Iqbal Mohammed has succeeded in obtaining an order for specific performance and judgement for damages in the High Court against a tenant who refused to abide by an expert determination in a lease dispute with the Council. The High Court ordered the Defendant to enter into a Deed of Variation, increasing the annual rent for a commercial property from £225 to £21,000, with 5-yearly upward rent reviews, for 48 years. The Court also gave judgement for damages, valuing the victory at over £1.1m for the Council.
Background
The Defendant acquired the lease at auction in early 2011. It subsequently altered the property, in breach of covenant, from a public house to convenience store, hot food take-away, ATM and two residential flats. The Council served a s. 146 notice, requiring the breaches to be remedied and damages to be paid. The Defendant disputed that it was in breach of lease and agreed to refer the dispute to a RICS-appointed expert for determination. The parties agreed the terms of reference and, if there was a breach of lease, agreed two proposed deeds of variation, for the expert to determine the appropriate one to compensate the Council. One required the payment of a premium, the other increased the rent to the prevailing market value for the property.
The expert determined that there was a breach of lease and that the deed of variation increasing the rent, which he assessed at £21,000, was the appropriate deed to be executed. The Defendant refused to execute the Deed arguing that (1) the expert had no power to compel it to execute the deed; (2) by submitting to expert determination, it had not agreed to execute the Deed; and (3) it was entitled to simply reverse the alterations rather than abide by the expert determination; it being unjust to order specific performance. At trial, the Defendant also argued that if there was an agreement to execute the Deed, it was unenforceable as it failed to comply with section 2, Law of Property (Miscellaneous Provisions) Act 1989.
Litigation & trial
The Council instructed Iqbal at the pre-action stage to advise on strategy and tactics. Iqbal successfully argued that the case should be tried under Part 8, significantly reducing the cost of litigation and time to trial. The case was tried within 1 year and heard without oral evidence. The judge held that the Defendant (1) had accepted, in its email exchanges with the Council, the offer to resolve the dispute through expert determination and had agreed to execute the draft deed; (2) in any event, the agreement could be implied; (3) s. 2 did not apply as the deed did not dispose of, assure or create an estate in land; and (4) it was just to order specific performance. The court further gave judgement for the rent lost by the Defendant’s failure to execute the Deed.
Points of law
This is a rare decision on enforcing an expert determination. The judge applied Cott UK Limited v F E Barber [1997] 3 All ER 540, in which Hegarty J accepted that if “a dispute as to performance is referred to the expert, then he must by implication have the power to make a final and binding decision.”
Practical significance
This case demonstrates the need to carefully consider any decision to refer a matter to expert determination, specifically, the consequence of an expert determining the issue against the client. Further, where a party reneges on an expert determination, careful consideration should be given to obtaining relief through a claim for specific performance.
Iqbal is a member of the Property Bar Association. Please click here to see his real estate experience.
Please contact chambers for a copy of the judgement.
