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PMA Seminar

Agenda

Health and safety issues on managing a retail property portfolio

and closed stores – Stephen Panton

Case law update: An update on recent cases that could have an

impact on the management of your property estate – Mark Barley

Maximising statutory compensation under the 1954 Act: Tips and

tactics – Vicki Young

Dealing with CPOs: A discussion of the top points to consider

with a CPO and how best to react from a retailers perspective –

Richard Guyatt and Nikki Powell


Management of Health & Safety

in Retail Premises

Property Managers’ Association

Seminar, WBD London Office

12 September 2019

What we do

p3

Appeals against Statutory Notices

Defending HSE/LA

Prosecutions

Critical Incident Policies,

Corporate Governance &

Risk Management

Corporate Manslaughter

Investigations & Prosecutions

Environmental Incidents/Waste

Offences

Food Safety & Consumer Protection

• Managing key Retail-sector risks

• Hot topics and enforcement trends

• Vacant premises

• Q and As

Topics to be covered

The Cost of Getting It Wrong

• Occupiers and controllers of premises have a duty to ensure so far

as is reasonably practicable that employees and others (customers,

contractors etc) who may be affected by its undertaking are not

exposed to risks to their health and safety (SS 2& 3 HSWA 1974)

• Duty is to reduce and, where possible, remove foreseeable risks to

health and safety

• The existence of an uncontrolled (material) risk gives rise to a

breach of the general duty of care. Proof of actual harm is not

required for a criminal offence to be made out.

• Directors/Senior Managers – risk of individual liability where

organisation’s breach is due to their consent, connivance or neglect.

Health and Safety essentials

Key risks are;

• Premises Safety (Unsafe/Defective Premises)

• Fire Safety

• Management of Asbestos Containing Materials

• Management of Contractors – an organisation’s Achilles Heel?

Key Health & Safety Retail-Sector Risks

Infinti – Incident in Bristol on Thursday 5 Sept 2019

• Company took over shop 5 months before incident. New sign fitted?

• Customer suffered serious head injury after sign broke in two and

fell from shop front

• Primary and underlying cause of sign failure?

• Suitable, sufficient maintenance checks and

inspection regime?

• Adequacy of existing sub-frame/fascia

assessed prior to new sign fitted?

• Competent sign-fitter contractor appointed?

Premises Safety

William Hill (Prosecution by LB Camden)

• Jan 2013: 200kg sign fell causing fatal injuries to member of public

• 2006: sign fitted to wooden fascia, which was safe/solid at the time

• WH had separately engaged Sign Maker (Acean) and Shop Fitters

(Saltwell). Evidence of a failure by A and S to formally assess

adequacy of fascia/sub-frame for 200kg sign.

• WH argued competent contractors had been appointed and no

defects/potential defects found during

scheduled, visual, examinations of signs

and shop front.

• November 2018: William Hill acquitted

following six week trial.

Premises Safety – The importance of having

effective controls and checks in place

Hugo Boss UK (Prosecution by Cherwell DC)

• June 2013: 4-year old son of customer sustained fatal head injuries

after 19 stone, free-standing, mirror in changing room fell on him.

• Mirror installed in September 2012 as part of “hastily arranged”

revamping of pop-up store at Bicester Shopping Village.

• Instructions (to re-inforce wall and then fix mirror to the wall)

provided to the store were “ill-defined and not followed through”.

• Sentencing Judge found risk “would have been obvious to the

untrained eye” and that ineffective health

& safety management systems and

responsibility for the breach went “to the

“very top of the company”.

• June 2015: Hugo Boss fined £1.2m

Premises Safety – Plan with haste, repent at

leisure

• Carry out regular, proportionate, internal and external inspections

and record findings and repairs/action taken.

• Ensure employees appreciate and act on/report suspected defects

and hazards.

• Consistent and robust approach to compliance with organisation’s

health and safety policies & procedures.

