Under these Regulations, a tenant will have the right to ask their landlord to allow a competitor electricity supplier to distribute electricity to him or her via the cables and electricity system in the building.

Previously, it has been usual practice for landlords of multi-tenanted buildings to choose an electricity supplier and simply recharge the tenants the cost of the electricity supply they use (mainly through the service charge or by measuring use through electricity meters.) Tenants have had no right to demand a change of electricity supplier or to ask for their own individual supply. However, from now on, even if there are several tenants in the building, each tenant can potentially ask for a different supplier rather than agreeing to the one chosen by the landlord.

On receipt of a request by a tenant to change electricity supplier, a landlord must respond in writing within ten working days to either (1) confirm that it will provide the tenant’s choice of supplier with the necessary information, or (2) explain why the tenant cannot have a separate supply (e.g. the cabling within the building has insufficient capacity, or that to increase its capacity would have a substantial adverse financial impact on the landlord). The landlord must obtain approval from Ofgem for any charges it seeks from the electricity company for the use of the electricity distribution system in the building.

Considerations for tenants

1. The cost of physically changing the electrical cabling system (or installing additional cabling) must be met by the tenant or electricity company; and

2. Tenants may be able to obtain better electricity deals than those offered by their landlords.

Considerations for landlords

Landlords do not have to do anything until a tenant makes a request for a separate electricity supply. However, if a request is made, they must:

1. Allow electricity companies access to carry out necessary works and to read meters;

2. Install additional infrastructure, if required; and

3. Cooperate in agreeing a ‘switching’ date and a reconciliation of charges between the outgoing and incoming suppliers.

It is prudent for landlords to look at their current electricity supply arrangements, particularly if they have fixed-term contracts at a fixed price, based on previously assumed levels of electricity consumption. It may also be possible for landlords to improve the terms of the existing supply, so that tenants have less incentive to request their own supply.

On the plus side, if a tenant receives a direct electricity supply, that tenant’s electricity consumption will not count towards the landlord’s requirements under the Carbon Reduction Commitment Energy Efficiency Scheme.

Will these new Regulations result in an army of tenants demanding to exercise their new right to change electricity supplier? Probably not – tenants are likely to be deterred by the prospect of high infrastructure and installation costs, which will probably outweigh the financial benefits of switching to a cheaper electricity supplier.

Squatting is not currently a criminal offence in England and Wales, so the police will not get involved. Film maker Guy Ritchie was recently a victim when squatters took up occupation of his £6m Grade I listed property in Fitzrovia, and Saif al-Islam Gaddafi, the son of the Libyan leader, also had his Hampstead home recently occupied by squatters. Property owners have to issue court proceedings to get squatters out of their properties, which can sometimes be a lengthy and expensive process.

Mr Shapps said that he wanted to “lock the door on squatters and their so-called rights once and for all.” In the first instance, he has announced the publication of a revised guidance note for homeowners with problems with squatters. The guidance, which replaces a note published in November 2010, reassures homeowners that there are steps they can take if a squatter unlawfully occupies their home. For example, it highlights that:

1. It is an offence for a squatter to stay in a residential property if they have been asked to leave by the displaced residential occupier;

2. If a squatter causes damage when entering or whilst occupying the property, they can be reported to the police for possible criminal damage; and

3. The ‘legal warning’ squatters often post on the front door of the property, stating that it is a criminal offence to use or threaten violence to enter the property against the will of those inside, is a distortion of section 6 of the Criminal Law Act 1977. It does not apply to displaced residential occupiers trying to get back into their homes and does not prevent police from entering the property if they want to arrest somebody inside on suspicion of criminal damage.

This will provide little comfort for homeowners who are rarely able to persuade the police to deal with any criminal damage. The position will not improve until there is a more radical review.

If you have been affected by squatting and require some legal advice, please contact me at faiza.ahmad@mablaw.com.

Although most landlord and tenant disputes are settled before they reach court, these figures prove that problems can escalate. The rise in the number disputes (and legal action) can probably be blamed on the recession, with tenants desperate to reduce their property overheads and landlords keen to protect the investment value of their properties. Particular problems that can – and do – arise include the following:

1. A tenant trying to sublet office space;

2. A tenant wanting to assign a lease to another company;

3. A tenant failing to carry out repairs (during a lease or at termination of a lease);

4. A landlord breaking his obligations under a lease;

5. A landlord refusing to accept that a break clause served by a tenant has been validly given, or the break conditions complied with;

6. Disagreements over the level of service charge payable; and

7. Rent review disputes.

These are of course just some of the problems that can arise between landlords and tenants. Disputes involving commercial leases can threaten a landlord’s investment and a tenant’s livelihood, so it is essential that you take legal advice as soon as possible. 

