Real Estate monthly digest – October

MEES consultation for commercial buildings: from E to B?

The minimum energy efficiency standards (MEES) restrict a landlord’s ability to grant a new tenancy or extend or renew an existing tenancy of certain property having an EPC rating of F or G unless the landlord carries out energy efficiency improvements. From 01 April 2023, the scope of MEES will extend to existing tenancies of commercial property and restrict a landlord’s ability to continue to let property with an F or G rating unless it carries out efficiency improvements.

The government has now issued a consultation looking at the future trajectory for MEES for commercial buildings through to 2030. The consultation applies to properties in England and Wales and closes on 07 January 2020.

The Government notes in the consultation that its preferred target is that, by 2030, all non-domestic privately rented property in England and Wales achieves an EPC rating of B as a minimum, provided the remedial action required meets a seven-year payback test and is therefore cost effective (the EPC B trajectory). The alternative trajectory is that, by 01 April 2030, all commercial buildings achieve a minimum EPC rating of C if required works are cost effective, again based on the seven-year payback test (the EPC C trajectory).

The Government acknowledges that not all buildings can achieve a minimum rating of B or C (as the case may be) and proposes that landlords should be able to continue to lease their premises from 2030 if they can prove that a building has reached the highest EPC band that a cost-effective package of measures can deliver. As part of the consultation, the Government is considering whether to introduce phased milestones or a single 2030 backstop for implementing whichever of the trajectory options is chosen.

The Government favours the EPC B trajectory as, on the basis of the Government’s own calculations, that trajectory delivers “significantly more savings” than the EPC C trajectory and “ensures that landlords across 85% of the existing stock must take action”. While acknowledging that the EPC B trajectory would require investment of approximately £5 billion between 2019 and 2030, the Government anticipates that the return on that investment would be “substantial”, with an average payback period of between four and five years, and “bill savings to business in 2030 would be £1 billion”. Further details, breakdowns and comparisons are set out in the consultation.

The Government also notes that an EPC cannot reflect or value improvements in operational performance and highlights separate plans to consult in 2020 on introducing mandatory in-use energy performance ratings for non-domestic buildings in the private sector.

Automatically generated email signature creates a valid contract for the sale of land

Mr and Mrs Neocleous and Ms Rees had been involved in a dispute in relation to access to a plot of land forming part of a property known as Wilders’ Wood. Wilders’ Wood was owned by Ms Rees and was situated at the edge of Lake Windermere. The plot was only accessible on land by crossing the property belonging to Mr and Mrs Neocleous, and Ms Rees maintained she had a right of way. Mr and Mrs Neocleous disputed and, it was alleged, prevented access. The matter was due to be heard by the First Tier Tribunal but during settlement negotiations it was agreed that Mr and Mrs Neocleous would buy the plot of land for £175,000.

The settlement terms were recorded by exchange of emails between the parties’ solicitors. However, some time then passed and Ms Rees sought to have the matter re-listed before the Tribunal. Mr and Mrs Neocleous argued that the email exchange was a binding contract of compromise and brought proceedings for specific performance.

As the contract involved the disposition of land, the email exchange had to comply with the requirements of s 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (the 1989 Act). In dispute was whether the ‘automatic’ generation of Ms Rees’s solicitor’s name, occupation, role and contact details at the foot of an email meant there was a contract which had been signed “by or on behalf of each party to the contract” in accordance with the requirements of the 1989 Act.

