As a result of the government’s Covid-19 measures, landlords found themselves in the position of facing the lease forfeiture moratorium for arrears being extended through to the 25th March 2022.

When extending the deadline, it was also stated that a new alternative means of resolving disputes in the landlord and tenant sector would be introduced to facilitate an earlier resolution of the potential high volume of disputes regarding rent arrears.

On the 4th August 2021, the government announced the outline of a new arbitration service. The details are still to be confirmed but there are some key indicators as to how this will begin to work in practice:-

If you are a commercial Landlord seeking advice in relation to a tenant who has fallen into arrears, contact Amy-Jane Westaway GCILEx within our Dispute Resolution Team on 01604 828282 / 01908 660966 or email amy-jane.westaway@franklins-sols.co.uk.

Contracts are entered into regularly by all of us, whether that be as consumers, suppliers, shareholders, investors – the list goes on. But what happens when one of the parties fails to adhere to their contractual obligations and breaches the contract? What remedies are available to the innocent party? This blog will outline the various remedies available in a breach of contract matter and the circumstances in which they may be awarded.

Repudiation

If another party to a contract fails to comply with the terms agreed, the innocent party may be entitled to ‘repudiate’ the contract, releasing themselves from any further obligations contained within the contract in addition to claiming against the wrongful party for any losses suffered as a result of the contract not being performed.

Alternatively, they may ‘affirm’ the contract, agreeing to continue with it despite the wrongful party’s breach, but reserving rights to claim against the wrongful party for any losses sustained as a result of the breach.

Damages

Perhaps the most common remedy for breach of contract is damages – monetary compensation for losses suffered by the innocent party.

Damages can come in two forms – ‘special’ damages and ‘general’ damages. Special damages are awarded for sums that can be easily quantified, such as a loss of profit, whereas general damages are awarded for losses that are not easily quantifiable such as loss of amenity.

It is important to note that damages are not awarded simply to punish the party in breach, but to ensure that the innocent party is placed in a position it would have been had the breach not occurred. Further, there are restrictions upon the extent to which damages may be awarded and a number of factors that ought to be taken into account by a party who has found themselves subject to another’s breach and careful consideration should be given to this.

Specific performance

If damages are unlikely to be adequate in the circumstances, an alternative would be to request an order from the Court for specific performance, requiring the party in breach to perform its positive obligations within a specified time frame.

Circumstances in which damages may be deemed as inadequate could include situations where the subject matter or product of the contract is unique and cannot be reasonably substituted or when damages would be financially ineffective in rectifying the position for the innocent party.

If you are party to a contract which has been breached and require advice or assistance with regards to the same contract our Dispute Resolution team on  01604 828282 / 01908 660966 or email litigation@franklins-sols.co.uk.

Contracts are entered into regularly by all of us, whether that be as consumers, suppliers, shareholders, investors – the list goes on. But what happens when one of the parties fails to adhere to their contractual obligations and breaches the contract? What remedies are available to the innocent party? This blog will outline the various remedies available in a breach of contract matter and the circumstances in which they may be awarded.

Repudiation

If another party to a contract fails to comply with the terms agreed, the innocent party may be entitled to ‘repudiate’ the contract, releasing themselves from any further obligations contained within the contract in addition to claiming against the wrongful party for any losses suffered as a result of the contract not being performed.

Alternatively, they may ‘affirm’ the contract, agreeing to continue with it despite the wrongful party’s breach, but reserving rights to claim against the wrongful party for any losses sustained as a result of the breach.

Damages

Perhaps the most common remedy for breach of contract is damages – monetary compensation for losses suffered by the innocent party.

Damages can come in two forms – ‘special’ damages and ‘general’ damages. Special damages are awarded for sums that can be easily quantified, such as a loss of profit, whereas general damages are awarded for losses that are not easily quantifiable such as loss of amenity.

It is important to note that damages are not awarded simply to punish the party in breach, but to ensure that the innocent party is placed in a position it would have been had the breach not occurred. Further, there are restrictions upon the extent to which damages may be awarded and a number of factors that ought to be taken into account by a party who has found themselves subject to another’s breach.

