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England's Green and Pleasant land
The Solicitor's Journal, December 2011
As another year passes without the sound of spades digging the footings for desperately needed housing stock, Laura Stevens takes a stroll down the meandering path to the village green and the associated complications for developers.
A definition of a village green is noted in the Countryside and Rights of Way Act 2000 as land ‘on which for not less than 20 years a significant number of inhabitants of any locality, or neighbourhood within a locality, have indulged in lawful sports and pastimes as of right... and continue to do so'.
In 1965, the first Commons Registration Act provided for registration of greens including ‘Class C Greens' relating to land on which 20 years use had accrued. In R v Suffolk County Council (ex parte Steed) (1996), the Court of Appeal held that ‘as of right' meant that people using the land had to have believed they had a right to use the land; this seemed to deviate from the traditional meaning of ‘as of right' in the context of prescriptive easements.
In 1999, the House of Lords overturned Steed in R v Oxfordshire County Council (ex parte Sunningwell Parish Council) and things reverted to the original objective test of ‘as of right'. This ruling brought with it numerous cases and in response, landowners sought to stem the flow by enclosing their land as soon as they had notice of a village green application. This activity led to an amendment to the Commons Bill to protect applicants by enabling applications to be pursued even when public access had been prevented.
The case of Betterment Properties (Weymouth) Limited (‘Betterment') v Dorset County Council (2010) is a useful gauge of what landowners ought to do to prevent a qualifying use of their land and also demonstrated the pre-emptive use of injunctions to stem potentially qualifying activity by the public. In Betterment, local residents successfully registered a village green but the landowner responded with an application to Court to cancel the registration (albeit under Section 14 of The Commons Registration Act 1965). The matter went to trial and the Court was able to review the basis for registration of the village green. The land had been used by the landowner for agricultural purposes and was surrounded by residential houses. The landowners had endeavoured to stop local residents using the land by erecting fences and putting up signs stating ‘Private', ‘Keep Out' and ‘No Trespassing'. Despite these efforts, members of the public made holes in the fences and vandalised the signs. The Judge found that the land had not been used ‘as of right' because use of the land had been by force. Importantly, the Court also confirmed that an injunction could be made which would stop any qualifying use of the site, despite the fact that the subjects of the injunction were unidentified.
The 2008 case of Secretary of State for the Environment, Food and Rural Affairs v Meier & Ors also confirmed an injunction could be made in respect of unidentified trespassers. In this case, the Secretary of State for the Environment, Food and Rural Affairs applied for an order for possession of an area of woodland in Dorset along with an injunction against Travellers who might attempt to access the land and set up camp. The Court of Appeal granted a possession order and an injunction but the Travellers appealed to the then House of Lords (now Supreme Court). The House of Lords decided that a possession order for the wider woodland area could not be granted because the applicant had been occupying the land un-interrupted (i.e. a possession order can only be granted when a property is subject to trespass rather than threatened by trespass). However, their Lordships found that an injunction could be granted in respect of unidentified parties in order to prevent a threatened trespass as this may act as a deterrent.
The Supreme Court has further considered the issue of village greens in 2010 - R (on the application of Lewis) v Redcar and Cleveland Borough Council. Five Law Lords unanimously found that the concept of "deference" (by an applicant) did not have any force in the context of a village green application. However, it is encouraging that their Lordships openly considered the principle of "give and take" between landowner and the Public. Both of these issues should give landowners some comfort that the process is not stacked entirely in an applicant's favour and that even in cases where a site has been used by the Public, there ought to be a collaborative approach to find some middle ground and preserve the landowner's and the Public's rights.
The path to an increased supply of housing stock is strewn with obstacles. The village green issue seems only to confirm the need for proper, robust and proactive local planning to ensure that the Public has access to open space without a need to resort to blunt tools such as section 15 of the Commons Act 2006 (and all the consequences that come with it). But unless Localism delivers, developers will continue to be asked to carry the risk and a well-meaning scheme capable of benefiting the community at large may be scuppered by a minority of people keen to preserve the status quo through Nimbyism. In this context, title insurance can be used as a tool to give developers the confidence needed to tackle higher risk sites and thereby aid local authorities in their quest to add much needed housing stock, in line with the new government regulations.
