LATEST: Landlords must wait ‘months’ for crucial Section 21 gas certificate decision

Landlords are still waiting for the courts to hand down a conclusive ruling on whether they can ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - LATEST: Landlords must wait ‘months’ for crucial Section 21 gas certificate decision | LandlordZONE.

LATEST: Landlords must wait ‘months’ for crucial Section 21 gas certificate decision

Landlords are still waiting for the courts to hand down a conclusive ruling on whether they can serve a section 21 eviction notice on a tenant when a gas safety certificate has been served after a tenancy has begun.

It’s 12 month since the Court of Appeal allowed the appeal of landlord Trecarrell House Limited; as we reported in , after nine months of legal preparation, lawyers representing the tenant in the contentious eviction case applied to the Supreme Court for permission to challenge the judgement.

The tenant involved, Patricia Rouncefield, had challenged her eviction after the St Ives landlord tried to serve an S21 notice on her, despite having provided a certificate after her tenancy began. Appeal court judges found in favour of Trecarrell House.

Readers have been in touch to ask for news, however, Justin Bates, housing lawyer at Landmark Chambers, which represented Trecarrell House, tells LandlordZONE: “The papers are currently with the Supreme Court awaiting a decision. I am afraid we have no idea when the Supreme Court will make a decision.”

LandlordZONE understands that could take another three months before a date can be secured for a Supreme Court hearing assuming permission for the appeal is granted.

Tim Frome (pictured) of Landlord Action has said that if Rouncefield’s legal team wins the appeal it would still be a blow to landlords ahead of the government legislating to remove the use of Section 21 notices.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - LATEST: Landlords must wait ‘months’ for crucial Section 21 gas certificate decision | LandlordZONE.

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Victory for commercial landlords in latest High Court challenge

The CVA process has been favouring other creditors over landlords, they argued – writes Tom Entwistle. The ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - Victory for commercial landlords in latest High Court challenge | LandlordZONE.

Victory for commercial landlords in latest High Court challenge

The CVA process has been favouring other creditors over landlords, they argued – writes Tom Entwistle.

The retail decline, exacerbated by Covid-19, has seen the Company Voluntary Arrangement (CVA) increasingly invoked by struggling businesses.

Struggling retailers in particular have increasingly been resorting to the CVA process which enables them to restructure their companies thus to some degree avoiding their liabilities and in particular their long-term lease liabilities. The process has allowed many retailing groups to close their unprofitable stores, while retaining control of their more profitable ones and carry-on trading.

The mechanism of a CVA also allows them to avoid their other liabilities to their creditors as well as getting their rents reduced under existing leases.

The landlords’ argument in Carraway Guildford (Nominee A) Ltd and others v Regis UK Ltd and others (2021) was that the result of Regis CVA ruling was that it was for the benefit of the tenant’s company shareholders, finance creditors and trade suppliers at the expense of the landlords.

Unfair processs

The case was prompted by the landlords’ concern about the rising number of CVAs (33 new CVAs in 2020 alone), and about the apparent unfairness of the process vis-à-vis landlords and the other creditors. It prompted some of the UK’s biggest commercial landlords to apply to the High Court to challenge what they identified as the worst excesses of the CVA.

The challenge was over the recent CVA involving the Regis hairdressing group CVA. With respect to the Regis CVA, the applicant landlords’ argued in court that landlords’ rights were significantly impaired, with rents reduced by between 25% and 75%, and arrears reduced to just 7% of their value.

The mandatory vote at the creditors’ meeting at which a majority of 75% of creditors by value had to approve the CVA, the value of landlords’ claim was reduced by 75%. By contrast, a long list of “critical creditors” – including the company’s shareholder, International Beauty Ltd (IBL) – were left entirely unimpaired by the CVA.

A key upshot of the appeal was the judge ruling that the CVA Regis be revoked on the basis that it favoured shareholders at the expense of landlord creditors. He deemed the CVA unfair to the commercial landlords as it favoured shareholders at the expense of these impaired landlords.

The landlords behind the appeal in Guildford (Nominee A) Ltd and others v Regis UK Ltd and others therefore have won a rare victory for all landlord creditors, the judge in the case setting some clear parameters for how far future CVAs can go without being seen to be unfair.

Mr Justice Zacaroli (pictured), said, to summarise: “IBL was… wholly owned by Regent, a global private equity firm… and to the extent that the company’s debt burden, in particular to landlords, was reduced, Regent as equity holder stood to benefit”.

As an unimpaired creditor, IBL would receive payment in full of a £600,000 debt. On the other hand, for the other creditors, a compensation fund of just £330,000 was provided to meet the claims of all impaired creditors.

The judge said it appeared that IBL had been given favourable treatment only because it was the company’s shareholder, rather than for any objectively justifiable reason, which otherwise would not have affected the CVA.

This, he reasoned, was unfairly prejudicial against the impaired creditors, including the applicant landlords. On that basis, Judge Zacaroli held that the Regis CVA should be revoked, meaning that it should be treated as never having taken effect.

Anyone interested in the full technical details of the High Court ruling can find them here:

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - Victory for commercial landlords in latest High Court challenge | LandlordZONE.

Source : Landlord Zone More   

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