Three key factors to be taken into account are mitigation, causation and remoteness of damage which are outlined briefly below.

Mitigation

The innocent party in a breach of contract matter does still have a duty to ‘mitigate’ the losses they may suffer as a result of the breach. If such a party is deemed to have unreasonably inflated their losses or to have otherwise acted or omitted to act in such a way that has resulted in the losses increasing, such conduct will be seen as breaking the chain of causation (ie, removing the liability from the party at fault for the additional loss) and the damages to be awarded would instead be quantified as if the innocent party had acted reasonably.

It is therefore important to do all you can to reduce the impact and extent of any losses suffered by you if you do experience a breach of contract on the part of another contractual party, otherwise you are likely to have to bear the extent of these losses yourself without recovering them from the opposing party.

Causation

For a claim for damages to succeed, the innocent party must be able to prove that the party whom breached the contract ought legally to be held as having caused the losses being claimed and that there is a complete ‘chain of causation’ between the breach and the loss.

It is not sufficient to demonstrate only that factually the losses would not have been suffered if the breach had not occurred. Even if this is demonstrated, damages will not usually be awarded if it can be proven that an unexpected and intervening act, caused or greatly contributed to the losses suffered. Examples of such circumstances would be the actions of an independent third party unknown to the party in breach or an ‘act of God’.

Remoteness of damage

In addition to causation, a party claiming damages for breach of contract must also establish that the damages claim pass the test for what is known as remoteness of damage. This requires the innocent party to demonstrate that the losses suffered are within the scope of the wrongful party’s responsibility. Remoteness essentially stems down to whether or not the loss would have been foreseeable or in contemplation of the parties at the time the contract was entered into. Not only must it be established that the losses would have been a possible result of breach, but also not an unlikely result of breach.

There are two key factors which the Court would consider when determining whether or not the test for remoteness of damage is satisfied; the knowledge of what tends to happen in the “ordinary course of things” and any special circumstances relevant to the specific circumstances of the contract which the parties knew or ought to have known about.

Specific performance

If damages are unlikely to be adequate in the circumstances, an alternative would be to request an order from the Court for specific performance, requiring the party in breach to perform its positive obligations within a specified time frame.

Circumstances in which damages may be deemed as inadequate could include situations where the subject matter or product of the contract is unique and cannot be reasonably substituted or when damages would be financially ineffective in rectifying the position for the innocent party.

If you are party to a contract which has been breached and require advice or assistance with regards to the same contract our Dispute Resolution team on  01604 828282 / 01908 660966 or litigation@franklins-sols.co.uk.

An award for damages is the most common remedy awarded in a breach of contract claim and the aim of such awards is to place the innocent party in the position it would have been had the breach not occurred.

However, there are restrictions as to the extent to which damages may be awarded and a number of factors that ought to be taken into account by a party who has found themselves subject to another’s breach.

Three key factors to be taken into account are mitigation, causation and remoteness of damage. These are outlined briefly below.

Mitigation

Regardless of the wrongful party’s conduct, the innocent party in a breach of contract matter does still have a duty to ‘mitigate’ the losses they may suffer as a result of the breach. If such a party is deemed to have unreasonably inflated their losses or to have otherwise acted or omitted to act in such a way that has resulted in the losses increasing, such conduct will be seen as breaking the chain of causation (ie, removing the liability from the party at fault for the additional loss) and the damages to be awarded would instead be quantified as if the innocent party had acted reasonably.

It is therefore important to do all you can to reduce the impact and extent of any losses suffered by you if you do experience a breach of contract on the part of another contractual party, otherwise you are likely to have to bear the extent of these losses yourself without recovering them from the opposing party.

Causation

For a claim for damages to succeed, the innocent party must be able to prove that the party whom breached the contract ought legally to be held as having caused the losses being claimed and that there is a complete ‘chain of causation’ between the breach and the loss.