• Often an Achilles heel - Appoint competent contractors, make sure

contractors have info about risks (relevant to their work) that exist,

make sure they plan to carry out work safely, and monitor

contractors.

Premises Safety – Minimising risks

• Increased activity – investigations and prosecutions by Competent

Fire Authorities for breaches of the Regulatory Reform (Fire Safety)

Order 2005

• Breach of a duty owed under 2005 Order = unlimited fine

• Common breaches include;

• No/inadequate Fire Risk Assessment and Emergency Plan

• Preventing/restricting evacuation routes & emergency exits

• Inadequate fire detection systems and lack of emergency lighting

• Cost of getting it wrong: Co-op fined £210,000 for x2 unsafe

premises (restricted/locked emergency exit doors)

Fire Safety: Post-Grenfell Tower

Failure to manage ACMs remains a key area of enforcement

• Check who is responsible for asbestos and find out where the

asbestos is (you’ll probably need an external accredited surveyor to

carry out an asbestos survey).

• Have the material analysed and keep a record of what you find.

• Carry out risk assessment and share information with anyone likely

to come into contact with the area (contractors/maintenance teams)

• Keep anything containing ACMs in good repair or have removed.

Management of Asbestos Containing Materials

In addition to those risks and enforcement trends already highlighted…

• Work at Height – still a major focus area for HSE/EHOs.

• Workplace Transport Risks – segregation of vehicles & pedestrians.

• CDM/Construction Projects – Satisfy “Client” duties and be clear

about involvement…sleep walking into design/control of work.

• Management of waste, Non-permitted discharges/Pollution events.

• Statutory Nuisance – Noise, Odour and….Pigeons.

Enforcement Trends

• HSE and Local Authorities are increasingly focusing on ill-

health/occupational lost-worktime events

• Ill-health accounts for five times more sick days than an

accident/incident

• Staff involved in cash handling duties and Cash in Transit transfers

are particular areas of interest.

• Rise in employee complaints - Some EHOs are asking operators to

demonstrate that they have suitable and sufficient controls and

measures in place to minimise risk of violence and harassment

HSE/LA Focus - Health & Wellbeing

• Fire safety/unauthorised access/building integrity risks

• Legal obligation to ensure vacant premises are, as with occupied

premises, maintained so as to minimise risks to health and safety

• Local Authorities are increasingly using Statutory Notices, including

Community Protection Notices, where vacant premises are deemed

to be a risk to health or a detriment to the local environment

• Regular visits/surveys are key to minimising risks

• Make sure you have procedures in place to identify/action LA letters

Managing Risks at Vacant premises

Any Questions?


Property Managers Association

- Case Law Update

12 September 2019

Facts• C was tenant under 999 year lease of a hotel in Manchester's Beetham Tower

• D was the landlord, a company specialising in buying up freehold reversions on residential blocks

• Lease contained a covenant by D to keep retained parts in good and substantial repair

• Building was clad with 1350 shadow box units (SBUs)

• Sealant on the SBUs had failed

• Temporary 3 year fix had been applied: stitch plates

• C wanted the SBUs all replaced, saying

• Concerns about safety

• Adverse effect on appearance of building

• Adverse effect of safety hoardings at foot of building

• D's position was that

• The stitch plates were adequate repair

• So no entitlement to an Order for Repair

• Precisely what was needed to be done was too vague to allow Court to order a repair scheme

Blue Manchester Ltd v North West Ground Rents Ltd (2019)

p19

Court found:

• Building was indeed in disrepair, despite the stitch plates

• Only designed as temporary measure, so could not be said to

be putting building in state required

• Aesthetics had some importance: this was a 'destination'

building spoilt by the stitch plates


Specific Performance

• Discretionary remedy even if breach of repair covenant established

• Failure to comply is a contempt of Court, so a draconian remedy

• 'where damages not an appropriate remedy' (Rainbow Estates v Tokenhold 1999) (T's repairing

obligation)

