Law Brief Update, August 2018

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Law Brief Update, August 2018
Welcome to the latest issue of Law Brief Update, a free monthly newsletter, written by our team of specialist barristers. It provides a brief introduction to recent case law in all the major areas of law.
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Aidan Ellis, Anthony Johnson, Tim Kevan (editors)
Costs and Civil Procedure
Financial Services Law
Media & Entertainment
Personal Injury
Professional Negligence
Expert Witness Corner
Paul Bury, Keating Chambers, 020 7544 2600
North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744
This was an appeal from a judgment of Fraser J on a Part 8 application concerning the correct interpretation of a contractual provision dealing with concurrent delay. The dispute related to the construction of a large house in Lincolnshire. The contract was an amended JCT Design and Build contract. The clause in dispute was an amended version of cl. dealing with extensions of time. The point of construction arose in relation to the proviso that, in assessing an extension of time, "any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account". At first instance, Fraser J held that the clause was designed to deal with the situation where there was concurrent delay, when one cause would otherwise entitle the contractor to an extension of time but the other would not. In such a case, the judge held that the provision meant that the contractor was not entitled to an extension of time. The contractor appealed on the basis that the prevention principle applied to oust the clause and/or that in circumstances where a Relevant Event had caused delay (even if concurrently) there was an implied term that the employer could not levy liquidated damages. The Court of Appeal dismissed the appeal. Firstly, the prevention principle was a matter of construction of the policy, and was not a matter of legal policy which would operate to rescue the appellant from the clause to which it had agreed; it was possible therefore to contract out of the prevention principle. Secondly, the Court rejected the argument that there was an implied term that where the clause applied the respondent could not levy liquidated damages; the liquidated damages were taken to be a pre-estimate of loss for delay, whether that had been caused by one or two causes and any such implied term would be contrary to the express terms of clause
BDW Trading Ltd v Integral Geotechnique (Wales) Ltd [2018] EWHC 1915 (TCC)
This was a professional negligence case brought against geotechnical engineers who allegedly failed to highlight contamination at a site in South Wales. BDW was interested in buying the site for a property development. IGL was instructed by the vendor of the site, Bridgend, to produce a report on potential asbestos contamination. When Bridgend engaged IGL, they made it clear that the report should be capable of assignment at least twice to potential purchasers. In IGL's terms and conditions, they included a clause which purported to prevent third parties from relying on it and a clause limiting liability to £300,000. However, the covering letter to the report explicitly stated that IGL accepted Bridgend's requirement that the report be capable of being passed on to potential purchasers under an assignment. No formal assignment of the report ever took place. It transpired after completion of the transfer of land had taken place and work had commenced that the site was in fact contaminated with asbestos. BDW brought a claim in tort against IGL. HHJ Stephen Davies dismissed the claim. He held, firstly, that IGL did not owe BDW a duty of care. He held that Bridgend's letter of engagement made reasonably clear that the report was to be relied upon by prospective purchasers but that a mechanism, such as a reliance letter or assignment, would be put in place to facilitate this. In the absence of such a step being taken IGL had not assumed responsibility to third parties for the accuracy of its report because the precondition for doing so, some legal reliance, had not taken place. This finding decided the case but the judge went on to find that in any event IGL had not been negligent.
Costs & Civil Procedure
Scarlett Milligan, Temple Garden Chambers, 020 7583 1315
Daniel Laking, Temple Garden Chambers, 020 7583 1315
Tim Kevan,
Jeffrey Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654
In a case concerning a hearing loss claim brought against six defendants, the Court of Appeal confirmed that a claimant's QOCS protection would apply across all defendants. The fourth, fifth and sixth defendants settled the claim in a Tomlin order, and the claim was discontinued against the first, second and third defendants. Those three defendants therefore sought their costs as against the claimant. The claimant sought to rely on its QOCS protection, arguing that it had not obtained an award against the first to third defendants, and therefore that the costs order could not be enforced. The Court of Appeal affirmed the cost judge's finding that the costs award could be enforced where the source of the claimant's award was another defendant, commenting that otherwise claimants could issue against any number of defendants without the risk of costs liability. However, on the facts of this case the claimant did retain protection against the costs order, as he had not obtained a court order for damages, as the damages provided to him were a settlement by way of a Tomlin order, and thus not caught by the wording of the QOCS provisions in CPR 44.14.