It is not sufficient to demonstrate only that factually the losses would not have been suffered if the breach had not occurred. Even if this is demonstrated, damages will not usually be awarded if it can be proven that an unexpected and intervening act, caused or greatly contributed to the losses suffered. Examples of such circumstances would be the actions of an independent third party unknown to the party in breach or an ‘act of God’.

Remoteness of damage

In addition to causation, a party claiming damages for breach of contract must also establish that the damages claim pass the test for what is known as remoteness of damage. This requires the innocent party to demonstrate that the losses suffered are within the scope of the wrongful party’s responsibility. Remoteness essentially stems down to whether or not the loss would have been foreseeable or in contemplation of the parties at the time the contract was entered into. Not only must it be established that the losses would have been a possible result of breach, but also not an unlikely result of breach.

There are two key factors which the Court would consider when determining whether or not the test for remoteness of damage is satisfied; the knowledge of what tends to happen in the “ordinary course of things” and any special circumstances relevant to the specific circumstances of the contract which the parties knew or ought to have known about.

Summary

As outlined above, it is important that an innocent party continues to act reasonably and proportionately in a breach of contract matter. This of course can be easier said than done when faced with a potential defendant acting in contravention of the terms agreed between you, but will reduce the risk of any sum of damages being reduced by the Court later down the line.

If you require advice or assistance with regards to a breach of contract claim our dispute resolution team are on hand to help on 01604 828282 or litigation@franklins-sols.co.uk.

What do I need to prove in a claim for breach of contract?

  1. That a contract exists – you must be able to demonstrate that there is a legally binding agreement between the parties;
  2. That one party has failed to comply with the contract – ie, they have not kept to their side of the bargain or have fallen short of the service or standards expected;
  3. That you have suffered loss – you should be able to evidence the financial losses you have suffered as a result of the other party breaching the contract.
  4. That the loss was foreseeable – ie, the party in breach knew or ought to have known that the losses would be sustained if the breach of contract occurred.

At Franklins we understand that you want a quick resolution that is also cost effective. We will work with you to provide specialist advice and ensure a full case plan is prepared to outline your options and next steps. Contact the Dispute Resolution Team on 01604 828282 / 01908 660966 or email Litigation@franklins-sols.co.uk.

The Small Claims Track is used for lower value claims, such as debt recovery claims or contract disputes valued at less than £10,000 and is intended to be a more “user friendly” process. This means that many Claimants and Defendants alike are able to take conduct of the matter themselves as a ‘Litigant in Person’, rather than being formally represented.

However, Court proceedings can often be daunting for those involved and it is important that deadlines and key dates are met to avoid detriment to your claim or Judgment being made against you. This article therefore aims to set out key features of the process and any final Hearing.

So what does a claim in the Small Claims Track involve?

The process

  1. Before a claim is commenced, the Pre-Action Protocol should be followed and an initial Letter of Claim sent to the Defendant;
  2. If the Defendant’s co-operation is not forthcoming or the parties are otherwise unable to resolve the matter, the Claimant may proceed to file a claim in the County Court;
  3. Once the Claim Form and Particulars of Claim have been filed with the Court and subsequently issued and served upon the Defendant, the Defendant will then have 14 days to file an Acknowledgment of Service;
  4. If no Acknowledgment of Service is filed within this timeframe, the Claimant may apply to the Court for Judgment in Default against the Defendant for the full amount claimed;
  5. If an Acknowledgment of Service is filed, the Defendant will then have a further 14 days to formally respond to the Claim with any alleged Defence;
  6. Once the Defence has been filed with the Court, the parties will be sent a Directions Questionnaire by the Court. The questionnaire contains information such as availability for a Hearing, whether the parties are willing to engage in Small Claims Mediation and details of any witnesses. The parties must both complete and return the Questionnaire by the date specified by the Court;
  7. Once the Directions Questionnaires have been filed, the Court will then decide whether to allocate the matter to the Small Claims Track and whether a Hearing is required and if so, will issue a Notice of Hearing providing confirmation of the Hearing date, the date upon which the Claimant must pay the Hearing fee and any special directions to be followed by the parties beforehand;
  8. Unless otherwise specified by the Court, standard practice is for the parties to file and serve their written evidence with the Court in a compliant format no later than 14 days before the Hearing date;
  9. The evidence and documentation supplied by both parties will then be considered by the Judge at the Hearing in order for Judgment to be made.

