The March 2010 edition of the Commercial Property Information Update is published today on this website.

That question? Again? Well, as predicted, it appears that this current recession is going to give us an answer to the question, and the answer, in the very well reasoned decision of Mr Justice Newey, in the case of Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch) - a Chancery Division application for summary judgment - is that a guarantor is released from liability upon a lawful assignment of a post-1995 Act lease, and that an attempt to prolong the guarantor's liability (e.g. by requiring the guarantor to guarantee the AGA, or to guarantee the incoming assignee) is rendered void by the anti-avoidance provisions of section 25 of the 1995 Act. Such an attempt would frustrate the guarantor's release under section 24 of the 1995 Act. Since this question first arose, the safest advice to a landlord client has been that the "double-decker" guarantee just might not work. No doubt this "obviously correct" (careful) decision of the High Court will be appealed, so that the Court of Appeal can get their teeth into it. But in the meantime, the implications of it will be considered in detail in the CPI Update to be published this weekend.

Starting in a couple of weeks, I am presenting a series of live online property seminars, on a variety of property law topics, each one running over a lunchtime for a period 90 minutes. These are seminars that you attend from the comfort of your own PC. The topics may be of interest to you, or to one or more of your colleagues.

I am hosting the first two seminars in March. They are:

Rent Deposit Arrangements - 12.30pm, Monday 8th March 2010
Detailed content can be found at http://propertypsl.webex.com/

Carbon Reduction Commitment - Drafting Points for Landlords and Tenants - 12.30pm, Monday 22nd March 2010
Detailed content can be found at http://propertypsl.webex.com/

If you would like to join either or both of these seminars, just get in touch. The cost per seminar is £75 (plus VAT). To see a current seminar schedule, click on http://propertypsl.webex.com/. You are welcome to join any of the seminars you will currently find scheduled there. More seminars will be added for later dates in the year. Each seminar runs for 90 minutes (even though 2 hours has been set aside on the server).

To see how these seminars will work, click on http://www.propertypsl.co.uk/cpd-seminar-faq/

For those looking for accredited CPD, I can confirm that my seminars have been accredited for CPD by the SRA, so that each one qualifies for 1.5 CPD hours.

Any queries – just get in touch.

The Law Society has published a practice note on the execution of documents by virtual means. The practice note advises on good practice in the light of the Mercury Tax case (R (on the application of Mercury Tax Group and another) v HMRC [2008] EWHC 2721) and, following the publication of the City of London Law Society’s "virtual closing protocol", it suggests different options for so-called virtual signings and closings. A virtual signing is the signing of a document by a person who is distanced from the document that would ordinarily be regarded as the original, but who signs the original by submitting a signed execution page.

Practitioners may wish to follow the guidance given in this practice note. However, remember that: (a) if the document is registrable at the Land Registry, the Land Registry will require a document that bears a “wet ink” signature, and not one that bears a PDF or faxed copy of a signed execution page; (b) the Land Registry will reject an application to register a deed where parties appear to have signed separate execution pages which have then been put together to form a single document; and (c) Mr Justice Underhill, in the Mercury Tax case, might just have been right. All guidance and opinions given to date are based upon a narrow view of the Mercury Tax case, and a wide view of the concept of the “discrete physical entity” that Mr Justice Underhill referred to. Traditionalists may like to adhere to traditional methods of securing the execution of a document.

Significant changes of practice are occurring in the house building industry. These will be covered in full in next week’s CPI Update. From April 1, 2010, a mandatory Code of Practice – the Consumer Code for Home Builders (see http://www.consumercodeforhomebuilders.com) - will apply to house builders who are members of home warranty schemes, such as the NHBC, who have undertaken to enforce the Code. Such home warranty bodies have agreed to require their registered builders to adopt and comply with the Code. Of greatest interest to property lawyers is the requirement in the Code for the house builder’s contract of sale to be clear and fair, to comply with the Unfair Terms in Consumer Contracts Regulations 1999, and to clearly state termination rights.

