This summary provides an overview of the key points from the document: 1. The document outlines an agenda for the PMA event 2015, including presentations on omnichannel retailing, lease terms, market trends, securing landlord consent, collateral warranties, and case law updates. 2. The sections discuss topics like flexibility needed for omnichannel retailing, turnover lease calculations, preferred lease terms, challenges with service charge caps, and dilapidation disputes. 3. Practical tips are provided for securing landlord consent for assignments and sublets, including pre-application checks, application content and costs, dealing with delays, and grounds for refusal. 4. Considerations for tenants receiving a ground F

1. Welcome to the PMA event 2015

2. Taking stock… another look at
the state of the market
Sarah Parkinson

3. Omni-channel retailing
• Flexibility needed? Landlord’s reactions?
• Connecting to shopping centre wi-fi
• Turnover leases – here to stay? Are those internet
sales covered in the calculation…… and do you
care?

4. Your preferred terms
• Monthly rents
• Shorter term or longer term?
• Break right conditions
• Service Charge cap - challenges

5. Market Trends
• Competitors buying deals… driving up rents
• Increase in dilapidation disputes

6. The single biggest issue over the
next 5 years?
• Money
• Space
• Watch out for your competitors!

7. You have a magic wand….
….what would you change in the market place?
From the general to the specifics

8. Practical tips on securing
landlord’s consent
Considerations if you receive a
Ground F Notice
Pamela Shepherd

9. Introduction
• Practical tips for securing landlord’s consent.
• Considerations on receipt of opposed notice
pursuant to section 30(1)(f) of the Landlord and
Tenant Act 1954.

10. Landlord’s consent – pre
application checks
• What are the restrictions on alienation in the
lease?
– Absolute covenant;
– Qualified covenant - (Section 19(1) Landlord and
Tenant At 1927);
– ‘Section 19(1A)’ conditions (if new lease under
Landlord and Tenant (Covenants) Act 1995); and
– Check if actually need consent

11. Landlord’s consent - pre
application checks
• Form of application
– Check notice provisions
– Usually in writing (not email unless the lease
provides for it)
• Service provisions
– Check the lease – service on landlord
– Section 196 of the Law of Property Act 1925

12. Landlord’s consent – content of
application
• Must be clear, unequivocal and specific
• Two considerations -
- What is required by the lease; and
- Other information that needs to be given for the landlord
to be able to consider the application.
• Information required by the lease
– Read lease carefully and provide all required

13. Landlord’s consent – content of
application
• Other information to consider –
– the identity of the third party and any guarantor;
– the address of the third party and guarantor;
– description of trade or business and proposed use;
– a bank/accountant’s reference;
– a previous landlord’s reference;

14. Landlord’s consent – content of
application
– three years previous audited/management accounts
which show roughly pre-tax profits net of salaries
and drawings x3 the anticipated outgoings that the
proposed third party will be liable for (or a
satisfactory position as regard net assets);
– valuations of other properties held by the third party
with proof of the level of borrowings against those
properties (if necessary).

15. Landlord’s consent – content of
application
– In the case of a proposed sublease, a draft sublease
or sufficient detail about proposed terms (having
particular regard to the lease terms)
– Provide an explanation as to urgency (if applicable)
– Offer to meet reasonable and proper legal and other
costs in connection with the application and the
grant of consent (see below).

16. Landlord’s consent – the costs
undertaking
• Landlord entitled to its “reasonable and proper
legal and other costs”
– What should be provided in the application?
• Usual to agree an amount which should reflect the
complexity of the application
• Timing considerations

17. Landlord’s consent – the costs
undertaking
• If the landlord considers that amount offered is not
enough or insufficiently secured it should promptly
give reasons
• Delay by landlord in this regard could mean an
unreasonable refusing of consent

18. Landlord’s consent - delay
• Statutory duty under section 1(3) of the Landlord
and Tenant Act 1988 -
– the reasonable period runs from a complete
application being received by the landlord to when
the landlord notifies the tenant of its decision
– Once the decision has been communicated the
landlord is not entitled to consider further issues
• Length of time is calculated in weeks rather than
days but weeks rather than months

19. Landlord’s consent - delay
– If the tenant communicates urgency that needs to be
taken into account by the landlord
– If response takes too long it can be the equivalent of
a refusal of consent without reasons - this could
mean a damages claim by the tenant even if
subsequently the landlord shows that he did have a
good reason

20. Landlord’s consent - grounds for
refusal
Reasonable reasons to withhold consent or impose
conditions -
• Conditions in lease are not met
• Real problem with assignee’s covenant strength
• Proposed assignee’s use is prohibited under the lease
• Good tenant mix
• Possibly good estate management

21. Landlord’s consent - grounds for
refusal
Unreasonable reasons to withhold consent or impose
conditions –
• To force compliance by the outgoing tenant with
covenants that are easily remedied by the incoming
tenant
• Possibly good estate management
• Any grounds that have nothing to do with the landlord
and tenant relationship with regard to the subject
lease.

