Update: residential property

Waiving contract conditions

It is well established that a party to a conditional contract may waive a condition that is solely for their benefit provided that it is severable from the remainder of the contract. The case of Irwin v Wilson [2011] EWHC 326 (Ch) highlights that waiver of the performance of a condition in a contract is not effective once valid notice has been given to terminate the contract.

In this case the lease of a flat had the wrong plan attached to it. The contract was conditional on the seller obtaining a deed of variation to correct the lease plan and registering this variation with the Land Registry. The contract provided that if, after using all reasonable endeavours, the landlord was unable to satisfy the condition by a given longstop date, either party could give five working days' notice to the other to terminate the contract. The longstop date came and went and the seller after using all reasonable endeavours had been unable to satisfy the condition. In the meantime the buyer had moved into the flat and wanted to proceed with the purchase of the flat, notwithstanding the problem of the plan that the seller had been unable to remedy.

The longstop date having passed, the seller served notice to terminate the contract. The buyer waived the condition, but the seller claimed that the buyer had no right to waive the condition and applied for a declaration that the contract had been lawfully terminated. The court decided that the buyer had a right to waive the condition, but that the seller's notice effectively terminated the contract before the waiver. The contract did not specify whether the notice to terminate the contract ended it immediately or after the five working days during which the buyer was to vacate the property and the seller return the deposit. This was left to the court to decide.

This case is a reminder of the importance of any conditional contract being carefully drafted. It should specify who has a right to waive a particular condition and enforce the contract without the condition being satisfied. It must also be made clear in the drafting how the waiver of the condition will affect the other party's right to terminate the contract, if the condition is not satisfied by a longstop date.

The case highlights that, unless a contract clearly states otherwise, once an effective notice to terminate has been given it will be too late for the other party to revive the contract by waiving the condition.

Landlord plastered

With the letting market not the golden egg it once appeared to be, the extent and cost of repairs to be carried out by landlords becomes a greater focus. The case of Grand v Gill [2011] EWCA Civ 554 concerned a landlord's liability to repair residential property let on a short lease under section 11 of the Landlord and Tenant Act 1985.

Under this provision a landlord's obligations include the repair of the structure and exterior of the property and the installations for the supply of water, gas, electricity and drainage.

The question before the Court of Appeal was whether damaged plaster on the wall and ceiling of a property let on an assured shorthold tenancy came within the landlord's obligation to repair under section 11 as part of the structure of the property.

The High Court had considered that internal plaster was 'more in the nature of a decorative finish', whereas the Court of Appeal held that plaster was 'in the nature of a smooth constructional finish to walls and ceilings, to which the decoration can then be applied, rather than a decorative finish in itself' and on that basis it forms part of the structure of the property and falls within the landlord's obligation to repair under section 11.

Clearly this judgment is of interest to both landlords and tenants as, by clarifying that plasterwork forms part of the structure rather than being a decorative finish, it extends the scope of landlords' repairing liability.

Where to draw the line

Two recent decisions of the adjudicator to HM Land Registry may be of interest to conveyancers. Both arose out of a boundary dispute between neighbours and involved a rectification of the register.

In the first, Milsum and another v Gorman and another [2011] EWLandRA 2010_0360, the question before the adjudicator arose out of a dispute over a prescriptive right of way claimed by Milsum over a 'small corner of a tarmac driveway' that, following rectification of the registered title plans by the Land Registry in 2004, was part of the registered title of land owned by his neighbour, Gorman.

The driveway had been used since 1988 as the only vehicular access to Milsum's house. As a consequence there was no doubt that there had been the requisite 20 years' use needed to establish an easement by prescription, but the question here was whether the fact that the land over which the right of way was claimed was for part of that 20-year period within the registered title of the land owned by Milsum prevented the right of way being acquired.

Gorman asserted that Milsum could not claim a right by prescription as it is not possible for a landowner to obtain an easement over his own land. What Gorman, however, had ignored was the effect of what is commonly known as the general boundaries rule which states that Land Registry title plans show only general boundaries which are not conclusive as to ownership. If landowners wish the title plan to be definitive, they must apply to the Land Registry for a determined boundary under a procedure which is rarely used.

