All change for unopposed lease renewals?

It is no exaggeration to say that this article is essential reading for anyone who deals with unopposed business lease renewals under Part II of the Landlord and Tenant Act 1954, particularly if the land is based in the areas of London that require the claim to be issued in County Court at Central London (“CCCL”). (If in doubt, enter the relevant postcode at https://courttribunalfinder.service.gov.uk/search/.)

A pilot scheme due to start in December (but likely to be January 2018) will see unopposed business lease renewal claims issued in CCCL transferred to the First-tier Tribunal (Property Chamber) (FTT) after the acknowledgment of service is filed. (Claims and interim applications have to be issued in CCCL rather than the FTT because the court fees need to be paid there.)

Under the scheme, the tribunal judges will sit as district judges in the FTT and apply the Civil Procedure Rules, including its usual costs rules. (Tribunal judges are also judges of the county court and so they are able to exercise the county court’s jurisdiction.)

The pilot scheme has two key implications for advisers handling these types of claim:

• cases will be administered by FTT staff and heard in FTT premises; and
• if a case reaches trial, the proposal is for the tribunal judge to sit with a valuer and together they will determine the new lease terms.

Recently, we were among a number of solicitors and surveyors who attended a meeting with members of the FTT and CCCL to discuss the FTT’s proposed draft directions and guidance for these claims and the practicalities of the new system.

Future timetable

In preparation for the pilot scheme, draft standard directions have been produced by the FTT and are designed to progress business lease renewal cases to trial within a 20-week target. These standard directions will be sent out once a case is transferred to the FTT, although parties can apply for bespoke directions if required.

Interestingly, the FTT appears to have based its proposed standard directions on those it uses to achieve a swift determination of leasehold enfranchisement cases. There are a number of differences between these draft directions and those that were produced by the Property Litigation Association (PLA) some years ago and which are generally used by CCCL in unopposed lease renewals claims.

Importantly, the FTT’s proposed timetable is much tighter and some steps will now take place concurrently. For example, the FTT will require a landlord to provide a draft lease within a fortnight of the directions being given, at the same time as the parties’ valuers exchange their measurements of the property and details of comparables.

Concerns were raised at our meeting about the FTT’s suggestion that it is unlikely to approve any stay of the proceedings once directions are given. The intention is to offer only one three-month deferment at the start of the process and on condition that the parties confirm that the dispute is being referred to PACT or “another recognised dispute resolution service”. This approach stems from a belief that these types of claim are now issued only if there is a dispute between the parties that needs to be resolved.

However, following some challenges to this assumption and approach during our discussion, the FTT is looking again at allowing parties to request a three-month stay or referral to PACT later on in the process. Even if there is no change here, parties will be free to agree extensions of time to the directions provided that the deadlines for bundles and trial are unaffected.

Evidence

In terms of the evidence required by the FTT’s draft directions, there is presently no provision for disclosure or witness statements and parties are required only to exchange experts’ reports a fortnight before the hearing. However, the FTT has agreed to reconsider whether there should be a direction for witness statements to be exchanged in appropriate cases.

There is a proposed direction for parties to “exchange statements of agreed facts and disputed issues” after the travelling draft lease has circulated between the parties. It is unclear why the PLA’s suggested direction for parties to agree a schedule of disputed terms has been replaced with this approach.

Will it work?

Following the feedback given during our recent meeting with the FTT, we expect to see revised directions and guidance for the pilot scheme published soon. However, we assume that the FTT will remain focused on achieving its target 20-week timetable between the issue of a claim and trial. Parties to future unopposed lease renewal claims issued in CCCL should therefore expect to comply with a tight timetable with little room for alteration or tactical delay. Solicitors and surveyors working in this area may therefore want to review their working practices and ensure that clients are aware of the importance of being available to give instructions.

There may be some who question whether the new proposed tight timetable is really appropriate and/or necessary with unopposed lease renewal claims but, if achieved, it will represent considerable improvement based on our experiences of CCCL. There is unlikely to be much complaint if advisers are able to conduct these types of cases more efficiently for their clients. The FTT has even pragmatically suggested that parties should send it copies of applications made to CCCL together with confirmation that the fee has been paid, so that the FTT does not have to await paperwork from CCCL before acting on it.

If the FTT’s pilot scheme is a success, then it will presumably become a permanent arrangement and other county courts could find this element of their workload removed.

This attempt to improve users’ experience of the courts follows on from the recent launch of the Business and Property Courts of England and Wales. Perhaps we are living in the “magic of the moment” to suggest that real change in court efficiency might be possible, but it is surely welcome that the judiciary are keen to try.

This article was written by Emma Humphreys and Natalie Johnston. For more information please contact Emma on +44 (0)20 7203 5326 or emma.humphreys@crsblaw.com.