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JANUARY 2013
Property Litigation & the PLA
33
Property Litigation UK
Looking further into the issues surrounding the world of Property Litigation, Lawyer Monthly speaks to Emma Pinkerton, a Senior Associate within the Dispute Resolution team at Dundas & Wilson LLP, based in London. Dundas & Wilson LLP is a UK-focused corporate and commercial law firm with over 340 lawyers and offices in Edinburgh, London, Glasgow and Aberdeen.
What have been the key trends with regards to property litigation in 2012?
As a team we have noticed a steady flow of asset recovery/disposal work across property and commercial litigation, which is only to be expected given the current financial climate.
Within this group of instructions we have noticed an increase in claims bought by and against Fixed Charge/Law of Property Act (LPA) Receivers. This is again perhaps not particularly surprising save that this type of appointment had decreased significantly in the years running up to 2007/2008.
Additionally, our institutional property portfolio clients continue to use us on resolving a broad range of issues to assist maintaining and enhancing both income and capital values.
Further there are still some areas with a buoyant property market where redevelopments are taking place where we assist with site clearance of legal issues including rights to light.
Has litigation increased over the last 4-5 years in your experience? If so, why do you think this is?
The amount of litigation has not increased significantly in the last 4-5 years but there has probably been a steady increase in the size and nature of those disputes. There has certainly not been the raft of litigation that I was warned about from those who weathered the last financial crisis. In particular with regard to claims against valuers.
Obviously there is a balance to be drawn in making any claim, merits aside, as to whether there is any cost benefit in doing so. I think this has become a more major decision making factor as costs have had to be cut across businesses of all kinds. An increasing number of claims are compromised, especially with the use of mediation, significantly before a trial occurs: with the attendant saving of costs and management time.
Having said that, as a team we have noticed a recent increase in litigation across all areas.
In property litigation this has been mostly in relation to real property asset recovery. One reason may be a result of the continued pressure on developers working under the apparent stalemate with lenders who are lending/re-financing only very cautiously and who are continuing to give very thorough consideration to their property portfolios and default.
can you tell me about any recent cases you have worked on that were particularly interesting?
With regard to the comments made above some of the most interesting cases I have worked on recently have involved Fixed Charge Receivers ("Receivers") where disgruntled borrowers, or companies/individuals associated with those borrowers, have sought to challenge, directly and indirectly, the appointment of the Receivers.
In particular I have recently dealt with a claim under s.91(2) of the Law of Property Act 1925 for the return of the property subject to the charge to the developer borrower to enable it to obtain further finance to complete the development and thereafter redeem the charge.
In that instance the claim was made against the lending bank and not the Receivers although they supported the bank in the proceedings and we continued to act for both. The Court found in favour of the bank and interpreted the wording of the Act narrowly, holding that the only power available to the Court was the power of sale and as the claimant was seeking redemption (which it had not claimed per se), rather than the power to control the sale and/or sell the property, it had no ability to make any order. The claim was dismissed, although it forms part of a larger claim for damages which will be heard next year.
do you foresee any changes in legislation that will impact on property litigation?
New property and planning legislation will no doubt prove fertile ground for litigation as statute and procedure is tested for the first time. Issues around community infrastructure levy, assets of community value and the green deal might produce novel testing case law.
Other than that there are of course the cost budgeting changes that will impact on all litigation, in particular to limit the amount of costs recoverable form the losing party, and which come into force next April. This may not have any specific impact on property litigation but is likely to cause at least some satellite litigation as the rules are tested as to what, for example, level of costs are proportionate for the particular claim and what events will be accepted as justifying an increase in the original costs budget.
As a general comment I would like to add that clients and solicitors are under ever increasing pressure to reduce costs/spend. So when litigation is brought or threatened there must be an open and honest dialogue to ensure proper consideration is given to the steps to be taken. LM
contact details:
Emma Pinkerton Senior associate dundas & Wilson LLP
d: +44 (0) 207 759 3617 S: +44 (0) 207 759 2401
E: emma.pinkerton@dundas-wilson.com W: www.dundas-wilson.com