Laura Stevens
Underwriter
CLS Ltd
Laura.stevens@clsl.co.uk
Shifting sands
Property in Practice, September 2011
We live in interesting times. Change is all around – not only regulatory and competitive change, but developments in property case law and legislation, too. Brian Chrystal gives a personal perspective on uncertainty and its place in legal practice
"What do lawyers do? The central thesis ... is that business lawyers are engaged in managing uncertainty for both their clients and themselves. Managing uncertainty is accomplished through interaction, rather than appeals to the law."
This extract, from a 1991 article by John Flood, of the University of Miami's School of Law, is just one of over eight million hits Google throws up for "lawyer uncertainty". It summarises perfectly one of the major problems which still confront real estate lawyers, and it defines the most challenging area for insurers of the ownership and use of land.
The law, in any field, is not a fixed institution. Law changes by evolution – as the courts gnaw over the existing corpus – and by revolution – when the only perceived solution is legislation to enact new laws or codify what is already, in effect, in practice. In either case, the unintended short-term outcome for lawyers may actually be greater uncertainty. There are two obvious examples in the current property law of England and Wales. One is a highly topical issue – rights of light – while the other is a familiar part of the landscape – easements, restrictive covenants and profits à prendre.
Rights of light is a hot topic, because the consequences of getting it wrong can be disastrously expensive. It is an area which mixes ancient law with modern means of assessing the physical effects (or, as one commentator put, "It's part ritual and part pseudo-science"). Given the increasing trend for courts to look not only at bare law and facts, including assessments by surveyors, but also at the conduct of the parties, the lawyer now has to advise the client about tactics and risk management as much as about the law. The task is not made easier when the most recent evolutionary change is a case (Heaney) which was settled before it could reach the reasonably authoritative level of the Court of Appeal. If it, or another like it, ever does get that far, perhaps the judges will give force to the view that rights of light should be dealt with by way of the planning process, and not through the courts. Until then, it cannot be easy for a real estate lawyer to give clear advice without wanting to be able to transfer, in some way, the inevitable risk away from his (or her) client and the firm's professional indemnity insurance policy.
The Heaney type of uncertainty will eventually be resolved by a senior court, and relative clarity will return. For most lawyers, the uncertainty which the Law Commission's proposals about easements and so on will create should be of much greater practical concern.
The proposed reforms are, to my mind, eminently sensible, and they are most lucidly presented (and explained) in the commission's report. But however sensible they may be, the process of change itself will cause problems for lawyers for years to come. Substantial real estate transactions take a long time to complete; the actual development takes even longer. Developers, lenders and investors want some certainty that any legal conditions which affect how they can use the land, and any mechanisms they put in place to control how others may act, will be legally valid and readily enforceable when it matters. Major changes in basic law (the "grammar" of property law, as the commission puts it) cloud that view.
Major recodification causes three kinds of uncertainty. First come parliamentary acceptability and management: will the proposals ever become new law, and will the new law be well enough drafted not to confuse things even further? Second is timing: how long will enactment and implementation take, and could a development be caught by an intervening change in direction? Third, and most important, is effect and enforceability: will the interpretation a lawyer makes before the new law is enacted or brought into force, or while it is in its infancy, prove correct, and how will any challenges to a new law be resolved by the courts? No prudent lawyer wants to give his client the costly privilege of being a high-profile test case.
The Law Commission's report mentions Scottish law in passing, then moves quickly on. In fact, the practical results of very similar changes brought about by the Title Conditions (Scotland) Act 2003 are well worth an English or Welsh lawyer's examination, even though basic property law in the two jurisdictions is fundamentally different. The changes the commission proposes are, in many parts, strikingly similar to the Scottish reappraisal. While the new law enacted many simplifying (and needed) changes to Scottish property law, the period between enactment and implementation threw up many examples of real uncertainty about practical outcomes (and those, not the elegant juridical opinions, are the ones clients care about). Problems with interpretation persist still.