• Jeune v Queen's Cross Properties (1974) – "no reason in principle why in an appropriate case an

order should not be made against a landlord to do some specific work pursuant to his covenant to

repair…… where there is no doubt at all what is required to be done to remedy the breach"

• Distinction between:

• Orders requiring the carrying on of activities eg keep open clauses: not generally possible

• Orders simply requiring a result: more easy to define, so more likely to be granted

• Need for precision: "the Court must be careful to see that the Defendant knows exactly in fact

what he has to do …… so he can give his contractors the proper instructions" (Redland Bricks

(1970))

• But where "Landlord can be taken to be aware of what is required, a relatively general form of

order may suffice"


Court found:

• Damages not an adequate remedy

• Unfair given nature of the building

• Unfair to make T pay and then have to try to recover money from

L

• Replacement of SBUs sufficiently clear and certain

• Possibility of applying to undertake different scheme if practically

necessary

• Not necessary for detailed scheme of works to be prepared if end

result required is clear

• Realistic time for compliance, despite previous delays on L's part

(18 months)


Lessons:

• SP has not been seen as a practical remedy for tenants

facing landlord's disrepair

• Case may give encouragement for this view to be revisited

• Beware special nature of the building in this case

• Still not an entirely straightforward solution


Issue:

• What happens if the tenant's name is wrong on a lease?

•

Facts:

• Darlow grants lease to Seafood Shack (UK) Limited (SS(UK)L)

• SS(UK)L did not exist as a company

• Seafood Shack Limited (SSL) parent company

• Seafood Shack (Cardiff) Limited (SSCL) subsidiary

• Lease negotiated by agent for Darlow, and a director of SSL

• HOTs signed off describing tenant as SS(UK)L, but e-mails mentioned SSL once

• Solicitors acted in accordance with the heads

• SSL's solicitor never filled in the co. reg number of SS (UK) Ltd in the lease, despite Darlow's solicitor asking for it

• SSCL take up occupation and trade, but went into liquidation within a year

• SSCL's liquidator disclaimed any interest, and Darlow took back possession and let to new tenant

• SSL claimed it was the tenant, and claimed damages for unlawful eviction

Seafood Shack Limited v Alan Darlow (2019)

Arguments:

• SSL argued lease should be interpreted as referring to it, not

SS(UK)L

• Parties must have intended to grant lease to an existing

company

• Reference to SSL in the e-mails negotiating the HOTs


Court held:

• Explanation for reference to SSL in e-mails was shorthand for SS(UK)L

• Darlow had never heard of SSL or SSCL when lease granted

• What would a reasonable person having all the background knowledge

have understood the parties to have meant?

• Reasonable person could not have concluded parties meant either SSL or

SSCL

• No common intention that SSL would be the tenant, nor outward accord of

that proposition

• So SSL not a party to the lease

• Likely that SSCL had a tenancy at will, but that was disclaimed

• So Darlow legitimately took back possession


Lessons:

• Take care to name the parties accurately on the HOTs

• Failure to do so may invalidate the tenancy entirely

• A lease cannot be validly granted to a non-existent company


Issue:

• What are the ramifications of granting a lease to a party that has no legal

existence (ie a rowing club)?

Facts:

• Hounslow purports to grant a lease to Rowing Club of their club premises

• Rowing Club enters into a joint venture with the next door Hockey Club

Company to share facilities

• Hounslow agree with the parties for lease to be assigned to both Club and

Company, and lease to be extended

• Company then goes into liquidation and lease is disclaimed

• Hounslow evict the Club from the premises

• Club claims it still has rights to occupy

Panton v Brophy (2019)

Court held:

• Not possible to grant a lease to an unincorporated body such

as a club or a church

• SO original lease invalid

• BUT, effect of the agreed lease extension to both Club and

Company was to grant a valid lease to the Company

• Company held that lease on trust for itself and the Club for the

purposes of the joint venture

• Upon liquidation of Company, the Club's trustees (Panton)

were entitled to have lease vested in them to hold on behalf of

all members.