The Hearing

The Hearing itself will be more informal than those in superior tracks and not at all as daunting or intimidating as often portrayed in TV dramas!

Usually the Hearing will be heard in one of the Judge’s rooms or one of the smaller Courtrooms.  Whilst they are usually open to the public, in practice it is uncommon for anyone other than the parties, witnesses and representatives to attend.

The Judge will have flexibility as to how to conduct the Hearing and will usually have read each party’s evidence and papers before the Hearing begins. The Judge will tend to ask each party to summarise their case in turn and then raise any queries they may have with either party. If either party has any comments or queries with the opposition, often the Judge will allow these to be expressed providing this is done in a reasonable and controlled manner.

Should you have representation?

Because claims allocated to the Small Claims Track are lower value, there are often issues of proportionality in instructing Solicitors to act on your behalf throughout the process. This is particularly so in defended claims and is important to bear in mind because costs recovery is extremely limited in Small Claims matters – even if you are successful.

To assist with this, our Dispute Resolution Team are able to offer a fixed fee consultation service to discuss your matter and provide you with guidance as to the next steps and what to expect moving forward.

If you are a Claimant or Defendant in a Small Claims matter please do not hesitate to contact our Dispute Resolution Team on 01604 828282 / 01908 660966 or email Litigation@franklins-sols.co.uk for details of our fixed fee services.

The severity of the Coronavirus pandemic has led to all possession proceedings being stayed from 27 March 2020 until 23 August 2020. This has left many Landlords and Tenants alike unsure what will happen with their pending possession claim and how it will be dealt with after this date.

Following the publication of the Civil Procedure (Amendment No. 4) (Coronavirus) Rules 2020 which is due to come into force on 23 August 2020, it has become clear that the Court will not automatically begin to process stayed Claims. Instead, a new Practice Direction will come into force requiring one of the parties to provide a ‘Reactivation Notice’ confirming that they wish for the Claim to continue.

The requirement for a Reactivation Notice will apply to all stayed possession claims, unless they are brought on or after 3 August 2020. This means that any trial date that was set before 27 March 2020, will be vacated and will not be relisted until a Reactivation Notice is filed.

After a reactivation notice has been filed, the Court will provide the parties with at least 21 days’ notice of any hearing to be listed.

If you require assistance with a rental repossession claim please contact Amy-Jane Westaway, GCILEx, in our Dispute Resolution Team on 01604 828282 / 01908 660966 or email amy-jane.westaway@franklins-sols.co.uk.

A Leaseholder of a residential property is entitled to extend your Lease providing certain criteria are met including the following:

  1. They have owned the property for no less than 2 years;
  2. The original Lease was granted for a period of no less than 21 years.

As a Leaseholder this right is important because the more the term of the Lease decreases, so does the property value.

Whilst many Leaseholders are successful in agreeing an extension with the Freeholders amicably either informally or following service of a Section 42 Notice, unfortunately disputes or circumstances can arise where an application to the First Tier Tribunal Property Chamber (“the Tribunal”) becomes necessary. For example if the parties are unable to agree on the premium payable or the Freeholder simply fails to co-operate or engage in the process.

Once an application to the Tribunal has been made, the Tribunal will either decide the terms of any new Lease, including the premium payable, on the papers filed, or a final Hearing will be listed in order for both parties to present their case.

After considering each party’s case and providing the Tribunal is satisfied that the Leaseholder meets the criteria required to entitle them to an extension, it will grant an Order setting out the terms upon which the new Lease is to be granted. If either party then fails to complete the new Lease incorporating these terms within two months of the Order being granted, a further Application can be made within 2 months to the Tribunal to enforce the Order.