In these circumstances, it is more than ever important for risk – and uncertainty is a kind of risk – to be properly identified, stated and transferred. As insurers, we believe we can help lawyers and their clients to achieve this, and find firmer ground. It's also the most interesting part of the job.
Brian Chrystal
Underwriting Director
CLS Ltd
brian.chrystal@clsl.co.uk
Problems Ancient and Modern: A Quick Look at Some English Peculiarities
Legal Week, September 2011
It's always difficult to throw old things away, and doctrines from mediaeval times or before live on in English law. But even historical curiosities can still bite. Homeowners can face major financial liabilities, and developers can be forced to dismantle parts of new buildings or abandon whole projects.
Old laws sit awkwardly in the modern real estate world. They pre-date rules on planning or building standards, and they can strike from unlikely quarters. They demand cautious underwriting but can be manageable. An underwriter needs to think about local history and feelings and land surveying practice as much as knowing the law.
The three examples below look briefly at rights of light, registration as a village green and chancel repair.
Rights of light
In English law, a right of light is an easement: it protects my land against being overshadowed by something built on your land. The right may be expressly created, or acquired over time. In crowded cities buildings go higher and higher, but they still cast shadows.
If you infringe my right of light, my remedy may be financial compensation or an injunction, to stop the offending work. Recent decisions show that, unless a developer has acted reasonably throughout the building project, and not simply ignored the rights of adjoining land, compensation may not be the only consequence. Failure in one of the four tests set by the courts is fatal to the whole case.
Building surveyors assess how a new structure may affect its neighbours' share of light, and model potential liability. Underwriters have to link both to current law (by scrutinising judges' decisions and the thinking behind them). They must also consider how the development has been handled during the planning process, and quantify potential losses at each stage of construction to offer cover which protects without stifling the developer's ability to manage the project - and relations with the neighbours - in a practical way. Recently, a developer who ignored the rights of adjacent owners and relied on being able to buy off the rights was ordered to remove the top two floors of his new building.
Village greens
Once, every English village had its green. The rules surrounding what is a village green date from the 12th. century, and contain elements of statute and common law. Halsbury gave a practical definition: the Royal Commission's 1958 description was more poetic: "Village green – the very words are evocative of great age and tranquillity, of turf as rich in hue as it is trim in a setting untouched by time.".
The Commons Registration Act's process allows village greens to be registered and preserved for local amenity. The initial registration period ended in 1970, but the Act allowed later registration of "missed" greens. This gives problem starts for developers, and opportunities for insurers.
In 1994, permission was granted for two houses on land owned by the Church of England at Sunningwell, in Oxford. An opponent to the scheme applied for registration as a village green. The local authority rejected the application, but the opponent persisted as far as the House of Lords which, in 1999, directed the local authority to register the land as a village green, so stopping the house-building.
The threat to developers was obvious: any person living near a new development could apply for registration as a village green: the developer would at least face delay and added cost, or at worst could lose any chance of completing the development. Matters remained confused, and insurers wary, until the Commons Act of 2006 introduced new tests and procedures.
Clearer laws help in assessing whether a site is insurable. An application may be a "blocking tactic", where other objections to planning proposal have failed, so the underwriter needs to gauge the strength of local opposition, and assess whether there is a real risk of determined action, as well as assessing the legal aspects. The internet can give a useful clues, and reports from the planning authorities can indicate whether other facilities will be made available. The cost of even a successful defence can be high, so keeping an eye on potential liability to defend is an essential part of underwriting.
Chancel repair liability
In mediaeval times, the rector was entitled to a tithe - one tenth - of the produce of certain lands in the parish. This "rectory" was managed from the chancel. While the local landowner and congregation looked after the nave, the rector had to maintain the chancel. Following the dissolution of the monasteries, the rectories were sold off to lay rectors. Tithes were converted into "glebe" land by enclosure laws, and this was divided up and sold. When tithes were abolished, the liability of the lay rectors to maintain the chancel remained and attached to glebe land. As Church and local landownership became more remote (the Chancel Repair Act of 1932 transferred the handling of claims away from the Church courts), this risk was given less consideration in the conveyancing process.
