Major Real Estate cases in 2021: a round-up.
This article looks at three major disputes in the first quarter of 2021 and their likely impact on the real estate sector. This article should be read alongside previous articles looking at other recent real estate cases.
Aviva Investors Ground Rent GP Ltd & Another v Williams & Others  EWCA Civ 27
In this residential dispute, the Court of Appeal considered whether a long lease requiring the tenant to pay a fixed percentage of the service charge “or such part as the Landlord may otherwise reasonable determine” was void. The Upper Tribunal had previously struck out the provision for being void under the Landlord & Tenant Act 1985, on the basis that the landlord had sought to deprive the Tribunal of “all jurisdiction over the apportionment of service charges”.
The Court of Appeal held that the provision should be interpreted as requiring the tenant to pay a fixed percentage “or such part as… may otherwise reasonably determine”, with the Tribunal filling in the vacuum. On this interpretation, it was open to either the landlord or tenant (in the absence of an agreement) to refer the question of a different percentage to the Tribunal.
The Court’s decision ensures that landlords subject to similar lease provisions will not be left with fixed service charge percentages that can only be varied in extremely limited scenarios. However, tenants will be able to apply to the Tribunal for a determination if unhappy with the landlord’s proposed variation.
The Financial Conduct Authority v Arch Insurance (UK) Ltd & Others  UKSC 1
This commercial case concerned the scope of several different business interruption insurance policies as applied to the COVID-19 pandemic.
The Supreme Court held that, where a “disease clause” insures against cases of COVID-19 within a specified radius of the policyholder’s commercial premises, the clause will cover business interruption losses resulting from COVID-19 – provided that there had been at least one occurrence of the disease within the specified radius.
The Supreme Court’s interpretation of disease clauses is likely to increase the number of policyholders – including business tenants – covered against business disruption losses resulting from COVID-19. Insurance pay-outs may allow more business tenants to pay-off their rent arrears before the Government’s moratorium on forfeiture ends
Bernel Ltd v Canal and River Trust  EWHC 16 (Ch)
A developer claimed “riparian rights” (ie. rights over natural watercourses) over a pipe that allowed it to discharge water and sewage into a nearby canal. In the alternative, the developer argued that it had acquired prescriptive rights through continued use of the pipe. The developer had planning permission to construct 9 dwellings, so establishing riparian and/or drainage rights over the pipe would have been hugely valuable.
The High Court held that the landowner did not have the right to use the pipe to discharge water and sewage, as the available evidence (including historic Ordinance Survey maps) indicated that the pipe did not follow a natural watercourse nor that the owner had acquired the prescriptive rights claims.
Although the landowner lost, the High Court’s judgment will have wider implications for developers throughout the real estate sector. In particular, the judgment suggests that:
- Riparian rights may persist even where the development brings about a “radical change” in the land’s former character – provided that the burden to land situated further downstream is not substantially increased.
- In terms of expert evidence in claims concerning prescriptive rights, the Court prefers a “thorough investigation on site” rather than a “modelling exercise”.
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