Commissioner of Police of the Metropolis v Andrea Brown [2018] EWHC 2046 (Admin)
The High Court interpreted the application of the QOCS exception in CPR 44.16(2)(b) to so-called "mixed claims", i.e. those containing a personal injury claim as well as a non-personal injury claim. CPR 44.16(2)(b) provides that:
"Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where...
(b) a claim is made for the benefit of the claimant other than a claim to which this Section applies."
In this case, the claimant was successful in a claim against two police forces for breach of the Data Protection Act 1998, breach of the Human Rights Act 1998, misfeasance in public office and misuse of private information, on the basis that the police forces had used crime prevention technology to identify her whereabouts for purposes other than crime prevention. The claimant also claimed for personal injury, on the basis that the actions alleged had caused her to develop depression. As a result of the personal injury element of her claim, the judge at first instance found that she had QOCS protection against the defendants. The defendants argued that this case fell within the aforementioned exception set out in CPR 44.16(2)(b).
Mrs Justice Whipple held that with a mixed claim such as the present, it was in the Court's discretion at the end of a case to consider whether costs orders were enforceable and, if so, to what extent. This approach will allow the court to consider the individual facts of the case and ensure a just application of the rule. In reaching this conclusion, Whipple J also held that the QOCS regime should not provide automatic protection for personal injury claimants in order to address broader issues of access to justice, which would be construing the regime beyond its intended purpose.
Mercel Hislop v Laura Perde; Kundan Kaur v Committee (for the time being) of Ramgarhia Board Leicester [2018] EWCA Civ 1726
In two personal injury cases, claimants sought to recover costs above and beyond the fixed costs prescribed by the CPR in relation to the low value road traffic accident protocol and the employer's liability/public liability protocol (i.e. the costs within CPR 45, Section IIIA). In both cases, the defendants had accepted Part 36 offers made by the claimants, though they did so late. The claimants argued that they should therefore recover the additional part 36 costs. This is permitted in situations where the claimant goes on to recover more than their Part 36 offer at trial, following the well-known case of Broadhurst v Tan [2016] EWCA Civ 94 and the subsequent revision of the CPR to insert the Part 36 consequences in CPR 36.29. However, the offers in these cases had been accepted before trial, and therefore did not attract "costs consequences following judgment". Following a settlement before trial, the rules only permit the recovery of fixed costs. The Court of Appeal held that the late acceptance of the Part 36 offers did not change this. The Court noted that a claimant in such circumstances could make an application for additional costs under CPR 45.29J: "If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H."
Gempride Ltd v (1) Jagrit Bamrah (2) Lawlords of London Ltd [2018] EWCA Civ 1367
The Court of Appeal held that solicitors were responsible for the conduct of costs draftsmen who were engaged as subcontractors. Accordingly, they would be responsible for any unreasonable or improper conduct. In this case, the cost draftsman had drafted a bill of costs claiming a £280 hourly rate, which the claimant had approved as accurate. The claimant in fact had in fact entered into a CFA setting a basic hourly rate of £232. Furthermore, the claimant had indicated that she did not hold a before the event insurance policy: she did have one, but had chosen not to use it as it did not permit her to instruct herself as a sole practitioner. The Court held that there had been no dishonesty or intention to deceive on the claimant's part, but that the defendant had been misled by the bill of costs, and that this conduct fell within of unreasonable or improper conduct for the purpose of CPR 44.11 (Court's powers in relation to costs). The claimant was bound by the acts of the cost draftsman as her agent, and as a solicitor subcontracting work. The subcontractor was not a legal representative and did not owe an independent duty to the Court. As a result, the Court held that the claimant would only be able to recover half of her profit costs, and that the remaining half would be disallowed. The case is a stark reminder of the need to scrutinise bills of costs before signing a statement of truth, as legal representatives will ultimately remain liable for their content.
Hertel & Anor v Saunders & Anor [2018] EWCA Civ 1831
The Claimants brought a claim seeking a declaration that there was partnership or joint venture between C1 and D1. The Defendants denied such a partnership existed. The Claimants served a draft amended Claim Form proposing a new claim that there had been agreement between C1 and D1 in respect of some specific matters. The Defendants replied indicating they would not oppose an application to amend. The Defendant subsequently sent an offer of settlement entitled 'Part 36 offer' denying the originally-pleaded claim but consenting to the declaration sought in the proposed amended Claim Form. The Claimants accepted the offer. The Master found the costs outcome was governed by CPR r36.10(2). The Defendants were entitled to their costs of the abandoned claim down to the date of acceptance. On appeal, the Judge found that the Defendants offer had not been a Part 36 offer as the offer related to the proposed amendment to which the settlement related was not "a claim or part of the claim or an issue which arose in the claim" under r36.5(1)(d), so r36.10(2) could not apply. The Defendants were the successful part and were entitled to their costs. The Claimants appealed, on the basis that r36.7(1) provided a Part 36 offer could be made before the commencement of proceedings when the word 'claim' could not be defined reference to the pleadings. As such, it should not be strictly defined by referring to the pleadings after issue, either.