Over the years, lay rectors had quietly paid the church to have their liability extinguished. One couple, though, fought, with ruinous consequences. Mr. and Mrs. Wallbank inherited Glebe Farm (a possible clue there?) in rural Warwickshire. Repairs to churches often receive grant aid from conservation bodies such as English Heritage, and in this case the funder enquired whether anyone else should contribute. The Wallbank's title contained a chancel repair liability, so the Parochial Church Council requested payment of around £6,500. They resisted and the matter went to court – and all the way to the House of Lords. In 2003, the Lords confirmed the liability (after the Wallbank's invocation of European Human Rights laws failed). The bill had grown as more repairs were needed and legal costs piled up; in the end, the total reached around £500,000. The property was auctioned to pay the church.
This was an exceptional case, but identifying and dealing with potential risk is an essential part of the conveyancing process. The safest way to deal with chancel risk is to blend searching and insurance: might there be a risk and is it insurable? A chancel screening report shows whether the risk may exist, but not whether a particular property is definitely affected (so as not to require registration of the liability at the Land Registry). The buyer can then be insured in case the Church may have a right to claim. The risk is fairly diverse, so the cost of insurance is modest. Where the link is stronger, insurance is still available, but at a higher premium and possibly only after the physical condition of the church is investigated (discreetly).
Now parishes must register their right to charge for chancel repair liability by October 2013 to keep it alive, but what many see as an antiquated and unfair burden remains, as do uncertainties about which parishes will register their right, and how liability over fragmented glebe lands will apply.
Ancient laws in a modern context challenge underwriters to keep up with changing judicial attitudes. But for insurance to provide solutions, insurers need to combine legal expertise, pragmatism and credible security.
Brian Chrystal
Underwriting Director
CLS Ltd
brian.chrystal@clsl.co.uk
Localism: Community Empowerment or the new synonym for NIMBYism
Todays Conveyancer, June 2011
The Localism Bill remains instrumental to the Coalition Government's "Big Society" Agenda. Taken at face-value, it amounts to more dialogue with communities at the earliest opportunity in order to help them shape plans for their neighbourhoods.
The Localism Bill spans 510 pages, 215 clauses and 25 schedules, but as yet, its significance and potential is untested. But, if recent events are anything to go by – take for example the protests at the Chelsea Barracks site, or the threat by residents to use Localism Bill powers to thwart CapCo's redevelopment of Earls Court – communities are more than keen to get involved. But what does this mean for the developers charged with rebuilding neighbourhoods.
The Localism Bill is currently being debated in the House of Lords and should it pass into law it will provide local communities the opportunity to become involved in the planning and development stages of projects within their community at a much earlier stage.
For example, the Bill provides an opportunity for "neighbourhood forums" to facilitate the types of development that a community wants to see. The Bill also seeks to give a community the power to initiate local referenda on local issues and define local development policy in order to push through favoured types of development. But all too often, the wider community benefits of a particular development will be difficult for an immediate neighbour to appreciate, especially when they will endure the construction and physical effects of the development: increased traffic, noise, interference with light.
But whilst few would disagree that encouraging dialogue with communities is a healthy way of developing community infrastructure, should we be concerned that developers will find it increasingly difficult to secure planning consent for certain types of development? As is often the case, people like new leisure facilities, better housing and more employment but they'd rather it wasn't right at the bottom of their garden. Admittedly, the Bill is not handing over complete control of the planning process to communities, but it is making more of us think about what goes on locally and how we might influence it.
