COVID-19: Electronic Bundles and Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18

18.05.2020

As many courts and court users are becoming more accustomed to the new ‘remote’ face of justice, practitioners are expected to become accustomed to the new tools of the trade. Once the teething problems with technology are eliminated, the courts will be able to move forward with their usual work. In this bulletin, Rosamund Baker considers the recent guidance on e-bundles and their use in remote hearings, whilst Tom Frazer delivers a case analysis on an important (and non-Covid-19 related) case.

Should you wish to discuss any of these topics, or raise any other queries, do not hesitate to contact either the clerking team (+44 (0)20 7420 9500 or clerks@selbornechambers.co.uk) or any member of Chambers. Please rest assured that Selborne Chambers remains fully operational and very much open for business.

Mark Warwick QC

 

PRODUCING AND USING E-BUNDLES

When creating any bundle, the first port of call was paragraph 27 of Practice Direction 32 (or the relevant guidance in the particular court). Now that practitioners must produce electronic bundles (or e-bundles) on a more regular basis, the first reference should be to paragraphs 24 to 26 of the courts’ ‘Protocol regarding Remote Hearings’. As previously referred to in Selborne’s Covid-19 bulletins, this protocol gave some guidance in March 2020 on e-bundles. Paragraphs 24 to 26 state:

  1. The parties should, if necessary, prepare an electronic bundle of documents and an electronic bundle of authorities for each remote hearing. Each electronic bundle should be indexed and paginated and should be provided to the judge’s clerk, court official or to the judge (if no official is available), and to all other representatives and parties well in advance of the hearing.
  2. Electronic bundles should contain only documents and authorities that are essential to the remote hearing. Large electronic files can be slow to transmit and unwieldy to use.
  3. Electronic bundles can be prepared in .pdf or another format. They must be filed on CE-file (if available) or sent to the court by link to an online data room (preferred) or email.

This guidance supplies the important points but is admittedly brief. Thankfully, a good body of further guidance or explanation is building up to help any person required to create an e-bundle.

A significant piece of guidance was provided recently by the High Court in Re TPS Investments (UK) Limited (In Administration) [2020] EWHC 1135 (Ch). Re TPS Investments involved a short application by an administrator to extend his term under the Insolvency Act 1986. More importantly for our purposes, HHJ Hodge QC took the opportunity to provide some guidance on e-bundles and in particular on what the ‘essential’ documents are (see paragraph 25 of the protocol above). The judge was referring to guidance issued by the Business and Property Court Judges in Manchester but the requirement for an e-bundle to contain only the ‘essential’ documents is the same as in the above protocol.

HHJ Hodge QC distinguished ‘essential’ from ‘that which is reasonably required’ as is used in CPR 35.1 (the duty to restrict expert evidence). ‘Essential’ clearly denotes a narrower set of documents than those which would have been required under ‘reasonably required’. The judge explicitly stated that the court does not want large amounts of documents that are difficult to navigate for judges and increase work for legal professionals. In TPS Investments itself, the court stated that only the application notice and the supporting witness statements should have been included and that the witness statements from previous applications were not ‘essential’. Although that statement is particular to the facts before the court in TPS Investments, it does demonstrate the extent to which the court wants bundles to be reduced when electronic. To work out what is essential, HHJ Hodge QC recommended that the parties consider their approach to the hearing at an earlier stage than perhaps otherwise required. If counsel is to be instructed, the judge stated that they should have a hand in selecting the ‘essential’ documents. This means that, if prepared effectively, an e-bundle should contain only those documents which the judge is actually referred to and the party actually relies upon in the hearing.

