As anticipated, The Energy Performance of Buildings (England and Wales) Regulations 2012 (“the EPB Regulations) which have been in force since 9 January 2013 have been swiftly amended.
The Building Regulations &c. (Amendment) Regulations 2013 include provisions to correct an error in the original EPB Regulations which created a requirement for an EPC on the sale or letting of the whole of a building but did not create the same requirement on the sale or letting of a “building unit” (i.e. part of a building). Now, regulation 9 of the Building Regulations &c. (Amendment) Regulations 2013 provides that, in regulation 2 of the EPB Regulations, the definition of a “building” (other than in regulations 9(4) and 11 – which already adequately deal with the differences between a building and a building unit) includes a reference to a building unit in that building.
Minor updating amendments have been made to all Property PSL leases on this website (to make reference to the new Energy Performance of Buildings (England and Wales) Regulations 2012 which are in force from 9 January 2013) and to licence for alterations (to align the drafting of clauses 7.1 and 9.4 in circumstances where the landlord's permission may cease to be of effect).
The February 2013 edition of the Commercial Property Information Update – Issue 109 – is published today on this website.
One wonders whether, when the Government published The Energy Performance of Buildings (England and Wales) Regulations 2012 which are in force from today (9 January 2013), the publishing department mistakenly put up a draft version of the regulations instead of the final version – so open to criticism is the published version.
Let us start with the most startling aspect of the 2012 Regulations: from today, the Government seems to have removed the requirement for a seller or landlord of a flat (or other part of a building, whether residential or commercial) to produce an EPC to its intending buyer or tenant. This is clearly not what was intended. Indeed the first “key point” in the Government’s guide to energy performance certificates for the construction, sale and let of dwellings states that: “A building requiring an EPC must have: a roof and walls; and use energy to condition the indoor environment. A building can be: the whole of a building; or part of a building where the part is designed or altered to be used separately.” But that is not what the new regulations say.
Under the original regulations – The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 - an EPC was required for the sale or the whole or part of a building. This was because the statutory definition of a building stated that “a reference to a building includes a reference to a part of building which has been designed or altered to be used separately.”
Under the new regulations, “building” means a roofed construction having walls, for which energy is used to condition the indoor climate. Separately, a “building unit” is defined to mean a section, floor or apartment within a building which is designed or altered to be used separately. However, Regulation 6 of the 2012 Regulations only requires an EPC where “a building” is to be sold or rented out. The sale of a flat is clearly the sale of a “building unit” not a building. It is stretching interpretation somewhat to say that a third floor flat in a ten storey block is a “roofed construction”. The flat (the building unit) has a ceiling, but it is the building that has a roof.
There are only fleeting references to “building units” in the 2012 regulations. For example in regulation 9(4) “Certification for building units on or after 9th January 2013 may be based (a) for a non-residential building, on a common certification of the whole building for blocks with a common heating system..” But this may be construed as applying where an EPC is commissioned voluntarily. There appears to be no duty in Regulation 6 to provide such a certificate on the sale or letting of a building unit in the first place. In Regulation 11, where a building unit “having a valid energy performance certificate” (or being part of a building having a valid energy performance certificate) is offered for sale or rent, the asset rating of the building expressed in the energy performance certificate must be stated in any advertisement in commercial media. But again this may be construed as applying where an EPC is commissioned voluntarily and does not itself create a duty to obtain or provide such a certificate on the sale or letting of a building unit.
Other anomalies exist. Regulation 10 requires an existing EPC (that is, one obtained pursuant to the 2012 Regulations, not the 2007 Regulations) to be exhibited: “In a building to which this regulation applies, the energy performance certificate must be valid, and must be displayed in a prominent place clearly visible to members of the public who visit the building.” But upon whom is this obligation imposed? Regulation 10(1) says: “This regulation applies to a building…” So, will the building be hauled up in court? (Actually, the point is a non-point since, oddly, while there is a duty to exhibit under this regulation, there is no penalty for breach, and therefore no powers of enforcement. The duty could be ignored).
Display energy certificates are now required for buildings with a total useful floor area of “over 500m²” where the building is occupied by a public authority and frequently visited by the public. From 9 July 2015, DECs are also required for such buildings with a total useful floor area of between 250m² and “less than 500m²”. So, if your building is bang on the 500m² mark, you escape from the duty. A classic case of the undistributed middle.
It is probably fair to say that we should expect some amending regulations any time soon…..
The Energy Performance of Buildings (England and Wales) Regulations 2012 (SI 2012/3118) are in force from today (9 January 2013). These regulations consolidate the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 and subsequent amendments made to those regulations since the 2007 Regulations came into force. As well as consolidating existing legislation, the new EPC regulations introduce the following changes:
- A requirement for property advertisements to include details of the energy performance certificate rating of a building where available (regulation 11);
- The removal of the requirement to attach the front page of the energy performance certificate to written material (e.g. sales particulars);
- An extension of the current requirement for a display energy certificate to be exhibited in large public buildings, to public buildings with a floor area above 500m² (regulation 14). Unlike buildings larger than 1,000m², display energy certificates for smaller public buildings will be valid for 10 years;
- A requirement for energy performance certificates to be displayed in commercial premises larger than 500m² which are “frequently visited by the public” where an EPC has been previously issued (regulation 10).
The Government’s guidance documents have been revised to reflect the changes.
This month’s CPI Update reports on the latest failed attempt to challenge the application of harsh rules relating to the exercise of tenants’ break rights - Canonical UK Ltd v TST Millbank LLC  EWHC 3710 (Ch). This case will be considered fully in Friday’s webinar: A Comprehensive Guide to Lease Break Rights - tenants' rights and landlords' rights.