Lessons:

• Reminder of fundamental invalidity of granting a lease to a

party that does not exist

• Clubs are not a body that can take a lease validly

• Some entities like a church can be registered charities that

are able to take a lease, but some aren't

• If dealing with a charity, check to see if it is a registered body

before granting any lease to it


Issue:

• What is meant by a landlord's 'intention' to carry out works, within the context of an

opposed lease renewal under Landlord and Tenant Act 1954 ground (f)

(redevelopment)?

Facts:

• L plans substantial works to the building in which T had a lease of part (C2); works

substantial enough to satisfy ground (f) so L opposing renewal of T's lease

• T also had leases of other units in the building

• Works started to rest of the building, but were stopped when T and others complained

about the extreme noise

• L decided to carry out the C2 works separately as soon as VP was obtained, to

facilitate carrying out the wider works later

• Did L have the requisite intention in these circumstances?

London Kendal St No3 Ltd v Daejan Investments Ltd (2019)

T's arguments

• The wider works would always cause a noise nuisance, so

could be stopped

• SO, either the wider works, including the C2 works, would not

go ahead at all, or they would only take place more than a

reasonable period after the C2 tenancy would end, after

issues about the noise nuisance had been resolved (so would

be too late to qualify for ground (f))

• SO, L may indeed subjectively intend to do the works, but in

practice would not be able to do so , so ground (f) was not

satisfied


Court held:

• Any injunction would be on terms to allow the works to

proceed but subject to appropriate terms to prevent excessive

nuisance

• So works could be started within a reasonable period (6

months and 21 days)

• Court believed L's witnesses as to the genuineness of the

intention

• Contract had been placed with contractors, planning

permission and funding also in place

• Intention made out, so L could oppose renewal


Lessons:

• Reminder that a landlord's intention for ground (f) is both

• Subjective: is the L's intention genuine?

• Objective: can the L actually carry through its intention?

• Always worth scrutinising what a landlord plans and whether it is

actually feasible, before conceding no renewal is possible

• Effect of S Franses : would L still carry out works if T vacated

voluntarily?

• Test applied in this case and answered affirmatively


E:

T:

Property Managers’ Association

- Case Law Update

Mark Barley

Partner

+44 (0) 238 020 8153

[email protected]


Maximising Statutory Compensation

under The Landlord and Tenant Act

1954 (the Act)

Vicki Young12 September 2019

• When will an automatic right to Statutory

Compensation arise

• Fault/ Non Fault Grounds

• Double or single Statutory Compensation

• Possible consequences of vacating early

• Negotiating a better deal

Statutory Compensation

p37

• When does the right to statutory compensation

arise?

• The grounds for opposing a renewal lease under

Section 30 (1) of the Act

• Opposing renewal on both a fault ground and a

non fault ground

Fault/non fault grounds

• Single Statutory Compensation

• Double Compensation

The amount of Statutory Compensation

payable

• Double Statutory Compensation

• The wording of Section 37(3) of the Act “the whole of the 14

years immediately proceeding the termination of the current

tenancy”

• Sight and Sound Education Limited v Books etc. Ltd.

• Exclusion clauses

The problem with vacating early

• What might persuade a Landlord to make a

further payment in addition to Statutory

Compensation?

• Timing

• Certainty

• What information can be gathered to see if a

negotiation is likely to be successful?

Negotiating a better deal


PMA PresentationRetail Units and Compulsory

Purchase12 September 2019

• Objections.

• Negotiations and Lease considerations.

• Relocation.

• Compensation.

• Points to watch for.

Introduction:

What to do if your property is subject to a CPO

p43

Current CPOs

• Planning Permission.

• Request for information.

• Initial negotiations.

• CPO made by Local Authority.

• Stopping up applied for?

• CPO inquiry.

• CPO confirmation.

• Vesting.

• Compensation resolved by Lands Tribunal if not agreed.

