Bishop & Sewell

The Transfer of unopposed Business Lease renewal claims to the Residential Property London Region – First Tier Tribunal (Property Chamber) forms the basis of a pilot scheme agreed with the County Court at Central London.

First Tier Tribunal

The pilot scheme was initially scheduled to run for one year from 1 December 2017. HMCTS has advised us that the scheme will now commence in early 2018 but no official date has been set. The Tribunal has issued a Guidance Note and Draft Directions.

Which claims will be included in the pilot?

Claims will automatically be included in the pilot and referred to the First-tier Tribunal for determination where proceedings are issued in the Central London County Court.

What about time out to negotiate?

The parties will have an opportunity to agree an initial three month deferral before directions are issued. The advance guidance issued by the Tribunal suggests that the deferral will only be made to allow the parties to refer the matter to PACT arbitration. However indications are that the Tribunal might be prepared to allow a general three month deferral for negotiation or mediation to take place.

Which procedure rules apply?

After the transfer to the Tribunal the Civil Procedure Rules (CPR) will continue to apply to the proceedings, costs and fees will be payable in accordance with the CPR and the Tribunal will have full cost shifting powers of the county court. If the case goes to a hearing then the Tribunal Judge will sit as a County Court Judge with the Tribunal valuer appointed as a Court Assessor.

First Tier Tribunal

How are the directions structured?

At the end of any deferment period or immediately if no deferment period is agreed the Tribunal will issue standard directions. In summary the directions provide a timetable for the service of a draft lease by the Landlord, comments on it by the tenant and a list from the Landlord of the terms still in dispute. The directions also provide for an early exchange of valuations (but not valuation reports until a much later stage) and then an exchange of statements of agreed facts and disputed issues. The Tribunal will then issue a listing questionnaire asking parties to list their dates to avoid during the proposed listing period. Thereafter the Tribunal will list a hearing date. The Tribunal’s target is to list all cases within twenty weeks of issue (or end of the deferral period). Once a hearing has been listed then expert reports must be lodged at least two weeks before the hearing and bundles with prescribed contents at least one week before the hearing.

What about the hearing?

It is anticipated that the hearings will be listed in 2 day blocks with say thirty cases per week in the expectation that all but one or two will settle. The Tribunal will generally inspect the premises in question, probably on the second hearing day.

What if evidence of fact is needed?

It is notable that there is no specific direction for the exchange of witness statements of fact. Such statements of facts are common where one side is proposing or opposing a break clause or one side is seeking a five year lease and the other a fifteen year lease. However, the Tribunal is open to requests for a specific direction to be issued. Alternatively the parties can simply prepare and serve the witness statements as required by the circumstances of the case.

Can applications be made for specific disclosure?

There are no directions for disclosure and any applications for specific disclosure will be dealt with on an exception basis.

Can the parties agree on a single joint expert?

The Tribunal’s directions are focussed on each side appointing their own expert, however a single joint expert could be appointed by the parties and the Tribunal would agree to this on an exception basis.

A case of Deja Vu?

The Tribunal has recognised there are similarities between unopposed business lease renewal claims and applications under the Leasehold Reform Housing and Urban Development Act 1993 to determine either lease or transfer terms and premium, where the Tribunal already has jurisdiction. During the pilot the Tribunal will apply similar procedures and directions to those adopted in enfranchisement cases.

Will the Pilot be a success?

Time will tell but if it is then it can be expected that the scheme will be rolled out across further regions.

To discuss any of the issues raised in this article or leasehold matters generally, please contact Stephen or email or call 020 7631 4141 and ask to speak to a member of the Landlord & Tenant team.

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