The Court of Appeal decided as follows. The position before proceedings commenced was different to after. Post-issue there were a range of procedural rules which applied, including setting out the case in pleadings. It would be wrong to construe the rules in such a way as to ignore the certainty and clarity the rules provided. In civil proceedings, claims and their constituent parts could only be defined by reference to the pleadings. A new claim which had been intimated but was not part of the pleadings was not caught by r36.5(1)(d), the fact the new claim was intimated by way of proposed amendment made no difference.
Broughal v Walsh Brothers Builders & Anor [2018] EWCA Civ 1610
The Appellant appealed a decision upholding an order refusing him relief from sanctions and thus assessing his PI claim at nil. The Judge considered the application on the papers and refused permission on the grounds that there was no prospect of success nor any other compelling reason why the appeal should be heard. The Appellant was later granted permission to appeal when renewing the application orally before a different Judge. The substantive appeal subsequently came before the same Judge who had refused permission on the papers. The appellant applied for her to recuse herself on the ground of apparent bias. That application was refused; the Judge finding that no fair-minded and informed observer would take the view that her previous involvement would create a real possibility of bias and that there were no other judges available to hear the appeal. After hearing the appeal, the Judge found there were no grounds for interfering with the first instance decision and it was dismissed. The Claimant appealed the recusal decision.
The Court of Appeal reaffirmed the right of litigants to have their cases heard before an impartial and unbiased tribunal. Consideration of administrative convenience was irrelevant to the administration of justice. In considering the 'fair-minded observer' test, the Court had to adopt a critical view of the degree to which a judge's training and professional objectivity would operate. The mere fact a judge earlier in the same case had commented adversely on a party or witness would not without more found a sustainable objection on grounds of bias. The involvement of the Judge at the permission stage involving a consideration of the papers did not disqualify the Judge from hearing the appeal or an oral renewal of the application unless the Judge had expressed her views in such a way as to indicate to any fair-minded observer that she had reached a concluded view and was unlikely to be open to further argument. Such cases would be rare. There was nothing inherent in the process which prevented the appellant from having a fair hearing. With the benefit of oral argument, the Judge would be open to changing her initial view on the prospects of appeal. That was an everyday feature of litigation.
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Financial Services Law
James Purchas, 4 Pump Court, 020 7842 5555
Dr Sandradee Joseph-Urquhart, Three Stone, 020 7242 4937
Sheikh Mohamed Bin Issa Al Jaber & Anr. v Sheikh Walid Bin Ibrahim al Ibrahim & Anr. 18/7/18 (CA)
In the context of an appeal against permission to serve the second defendant out of the jurisdiction the Court of Appeal considered whether a claim for interest on a debt is a separate claim to that for the principal and whether a term that interest would be paid should be implied as a matter of law or fact.
BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA 2/7/18 (Ch)
The Defendant's application for a declaration that the English court had no jurisdiction to address the bank's claim was refused. The parties had entered into a financing agreement which provided for the exclusive competence of the court of Turin and thereafter entered into a 1992 ISDA Master Agreement (Multi Currency - Cross Border) for an interest rate swap which was governed by English law. The bank brought an action in London seeking in its brief details of claim declarations in connection with a financial transaction pursuant to which the company entered into hedging agreements with the bank. The Defendant alleged that this extended to the financing agreement and therefore was subject to the exclusive competence of the Turin court. The court held that read in context the bank had much the better of the argument on jurisdiction because the bank's claim was limited to the ISDA agreement.
Playboy Club London Ltd & Ors v Banca Nazionale del Lavoro SPA 26/7/18 (SC)
Where a bank negligently supplied to an agent a favourable credit reference, the bank was not liable to the agent's undisclosed principal when the customer subsequently defaulted. The relationship between the bank and the undisclosed principal was not sufficiently proximate to give rise to a duty of care.
Elite Property Holdings Ltd & Anr v Barclays Bank Plc 17/7/18 (CA)
Where a bank had undertaken to the Financial Conduct Authority to review its sale of interest rate hedging products it did not come under any contractual duty to its customers in relation to its conduct of the review when it made an offer of redress in relation to the misselling of structured interest rate collars.