It may be relevant to consider briefly how the behaviour of the public has changed in recent years. Title indemnity insurers are strangely well-placed to observe on these events, since they are often asked to insure against the issues which have become favoured tools of members of the public when seeking to protect their environs. Take Judicial Review, Village Greens, Rights of Light or even the trusted Restrictive Covenant. All have been employed on countless occasions in a last-ditch attempt to halt a supermarket or limit the number of units on a housing estate. And recent judgments appear to encourage use of private law rights. Take for example the recent judicial movements limiting an applicant's exposure to a respondent's costs in an application for judicial review, or the Court's decision in the context of the Commons Act 2006 to remove ‘deference' as grounds for resisting an application to register land as village green. Or even decisions of the Lands Tribunal resisting modification of a covenant notwithstanding extant breaches or developments of a similar nature in the vicinity. And whilst title indemnity insurance can help manage the legal and commercial risk associated with all of these issues, the process of acquiring sites and readying them for development is becoming more challenging, time-consuming and expensive. Clearly we will need to see how the landscape develops over time before we can say whether Localism will have adverse effects on developers. But it may be fair to say that having invited the public in to the planning forum, private rights may end up being employed to get the results that Localism promised but failed to deliver. Let us hope that localism doesn't become a synonym of NIMBYism.
Kevin Williams
Underwriter
CLS Ltd
Kevin.williams@clsl.co.uk
Time to shed light on rights of light insurance
Property Week, May 2011
The Heaney judgment has raised questions for developers about how to mitigate risks if their proposed scheme would block out neighbours' light
We do insist on living on top of each other. Whether it's the allure of an inner city designer flat or the simple necessity of living where the work is, there is no escaping the fact that it is getting a bit crowded round here.
And while construction methods now allow incredible heights to be scaled, neither the engineers nor the architects have managed to build a skyscraper that does not cast a shadow.
It is established law that we all have a right to receive daylight through the windows of our homes and offices. A right accrues in a number of ways, either by express grant or accumulated over time. Interference with a right of light entitles the injured party to compensation or, in certain circumstances, a court injunction prohibiting (or requiring demolition of) the offending part of a building that interferes with another's right of light.
So are the court lists full of applications for injunctions? Seemingly not, except the recent High Court decision in the dispute between Highcross subsidiary HKRUK and neighbouring property owner Marcus Heaney.
And if you speak to the expert surveyors operating in this field, their response is typically robust: rights of light are either overlooked by neighbours or else addressed by way negotiation between developer and injured party long before building work gets underway.
The principal remedy for interference with rights of light is an injunction or compensation. But since the first instance decision in Heaney, the perceived threat of an injunction is such that rights of light appear to be hampering ambitious and well intended regeneration schemes otherwise capable of contributing much needed accommodation and employment in the construction section.
That said, we probably ought to take account of the fact that Heaney is only one of several recent decisions and, by and large, the courts have now distilled their position - unless a developer has acted reasonably throughout the course of their building project, they will be held accountable. It appears that developers should not assume they can ignore individuals' rights of light and expect a court to sanction interference with such rights at a later date by the award of compensation (as opposed to an injunction).
So can insurance help?
Much like the spectre of village greens, the threat of legal action to preserve a right of light is not a defect in title in the traditional sense. But like village greens, an application by a neighbour to prevent interference with their right of light is capable of sterilising a construction project, or rendering it uneconomical to complete. While it is a commonly held perception that title insurance shies away from risk, some insurers have worked hard to adapt their risk assessment techniques in order to be able to offer insurance for rights of light-related risks.
The methods employed by an insurer should be considered carefully as they vary. Traditionally, title insurers will accept risks on the basis of a conclusion that the prospect of a claim is remote. Typically, this decision is heavily reliant on the planning process – if the application for planning consent is successful and does not elicit any material objection on its way through, the question of remoteness is seemingly resolved. But in the context of rights of light, this approach fails to acknowledge the fact that a potential victim is unlikely to appreciate the degree of interference until construction is underway.
Insurance predicated on an assessment of the representations made to a planning application alone could well create issues later in a project. Absent insurance, severe interferences to neighbour's rights of light are normally addressed by developer through negotiation with the injured party
before work starts on site.
However, insurance that permits a developer push ahead on a project without due regard to the rights of light issue at the early stages of a project could store up problems for insured and insurer later down the line. When the girders are up, neighbours are far more likely to become entrenched as a point of principle and, if case law is anything to go by, so is the Court. And if a Court awards an injunction, rather than damages, the developer would recover its abortive costs under a typical policy but not the anticipated profit from the project.
