Off-loading leases

The CBI/GVA Grimley Corporate Real Estate Survey was published last week. Among its findings are that 20% of businesses are planning to reduce their property space. It was only 12% six months ago.

That is not surprising in current conditions. Rents in FTSE 200 companies amount to 25% of profits, the report says.

In good times, however, property costs are not high on the agenda. Now they are becoming important. The report found that by the end of February 2008, construction companies suffered an 80% increase in operating lease liabilities and property provisions as a percentage of the value of their business, for example.

The trouble is that it is not easy reducing property costs where you have the long inflexible leases with upward only rent reviews which are still pretty much the norm.

I think we are going to see increasingly desperate attempts to get out of them – and that may mean an increase in property litigation.

Rising defaults expected

Research published by Investec Private Bank on Friday shows that nearly 90% of property professionals expect defaults on commercial property to increase in the next 12 months – but believe that banks will continue to lend to property investors and developers.

The wisdom of crowds. Though apparently as many as 4% think that banks will stop lending altogether!

Co-op to stay central

Co-operative Group, one of Manchester’s largest employers, is to stay within Manchester City Centre after all, when it relocates its offices. Previously it had been looking for a new location across Greater Manchester, although it never ruled out staying in the centre. It wants to leave its present site at Corporation Street on the grounds of cost, Egi reports today.

Court dress

The judiciary’s new robes are out. They went on show at the Royal Courts of Justice yesterday, The Lawyer reports. For civil work, no wigs, no wing collars, no bands. Just a long black gown, with coloured flashes on the breast to indicate rank. Suitable for any figure...

I think I rather like them. See them on your Judges from 1st October.

Apology

Things have been unusually busy the last few days and I apologise to regular readers for not having been able to update this blog for some days. Normal service will be resumed shortly.

Printworks works

Davis Coffer Lyons and Tushingham Moore have been appointed to re-position The Printworks in Manchester, EGi reports. Resolution bought the leisure scheme last year. Talks have started with bowling, club and restaurant operators, and there will some restructuring.

Amount of security for costs against receivers

A company in administrative receivership, acting by its receivers, sued for specific performance of a contract for sale and failed because all its terms were not in writing. The successful defendant knew all along the company was insolvent, but had not made an application for security for costs because he knew substantial sums had been realised in the receivership, and thought his costs would be paid out of monies held by the receivers.

When he realized the truth he applied for an order that receivers should pay (under s. 51(3) Supreme Court Act 1981). The Court declined.

1. Making a third party costs order required some exceptional circumstance, and there weren’t any
2. No-one said the receivers had acted improperly or unreasonably
3. Neither they nor the bank had funded or substantially controlled the proceedings or was to benefit from them
4. Since the company was not being wound up the receivers were its agents, and it alone was responsible for their acts
5. The defendant could have sought security for costs.

His appeal was dismissed. The Judge’s reasoning was correct. Aiden Shipping Co Ltd v Interbulk Ltd, The Vimeira (No 2) [1986] 2 All ER 409 considered. There was no justification for creating a rule that receivers should be personally responsible for the costs of a successful party, and it an order were made in this case, it would have to be made in virtually all such cases.
Usefully, the court observed that where the receiver has the money, the court should be robust and (in appropriate cases) order security for the full amount of standard costs expected.

The case is reported by LexisNexis and is called Dolphin Quays Developments Ltd v Mills [2008] EWCA Civ 385.