taking stock of the damage

www.strettons.co.uk
THE NEWSLETTER FOR STRETTONS’ CLIENTS
October 2011
The UKʼs 28th Largest Agent
Issue: 64
briefingNOTES
TAKING STOCK OF THE DAMAGE
Many of us were shocked to see the public disturbances in August of this year. We were fortunate
in that not many of the hundreds of properties that we manage in London were affected.
Notwithstanding, we do look after some
affected properties in Tottenham.
professionals taking stock of the
damage to buildings.
These pictures are of 638 High Road
Tottenham on Wednesday 11 and 12
August. Unfortunately following the
riots and the arson attack it had to be
demolished after rioters set fire to it. We
manage the adjacent building too which
was also damaged by rioters who broke
into the building.
Riot and civil commotion is an
automatic peril in a standard landlords
buildings insurance policy but beware
as many insurers restrict cover to fire,
lightning, aircraft and explosion for
vacant premises so riot and civil
commotion will be excluded.
One of our management surveyors
was first on the scene after the police
cordon was removed and at that time,
the area was awash with loss
adjustors, building surveyors and other
However, property owners can make a
claim against the police authorities
direct for riot damage even if the
cover is excluded from their policy or
they had no policy at all. The insurer
will also claim against the police
authorities to recover their loss.
Usually a claim against the police must
be made within seven days of the riot but
the police and Government debated the
matter and extended the seven day
deadline to forty two days to make the
claim against the police. This deadline
has now passed and any claim not in to
the police will be dealt with by the
insurer who will not have the power to
recover their loss. Strettons acts as
insurance broker and has a very large
portfolio under insurance.
Contact Ram Bekir
for information.
www.strettons.co.uk
SEE INSIDE
EASTENDERS
2
COMPETITIONS ACT 1998
3
SURVEYOR FACES JAIL OVER £1,000,000 BRIBES
2
SEE YOU IN COURT
4
WHAT A RELIEF
2
IMMUNE FROM PROSECUTION
4
THE IMPORTANCE OF ACCURATE DOCUMENTATION
3
NEXT AUCTION DATES: 24 OCTOBER AND 5 DECEMBER 2011
EASTENDERS
The Olympic Park is to get the same post code as the BBC use in the
soap opera Eastenders.
The site in Stratford will receive the E20 postcode which is currently used
by the fictional district of Walford in the TV series. The postcode will
serve five new neighbourhoods which are to have the following new
names which were selected as part of a neighbourhood competition;
Chobham Manor, East Wick, Marshgate Wharf, Sweetwater and Pudding
Mill. The previous highest postcode in East London was E18. There is no E19.
www.strettons.co.uk
SURVEYOR FACES JAIL OVER £1,000,000 BRIBES
We reproduce below text from Estates Gazette concerning the case of a surveyor who
was found guilty of taking bribes. Strettons prepared valuations for one of the parties
here but were not called to give evidence.
SURVEYOR FACES JAIL
OVER £1M BRIBES
A chartered surveyor at Ashdown Lyons has been found guilty of takin
g more
than £1m in bribes for inflating the values of exclusive London home
s.
Mary–Jane Rathie was told by Judge Timothy Pontius that
she can expect a jail sentence after she was found guilty
of five counts of fraud by a jury at the Old Bailey, EC4. She
will be sentenced next month.
The court heard that Rathie, who has worked at Ashdown
Lyons since 2003, accepted bribes including £900,000 in cash,
a Bentley Continental and a Range Rover Sport for inflating
the values of five properties in Belgrave Court, Westferry
Circus, Canary Wharf; Chester Mews, Belgravia; Grosvenor
Road, Pimlico; Cheyne Walk and Cadogan Square.
The scam led to Bank of Scotland paying out £10m in
mortgage offers to a fraudster calling herself Joanne Pier,
who has now disappeared.
Prosecutor David Durose told the jury that, in March 2007,
Joanne Pier approached Ashdown Lyons seeking valuations
on numerous residential properties claiming she was in
dispute with her father, a wealthy diamond trader, and was
trying to obtain the properties from the family trust.
The next month Rathie reported to her bosses in the
Finchley office that Pier had offered her a £100,000
"wedding gift", which she refused as she was acting in the
role of independent surveyor for a bank.
However, Durose said that in the following months,
Rathie accepted other bribes for providing dozens of
valuations to Pier, including for the five properties at the
centre of the case.
Rathie valued the Cheyne Walk property, after
refurbishment, at £6m with a rental value of £270,000 a
year, but an independent surveyor assessed the true value
at £3.5m with a rental value of £180,000 pa. The property
at Cadogan Square was valued at £3.2m, whereas the
independent survey valued it at £1.5m.
Rathie's husband, an officer with the Metropolitan Police,
was cleared of concealing his wife's crimes.
www.strettons.co.uk
WHAT A RELIEF
Readers maybe interested to know that 100% small business rate relief for certain properties was
extended for a further year from 1 October 2011 to 30 September 2012.
