Developer Issues


Assets of Community Value  

The ACV regime introduced by the Localism Act 2011 is going to have an increasing impact. It is not just the effect of the moratorium on the owner’s ability to dispose of a listed asset but also the increasing significance in the area of planning. The increasing number of appeals to the First-tier Tribunal are evidence of this. The subject now warrants a separate page on this website which includes a link to a Guide to the Asset of Community Value regime. This guide includes not just the statutory regime but the reported appeals on the Community Right to Bid.

Late completion tempts premature termination – A growing buy to let market combined with a buoyant property market led to a large number of purchases of flats and commercial units “off plan”. This was hit hard by the on set of the recession. Many developer vendors lost the funding for the construction work and the purchasers lost their mortgage offers for 90%-100% of the purchase price. Long delays occurred and only now are the blocks being completed. Where does that leave the parties to the contract. One reaction to the news that the developer has at last finished the work is for the purchaser to seek to terminate the contract alleging a repudiatory breach by the vendor. Often there will be no longer a mortgage offer available or if there is it will be for a smaller amount than needed. Two Court of Appeal decisions illustrate how dangerous such a reaction is for the purchaser. In both Telford Homes (Creekside) Limited v Ampurius Nu Homes Holdings Limited [2013] EWCA 577 and Urban 1 (Blonk Street) Limited v Ayres [2013] EWCA Civ 816 such a course was adopted by the purchaser and failed. By taking such a step the purchaser committed a breach thereby losing the deposit and becoming exposed to a possible damages claim. These decisions are considered in Late completion tempts premature termination [PDF].

Warning

(a) terms covering the possibility of delay are crucially important as without them the purchaser faces real uncertainty;

(b) purchasers without the protection of conditions must exercise caution to avoid repudiating the agreement whilst seeking to terminate.

Harassment – It is important that development is carried out without the developer infringing the Protection from Harassment Act 1997. Jones v Ruth is a serious warning in this respect. If a court considers that a development has been carried out in a wrongful manner then the damages can mount. The details are contained in the analysis of this decision contained in Warning to developers to act as a good neighbour.

Protests – it is not just the conduct of the developer which can pose problems with regard to the development. Delays and obstruction may be caused by protesting local residents as with the development works needed for the Olympics. There are options open to the developer as illustrated by Olympic Development v Persons unknown which is more fully considered in Protecting developers from protests.

Break notices – to obtain the ability to develop a site reliance often has to be placed on the exercise of a break clause. This is a fraught area facing many hurdles as shown by the decision in PCE Investors v Cancer Research. The dangers are expanded on in the article Beware Break Clauses.

Execution of documents – it is crucial that documents execute on behalf of a corporate developer comply with the requirements of section 44 Companies Act 2006. It is trap which unfortunately is fallen into even when legally represented. For instance, a notice required to be given to acquire a site under a conditional sale or opition must comply and if the notice served fails to then the site will not be acquired. For a fuller explanation see the article Beware companies executing documents.

Parking – Risk assessment is really important before incurring heavy expenditure on a proposed development. Developers run a serious risk if any issue highlighted by such an assessment is ignored and the development proceeds without addressing the issue. The Courts place a premium on developer’s behaving in a neighbourly manner. One such right is parking rights. An infringement will result in a mandatory injunction or alternatively to an injunction will be an award equal to a slice of the expected development profits which in Kettel v Bloomfeld amounted to 50%. This is investigated in more detail in this article Don’t mess with parking rights.

Easements affecting Adjoining Properties and their impact on Party Wall awards

Section 9 of the 1996 Act prohibits interference with any easement or right relating to a party wall. This paper explores

  • the relationship between adjoining properties;
  • the type of easements that may arise;
  • how section 9 operates – considering Crofts v Haldane; Selby v Whitebread; Louis v Sadiq; Rodriques v Sokal; and Arena Property Services v Europa 2000
  • claims relating to works prior to notice under the Act – including consideration of Roadrunner Properties Ltd. v Dean;
  • the measured duty of care arising from Leakey v National Trust with consideration of the further development in relation to cost sharing n Abbahall v Smee.

This document is part of a paper given at a seminar organised by Party Wall Solutions on 24th April 2013 at the RAF Museum.

Dangers of taking a risk

Injunctions rather than damages for wrongful interference with easements/Pre-emptive Declarations

In the past developers have taken a risk and carried on notwithstanding that there is a danger that the development will result in an actionable interference with an easement. It has to be appreciated that such a course of action carries with it a real risk of an injunction being granted and heavy financial losses. This paper considers

  • the test in Shelfer v City of London Electric Lighting as to whether an injunction of damages should be ordered;
  • the dangers of taking a risk as illustrated by case such as Regan v Paul Properties; Jacklin v Chief Constable of Yorkshire; Tamares (Vincent Square) v Fairpoint; HRUK II v Heaney.
  • Use of Pre-emptive declarations to overcome danger and the hurdles facing such applications as shown by Site Developments (Ferndown) v Cuthbury;
  • The dangers of property owners acting prematurely when facing the worry of an actionable interference as in CIP Property v Transport for London.

Warning do not take risks – Injunction or damages

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