For more information on how we can help you, please click here and here. If you have any concerns about anything I’ve set out here, or would like any legal advice, please contact me at laura.seaman@mablaw.com.

The growth in the letting of property and the effects of the recession have resulted in an increase in the number of evictions of unauthorised tenants. As a consequence, the previous Labour Government introduced the MRPTA 2010, which came fully into force on 1 October 2010, in order to protect residential tenants by ensuring that they are entitled to a reasonable period of notice to leave a property if their landlord is repossessed

In short, the MRPTA 2010:

1. Gives courts the power to postpone a possession order for up to two months (thus allowing tenants the opportunity to find alternative accommodation); and

2. Requires lenders to give notice of the proposed execution of the possession order.

Further comment on the Act is available here.

The Guidance aims to inform lenders, landlords and tenants of their rights and responsibilities under the MRPTA 2010.

Background

Historically, all forms of contingency fees in litigation (whereby payment of the solicitor depended on the results) were considered to be unlawful. It was felt that they could lead to a conflict of interest between the solicitor and his client. In 1990 CFAs (Conditional Fee Agreements) were introduced which allow for the amount of any fees to be increased, in specified circumstances, above the amount which would be payable if it were not a conditional fee agreement. All other forms of contingency fee agreements are unlawful.

CFAs are often referred to as “no win, no fee” agreements. Essentially the solicitor agrees to forego payment of his fees until the court decides the matter. In the event you win he is entitled to his fees at his normal rates together with a success fee being a percentage of his normal rates, subject to a maximum 100%. Significantly, not only the normal rates but also the success fee are recoverable from the other side in the event you win in the proceedings. In the event you lose the solicitor will not recover any fees from you. You will only be liable to pay disbursements, which will include Counsel’s fees (although rarely some Counsel  will also proceed on CFAs).

A success fee must be expressed as a percentage uplift on the amount which would be payable if there was no CFA. The percentage uplift of the success fee must be reasonable. The reasonable success fee should in general be calculated so that it does not exceed the amount of the fees at risk ie. the conditional fees. On a detailed assessment of costs the Court will consider the reasonableness of the success fee. If the Court finds the level of the success fee to be unreasonable it will reduce it accordingly.

 The legal representatives acting for the client with whom the CFA is to be concluded will calculate the level of the success fee. There are two elements which go into the calculation of a success fee:

• The risk of losing the litigation (the risk element).
• The cost of funding the litigation (the postponement element).

The legal representative will need to calculate separate percentages for these elements which, together, must not exceed 100% of the amount which would normally be payable if there was no CFA.

Discounted CFAs are becoming increasingly common. This is where the solicitor will be paid a discounted rate for his fees during the progress of the matter. In the event you win the claim the solicitor will be able to recover his fees at his normal rates together with the success fee, applied to his normal rates. If you lose the solicitor simply retains the discounted fees he has been paid during the conduct of the litigation. The court will usually take into account the fact that a reduced level of fees would have been recoverable even if the case had been lost when considering the reasonableness of the success fee.

A success fee is seen as the just reward for the solicitor taking the risk of either not being paid at all; or being paid significantly less than their usual going rates (depending on the terms of the CFA) if the client should lose the case.

The Peacock decision

The recent decision in Peacock v MGN Ltd [2010] EWHC 90174 (Costs) on a detailed assessment of costs reconsidered the issue of staged success fees.

In Callery v Gray (2001) EWCA CIV 1117 Woolf CJ explained the logic behind a staged success fee:

“The logic behind a two-stage success fee is that, in calculating the success fee, it can properly be assumed that if, notwithstanding the compliance with the protocol, the other party is not prepared to settle, or is not prepared to settle upon reasonable terms, there is a serious defence [emphasis added]. By the end of the protocol period, both parties should have decided upon their positions …”

In Peacock the success fee was staged so that it was:

• 100% it the claim proceeded to 28 days after service of the defence and beyond.
• 50% if the case settled after proceedings were issued, but before 28 days after the defence is served.
• 25% if the case settled before proceedings were issued.

Proceedings were issued on 2 September 2008, the defence was served on 24 October 2008 and a settlement was reached and embodied in an order dated 30 November 2009. The order included a provision that the defendant would pay the claimant’s costs on the standard basis, to be assessed, if not agreed.