This means that small businesses occupying single properties
with a rateable value of £6,000 or less will continue to be
exempt for the next twelve months. There is tapering relief
for rateable values of £6,000 to £12,000 per annum. If the
occupier leaseholder leaves the property empty he will be
subject to 100% empty rates if the rateable value is over
£2,600 so it is worth keeping the premises occupied!
Strettons has been very successful in persuading the
Valuation Office to reduce certain rateable values to
below £2,600 thus saving the owner for empty rates.
www.strettons.co.uk
THE IMPORTANCE OF ACCURATE DOCUMENTATION
Mr & Mrs Haq had occupied a shop on a Council estate in East London, since 1983
They became periodic-tenants in 1998, on expiry of their lease and applied to renew their tenancy, as they were prepared to
invest some £300,000 on improving and extending the shop over adjacent land belonging to the Council. Strettons acted for
the tenants and negotiated heads of terms with the Council in 2001, whereby, in consideration of the proposed improvements
and extension by the tenants, there would be a new 60 year-lease with 5-yearly reviews to 15% of rack-rental, reflecting the
value of proposed improvements. There was a long period in which respective solicitors settled the necessary documents.
The Council, having agreed terms in principle, allowed Mr
Haq to commence works on its land adjacent to his shop; he
arranged finance and was anxious to go ahead. He built the
agreed shop-extension and made other improvements in 2003,
ahead of legal formalities, which were delayed and left
incomplete until 2005, when the Council transferred a number
of its properties (including this shop), to a Housing Association.
This new landlord then refused to recognise the Council’s
agreed terms and demanded that Mr Haq should accept a new
commercial 15-year lease, at a market rent, effectively making
him pay twice for his own improvements!
He and his wife were devastated and sought legal redress.
Their case involved complex legal argument about the effects
of a subject to contract agreement, proprietary estoppel,
constructive trust and unilateral actions. The Court of Appeal's
decision was published in July 2011 (almost 10 years after
Strettons had agreed the terms on their behalf). The Court
criticised the successive landlords for mishandling what should
have been a routine conveyancing transaction. The case was
appealed and Mr & Mrs Haq were, eventually, vindicated.
The Housing Association would not accept that they had
acted either unfairly or, unlawfully and went to Central
London County Court which, after a 3-day trial, found in
favour of Mr & Mrs Haq. This was followed by an application
to the Court of Appeal. The opening paragraph of its judgment
said: "…In these proceedings the court has once again to
consider the position of parties who embarked on a
negotiation with a view to agreements to be set out in written
contractual documents, where much of what was intended to
be done under the intended contract was done, at substantial
expense to one party on land belonging to the other, but
where the documents were never executed, though they had
been agreed in substance. The land is now owned by a third
party, which refuses to execute the documents. The most
important aspect of the agreements cannot have effect at law
without executed documents. Accordingly the arrangements
are sought to be enforced by way of a constructive trust, so as
to give effect to a proprietary estoppel. The judge held that
they should be so enforced. The landowner appeals"
Strettons took no part in the legal proceedings, as the Housing
Association had become our client from 2005 and we would
have had a conflict of interest. It is gratifying that a commonsense judgement confirmed the terms negotiated by us 10
years earlier; nevertheless, the costs must have amounted to
tens-of-thousands of public pounds.
A small business obtained justice but it took 10 years. The
landlords lost nothing, because their property was extended
and improved. Only the lawyers gained anything out of what
should have been a straightforward, common-sense settlement
that ought to have been settled by agreement years ago.
The only moral here is to agree terms and ensure that
they are documented swiftly and before works start.
www.strettons.co.uk
COMPETITIONS ACT 1998
On 6th April 2011 Leases and other Property Agreements, including those already in existence,
became subject to the UK Competition Law prohibiting anti-competitive agreements.
From hereon, any Lease that restricts
competition, such as a restrictive
user clause or an exclusivity clause,
will be void unless the clause can be
justified. Broadly speaking the Act
prohibits agreements that restrict
competition, either deliberately or in
their effect. The competition law
operates on a self-assessment basis
where the parties must determine
from the source whether the
agreement is lawful or could breach
the prohibition.
The Office of Fair Trading (OFT) is
regulating this, and has the powers of
investigation if they discover an
infringement. If this is the case the
parties can be fined up to 10% of the
turnover and also face potential
damage from the third parties. In
more serious cases individuals may
be disqualified as directors or face
criminal proceedings for more
serious infringements.
Currently there are no legal cases on
this matter and until a case arises it is
at present unknown as to how rigid
the Act will be enforced by the OFT.
