Real Estate Bulletin – November 2019

Welcome to the October 2019 edition of the Real Estate Bulletin

In this edition we update you on recent decisions and legal developments affecting the property industry:

Landlords prove unsuccessful in challenging Debenhams CVA despite its somewhat draconian provisions A group of landlords known as the Combined Property Control Group mostly unsuccessfully challenged the CVA proposed by Debenhams Retail Limited. Here we look at the background and challenge behind this, and the implications for retail and other CVAs. Court of Appeal pulls the trigger on Town and Village Greens The Court of Appeal decision in Wiltshire Council v Cooper Estates Strategic Land Ltd will come as good news for developers as the Court of Appeal upheld a High Court ruling overturning Wiltshire Council's decision to register a plot of land as a town or village green and resolved previous ambiguities as to what constitutes a trigger event by adopting a wide interpretation of the same. Contracting-out of security of tenure - Can tenants have their cake and eat it too? We consider the important decision in TFS Stores Limited v BMG (Ashford) Limited et al regarding the contracting out procedure under section 38A of the Landlord and Tenant Act 1954 Overage - How reasonably hard does a developer have to work to make himself liable? The Court of Appeal upheld the first instance decision that a developer had not used "reasonable endeavours" to achieve "as soon as reasonably practicable" the satisfaction of certain conditions which would trigger liability to make an overage payment: Gaia Ventures Ltd v Abbeygate Helical (Leisure Plaza) Ltd. When should a judgment be set aside for fraud? In the context of a family property dispute, the Supreme Court ruled in Takhar v Gracefield Developments Ltd that a party who applies to set aside a judgment on the basis of fraud need not demonstrate that the evidence of the fraud could not have been uncovered at the earlier trial through reasonable diligence. Court of Appeal upholds order for rectification We consider the case of Persimmon Homes Ltd v (1) Anthony John Hillier (2) Colin Michael Creed in which housebuilder Persimmon Homes was successful in arguing that a share purchase agreement and disclosure letter should be rectified in order to give effect to the common intention of the parties' negotiated deal. Section 21 Notices to be abolished - Disaster for Landlords? We discuss the government's ongoing consultation regarding its proposals to abolish section 21 notices. 1954 Act protected leases flowchart We have included a helpful flowchart which outlines the various procedures to be adopted by landlords and tenants when seeking to terminate/renew 1954 Act protected leases. Landlords prove unsuccessful in challenging Debenhams' CVA despite its somewhat draconian provisions

Discovery (Northampton) Ltd & others v Debenhams Retail Ltd & others [2019] EWHC 2441(Ch)

Company Voluntary Arrangements ("CVAs") are seen as most unfair by landlords who are often forced to continue to make a supply of premises at an imposed reduced rent.

A group of landlords known as the Combined Property Control Group ("CPC") unsuccessfully challenged the CVA proposed by Debenhams Retail Limited ("Debenhams"). CPC argued that, pursuant to section 6 (1) (b) the Insolvency Act 1986 (the "Act"), the CVA was unfairly prejudicial because it treated landlords less favourably than other unsecured creditors.

Background

A CVA is a legally binding arrangement entered into by a financially distressed company and its creditors. A CVA serves to allow a company to continue trading whilst its liabilities and debts are restructured. CVAs have become increasingly popular as a method of reducing the rental costs that commercial tenants (often retailers) perceive to be onerous. Debenhams' prepack administration was announced 9 April 2019. The company proposed a CVA soon after with the aim of restructuring the company's balance sheet and store portfolio. The CVA was approved at a meeting of creditors on 9 May 2019. On 10 June 2019 CPC launched its legal challenge against the CVA.

Grounds of Challenge & Decision

The challenge was brought on five grounds (detailed below) all of which failed, with the exception of Ground...