The implication is that house builders’ contracts, which may not be individually negotiated, are currently unfair; i.e. they create a significant imbalance between the rights and obligations of the builder and the consumer, to the detriment of the consumer. This might not be too far from the truth. Parts of the contract where changes may be required as a result of the Code include removing the “unfair” exclusion of liability for oral representations made by the house builder in the reservation process, introducing fair rights of terminations where the builder makes significant changes in design and construction, providing for anticipated practical completion dates, and providing for rights of termination if practical completion is not reached within a reasonable time of the anticipated date. Significant changes, indeed.

Draft regulations - The Community Infrastructure Levy Regulations 2010 - have been laid before parliament. At the same time, the Department for Communities and Local Government has published a summary of responses received on the detailed proposals and draft regulations for the introduction of the Community Infrastructure Levy which took place between July and October 2009. See DCLG CIL Summary.

The final draft regulations laid before parliament contain some modifications to the government’s initial proposals for CIL. These include levying the CIL charge on net additional increase in floor space arising from development, rather than gross floor space; allowing for a system for payment in kind for CIL (i.e. paying by land transfer); stretching the CIL payment period from 28 days to 60 days, and allowing larger CIL liabilities to be paid by instalments; preventing “double dipping”, whereby local authorities might seek infrastructure contributions through both planning obligations and CIL; and extending charity relief.

CIL is still scheduled to commence on April 6, 2010.

How much time is available to a local planning authority to enforce breaches of planning control?

See section 171B of the Town and Country Planning Act 1990:

“(1) Where there has been a breach of planning control consisting in the carrying out without planning permission of building, engineering, mining or other operations in, on, over or under land, no enforcement action may be taken after the end of the period of four years beginning with the date on which the operations were substantially completed.”

“(2) Where there has been a breach of planning control consisting in the change of use of any building to use as a single dwellinghouse, no enforcement action may be taken after the end of the period of four years beginning with the date of the breach.”

“(3) In the case of any other breach of planning control, no enforcement action may be taken after the end of the period of ten years beginning with the date of the breach."

In Welwyn Hatfield Council v Secretary of State for Communities and Local Government & Anor [2010] EWCA Civ 26 an applicant for planning permission was granted permission for the erection of a hay barn. Instead, he built a house. The applicant and his wife moved into the property on 9 August 2002. On 15 August 2006, he applied under section 191 TCPA 1990 for a certificate of lawfulness of existing use. The process was described by the Court of Appeal as “deliberate deceit”. The building had been given the external appearance of a barn, but had been fitted out internally as a dwelling. However, the Court of Appeal unanimously held that the local authority had lost its ability to enforce a breach of planning control, since the applicant’s change of use fell squarely within section 171B(2).

Lord Justice Richards said: “the lesson for local planning authorities is clear. When checking whether a building has been built in accordance with planning permission and is being used in accordance with the permitted use, they need to look carefully at the inside of the building and not just at the exterior. External appearances can be highly misleading, as this case shows, and authorities need to be alert to the possibility of deception. The legislation in its existing form is open to abuse. Whether it should be amended so as to prevent dishonest advantage being taken of the shorter time limit under section 171B(1) and (2) is, as I have said, a matter for Parliament.”

The February 2010 edition of the Commercial Property Information Update is published today on this website.

The draft CRC Order has now been published on the Office of Public Sector Information (OPSI) website. Click on: The CRC Energy Efficiency Scheme Order 2010, press print, and read all 87 pages.

In November 2009, we posed the question: Is rent an expense of an administration? The question was answered in the affirmative, on the basis of obiter comments made by Mr Justice Briggs in the case of Lomas & Ors v RAB Market Cycles (Master) Fund Ltd & Ors [2009] EWHC 2545 (Ch). Now, we have a Chancery Division decision in which the point was central to the case: Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] EWHC 3389 (Ch). This case positively decides the point in favour of the landlord. Where the administrator makes use of the tenant’s premises during the period of administration (e.g. to continue trading, or, perhaps, to grant licence to occupy to a buyer of the tenant’s business under a pre-pack), rent falling due for the period of use will become an expense of the administration. This does not necessarily mean that the rent is paid on time: the administrator will have to weigh up other competing priority claims. But it takes the landlord ahead of the vast bulk of unsecured creditors lacking such priority.