In the meantime however, it may be
advisable for clients with parades of
shops or shopping centres that have
restrictive user clauses or exclusivity
clause in their leases to bear note of
this Act although our strong view is
www.strettons.co.uk
that there is a legitimate place for
restrictive clauses in certain
circumstances - the landlord will just
have to demonstrate the practical
reasons why they have been required.
briefingNOTES
www.strettons.co.uk
THE NEWSLETTER FOR STRETTONS’ CLIENTS
SEE YOU IN COURT
DIRECTORS
Benjamin Tobin BSc FRICS
Registered Property Receiver, Auctions,
Investments
Nothing is wrong until it goes wrong.
Philip J. Waterfield BSc FRICS
Auctions
We have all heard this well known phrase and
saying. Many litigators will tell you that their
business starts to improve when the economy goes
into recession as people start to look more closely at
transactions and when people start to lose money.
In addition, the murky world of fraud starts to come
to light as organisations start to look more closely at
their financial affairs and start to notice when things
are not quite as they should be.
Strettons has seen a marked increase in the work that we are being asked to do
for banks, solicitors and surveyors where organisations are thinking of pursuing
others in respect of poor valuation advice, fraudulent transactions and loss of
opportunity.
We act for both claimants and defendants in relation to property related matters
and have experience in both the County and High Courts. We have a team of
over 20 RICS Registered valuers, many of which are engaged in providing
expert evidence work.
For more information contact Mark Shaw on 020 8509 4412.
www.strettons.co.uk
IMMUNE FROM PROSECUTION
The decision of the Supreme Court
(House of Lords) in the recent case of
James v Kaney to remove immunity
from expert witnesses has caused a lot
of discussion and speculation in the
professional press as to whether it will
reduce the number of expert witnesses
prepared to give evidence in Court.
Our view is that this is probably of
more concern to expert in fields other than our own (eg medicine) as we
carry the risk of an action for professional negligence every day of our
working lives and hold suitable professional indemnity insurance for this very
reason. Many of us carry out expert witness work and for us the job remains
the same, i.e. to give evidence impartially and objectively and to understand
that our duty to the Court overrides any duty to our instructing solicitor or
client. Providing expert evidence remains a mainstay of our
business and is a growing part of our practice.
www.strettons.co.uk
Detailed specialist advice should be obtained before taking or refraining from any action as a result of the
comments made in this publication, which are only intended as a brief introduction to the particular subjects.
If you wish to discuss any of the issues referred to in this bulletin then you should consult your normal contact
in the firm or your legal advisors. Strettons cannot take any responsibility and will not accept liability for
action taken or refrained from on such general advice as contained within Briefing Notes.
If you receive Briefing Notes regularly your information is held by Strettons in accordance with the Data Protection Act
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not pass your details on to third parties. Please advise Strettons (ref ST) if you wish to be removed from our database.
Simon E. D. Tilsiter BSc FRICS IRRV
Property Management, Property Receiver & Auctions
Francis C. Hunter BSc FRICS
Property Management
Christopher J. M. Collins
Retail Agency
Mark R. Bolton BSc MRICS
City Agency
Mark R. Iliffe BSc MRICS ACIArb
Property Management
Neal Matthews BSc MRICS
Industrial Agency & Regeneration
Mark Shaw BSc FRICS
Professional Department
DIRECTOR OF I.T.
David Morris FRSA
ASSOCIATE DIRECTORS
Ian Mann BSc MRICS
Auctions
Kirit K. Jethwa
Financial Controller
Giles Owens MRICS
Auctions
Philip Costa BSc MRICS ACIArb
Professional Department
Geneviève Mariner BSc (Hons) MRICS
Professional & Leasehold Reform
Nick Fell LL.B (Hons) PG.Dip MRICS
Harlow Office
James Bacon BSc MRICS
Property Management
Chris Cornhill
Retail Agency
Gary Powis BSc (Hons) MRICS
Professional Department
CONSULTANTS
Peter G. Tobin BSc MPhil FRICS FCIArb
Philip P. Tobin FRICS MCIArb
Graham R. Slyper FRICS IRRV
John Shoesmith FRICS
Geoff Fisher FRICS IRRV
Malcolm Osborne FRICS
Ian Lerner FNARA, FICBA
STRETTONS’ OFFICES
Central House,
189-203 Hoe Street, London E17 3SZ
Tel: 020 8520 9911
41 Artillery Lane, Spitalfields, London E1 7LD
Tel: 020 7375 1801
Strettons Edwin Evans
253 Lavender Hill, Battersea, London SW11
Tel: 020 7228 5864
Stratford Office
63 Broadway, Stratford, London E15 4BQ
Tel: 020 8522 4666
M11 Corridor
The Forge, Mulberry Green,
Old Harlow, Essex CM17 0ET
Tel: 01279 451 835
www.strettons.co.uk
E-mail: [email protected]
E-mail: [email protected]
NEXT AUCTION DATES: 24 OCTOBER AND 5 DECEMBER 2011