So if it is the latter that a developer wishes to protect, insurance does have a genuine role to play in helping to plot a course, but it is a role defined through collaboration between developer, surveyor, lawyer and underwriter to determine a course of action for each project that has the best chances of satisfying the court's requirements for transparent and conscionable behaviour while still protecting developers from the ransom value fast becoming attributable to rights of light.
Jean-Claude Domaingue
Senior Underwriter and Solicitor
CLS Ltd
jcdomaingue@clsl.co.uk
Commercial Contaminated Land
The Solicitors Journal, January 2011
Commercial Contaminated Land
The Olympic Stadium is now taking shape and looks set to be a spectacular centre-point for the 2012 Olympics in Great Britain. However, the development of the site has not been quite as straight forward as it could have been when compared with the impressive progress that the Olympic Village is making. At the opening stages of the development, construction could have been halted before it even began, and the reason for this? Contamination issues associated with the land on which the site was to be built.
Since the introduction of the Environmental Protection Act 1990 (now embodied in the Environment Act 1995) Local Authorities have been given responsibility for identifying and forcing the clean-up of land that has been deemed to be 'contaminated'. Local Authorities have been actively seeking sites to be 'cleaned-up', serving remediation notices where necessary and ensuring that any contamination within the land does not impose any health and safety risks.
The responsibility for the clean-up rests with the owner of the land and as a result the Law Society issued a warning card relating to Environmental issues and how they should be considered in a conveyancing transaction.
Desktop Environmental searches have long been included as a standard 'usual and necessary' search conducted by the conveyancing profession when acting on the purchase of a property. These searches are accepted as industry standard and the nature of risk highlighted can range from minor (but potentially costly to remedy) to something that could affect the quiet enjoyment of the property or land. Where a search indentifies a potential contamination issue the purchaser has 3 options:
- To withdraw from the purchase of the property on the basis that potential remediation costs of the land will outweigh the value of the property
- Purchase the property making an allowance for any estimated clean up costs further down the line
- Purchase the property with the benefit of a commercial contaminated land insurance policy
The first option of withdrawing from the purchase when option 3 is available clearly seems quite dramatic and doesn't allow client satisfaction unless it's as a result of a major issue identified with the land that would create very high remediation costs or delay in completing building or development works.
The second option likely to be less desirable to the prospective owner as it takes a risk that remediation will be required or enforced which has to be costed into the purchase.
The advantages of proceeding with option 3, an insured solution, are two-fold. The purchaser is able to proceed with the transaction but also does not need to make allowances for any financial restraints posed by the threat of enforcement action (other than those incurred in complying with any planning conditions set). A contaminated land insurance policy has, historically, provided cover for both remediation costs incurred in complying with an enforcement notice served by the Local Authority together with any diminution in value of the site as a result of such an enforcement notice being served. New policies on the market now also provide cover for third party property damage and/or third party bodily injury as a result of the identified contamination, where required.
Previously, purchasing contaminated land insurance was both a time consuming and expensive option with cover only being offered on a bespoke basis for commercial properties. However, a new breed of commercial contaminated land insurance has recently been brought to the market which is now available on a scheme basis with cover available online for lower value commercial risks up to £1m. In making commercial contaminated land policies as accessible as those already used for residential transactions, commercial property transactions can now benefit from increased cover and reduced premiums as another area of the conveyancing market takes advantage of the electronic superhighway to provide workable market solutions.
As is often the case with conveyancing transactions, be they residential or commercial, there remains a place for bespoke policies for transactions that don't fit "standard criteria", and there are always underwriters available to discuss whether the individual cases fall within the scheme or not, but now the market has a choice to opt for a cost efficient time efficient solution to this sometimes difficult issue.
Commercial Contaminated Land insurance is now available through Conveyancing Liability Solutions as part of the Commercial ConveySure® suite of defective title and legal indemnity products. CLS is the Landmark Information Group approved insurance provider. To find out more please contact our legally qualified underwriters: underwriters@clsl.co.uk or 01732 897_530 or go online at www.clsl.co.uk
Clair Rickaby
Underwriter and Product Development Manager
CLS Ltd
clair.rickaby@clsl.co.uk