The second, if equally important, point made in TPS Investments was that an e-bundle must still comply with the requirements of a bundle. Further, extra effort will be necessary to ensure that the e-bundle is easily navigable by the parties and the court. When making an e-bundle therefore, the practitioner should be considering the many different technological options available to ease such navigation. Some guidance on this in provided in TPS Investments but practitioners should also be looking at the more detailed guidance issued by each court or in each area. For instance, COMBAR has issued a Guidance Notice on Remote hearings in the Commercial Court and the Supreme Court has issued its own ‘general guidelines’. Some helpful tips are as follows:

  • Page numbering should be sequential throughout the e-bundle i.e. the separate documents incorporated into the e-bundle should not be separately paginated. The emphasis on this requirement in TPS Investments is a friendly reminder to still consult paragraph 27 of Practice Direction 32 (or the relevant guidance for the particular court) for the usual requirements for any bundle.
  • If hard copy bundles are also to be produced, the page numbering in such bundles should be identical to the e-bundle. This may mean paginating the index for instance in the hard copy bundle. The Supreme Court also recommends that hard copies should be printed before any resolution changes or hyperlink additions.
  • The index of an e-bundle should be searchable and provide hyperlinks to the individual documents.
  • If possible, the e-bundle should be capable of being word-searched i.e. each file incorporated has text recognition enabled.
  • The size of each document incorporated into the e-bundle should be regulated. The Supreme Court recommends that the default display view should be 100%.
  • Tabs can be made with bookmarks instead and, if appropriate, secondary bookmarks can highlight particular pages of important documents.
  • The complete file should not be so large that the speed of loading or scrolling is compromised. The Supreme Court recommends that the resolution be reduced to about 200 dpi to 300 dpi.
  • If possible, the party should liaise with the court (or the judge’s clerk) to discuss whether the court wants a hard copy bundle as well as an e-bundle. Different options may involve producing hard copies for the court and advocates or producing a hard copy core bundle and producing the rest in only soft copy.
  • Particular reference should be made to any orders in the proceedings or guidance in the particular court as to the time for lodging and serving the bundle. The courts are generally requiring e-bundles to be lodged earlier than they would otherwise.
  • The e-bundle should be lodged and served in such a way that the court and the other party can easily access it. In TPS Investments itself, the access key or password to the e-bundle was provided much later than the e-bundle itself and even then the court was unable to access the file. Practitioners should test their methods of filing the bundle beforehand and should refer in particular to paragraph 26 of the protocol above.
  • If there is to be live evidence, thought should be put into how the witnesses will view the e-bundles. If there are to be no hard copy bundles, each witness should have access to a computer capable of reading the e-bundle. If necessary, a second screen should be provided so that the witness can see the e-bundle and video conferencing facilities at the same time.

As we all adjust to e-bundles and learn how to produce and navigate the same, there should also be a recognition that sometimes specialist help is required. In some larger or more complex cases, it will be necessary to engage IT or document management consultants or providers. If this is done, it is inevitable that such specialists will enable new methods of producing, displaying and using an e-bundle and the indication of the COMBAR guidance is that the courts will welcome the same.

 

LICENCE FOR WORK AND ENFORCEMENT BY OTHER TENANTS – Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18

On 6 May, the Supreme Court handed down its judgment in Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18. The Court was faced with the following question:

whether the landlord of a block of flats is entitled, without breach of covenant, to grant a licence to a lessee to carry out work which, but for the licence, would breach a covenant in the lease of his or her flat, where the leases of the other flats require the landlord to enforce such covenants at the request and cost of any one of the other lessees

The lead judgment was given by Lord Kitchin, with whom Lady Hale, Lord Carnwath, Lady Black and Lord Sales agreed. The Court concluded that, in licencing one lessee to carry out works that otherwise would be a breach of an absolute covenant, the Landlord was in breach of its enforcement covenants to the other lessees.

 

Facts

The leases

The property was a block of nine flats granted on long leaseholds by Randolph Crescent Ltd (“the landlord”). The lessees had covenanted to the effect that:

  • They were not to carry out alterations or improvements to the demised premises without the written consent of the landlord (“Clause 2.6”);
  • They were not to commit or suffer any waste, spoil or destruction in the demised premises or cut any roof, wall or ceiling in the demised premises or any drains, pipes, cables etc therein (“Clause 2.7”).