The adjudicator held that before the rectification in 2004 the title plan wrongly showed the area of driveway in question as being part of Milsum's registered title and the correction of the title plan was not a transfer of ownership, but merely an amendment to more accurately represent the legal ownership of the land. As, in spite of what the title plan had suggested, Gorman had owned the driveway at all material times, Milsum had acquired a prescriptive right of way by his use of the driveway for over 20 years.

The second case also concerned a boundary dispute and rectification of the register. In Mann v Dingley [2011] EWLandRA 2010_0582, the adjudicator to HM Land Registry was asked to rule on whether someone had standing to apply for the rectification of the register by removing land from a title, when the applicant could not show title to the land herself.

A plot of land in Cornwall had been the subject of a long-standing boundary dispute between neighbours, each claimed it as their own. There had first been an attempt to register it in 1989, which had led to considerable correspondence between the two parties' solicitors and the Land Registry and had culminated in the application being cancelled five years later. One of the parties to the dispute then died and her son, Dingley, applied for first registration of the disputed parcel of land and was successful. The neighbour, Mann, applied to the Land Registry for the land in dispute to be removed from Dingley's title. Mann could not prove ownership of the land herself, but the adjudicator held that this did not stop her applying successfully for rectification of Dingley's registered title.

There are circumstances in which the land registrar can rectify a registered title without the registered proprietor's consent. This power can be applied where the registered proprietor has, by a lack of proper care, caused or substantially contributed to the mistake. In this case, the adjudicator was satisfied that Dingley had substantially contributed to the mistake by not revealing either the dispute to the Land Registry or the existence of the correspondence with the Land Registry more than a decade earlier.

This finding emphasises the importance of full disclosure in an application for first registration. It was decided that Dingley had a duty to bring the dispute to the attention of the Land Registry, but that it might have been different had he warned his neighbour that he was making the application.

Secret planning foiled

Another example of a lack of transparency backfiring was seen in Secretary of State for Communities and Local Government v Welwyn Hatfield Borough Council [2011] UKSC 15, when the Supreme Court overruled the Court of Appeal and held that a landowner was not entitled to a certificate of lawfulness of existing use or development (CLEUD) where he had intentionally deceived the local planning authority.

The landowner obtained planning permission to build a barn on green belt land, subject to a condition that the building was not to be used other than for the storage of hay, straw or other agricultural products. Although the building was erected pursuant to this permission and looked like a barn, internally it was built and fitted out as a dwelling house and the landowner moved in and lived there, as he had always intended to do.

Four years later the landowner applied for a CLEUD to confirm that the existing use of the building as a dwelling house was lawful. In his appeal to the planning inspector after the council refused to grant a CLEUD, the landowner made no secret of the fact that he had deliberately deceived the council and had always intended to use the building as a dwelling house. The planning inspector granted the CLEUD, causing the council to apply to the High Court to quash the planning inspector's decision and confirm that enforcement action could be taken. The planning inspector's decision was duly quashed by the High Court, but a successful appeal by the landowner to the Court of Appeal followed.

The seven judges of the Supreme Court unanimously allowed the council's appeal on the basis that there had been no change of use under the Planning Acts as the building had been constructed as a dwelling house rather than a barn. A change of use must be from the 'real or material' use, rather than the permitted use.

The Supreme Court went on to say that, even if there had been a change of use, the landowner's dishonest conduct would not have allowed him to rely on the four-year time limit for enforcement action in respect of an unauthorised change of use of any building to use as a single dwelling house, as the landowner's intentional deception prevented the council discovering the unlawful use during the four-year period. It would be against public policy for a landowner to profit from his own wrongdoing in this way, although the Supreme Court did assert that the public policy argument should only be invoked in highly exceptional circumstances.

The government has confirmed its intention to strengthen the ability of local planning authorities to deal with unauthorised development and the Localism Bill 2010-11 proposes to address the issue of concealment, although, as currently drafted, not just limited to deliberate concealment.