Chickombe & Ors. v FCA and Clydesdale 1/8/18 (UT)
The Upper Tribunal considered the factors to be taken into account when an application is made for a validation order in respect of consumer-credit regulated contracts under FSMA s. 28A which were unenforceable because they had been entered into through a an unauthorised broker. The Tribunal found that consumer detriment was a relevant factor and that consumer detriment went beyond just the detriment caused by the fact that the Broker was not authorised or licensed at all material times. The question whether it was just and equitable to enforce and otherwise unenforceable agreement requires the Authority to consider all relevant factors and conduct a multifactorial assessment by reference to all the circumstances and balancing the various factors which it identifies as being relevant to the matter. Without deciding the point the Tribunal noted that there was considerable doubt that it could set aside a decision remitted to the Authority for reconsideration under FSMA s. 133 (6) contrasting the express provision to this effect in the Finance Act 1994 s. 16.
Burns v FCA 31/7/18 (UT)
The Upper Tribunal considered a reference relating to whether a director failed to take reasonable steps to manage a firm's business so as to ensure that it complied with relevant requirements and standards of the regulatory system. The Tribunal considered whether action to impose a financial penalty was time-barred and if not whether the financial penalty was appropriate. The Tribunal also considered whether to make a prohibition order in relation to senior management and significant influence functions. Mr Burns had held the positions of CF1 (Director) at Tailor-Made Independent Limited in the period 22.1.10-20.1.13 during which it carried on business as an IFA specialising in the giving of advice to retail customers on the merits of their transferring their pension monies into SIPPs whereby it did not give detailed consideration to the underlying merits of the investments to be held under those SIPPs. Part of the Authority's case based on the advice-model had previously been found to be time barred. The Authority's case based on conflict of interest was not time barred. However it was of less significance than the advice-model and the penalty should be reduced to £60,000. The Authority's prohibition order was justified.
James Purchas, 4 Pump Court, 020 7842 5555
Dr Sandradee Joseph-Urquhart, Thirteen Stone, 020 7242 4937
Advantage Insurance Co Ltd v Stoodley & Anr. 9/8/18 (QB)
The court considered whether the cover for third party liability for other cars was a liability required to be covered by a policy under s. 145 of the Road Traffic Act 1988 such that the insurer could decline to indemnify an insured where he was driving another vehicle and had since the accident declined to comply with provisions in the policy requiring him to report the accident, co-operate with the investigation and such like. Following the court's reference to the Marleasing principle, the insurers sought to discontinue the claim. The notice of discontinuance was set aside by the court and judgment delivered holding that such third party vehicle cover is insurance within s. 145 of the Road Traffic Act 1988 such that an insured cannot decline an indemnity to its insured in respect of third party liability, albeit it may have a right to recovery.
UK motor insurers vote to mutualise risks for terrorism claims 23/7/18
From 1 January 2019, all compensation for victims of vehicle-related terrorist events will be handled directly by the MIB. The MIB would usually handle the claims for victims in uninsured and 'hit and run' accidents. All motor insurers writing business in the UK are members of MIB and insurers have voted to mutualise the risks associated with terrorism claims.
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Media & Entertainment
John Stables, 5RB, 020 7242 2902
Harlow Higinbotham (formerly BWK) v Teekhungam and anor [2018] EWHC 1880 (QB), Nicklin J, 24 July 2018
This was an appeal from a Master's order striking out C's claim in breach of privacy, confidence and data protection obligations over publication of a Facebook page that C claimed contained his private information.
C, who was married, and D1, whom C had met in Thailand, had had a relationship within which D1 had borne children conceived by IVF with C's sperm. Subsequently the relationship had soured and litigation had taken place - in public - both in Thailand and in the US brought variously by D1 in respect of financial support and by C's wife whose claim included damages for reputational harm to her.
C had previously obtained a without notice order in the English action anonymising him but not the Ds.
C alleged that the Ds had wrongfully disclosed details online relating to the affair and the children. He argued that this information was private despite the information having been made public many times during the course of the long-running foreign litigation.
Nicklin J upheld the decision of Master Yoxall below striking out the claim, finding that C's claim had a "total absence of reality", was harassing in nature and was not being pursued by C for any legitimate purpose. Noting the "extraordinary" nature of the case, the judge upheld the decision below to strike out the claim as an abuse of process, both on Jameel grounds and for collateral purpose abuse. Nicklin J also overturned the Master's decision below that there was an arguable reasonable expectation of privacy in respect of the information.