By Clause 3.19, the landlord covenanted to the effect that:

  • Every lease of the building would contain covenants of a similar nature to those in clauses 2 and 3;
  • At the request of a tenant, subject to payment of costs, the landlord would enforce covenants of a similar nature to those in clause 2 entered into by any other tenant of the building

 

The dispute

Mrs Winfield, one of the lessees, sought to carry out substantial works to her flat which fell within the scope of Clause 2.7. She obtained a licence from the landlord permitting her to carry out the works. Dr Duval, another lessee, objected to the works and issued proceedings against the landlord seeking a declaration that the landlord did not have the power to permit Mrs Winfield to breach Clause 2.7.

The dispute reached the Court of Appeal, which found in favour of Dr Duval (see judgment [2018] EWCA Civ 2298). The Court of Appeal held that:

  • It was implicit in Clause 3.19 that, in granting a licence permitting works that would otherwise breach Clause 2.7, the landlord was in breach of its agreement with the other lessees. This was the case irrespective of whether the contingency in Clause 3.19, namely the request to enforce, had arisen.
  • The Landlord would only be able to sanction a breach of Clause 2.7 with the express consent of all other lessees.

 

Decision of the Court

The Supreme Court, first construing the express terms of the lease to ascertain their proper meaning and then considering whether any terms were to be implied, found in favour of Dr Duval and dismissed the appeal against the decision below.

 

Clauses 2.6 and 2.7 [32-36]

The Court took into account the remaining length of the leases and the expectation that considerable work would be required to modernise them during their term. Contrary to the position accepted by both parties, the Court found that, on their proper construction, Clause 2.6 concerned routine improvements and alterations, whereas Clause 2.7 concerned works that went beyond the routine and could do damage to the building. The prohibition on cutting in Clause 2.7 extended only to works which were inherently destructive, and did not pertain to lesser works under Clause 2.6. The other lessees are protected from harm caused by routine improvement works by other means, such as the landlord’s covenants to maintain the building and keep it in good and substantial repair, as well as an action in nuisance against the lessee (for which an authorising landlord will also be liable).

 

Clause 3.19 and Implied Terms [42-55]

Clause 3.19 is intended to protect the lessees, by ensuring that every other lessee is bound by covenants of a similar nature to Clauses 2.6 and 2.7, and providing a mechanism to compel their enforcement. The landlord’s obligations under this covenant are continuing.

Clause 3.19 does not expressly prohibit the landlord from giving a lessee permission to carry out works subject to Clause 2.7. The key question is whether such prohibition is implicit. It is settled law that a party who undertakes a contingent obligation may not act to prevent that contingency ever occurring, or from putting performance beyond his power if and when the contingency arises. It should therefore be implied into the leases that the landlord has promised not to put it out of its power to enforce clause 2.7 in the leases of other lessees by licensing what would otherwise be a breach of it.

In granting Mrs Winfield a licence for her works, the Court therefore considered the landlord to be in breach of its obligations to the other lessees of the building.

 

Practice Points

  • Where, as is common, leases contain a landlord’s enforcement covenant, a term will also be implied that the landlord may not put it out of its power to enforce covenants within the scope of the enforcement covenant.
  • Landlords should be wary that their freedom to licence works that are otherwise contrary to an absolute covenant has been limited. Whilst they are legally able to do so, they risk breaching any enforcement covenants made to other lessees in the same building.
  • Landlords will be able to grant such a licence where permission is given by all the other lessees. The difficulty of obtaining such permission will likely increase for buildings with a greater number of lessees.
  • Where a lease contains a covenant to the effect that a lessee is not to make alterations without permission of the landlord, and an absolute covenant not to commit waste, spoil or destruction on the demised premises, it is likely that the two should be construed so as to exclude from operation of the absolute covenant anything which falls within the qualified covenant, not the other way round.
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