The County Court held that the email footer was a sufficient act of signing and the requirements of the 1989 Act had been met, the judge commenting that:

• the ordinary usage of words has a tendency to develop and “many an ‘ordinary person’ would consider that what is produced when one stores a name in the Microsoft Outlook ‘Signature’ function with the intent that it is automatically posted at the bottom of every email is indeed a ‘signature’”. However, the “sounder guide” to whether it is in fact a signature is whether the name was applied “with authenticating intent”. In this case the solicitor had added the words ‘Many Thanks’ at the end of the text. The judge noted that “the manual typing rather than automatic inclusion of the words ‘Many Thanks’ at the end of the email strongly suggests that the author is relying on the automatic footer to sign off his name”;
• the recipient of an email has no way of knowing whether a signature is added automatically or manually and that “the presence of the name indicates a clear intention to associate oneself with the email – to authenticate it or to sign it”; and
• the footer is only present because of a conscious decision to insert its contents (whether as a decision in that particular case or a more general decision to add the footer in all cases) and the sender is aware their name is being applied as a footer.

As the contract has been signed and it was not in dispute that the solicitor had Ms Rees’s authority when the email was sent, there was contractual intention and the exchange incorporated the terms of the agreement, Mr and Mrs Neocleous were granted an order for specific performance.

Comment

The decision is of interest for a number of reasons: (1) it is a reminder that a signature footer in an email can be a signature if it is affixed with an authenticating intention and this decision will no doubt be cited with approval in discussions about electronic signing; (2) it makes it clear that the automatic inclusion of a signature footer by the operation of Microsoft Outlook does not make the footer any less valid a signature than if it had been included manually; and (3) it demonstrates the need for care in exchanges of emails when the context may give rise to an argument that a binding contract has been entered into (and the insertion of the words ‘Subject to Contract’ in the title may be desirable in appropriate situations).

Neocleous v Rees [2019] EWHC 2462 (Ch)

A failure to document….

The High Court has held that an informal agreement between the Claimants in this matter (who wished to develop their land) and a neighbouring property owner to have a right of way removed from the property register was not binding on a successor in title where the agreement had not been registered.

The case provides a cautionary tale for developers. Had the Claimants arranged for the right of way to be removed from the Land Registry title as soon as they reached agreement no dispute would have arisen.

Read the full details of this case.

Pezaro & Anor v Bourne & Anor [2019] EWHC 1964 (Ch)

Making ‘gigabit- capable’ connections…

The Telecommunications Infrastructure (Leasehold Property) Bill 2019-20 has been introduced in Parliament. The Bill would amend the Electronic Communications Code (the Code) to provide operators with a cheaper and faster process for installing equipment where a residential tenant in a block has requested a service and a landlord is unresponsive to the operator’s requirements in order to meet that request.

The Bill proposes a fairly complex procedure requiring two warning notices and a final notice to be served by an operator on a landlord. If the landlord remains unresponsive, the operator can seek interim Code rights for a period of no more than 18 months (after which time if the Code rights are to continue it is envisaged the operator will have reached agreement with the landlord or applied to have Code rights imposed). In England and Wales, the application would be made to the Upper Tribunal (Lands Chamber). The Bill does not apply to commercial property at this point.

The Bill does not take forward many of the proposals set out in the Government’s 2018 consultation on this topic. The consultation covered both residential and business tenants and included proposals to allow operators to seek a warrant of entry via a Magistrates’ Court two months after first contacting a landlord, and sought to place an obligation on landlords to facilitate the deployment of digital infrastructure.

Read the Government’s response to the consultation and accompanying press release.

The Bill’s progress can be followed here.

A reasonable refusal of consent…

The Supreme Court has held that a landlord was reasonable in refusing a tenant’s request for consent to apply for planning permission, whereby if successful, the planning permission would have given the tenant the chance to compulsorily acquire the freehold under the Leasehold Reform Act 1967. This reversed the decision of the High Court and Court of Appeal.

The case concerned a ‘fully qualified covenant’ where by the tenant promised not to apply for any planning permission without the consent of the landlord, not to be unreasonably withheld. It was noted that the reasonableness of the landlord’s decision ‘will in every case be a question of fact and degree measured as at the date upon which the relevant consent is sought by the tenant’.

Sequent Nominees Ltd (formerly Rotrust Nominees Ltd) v Hautford Ltd (a company registered in the British Virgin Islands) [2019] UKSC 47.