Dispute Resolution for Individuals

A contract does not need to be in writing to be legally binding. A contract may be made orally or partly orally and partly in writing. The difficulty comes when there is a dispute over what terms were agreed if the contract was made orally. In this case much will depend on the strength of witness evidence.

No. Court should be a last resort. Civil proceedings are covered by the Civil Procedure Rules which encourage parties to exchange information and communicate with each other to try to avoid disputes going to court. Even if proceedings are issued, parties are still encouraged to seek to negotiate settlement. Only between 3 and 3.5% of claims issued actually go to trial.

Typically, small claim hearings for which mediation is in effect compulsory, will take a year to reach a final hearing after the claim was originally made.

In the period to March 2014 there was an average of 56 weeks between a claim being issued and the claim going to trial. The time between issue and the claim going to trial rose between 2008 and 2012 and has fluctuated between 52 and 60 weeks over the last five years.

The loss of ground rent will be taken into consideration by your valuer when giving his opinion on the premium to be paid by the leaseholder. This is one reason why it is important to get advice from an expert valuer.

Your leaseholder has to pay your reasonable legal and valuation costs (although not the cost of negotiation by your valuer) and is legally liable for your costs as soon as s/he serves you with a notice claiming an extension. The first thing your solicitor should do is to demand from the leaseholder a deposit of 10% of the proposed premium (or £250, whichever is the greater). Solicitors will have their own policies but they may be prepared to wait until completion of the new lease and take their costs from the final sum paid.

This sounds like a claim under section 42 of the Leasehold Reform Housing and Urban Development Act 1993. There are very strict rules, deadlines and time limits to follow. You should get the advice of a solicitor who specialises in statutory lease extensions. Your solicitor will be able to tell you if the notice is valid and what you have to do.

The short answer is no.  The Leasehold Reform Housing and Urban Development Act 1993 sets out very clearly who is entitled to claim a new lease and a leaseholder’s breaches of lease covenants do not give the landlord the right to refuse the claim.  However, your solicitor will need to know what alterations have been done to the flat so that your valuer can take this into consideration when calculating what premium should be paid.

Your solicitor will advise whether the premium is so low as to invalidate the claim, but our advice would be do not ignore the claim but respond with a counter notice within the correct time frame. This can always be done on a “without prejudice” basis if there are serious doubts about the validity of the claim. Your solicitor will need to obtain advice from a surveyor who specialises in leasehold valuation work and your counter notice will specify what premium he considers is appropriate.

The leaseholder will have told you what they are willing to pay for a new lease. If you do not respond with a counter notice by the deadline stated (assuming that the deadline is correct) then you may be stuck with the figure your leaseholder has offered.

If all else is agreed and you are only arguing about costs you cannot refuse to complete the new lease. Your solicitor will advise you whether to make an application to the First Tier Property Tribunal for a decision about how much of your costs your leaseholder has to pay, or whether to accept what your leaseholder has offered.

While you may be able to get a rough estimate of the premium to be paid you will need to argue your case for that figure if a Tribunal has to make the final decision, and you could end up paying more than you had planned. We always recommend, therefore, that you get proper advice on the premium before you start, so that you can budget accordingly. The legal process of a statutory lease extension is fraught with difficulties as there are very strict deadlines to meet. If you get it wrong you can lose your right to a new lease immediately, be obliged to pay your landlord’s wasted costs, and will have to wait a year before you can start the process again, by which time the premium will have increased.

Generally, the fewer years remaining on the lease, the greater will be the premium.  Many other factors are taken into consideration.  A surveyor specialising in valuations for statutory lease extensions will be able to advise on a range of valuations which will give you the starting figure for your claim.  The Leasehold Advisory Service has an online lease extension calculator at www.lease-advice.org which can give you a rough indication of the likely premium.  The premium will be valued as at the date of your claim.

As long as you have been registered as the owner for two years or more you should be entitled to claim the right to surrender your existing lease and be granted a new lease on similar terms for 90 years on top of the remaining term, paying effectively no ground rent. This process of surrender and re-grant is commonly known as a statutory lease extension.

You will have to pay your solicitor and valuer for their time. From the date you give notice claiming a new lease, you also have to pay the landlord’s legal costs, plus the landlord’s valuer’s fee for the initial valuation, whether or not the new lease completes. So, if you change your mind, you will have to pay your own solicitor’s and valuer’s costs plus the landlord’s wasted costs and initial valuation fee. The landlord’s costs you have to pay are, however, limited to the costs incurred in responding to your claim and preparing a new lease. You do not have to pay your landlord’s valuer’s costs of any negotiations with your valuer, for example (although obviously you do have to pay your own valuer’s costs in respect of those negotiations).

Again, you will have to pay your solicitor and valuer for their time throughout the case. You will also have to pay the landlord’s solicitor’s costs and initial valuation fee (though not valuer’s negotiation costs) from the date you give notice claiming a new lease. Generally, you will not have to pay your landlord’s costs incurred after you have applied to the tribunal (unless the tribunal thinks there is some pressing reason why you should). Claims are very often settled before a hearing.

It would be unusual for the landlord to agree with your first offer. He will also have been given a range of values by his specialist surveyor. If a price cannot be agreed after negotiation you will have to apply to the First Tier Property Tribunal for a decision about the premium to be paid.

No, but we can tell you what sort of figure to expect. If the landlord tries to charge an unreasonable sum and we advise you not to agree, then the landlord will have to make an application to the First Tier Property Tribunal for a decision about his recoverable costs. This often does not involve a hearing.

You should receive a response pack with the claim. You have 14 days to respond. You should seek advice as soon as possible. You can:

• do nothing, in which case it is likely the claimant can apply for Judgment in Default against you
• pay the amount of the claim (in full or part)
• admit the claim and ask for more time to pay (in full or part); and/or
• dispute (defend) the claim (in full or part)

If the claim is defended, further information is usually provided by each of the parties, after which the case is allocated by a judge to one of three case management tracks (small claims track, fast track or multi track).

This is a question of fact, to be decided by reference to the particular circumstances of each case. It is usually presumed that the parties did have such intention. The onus of proving that there was no intention is on the party who asserts that no legal effect was intended and that onus is a heavy one.

Capacity, in this context, concerns a party’s ability to enter into an agreement. A court may refuse to give effect to a contract if one of the parties does not have capacity. Examples are:

bankrupts—have limited capacity to contract as a bankrupt’s property vests in the trustee in bankruptcy
minors—for most contracts the age of majority is 18 years
persons of unsound mind—a person can plead their own unsound mind to avoid a contract if it can be shown that the contracting party knew of that insanity
drunkards—the courts consider that drunkenness may be a defence to an action in contract, in a similar way to cases concerning unsoundness of mind