In the Canonical case, as a condition of its break clause, the tenant was required to have paid rent and other sums due “up to and including” the break date, and to have paid a break premium equivalent to one month’s annual rent. In response to an invoice for payment of the full quarter’s rent and service charge due on the quarter day before the break date, the tenant paid the full amount, but later claimed that the payment was in respect of rent and service charge for the period from the quarter day to the break date, and that the excess could be treated as the one month break premium. The lease reserved the annual rent “yearly and proportionately for any part of a year”. However, the court held that the lease could not be construed as allowing an apportioned payment of rent prior to a break date. The words “proportionately for any part of a year” were taken to apply only at the start and the end of the full contractual term. On that basis, either the rent had not been fully paid by the tenant, or the break premium was not paid. In fact, the June payment by the tenant was clearly attributable to the landlord’s demand for rent and service charge and so it was the break premium that had been left unpaid.
The January 2013 edition of the Commercial Property Information Update – Issue 108 – is published today on this website.
Freetown had lodged an appeal against an award of a surveyor under the Act. The time limit for appealing an award is strict: there is a 14 day period “beginning with the day on which an award… is served”, with no power for any extension of time. If the date of service of the award was the date of its posting, Freetown was out of time; if instead it was the date of its arrival, Freetown’s appeal could be heard. The High Court decision aligned the notice serving provisions of the Party Wall etc Act 1996 with section 23 of the Landlord and Tenant Act 1927 in deeming service to be effected at the point at which a notice is consigned to the post. Freetown was therefore out of time. However, the Court of Appeal disagreed. The language of section 15 did not exclude the operation of section 7 of the Interpretation Act 1978, which deems service to be effected “at the time at which the letter would be delivered in the ordinary course of post”. Hence, the appeal was in time.
However, perhaps the greater significance of this case is its casting of a slight element of doubt regarding rules of service under section 23 LTA 1954 (and therefore rules of service under the 1927 Act, the 1954 Act and the 1995 Act). Whatever Rix LJ says regarding section 23 must be considered as obiter, but he comments that “jurisprudence [in relation to section 23] has developed in large part without consideration of section 7 [of the Interpretation Act 1978], even if ultimately in Webber [C A Webber (Transport) Ltd v Railtrack plc  1 WLR 320] the inference was drawn that section 7 was excluded.” He suggests that, in C A Webber (Transport) Ltd v Railtrack plc, the Court of Appeal assumed it was bound by earlier authority (Galinski v McHugh  57 P&CR 359), which authority had not clearly decided that section 7 of the Interpretation Act 1978 was excluded by the language of section 23 LTA 1927.
Now, since the Webber case is at the heart of the rule of service under the 1954 Act that if you post a section 25 notice by recorded delivery, it is deemed served at the point of posting, and not when it would be delivered in the ordinary course of post, this is a rather important doubt to raise. He says  “I have also been struck at how the section 23 jurisprudence has not proceeded so much by reference to section 7 of the Interpretation Act and its exclusion, as by reference to the construction of section 23 on its own terms. Thus in Webber this court reasoned that it was bound by this court's decision in Galinski, but Galinski did not consider section 7. In such circumstances, I do not consider that it would be appropriate to extend the reasoning applicable to section 23 of the LTA 1927 into a different statute, with different wording, by reference to which it cannot be said that section 7 is excluded on the basis that "the contrary intention appears".” Rix LJ declines therefore to use section 23 jurisprudence to interpret section 15 since he is not wholly sure about the correctness of that jurisprudence.
An injustice appears to have righted in Davisons Solicitors (a firm) v Nationwide Building Society  EWCA Civ 1626. This was a case in which the appellant law firm had found itself unwittingly embroiled in a property fraud and ended up releasing mortgage advance moneys to complete a transaction that simply did not exist. The seller’s “solicitors”, although appearing to exist on Law Society and SRA databases of law firms, were fraudsters. The appellants were necessarily held to have committed a breach of trust since they had parted with the mortgage advance on terms that were not permitted. (See Lloyds TSB Bank plc v Markandan & Uddin  2 AER 884). However, the High Court did not allow the firm to avail itself of the protection of section 61 Trustee Act 1925 which enables a court to exonerate a trustee from a breach of trust if he/she has acted honestly and reasonably, and ought fairly to be excused for the breach of trust. In the High Court’s opinion, the law firm had not acted reasonably because it had failed to extract a formal written undertaking for the discharge of the “seller’s” charge. Mere adoption of the Law Society’s Code for Completion did not amount to extracting an undertaking. This was a surprising conclusion given that (in the version applicable at the time) the Code says: “When completing, the seller’s solicitor undertakes… to redeem or obtain discharges for every mortgage or charge so far as it relates to the property specified [in writing to the buyer’s solicitor before completion] which has not already been redeemed or discharged.”
The Court of Appeal has, however, overturned the High Court’s decision. It concludes that the terms of the Code for Completion, when coupled with an agreement to adopt the Code, did amount to the reasonable extraction of an undertaking to discharge. In its view, the law firm had obtained the benefit of an undertaking to redeem the seller’s charge from a person they reasonably believed to be the seller’s solicitor. Relief was therefore granted under section 61 Trustee Act 1925. Further, there was no breach of the firm’s retainer with the Building Society in failing to obtain a fully enforceable first legal charge (CML Handbook paragraph 5.8 at the time - now paragraph 5.12) since the relevant terms of the CML Handbook did not impose an absolute obligation on conveyancers, but a duty to act with reasonable skill and care.
The December 2012 edition of the Commercial Property Information Update – Issue 107 – is published today on this website.