MGN disputed the reasonableness of the 100% success fee. In advancing an offer of 43% success fee, the thrust of MGN’s argument was that where the success fee is staged, it is unreasonable for this to be fixed at 100% at an early stage in the proceedings, such as 28 days after service of the defence. MGN further advanced the proposition that the risk assessment undertaken by Carter Ruck (solicitors acting for Peacock) is not “bespoke” but is akin to block-rating, because if the firm decides to accept a case funded by a CFA, a “one-size-fits-all” success fee of 100% is invariably agreed at the final stage.

MGN did not contend that the “discount” from 25% to 100% “ran out too soon”. This was wise given that the case of KU v Liverpool City Council (2005) EWCA Civ 475 plainly contemplated the second stage of a two stage success fee taking effect on service of the Defence.  

Master Campbell held that the decision to enter into the staged success fees was reasonable. Once the claim had got to the stage where it was apparent that the defendant believed it had a “serious defence” then it was reasonable for the level of success fee to rise in accordance with the other side’s view of the merits and the defendant’s apparent belief that the claim would fail.

He derived the following propositions in relation to the arguments in the case:

• A party who contends for a high success fee in a matter that has gone a long distance towards trial (the situation here) stands a better prospect of having that fee approved if a lower success fee would have been payable had the claim settled earlier (precisely what could have but did not happen here). A party who enters into a CFA with an unstaged success fee which is payable at that level irrespective of whether the case settles quickly or slowly, will find it more difficult to justify the fee. For that reason, the “high” success fee, having been staged so that it would have been less if the case had settled “quickly”, is justified;
• It is open to the Claimant to choose the date of staging. Since in Ku the Court of Appeal contemplated a low success fee, “perhaps until the service of the defence” and to have the benefit of a high success fee in the cases that did not settle early, Master Campbell considered there was nothing unreasonable in the Claimant choosing 28 days following service of the Defence as the date on which the 100% success fee would come into effect; this gave MGN an extra four weeks above and beyond the period mentioned by Brooke LJ in Ku before it would assume any potential liability for a 100% success fee.
• If a defendant denies liability and serves a Defence the Court can infer that the defendant must believe that it has a realistic chance of the defence succeeding at trial. Having not settled the matter in the protocol period and having thereafter served a Defence giving the particulars of justification in the manner that it did, it is reasonable to suppose that MGN believed it had a “serious defence” in the nature contemplated by Lord Woolf in Callery v Gray.
• A court should be cautious about a suggestion that a claimant firm has not undertaken bespoke risk assessments when fixing success fees but rather, has used a “one size fits all” staged success fee. Such arguments will be put to strict proof and require cogent evidence.

Upon entering into a CFA notice must be given to the other parties to the dispute as soon as possible and in any event within 7 days of entering into it or, where a claimant enters into a CFA before sending a letter before claim, in the letter before claim. The only information that must be provided to the court and the other parties is the date of the CFA and the claims to which it relates. The party with the benefit of the CFA does not need to reveal the terms of it or the applicable success fee.

Lord Justice Jackson’s review of civil litigation costs published in January 2010 included the proposal that success fees should cease to be recoverable. For further information on Lord Justice Jackson’s report see Karen Jacobs blog on 14 January Lord Justice Jackson’s report on costs in civil litigation. However, for the time being at least the current CFA regime remains.  

Comment

Beth Lovell, solicitor at Matthew Arnold & Baldwin, comments “the Peacock case is a further example of the Court’s willingness to penalise in costs a losing party who has passed up the opportunity to settle the claim at an early stage in the proceedings. Entering into a CFA early on and giving notice to the other side, as required by the rules, can be a real tactical weapon in settling claims early in the proceedings. A foolish defendant that carries on regardless runs the risk of paying significant sums in costs with hefty success fees on top”.

Legal costs in dealing with and fighting boundary disputes are notoriously out of line with the monetary value of the issues in dispute and the effect on neighbour relations and stress high. “Principles” take over and costs mount to £1000s before you know it.  The alternative  is for the parties to try to resolve matters by agreeing terms with eachother on the best terms possible for both parties. There might be no winner and no loser, but a solution which both parties can live with without incurring huge costs and without further souring relations.

Alternative dispute resolution can help at the outset once solicitors are involved. Parties coming together on site with a mediator and solicitors can often focus the parties’ minds on the reality of the situation. On site resolution seems the most sensible and cost effective method of dealing with such a dispute rather than lengthy correspondence, compliance with Court procedure, the associated costs and growing animosity.  A day long mediation will be money well spent  if not to resolve matters entirely then to at least narrow down the issues remaining in dispute.  If matters cannot be resolved at such a meeting, then the parties can decide whether or not they wish to litigate and proceed with litigation but should be fully aware of the potential costs liability they may incur. This is not to say neighbours who wish to fight a boundary dispute should not, nor does it trivialise the importance of issues relating to someone’s property. It can be a commercial approach to dealing with what is otherwise an expensive and emotionally exhausting experience.

