the lease as a lease for a term off 2000 years. Reason did so was that the least permitted renewal but contained no limitation on the amount of times it could be renewed. So according a, it was perpetually renewable. Moustache one reported five and shuttle 15 of the Law of Property Act 1925 it was converted to a 2000 year term. Perhaps then it was no surprise. Handled objective was applied for rectification of the lease on the basis that was only intended to permit a maximum of two in yours. But when the dispute was heard by the F T. T, they would recognize quote. But actually, renewable lease is a disastrous in Congress on a land of title unless it happens to make provision for a market rent throughout its life spot. So the first here tribunal it was how that that being a unilateral mistake rather than north and ordered the least to be rectified such that would only be renewable twice. So to admit that a maximum letting period off three years the judge found at that time have taken advantage of the channels. Agents know perfectly well what he was doing the moment he had made to the renewal. Klaus had a very different effects than that which is being discussed, to which the landlord had agreed. So Children into PowerPoint slide fine. What happened in the open tribunal? What he doesn't peeled, but they also lost in the upper tribunal on appeal. The telling argued that the ftt have bean wrong to find there was a unilateral mistake because such a finely required dishonesty by the tenant and turn said that had not being dishonest with the upper tribunal concluded. But where the defendant was found to have had actual knowledge of the mistake made by the other party, this was sufficient for unilateral mistake, and those dishonesty was not required. The judge had been sure that the talent had actual knowledge of the mistake on the land as agents were making in accepting its actual night of. The mistake those agents are making, we're accepting is a mandatory nor clauses in the lease. And it was sufficient to find in favor of the landlord and to ratify the agreement. You were trying me, although did say that he would have found his song see to have been established on the fax talents prior to explaining about the amendment to the landlord's ages amounted to dishonest conduct. What's interesting about this case? Yes, that's the fastest case prove how wrong it is for parties to believe that smaller property below the rental of short of the term and therefore, the less need. The rest have a professionally drafted document. How wrong they are, So the options to renew they should always be carefully drafted. You should always take professional advise, even if the profitable, even if it's just short term you want. Even if the rent is low, it does not matter, because this is the kind of error back happen. Turning into PowerPoint Slide number six. This is the case of Sometimes Die You KPRC an LPs Estates LTD. In 2018 England Wales High Court at 2193 in the Chancery Division. And in this case, we are doing the third party development lease renewals and whether or not they can. This is an interesting case because that it considered the case of Francis, but we'll come to that in a short moment. But in this case, there's also focus on the case of direction limited on the British Railways Board in 1988. So this is a nice case if you want to read the entire thing, which practice together, though to those two years authorities. But this particular cases background was this. It principally confirmed that a landlord is entitled to oppose his talents. Reached No. 9 11 turned out 1954 where there's a redevelopment of the site, which is undertaken by 1/3 party. So what it does is focused on the 1954 act. Now this actually probably know, get the best business turned the right to remain in occupation Once, please have ended onto the right to request the ground to the new lease. One exist in terms. Now a landlord is only entitled to refuse a request for a new leaf specific and limited rounds that are set out in section 30 off the act. One of those grounds is ground. A Round F requires a landlord to crew, but on the termination of the court tenancy, it intends to substantiated Mon ish or reconstructed premises for such next steps that it could not reasonably do so that first obtained possession of them. So sometimes there was a tenant on Delpy Ashes landlord off commercial premises after the expiration off its lease. Sometimes they requested the grand to the new lease, and oh yes, was opposed to the ground. Based on ground back to $1.2 LPs have entered into a building these third party. That's a lot relied on proving its intention to really by obliging the third party to carry out the read about works. If this would satisfy Ground invented, the landlord could back to be terminated. Existing tenancy in favour are a new tenant that's beautification of the court to decide that intention to be better and at first instance help. Yes, but my mold was successful. Sometimes they repealed The high court argue that you are standing appeal in the case of S. Francis Limited in Cavendish Hotel London LTD. 2017 England Wells High Court at 1670 French division WAAS relevant and that its case should not be decided until the outcome that you know. But the judge disagreed with the comparison rating Francis. He explained the issue to be decided. France's appealed his other landlords intention to develop, required to satisfy Ground F is satisfied when the works are a contrivance to prove ground air, but the issue