After losing the appeal the anonymity order formerly in place in respect of Mr Higinbotham, who was previously known as "BWK", was discharged.
Personal Injury
Scarlett Milligan, Temple Garden Chambers, 020 7583 1315
Daniel Laking, Temple Garden Chambers, 020 7583 1315
Tim Kevan,
James-Bowen & Ors v Commissioner of Police of the Metropolis [2018] UKSC 40
B, a suspect, brought a claim that he had been injured during arrest by Met Officers against the Commissioner as vicariously liable for the actions of the officers. The Commissioner settled the claim during trial with an admission of liability and an apology. The officers were later acquitted of criminal charges and brought proceedings against the Commissioner for breach of contract, negligence and misfeasance in public office, seeking damages for reputational, economic and psychiatric damage. The Commissioner applied for the claims to be struck out, which was successful in the High Court. The Court of Appeal allowed the officers' appeal on the issue of whether the Commissioner owed a duty of care to them to safeguard their economic and reputational interests. The Commissioner appealed against that finding.
The Supreme Court held as follows. Officers were analogous to employees for the purposes of employment law and particularly the implied duty of trust and confidence. However, the Court had not been referred to any authority for the proposition that an employer owed a duty of care to conduct litigation in a manner that protected them from economic and reputation harm. Whether an employer (and by extension the Commissioner) owed such a duty would have been judged against the Caparo test.
First, the fact a duty of care might give rise to competing interests would often be an important factor weighing against its imposition. The obvious difference between an employer and employee's interests when sued vicariously suggested it was not fair, just and reasonable to impose such a duty of care. It was not realistic to suggest that such a duty could subsist until the conflict between employer and employee arose. In respect of the Commissioner, she had to be able to undertake her public duty unfettered and to be free to act in accordance with it. That duty was inconsistent with her owing a duty of care to protect the reputational interests of her officers when defending litigation based on their conduct.
Second, public policy considerations weighed against imposing a duty. In particular, considerations regarding legal policy and practical conduct of proceedings. Parties should be able to avail themselves of litigation to resolve disputes without fear of incurring liability to third parties. It would also be inconsistent with the policy encouraging settlement of civil claims.
Laws v Williams & Anor [2018] EWHC 1871 (QB)
The Claimant brought a PI claim arising out of a collision between an Audi driven by the Defendant and a Yamaha motorcycle driven by the Claimant on a slip road joining a dual carriageway. The Claimant was behind the Defendant's Audi on the slip road. The Defendant came to halt on the slip road before entering the main road. The Claimant judged that it was safe for him to enter the main road and assumed that the Defendant would do likewise. He accelerated and crashed into the rear of the Audi, landing in the main road and being carried by a lorry that was proceeding along the main carriageway. He sustained significant injuries. The issues to be decided were (1) whether the Defendant was negligent in slowing or stopping her car on the slip road and (2) if so, whether and to what extent the Claimant contributed to the accident. The Claimant submitted that the Defendant caused a hazard in the slip road by stopping. It was negligent not to put on her hazard lights. If the Defendant had accelerated, she would have been able to enter the carriageway in front of the lorry.
The Judge found that the Defendant had little time to assess the traffic as she was on the slip road. She had to decide whether to accelerate into the gap in front of the lorry, or slow down and let it pass. If she had accelerated into the gap she would have caused the lorry to slow down, thereby being responsible for an unsafe maneuver. She was right to slow down and stop on the slip road. The fact the Claimant did not see her brake lights was due to the fact he was not looking ahead but over his shoulder. The actions of the Defendant were those of the reasonably competent driver. A motorcyclist may have made a different decision but that did not render the Defendant negligent. In the circumstances, it was not necessary to consider contributory negligence. However, the Claimant was negligent in failing to keep a safe distance from the vehicle in front and beginning to accelerate before looking ahead of himself. The Claimant would have been liable for 75% contribution in respect of his own actions.