If you have been unable to agree an extension with your Freeholder please contact our Dispute Resolution Department for information about our fixed fee services for Tribunal applications on 01604 828282 / 01908 660966 or email litigation@franklins-sols.co.uk.

If you are owed money by either an individual or a company, the service of a statutory demand can be an effective way of recovering the sums due to you if used appropriately.

What is a Statutory Demand?

A Statutory Demand is a formal and final demand for payment made to a debtor, providing them with a three week period within which the debt is to be paid.

If the debtor fails to pay the debt within this time-frame, they can be deemed as unable to pay their debts and as a result, a creditor may proceed to present a Bankruptcy Petition (if the debtor is an individual) or a Winding-Up Petition (if the debtor is a company). 

When is it appropriate to use a Statutory Demand?

A Statutory Demand should only be served if the following points apply to the sums owed:

What are the advantages of serving a Statutory Demand?

There can be a number of advantages in serving a Statutory Demand, rather than pursuing a County Court Claim including the following:

What are the disadvantages of serving a Statutory Demand?

Whilst there are a number of advantages to serving a Statutory Demand, can be disadvantages which ought to be considered prior to service:

Summary

Serving a Statutory Demand can be an effective way of recovering sums legally due to you but only when used appropriately. Using one inappropriately can be deemed as an abuse of process and it is therefore important to seek legal advice before proceeding down this route, to avoid facing severe costs consequences.

If you require legal advice or assistance in pursuing a debtor for sums due to you, or information about our fixed-fee debt recovery services, please do not hesitate to contact a member of our Dispute Resolution team on 01604 828282 / 01908 66966 or email litigation@franklins-sols.co.uk.

 

The Tenant Fees Act 2019 – Limiting payments charged by residential landlords and letting agents

From 1 June 2019, restrictions will come into force limiting the fees that tenants can be charged by residential landlords and letting agents. These limitations will apply following the introduction of the Tenant Fees Act 2019 (“the Act”) which will apply to all residential assured short-hold tenancies, licences to occupy and student accommodation tenancies.

Whilst initially, the Act will only apply to arrangements made between tenants and residential landlords or letting agents after 1 June 2019, from 1 June 2020, it will also apply to pre-existing arrangements. It is therefore vital that all residential landlords and letting agents become familiar with the restrictions imposed by the Act.

Payments that will be permitted

The introduction of the Act will mean that residential landlords or letting agents will not be able to charge fees to tenants unless they are expressly stated as being permitted within the Act. At present, fees permitted by the Act include the following:

In terms of time-frames for refunding such deposits, the Act states that refunds must be seen to:
– Within 7 days after the tenancy is entered into;
– Within 7 days after the landlord makes the decision not to grant the tenancy;
– By the “deadline for agreement”, being 15 days after the deposit is paid unless otherwise agreed in writing.

If a holding deposit has been taken from a tenant but the tenant withdraws, fails a right to rent check or provides false or misleading information regarding their financial suitability or honesty, the landlord or agent may serve notice on the tenant confirming that they intend to retain the deposit and their reason(s) for doing so.

If no such notice is served, the landlord or agent will lose the right to retain the deposit and must refund it to the tenant within the time frames specified above.

Consequences of failing to comply with the Act

The sanctions that landlords could face as a result of failing to comply with the Act are severe and include the following:

1. Civil fines of up to £5000 for a first offence and criminal fines of up to £30,000 for subsequent offences.

2. The repayment of prohibited payments plus interest.

3. Being banned from letting property of carrying out residential lettings and management work under the Housing and Planning Act 2016.

Any Section 21 Notice served upon the Tenant would also be rendered invalid and unenforceable until any prohibited payment has been repaid in full. Landlords and letting agents must therefore ensure that the Act has been complied with prior to service any Section 21 Notice upon a tenant.

The Dispute Resolution Team here at Franklins are on hand to provide advice and assistance with a variety of landlord and tenant disputes as well as rental repossessions. If you are a Landlord, Letting agent or Tenant seeking said advice, please do not hesitate to contact our team on 01604 828282 or litigation@franklins-sols.co.uk.