The Court ruled that Natasha Rashid must pay Ballymore the £279,200 balance due on the flat she agreed to buy, plus interest and legal costs. Ms Rashid had put down a £69,800 deposit on the luxury flat, agreeing to pay the remainder of the purchase price once the flat was completed. The Court also said that if Ms Rashid fails to comply with the order by the end of April, Ballymore will be able to resell the property and seek a court order for damages against her.

This ruling highlights the growing number of claims being brought by housebuilders and developers against purchasers who renege on their contracts. A recent investigation by the property journal Estates Gazette found that between August 2008 and December 2009, nearly 300 claims were lodged against buy-to-let investors who had not completed on off-plan purchase contracts. These findings came to the fore when, in December 2009, the High Court backed housebuilder Prestige Homes South West in its attempt to obtain payments from an investor over two failed completions in its Zero 4 scheme in Plymouth, awarding it damages of £133,000.

There is no doubt that these two recent rulings are good news for developers and housebuilders, who have invested a lot of time and money in their developments and rightly expect purchasers to honour their contracts. However, off-plan buyers have become victims of the decline in the property market, with many of the properties they put deposits down on now worth much less than when they agreed to purchase them. Buyers have been unable to obtain mortgages once the value of their properties fell and buy-to-let investors have been unable to sell their properties on at a higher price than they paid.

It is an unfortunate situation for all concerned, and, although similar disputes are being settled out of court, more court cases should be expected.

Landlords of residential properties where the annual rent is more than £25,000 are not currently required to register a tenant’s deposit with a tenancy deposit scheme but they will  need to protect that deposit before 1 October 2010. Failure to do so will result in a Landlord falling foul of the requirement to protect a tenant’s deposit in accordance with the provisions of the Housing Act 2004, leaving them open to a claim by a tenant for failing to register the deposit.

For tenants this change means greater protection as they will be afforded the rights granted to them under the Housing Act 1988. Landlords face potential claims against them for failing to register a tenant’s deposit. The change will of course impact Landlords with expensive properties in London where rents are higher than the rest of the country as well as Landlords of larger properties which are occupied by multiple tenants such as student houses where the rent is more likely to exceed the current threshold.

The changes will increase the number of tenancies coming within the Assured Shorthold Tenancy regime which will standardise procedures for Landlords to gain possession and allow use of the accelerated possession route (only open to Landlords of Assured Shorthold Tenancy Agreements).  Landlords who do not and who are required to register a tenant’s deposit will be unable to get possession of a property on a “no fault” basis until the deposit is registered, causing unnecessary delay.

Landlords – review rental levels register your deposits without delay.

Managing Agents – notify your Landlord clients immediately of the impact of this change and the steps they need to take.

We are already seeing cases in the County Courts regarding non-registration of deposits and no doubt Court offices across the country will see further cases next year arising out of these changes.

By comparison, usually with a buy-to-let mortgage, the tenancy will be binding on the lender.  If the lender wants vacant possession, it has to comply with the provisions for termination under the tenancy agreement and usually the tenant will have two months’ notice.

 The Act is intended to make sure that unauthorised tenants are not given very limited notice that their home is about to be repossessed.  The Act provides that: 

• The unauthorised tenant will have a right of audience at the possession hearing.  In practice, if the tenant attended the possession hearing, a district judge would usually let them be heard, but this now ensures that they have a formal right to do so.   
• On application by the unauthorised tenant, the court has the ability to postpone the date for delivery of possession for a period not exceeding two months.
• Once a possession order is made, the court has the power to stay or suspend the enforcement of the possession, for a period not exceeding two months, if the court did not make an order at the initial possession hearing.  The unauthorised tenant can only do so if they have asked the lender to give an undertaking in writing not to enforce the order for two months and the lender has not given this undertaking. 
• Once the lender obtains a possession order, the order may only be enforced if the lender has given notice of any prescribed step and only after the end of a prescribed period.  At present this prescribed step and prescribed period has not yet been defined, but it is likely to consist of the service of a notice and it is believed that the prescribed period will be 14 days, which will run concurrently with the possession order.

 When deciding whether to exercise its powers, the court must have regard to the circumstances of the unauthorised tenant and whether the tenant has breached any of the terms of the unauthorised tenancy, the nature of the breach and whether the tenant might reasonably be expected to have avoided breaching that term or remedied the breach.

 In addition, the court may make any postponement or stay conditional on the payment to the lender in respect of the occupation of the property during that period of the postponement or stay.  The Act states that any such payment will not be regarded as creating or providing evidence of any tenancy or right to occupy the property.