The CPO Process for a Town Centre Scheme

• Engage a professional team!

• Record everything.

• Business as usual – but tell the acquiring Authority.

• Self-help – don’t assume the Acquiring Authority will lend you

a hand.

• Review your land interest (and compensation entitlement) and

keep reviewing.

• Check and maintain your accounts

If your property is subject to a CPO

• Assuming compensation package will cover everything – it

won’t

• Not keeping records.

• Not investing in the business in the shadow period

• Not talking to the Acquiring Authority (AA)

• Not considering insolvency/change of Developer

• Not planning for acquisition - or assuming acquisition is

inevitable

• Assuming you can hoodwink the AA and the LT

Common mistakes

• Requests for information – ask for costs before you return

them (you might not get them).

• negotiations – always engage.

• Planning application – best to object.

• CPO/Stopping up – again best to object.

What to do, when….

• Do you have to move?

• Can you be relocated into the scheme?

• Is a double decant what you want?

• What if you are left alone but your:

• fire access

• service access

• Services

• parking

are to be severed?

• Impact of stopping up – may not be something you are

compensated for, so best to object to the Order to protect your

position

What is the scheme going to do to you?

• Request undertaking for costs at the earliest opportunity (you

probably won’t get it but keep trying).

• Unsuccessful objection costs will not be reimbursed (but ask

for them in negotiations).

• To obtain objection costs back you need to defeat the CPO in

relation to your property - rare.

• Conveyancing and compensation negotiation costs should be

covered, if reasonable.

• Beware of without prejudice/sealed offers – significant costs

consequences.

Costs

• Different rules for owners and occupiers.

• Short term/rack rent leases may not lead to very much

property based compensation.

• Occupiers on rack rent leases are not main priority of the

Developer/Authority

• Lease events - Protected tenancies

• Never assume a CPO will actually happen.

• Keep Landlord informed – hold their hand.

• What to do about your subtenants/occupiers

Landlord and tenant issues

• Managing the business’ expectations during a CPO

• How do you manage store investment in the meantime.

• Investigating a relocation at risk

• Trading in isolation/a development site – impact on:

• Footfall

• Servicing

• Fire escapes

Retailing against a CPO

• The “Compensation Code” applies.

• Based on equivalence.

• Rule 2 – value for interest in property (for many retail

premises there will not be much).

• Principal other head of claim is Rule 6 “disturbance” – any

other losses flowing from the dispossession.

How compensation works

• Fees.

• Loss of profits (temporary/permanent).

• Impact on retained land (for instance fire access/servicing

access severed).

• Relocation –v- Extinguishment.

• Claimant must act reasonably throughout.

• Value for money / “new for old” – can be a significant factor in

retail relocations.

• Early and continuing valuation advice essential.

• VAT/ other tax issues.

Disturbance – Heads of Claim

• Value for money.

• Lack of evidence of profits/Proving future profit

projections.

• Multiple interests – is the person relocating the person to

whom compensation will be paid.

• Section 10A re investment compensation – only

available for one year post vesting.

Compensation Pitfalls

• Be clear in your specification and what you can afford.

• Impacts of value for money.

• Don’t move until the ink is dry and you are definitely going to

be compensated.

• Try to load as much cost as possible on the acquiring

Authority.

• Remember the relatively short timescales – vesting only takes

three months.

• Need to relocate specialist kit?

Dealing with relocations

• Not planning for relocation:

• Active searching

• Time to plan

• Customer retention

• Staff retention

• Moving, but then not being acquired – no remedy and no

compensation!

• Not having the AA on the hook if the Developer goes

bust.

Practical issues.

• Complicated and time consuming process – and you have to

continue with “business as usual”.

• Putting risk on the AA.

• Experienced professional team essential – and eventually

should not be a significant cost to you.

• The importance of considering the existing (and future)

ownership structure.

• Not getting caught out by value for money issues.

• Let your professional team deal with the CPO – so you can

keep profits healthy.

Conclusions

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