22. Landlord’s consent - remedies
If consent unreasonably withheld – either due to
delay or unreasonable reasons what can you do?
• Proceed anyway; or
• Apply to court for a declaration.

23. Landlord’s consent - The
Alienation Protocol
• Sets out good practice, but not adopted formally
• Last amended February 2015 on the issue of costs
undertakings

24. Ground F Notice – The ground
“That on the termination of the current tenancy, the
landlord intends to demolish or reconstruct the
premises comprised in the holding or a substantial
part of those premises or to carry out substantial
work of construction on the holding or part thereof
and he could not reasonably do so without obtaining
possession of the holding”
Section 30(1)(f) of the Landlord and Tenant Act 1954

25. Ground F Notice – Initial points to
remember
• Termination of current tenancy
– Date of trial
• Landlord “intends”
– Settled intention coupled with the ability to carry it
through
– Look at totality of works
• On the “holding” (or part thereof) - so excludes
– Works outside holding

26. Ground F Notice – Initial points to
remember
• On the “holding” (or part thereof) - so excludes
continued…
– Works under tenant’s obligations
– Works under landlord’s obligations
– Those the landlord is legally entitled to undertake
anyway through reservation in the lease
• A tenant will need specialist help on the
information given by the landlord

27. Ground F Notice – Initial points to
remember
• The landlord must require possession from the
tenant to undertake the works
– Section 31A(1)(a)
 The inclusion of terms giving access and other
facilities
 Landlord able to ‘reasonably’ carry out the works
 Interference to the tenant will not be substantial in
extent or in time

28. Ground F Notice – Initial points to
remember
• The landlord must require possession from the
tenant to undertake the works
– Section 31A(1)(b)
 Tenant will accept ‘economically separable part of the
holding’
 May need to show 31A(1)(a) applies
 Landlord able to ‘reasonably’ carry out the works
 Test for ‘economically separable’

29. Ground F Notice – Considerations
If a tenant decides not to fight it –
Advantages
• Entitled to compensation (as long as not combined
with a fault ground which is then proven)
• Can probably negotiate timing of exit with landlord
(you get certainty)
• Can probably negotiate down any interim rent/final
rent payments/dilapidations

30. Ground F Notice – Considerations
Advantages continued…
• No risk on costs
Disadvantages
• Landlord may change its mind and not carry out the
works
• Compensation will not cover all losses
• Need to find new premises with all the associated
costs

31. Ground F Notice – Considerations
If a tenant decides to fight it –
Advantages
• Still entitled to compensation at end of day if not
successful (as long as not combined with a fault
ground which is then proven)
• Opportunity to put landlord to strict proof
• Delays matters which may bring landlord to
negotiating table

32. Ground F Notice – Considerations
Advantages continued…
• If successful, will get a new lease of holding, or
part thereof or possibly whole
• Continuity of trade
Disadvantages
• Considerable risk on costs
• May not get a new lease at all
• Landlord may ‘drip feed’ evidence

33. Ground F Notice – Considerations
Disadvantages continued…
• The new lease granted may not be as envisaged -
– Redevelopment breaks
– Interim rent and increased new rent
• Uncertainty for business for a considerable amount
to time

34. Ground F Notice – Considerations
And finally don’t forget –
• Tenant may not decide the pace of any proceedings
– Termination applications (section 29)
– Summary judgment
• Full demolition is generally a ‘slam dunk’; but…
• Misrepresentation

35. Collateral Warranties and
Third Party Rights
Michael Sadler

36. Structure of session
• Why do you need them?
• What’s the difference between CW and TPRs?
• What do they say?
• Things to look out for in CW and TPRs
• What’s wrong with the standard forms?
• General points to be aware of

37. Why do you need them?
Employer
(Developer)
Contractor
Employer’s
Agent
Architect
Subcontractor Subcontractor
Tenant/
Purchaser
Funder
(Bank)
Structural
Engineer
JCT Design and Build
Subcontracts
Professional
Appointment
Professional
Appointment

38. Why do you need them?
Employer
(Developer)
Contractor
Employer’s
Agent
Architect
Subcontractor Subcontractor
Tenant/
Purchaser
Funder
(Bank)
Structural
Engineer

39. Why do you need them?
Employer
(Developer)
Contractor
Employer’s
Agent
Architect
Subcontractor Subcontractor
Tenant/
Purchaser
Funder
(Bank)
Structural
Engineer

40. Why do you need them?
Employer
(Developer)
Contractor
Employer’s
Agent
Architect
Subcontractor Subcontractor
Tenant/
Purchaser
Funder
(Bank)
Structural
Engineer

41. Why do you need them?
• To create a direct contractual link between:
– yourself (as the beneficiary); and
– the contractors or designers who carried out the
work.
• Property is more attractive to future purchasers/
tenants.