Pook v Rossall School [2018] EWHC 522 (QB)
The Appellant was a pupil at the Defendant school. The Appellant was attending a PE lesson, being hockey on Astroturf pitches some way from the changing rooms. Having got changed, the pupils made their way to the pitches. On the Appellant's case, they were encouraged to run to the pitches. The Appellant decided to race another pupil and cut the corner of the route and running on a grassy and muddy area rather than staying on the tarmac. As she did so she slipped on the grass verge and fell, sustaining a serious fracture. The Judge at first instance found that the Appellant was running and that the Claimant had fallen forwards rather than slipping backwards. The Judge concluded: "in all the circumstances, the Claimant has not satisfied me on the balance of probabilities that she suffered injury as a result of falling backwards having slipped on the muddy verge whilst running and her claim accordingly fails." She further found that the Defendant was not negligent in failing to supervise the pupils on the run as it was on the school estate where vehicle access was limited, and it was no different than, for example, participation in a cross-country race. The Claimant appealed the Judge's findings on liability.
The High Court dismissed the Claimant's appeal. It was correct that schools owed an enhanced duty to those in their case who are vulnerable because they are young. However, that did not mean it was incumbent for the Defendant to reduce the risk to that which was the lowest reasonably practicable. In particular there were extremes where pupils were allowed to run (for example during sports) and those where pupils were normally prohibited (for example running in corridors). The instant case fell somewhere between those two extremes. The Court should be slow in substituting its own judgment for that of the teacher who had knowledge of the school and its environment. The teacher did not recognize any fault on her part and the Judge at first instance had come to the view that she had not been negligent. It is not inherently dangerous for children to run as long as they are careful, and the environment did not pose an enhanced risk. The High Court approved that finding. In respect of causation, the Judge at first instance rejected the Claimant's contention that she had slipped backwards and sustained injury. She had tripped and fallen forward. Thus the Claimant had failed to prove causation. That was a conclusion the trial judge was permitted to come to on the facts. The appeal was dismissed.
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Professional Negligence
James Purchas, 4 Pump Court, 020 7842 5555
Reynard v Fax 8/8/18 (Ch)
Permission was sought to bring a claim under s. 304 of the Insolvency Act 1986 against a former trustee in bankruptcy. The claim in contract was in substance a personal claim and outside the scope of s. 304 and it was in any event inherently unlikely that there was a contract. The claim in negligence also failed to demonstrate a meritorious cause of action. Accordingly the application was refused.
Shaw v Leigh Day 31/7/18 (QB)
A claim for professional negligence in the handling of an inquest did not succeed. There was no legitimate basis for criticism of the firm in the performance of their retainer.
Victoria Seifert, Lamb Chambers, 020 7797 8300
Elizabeth Dwomoh, Lamb Chambers, 020 7797 8300
David Sawtell, Lamb Chambers, 020 7797 8300
Whitehall Court London Limited v The Crown Estate Commissioners [2018] EWCA Civ 1704, Underhill LJ, Floyd LJ and Sales LJ
Chapter I of the Leasehold Reform, Housing and Urban Development Act 1993 ("the Act") deals with rights of collective enfranchisement. Chapter II of the Act concerns the right to extend a lease. Both chapters give rise to a "no-Act" assumption; namely, whereby they "confer no right to acquire any interest in any premises containing the tenant's flat or to acquire any new lease."
The novel issue on appeal concerned the scope of the valuation assumption contained in para. 3(2)(b) of sch.13 of the Act. The appellant, Whitehall Court London Ltd contended that it applied solely to the flat that was the subject matter of the lease claim. The respondent, the Crown Estate Commissioners, argued that it extended to the block containing the flat and not the flat alone.
Online information and resources on residential landlord and tenant law.  For more information visit
In dismissing the appeal, the Court of Appeal held that the assumptions conferred by Chapter 1 of the Act extended to the block containing the tenant's flat and not just the tenant's flat alone.
Paragraph 3(2)(b) of the Act required the open market valuation to take place under certain assumptions. Although the focus of the valuation was the diminution in value of the landlord's interest in the tenant's flat, it did not follow that the Chapter I and Chapter II rights afforded to other tenants in the same block did not also have to be switched off. Paragraph 3(2)(b) of the Act required an assumption that Chapter I conferred no rights to acquire any interest in any premises containing the tenant's flat. Although the focus of the valuation was still the landlord's interest in the tenant's flat, the assumption must switch off, for the purposes of valuation, not only that tenant's collective enfranchisement rights, but the rights of all other qualifying tenants in those premises. Such an assumption was necessary otherwise the Chapter I rights held by those other tenants would depress the value of the landlord's interest in the tenant's flat, even if the tenant himself did not have any Chapter I rights. Thus the scope of the assumption in relation to Chapter I rights plainly extended to qualifying tenants of other flats in the block.
Further, the expansive use of language "any new lease" was intended to capture the Chapter II rights of tenants of other flats in the block.
Expert Witness Corner
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