Court Finds Hole in Polo Argument

Ownership of land is often fettered with obligations and, in some circumstances, the obligation can be to permit someone else to extract something from the land. In legal terminology, this is called a profit-à-prendre and one of the most common of these is the right to graze animals.

Where such a right exists, the owner of the land cannot prevent the right being exercised. Recently, the High Court had to consider such a case. A farm which reared polo ponies sought to re-establish the right to graze them over a piece of adjacent land owned by someone else. The right was to graze the ponies from evening until morning for eight months of the year. The farm sought to register the right at the Land Registry. The application was opposed by the landowners.

The landowners had fenced off a part of the land which was being used to keep chickens and a pig. A deputy adjudicator at the Land Registry ruled that the farm had no right to graze its ponies on the land. The owners of the farm appealed against the decision, which led to the matter being heard in the High Court.

After complex arguments, the judge decided that the initial decision had been made on the wrong grounds and that, in principle, a right to profit-à-prendre had been established. The case was remitted back to the adjudicator for reconsideration.

The issue arose initially because the owners of the land, which they had bought in 1994, appeared not to be aware of the existence of the legal right to graze the ponies. The result was a court case over a right that, in financial terms, is almost valueless.

It is important when buying any property to ensure that rights others may have over the land are fully explored and their implications considered. Our property professionals can help you ensure you do not have any nasty surprises after you have purchased a property. Contact the Dale & Co. Solicitors Lincoln Conveyancing team for advice.


Partner Note
Polo Woods Foundation v Shelton-Agar [2009] EWHC 1361 (Ch). See
http://www.bailii.org/ew/cases/EWHC/Ch/2009/1361.html.

Dale & Co. Solicitors Lincoln Disclaimer

Subcontractor Fails to Avoid Liability

When a contractor and an employer are in dispute over something which has been done by a subcontractor, it is quite common for the contractor to try to ‘keep the peace’ by settling the claim with the employer and to then seek recompense from the subcontractor.

In a recent case, a defect in the sprinkler system in an office block caused damage which led to a claim for over £5 million against the contractor who had the contract for installation of the system. The sprinklers were installed by a subcontractor. The contractor settled the claim for £2.72 million and claimed that sum from the subcontractor.

The subcontractor disputed the claim, arguing that there were good defences against it and that the settlement reached was unreasonable.

The court rejected the subcontractor’s argument, holding that the defect was the fault of the subcontractor and the contractor had reached a reasonable settlement with the claimant and was therefore entitled to seek restitution from the subcontractor.

Subcontractors who are on notice that their work could give rise to a ‘second-hand’ liability may wish to consider at an early stage their strategy with regard to the proceedings, especially if they have a good defence against any claim and/or they think the contractor will be a weak negotiator.

Contact Richard Dale for advice on Commercial Law Matters.


Partner Note
Siemens Building Technologies FE Ltd. v Supershield Ltd. [2009] EWHC 927 (TCC).

Estate Property – HMRC Recommend Three Valuations

HM Revenue and Customs (HMRC) have recently been hosting conferences for the professions on Inheritance Tax (IHT) and one of the issues that has been at the forefront of concern for practitioners is the problem of IHT liabilities on properties, the values of which have fallen significantly since the owner died.

Contact the Dale and Co. Solicitors Lincoln Wills and Probate Department

There is a procedure for obtaining a refund of IHT overpaid when a property is sold for less than the probate value, but HMRC’s view is that a mere fall in the value of a property is not enough to warrant an adjustment to the IHT return. They advise that ‘Where the value of real or leasehold property has been accepted as returned, or agreed through negotiations, and tax has been paid and accepted based on that value, then that valuation is final. The valuation can only be re-opened if it can be shown that:

• information affecting the value of the property, that was available at the time of the valuation, was not taken into account; or
• new information affecting the value of the property has come to light, and that information would reasonably have been available at the time of the original valuation.’

Where an uplift in a property valuation is required, then penalties can be levied if the original IHT valuation is too low. In this case, HMRC comment that ‘Whilst each case is dependent upon its own facts, if instructions for the valuation of a property are given on the correct basis, i.e. as a hypothetical sale in the open market under normal market conditions, and marketed properly with no discounts for a quick sale or the time of year etc., then any uplift in value that is agreed is unlikely to attract a penalty.’

The feeling amongst many participants at the conference was that to demonstrate compliance with this approach can be demonstrated, three valuations from different estate agents are preferable, or a valuation to RICS (Royal Institution of Chartered Surveyors) standards if a definitive figure is required. Whilst this will go a long way to demonstrate that the liable persons exercised reasonable care, the most important questions for HMRC are on the actual steps that were taken:

• Was professional advice sought?
• Were instructions given on the correct basis?
• Was the valuer’s attention drawn to particular features of the property (such as development potential)?
• Was anything unusual about the valuation questioned?

The answers to these questions will help demonstrate whether reasonable care was taken or not.

Says Richard Dale, “HMRC’s approach will cause concern to executors who, whilst wishing to be diligent in the performance of their role as executor, may find it difficult to find the funds or time necessary to obtain three valuations.”

Partner Note

Source – HMRC Inheritance Tax and Trusts Newsletter, August 2009. See

http://www.hmrc.gov.uk/cto/newsletter-aug09.htm

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