42. What’s the difference?
Employer
(Developer)
Contractor
Employer’s
Agent
Architect
Subcontractor Subcontractor
Tenant/
Purchaser
Funder
(Bank)
Structural
Engineer
Collateral
Warranty

43. What’s the difference?
Employer
(Developer)
Contractor
Employer’s
Agent
Architect
Subcontractor Subcontractor
Tenant/
Purchaser
Funder
(Bank)
Structural
Engineer
Third party
rights
Third party
rights

44. What’s the difference?
• Collateral Warranties are a separate agreement
between the warrantor (eg Contractor) and the
beneficiary (eg tenant).
• Third Party Rights rely on the Contracts (Rights of
Third Parties) 1999.
– Used to give a non-party to a contract a right to
enforce some terms of the contract.

45. What’s the difference?
• Third Party Rights might be used in large
commercial developments with multiple tenants
and multiple construction companies.
• Funders and tenants still like physically holding an
executed collateral warranty.

46. What do they say?
• That the warrantor has complied with the underlying
contract.
• Designed with reasonable skill and care.
• Contractor/Consultant can rely on any limitations
contacted in the underlying contract and raise
equivalent rights of defence.
• For a funder – likely to contain step in rights.
• Copyright licence to use ‘Material’ – FM? BIM Model?

47. What do they say?
• Maintain professional indemnity insurance
• Liability period (12 years from practical completion –
note this is traditionally a long-stop only)
• Assignable twice (so you can transfer it to a future
purchaser/ tenant)

48. Things to look out for
• Warranty is only as good as the underlying contract
(equivalent rights of defence).
– Underlying contract executed as a deed?
– Exclusions of certain types of loss?
– Limitations or caps on liability?
• Consistency with underlying terms (standard of care,
copyright etc).
• Priority of step in (if you’ve got more than one)
• Limitations on liability in the warranty
– Net contribution clause?

49. What’s wrong with the standard
forms?
• Their effect depends on how they are completed
(various options which change their meaning).
• Unlikely to be consistent with the underlying contract
(unless standard form contract used).
• Generally ‘contractor/ consultant’ friendly – contain
net contribution clauses and limitations.

50. General points to be aware of
• At the heads of terms stage make sure:
– You are to get warranties from the Contractor, the
professional team and key sub-contractors;
– You are also to received certified copies of the underlying
contracts;
– Completion of the lease is conditional on receipt of the
warranties.

51. General points to be aware of
• Follow up receipt of the collateral warranties after
completion
– It may not be possible to get all sub-contractor warranties on
completion (because they’ve not been employed yet); and
– Ensure that the provided forms are in the agreed form.

52. General points to be aware of
• I’ve got a warranty/ third party rights – I’m protected
right?
– A warranty is not money in the bank.
– Relies on the solvency of the relevant contractor/
consultant and whether they carry insurance to cover
your loss.
– Legal costs in making a claim for damages for breach of
the warranty – is it worth it?
– Get your surveyor to survey the property.

53. General points to be aware of
• So what’s the construction lawyer do?
– Reviews the construction provisions of the agreement for lease
or sale and purchase agreement;
– Reviews the form of the collateral warranties;
– Reviews the underlying construction contracts to check they
are in market norm form/ are they executed correctly (unusual
to check form of sub-contracts)
– Aligns the construction documents with any funder
requirements (to report on the ‘security package’)
– Do you want a report on the construction documents?
– Do you want your lawyer to spend time (and your money)
following up the warranties after completion? (Banks do)

54. Case Law Update
Suki Tonks

55. Legislation
Wales– Devolution of Power
Minimum Energy Efficiency Standards (“MEES”)
• What they say
• How they affect existing leases
The Deregulation Act 2015

56. Legislation
The Smoke and Carbon Monoxide Alarm (England)
Regulations 2015
Right to rent and the Immigration Act 2014

57. Case Law
The Creative Foundation v Dreamland Leisure Ltd
and others [2015] EWHC 2556 (Ch)

58. Case law
The Creative Foundation v Dreamland Leisure Ltd
and others [2015] EWHC 2556 (Ch)
• The Facts
• Issues
• Decision

59. Case Law
The Creative Foundation v Dreamland Leisure Ltd
and others [2015] EWHC 2556 (Ch)
Points to Consider

60. Case Law
Cavendish Square Holding BV v Talal El Makdessi;
ParkingEye Limited v Beavis [2015] UKSC 67
The Facts
Issue
Decision

61. Case Law
Cavendish Square Holding BV v Talal El Makdessi;
ParkingEye Limited v Beavis [2015] UKSC 67
Points to Consider

62. Talk to us….
Sarah Parkinson | 0115 976 6575 |
sarah.parkinson@brownejacobson.com
Pam Shepherd | 0121 237 3937 |
pamela.shepherd@brownejacobson.com
Michael Sadler | 0115 976 6599 |
michael.sadler@brownejacobson.com
Suki Tonks | 0115 976 6519 |
suki.tonks@brownejacobson.com