in Santa there is different, said the judge. The issue is whether the intention to develop is satisfied whether landlord didn't turn the work to be carried out. It had chose that it should be carried out by the party by means of building these deliberately the purposes satisfying ground death. Now there's already strong legal authority on the point, and that is like I say in the case of Screw Correction limited on British Railways Board in 1988. And that is in the the state's Got that little review on page 76 Born You one in the spook you want to know more about Spook? Alanna wanted to redevelop the property itself. Notice to terminate the existing lease, stating that it opposed the ground for new talent. See on the grounds off ground and, at the time off service of the notice it waas the landlord's intention to sell the property to developers by the date of the hearing caused. The tenants have refused to me about onto sustains grandma position. The landlord had entered into a build agreement with a supermarket operator. You agree to read about the site and to take a new lease on completion of the works. A building lease because appeal held, that's the landlord had proved is firm intention to carry out the works. Even noted antidote building lease to get around high court was found to follow this earlier cause appeal case because in spoke of that match of the precedent. This is 1/4 pure decision. Where's it? Sometime? Diet is a high court decision and it would only be capable. I'm not being followed in the situation of a The facts very different will be court sorts. Distinguish it on the backs. Well, that's a real prospect that even a high court Supreme Court example would overturn such decision. That has not been the case with spook. It's all I could be. The case with this sometime down and LPs states one. No, last landlords will be relieved that the spirit decision has been upheld and the law remains clear. But in a lying Donald Gramps forgotten leads to at the party to do worse required by ground. So I guess we're gonna have to wait for the Francis decision in the Supreme Court two car by weather to satisfy ground death. The intention to carry out works must be motivated. Brighton all the van and need only to prove the statue to ground. What position those were interested. That appeal has been heard this month. That is October 2018 Going into powerful It's 57 It is a briefcase being doubt within the high Court, its first tower trustees and CD S Superstars International LTD. 2017 you know as High Court B six. Okay, Lieutenant Race inquiry is whether there were any breaches of environment full premises. The land respondents said no so so quickly, just before completion landlord was served. Notice it in relation to us best off the premises. Lionel did not notify the change of circumstances. The talent was faced with nearly £500,000 worth of mediation work. That suit perhaps this representation the landlord larger than on Reliance Clause, whereby the tenant was deemed not to have relied on any misrepresentations. Escalation of liability for misrepresentation, as you probably know, must be reasonable. Section three of the Misrepresentation Act of 1967. It's a most in just about K. So is that non Reliance clause was how to be unreasonable. So that's an example of more recent case or misrepresentation. How police slight eight deals with the case of Francis. I would say that in relation to this, we'll find that quarter p accepted that grounder could be used, even though the work of reconstruction specifically planned nor to terminate the lease. However, the ASA what would not commit to 12 months, the intention was not sufficiently immediate in that case, But I have already mentioned it has been appealed. This being heard about Supreme Court this month, so turning them to PowerPoint slide number nine is a case of property searches. Orient Field Holdings on Bird and Bird. This is ending on a World Court appeal Civil division. It's 348 in 2000 and 17 in this case, the client was purchasing of £245 million House in London. Uh huh, there's a Leicester was aware that there was planning permission and I should go to school the 1400 peoples in the same street. This was not disclosed in their report on title sellers. Response. Two related questions. Seed Bay. When the purchaser found out about the planning permission, refused to go ahead with completion, be very much giving up altogether and eventually negotiated with a sad out of orbit Half they subsequently sued this Lester's. For that loss, the court refused to accept normal that purchase, not mitigate their lost by completing the purchase. I just did state that there was no obligation to carry out additional searches. We left a pony express or implied instruction off the client. That's an interesting case. Well, so hopefully that will give you a summary of the more important cases out of come out the quarter appeal in High Court. In the past, I would say what's also and like I say, keeping out of what happened with case of Princess, because it may be that you have to have in the Lebanon From what Watters maybe change. So it's pink or decision. You never got it. It might be some looks by that. In the meantime, it's a good case to look at. That is always a case of sometimes there as well. I do have us peanuts and assistance to give an update or commercial leases. Certainly in the past three months, so looked vacation, and I do what you can actually violation more questions. Do you have a lot of those? Thank you for listening