 As yet, there is no date for when this Act will come into force.  Overall the impact of this Act will give unauthorised tenants more time if faced with eviction, but equally it is likely to lead to further delay for lenders.  In order to avoid any delay, it may be sensible for a lender to check whether anyone is living at the property prior to seeking enforcement.

In Gavin Goodale v The Ministry of Justice, Queen’s Bench Senior Master Whitaker dealt with exactly this problem.

The Senior Master ordered the defendants to make a reasonable search for documents, including documents contained in electronically stored information. In so doing, he required them to complete the draft e-disclosure questionnaire which is presently being considered (together with a draft practice direction on e-disclosure by the Civil Procedure Rules Committee (CPRC). The completed questionnaire would provide the claimants and the court with the necessary information in a structured manner, regarding any issues that might arise in relation to searches for electronic documents. This is the first known case in which the draft e-disclosure questionnaire has been used as a tool in case management. The Master attached the questionnaire in a schedule to the judgment, even though it has not been finalised and approved by the CPRC.

The general rule for standard disclosure under CPR31.6 requires a party to disclose the documents on which he relies, the documents which adversely affect his own case or adversely affect another’s party’[s case or support another party’s case and documents which he is required to disclose by a relevant practice direction. CPR31.7 requires a party to make a reasonable search search for these documents. What constitutes a reasonable search is fact-specific. There are additional factors to bear in mind when scoping and conducting a reasonable search for electronic documents, set out in Practice Direction PD 31.2A.

Electronic documents include email and other electronic communications, word processed documents and databases. In addition to documents that are readily accessible from computer systems and other electronic devises and media, the definition covers those documents that are stored on servers and back-up systems and electronic documents that have been “deleted”. It also extends to additional information stored and associated with electronic documents known as metadata.

Parties to litigation should from the outset discuss any issues that may arise regarding searches for and the preservation of electronic documents. This can involve the parties providing information about the categories of electronic documents within their control, the computer systems, electronic devises and media on which any relevant documents may be held, the storage systems maintained by the parties and their document retention policies. Where there is disagreement, the matter should be referred to a judge for directions at the earliest practical date, if possible at the first Case Management Conference.

The Senior Master’s judgment also provides a number of useful reminders as to the general approach which should be taken when dealing with e-disclosure. In particular, he emphasised the importance of taking a staged approach to avoid running up unnecessary and disproportionate costs and explains how this can be done.. The judgment is useful for a number of reminders that are highly relevant to the general approach to disclosure of electronically stored documents. Since every case is different, you should take specific advice on each search as it arises.

The short answer, given by Arnold J in his judgment in Williams v Hull [2009] EWHC 2844 (Ch) is  “without prejudice to my position in any subsequent proceedings”.

The judge reached this conclusion in an application centered around the interpretation of a single letter sent by Mr Hull, a financial consultant, to his former cohabitant, Ms Williams, a solicitor, concerning the value and allocation of their jointly owned home and its contents, following the breakdown of their relationship.

Mr Hull had said that he thought he owned half of the property. Ms Williams contended he owned 7%, based on a draft Deed of  Co-ownership prepared, but never signed, when the property was purchased.

In his letter dated 19 October 2009 and headed “Without Prejudice” Mr Hull advanced arguments based on an assumption that he owned 12% of the property, not half. Not unnaturally, Ms Williams sought to tie Mr Hull to that concession. If the letter was validly headed “Without Prejudice” she could not, but if it wasn’t then she could.

Arnold J reviewed the established authorities and concluded that the “without prejudice” rule is founded on the public policy of encouraging litigants to settle their differences. It is intended to enable parties in dispute to lay their cards on the table  and negotiate without fear that by so doing they will have compromised their legal position, if subsequently their issues are taken to a litigated conclusion.  Whether or not a particular document bears that heading or whether proceedings have been issued is not an essential requirement; it’s all a question of context and interpretation.

On his interpretaion of three letters passing betwen these parties, the second and third of which were headed “Without prejudice”, the label was properly applied, and was not a “cloak for perjury” or a mere assetion of rights as Ms Williams had contended; consequently, the content of the “Without prejudice” correspondence should not be referred to at trial. In reaching this conclusion he reversed the decision of HHJ Marshall QC, who first considered the point.

Whilst the decision has provided clarity for these parties, issues of context and interpretation continue to mean that for the label to be effective, thought has to be given to its use.  The case also underlines that in such circumstances it remains better to be safe than sorry – if you are buying property jointly, don’t just have a deed drafted, have it signed and dated too!