Winter '17 Scotland

Winter 2017 ISSUE

08

FIRST COMMENT IN THIS ISSUE: • GET YOUR ‘PENALTY-TAKING ORDER’ IN PLACE TO INCREASE YOUR TELEPHONE QUOTES CONVERSION RATE • RESTRICTIVE COVENANTS • EASEMENTS & POLICIES • UNDERWRITER CASE STUDY - EASEMENTS; A NEW RIGHT • PRODUCT CASE STUDY - ADVERSE POSSESSION

Leading Title Insurance

FIRST COMMENT

We have the last in the series of submissions from business development expert Professor Ian Cooper. He offers his thoughts on how to ensure you get the most out of your call handlers.

Get your ‘penaltytaking order’ in place to increase your telephone quote conversion rate

Kevin Lee, of Hill Dickinson LLP, looks at restrictive covenants, and Paul Butt revisits an article on prescriptive easement where a case has since been overruled on appeal.

By Professor Ian Cooper

Welcome to the final edition of our newsletter for 2017.

In this issue we have contributions from our regular writers.

Our underwriter contribution for this quarter comes from William Goodwin who offers an insight into a case concerning the use of recreational facilities as easements.

Law firm skills trainer / consultant, Author of the Financial Times Guide to Business Development

Imagine this. You are the manager of a football team. It is extra time in an important match and, in the last few minutes, your team is awarded a penalty. Who are you going to get to take this all-important, potentially match-winning shot?

Are you going to consider who in the team has the best track record for sticking the ball in the back of the net, or are you going to let just anyone take it who happens to be closest to the ball? The answer is obvious. You would think strategically, consider the statistics of past success with penalty kicks, and then get the person who is most likely to score to take the shot!

Hopefully, by now you should have got the metaphor?

Understand this concept and implement the suggestions and I absolutely guarantee an increase in your quotes conversion rates, even if you do nothing else at all.

Let me be clear. You need to make sure that the telephone quotes enquiry handlers in your firm, who currently get the best conversion rates regardless of their position or role in the firm, handle the most calls.

2

3

FIRST COMMENT That way, your average percentage conversion success rate goes up to the level of the best people.

So, for example, the reality in most law firms is that who the quote call is put through to, is rarely thought through commercially.

One of the first questions I ask firms is: what criteria is used to determine who actually handles incoming new requests for conveyancing quotes?

Here is a sample of the most common responses I am given:

“We have a rota so that no one person gets too burdened down with dealing with telephone quotes”.

“In our department, Bob deals with quotes on Monday, Wednesday and Friday afternoons, and Sally deals with them on Tuesday, Thursday, and Friday morning”.

“We let people volunteer to be on the rota, to help them get work and meet their fee-earning targets”.

“We pass all enquiries through to whoever is least busy”.

“If it’s just the price someone wants, switchboard have the figures ... they can easily give them out”.

“We don’t want the senior staff wasting their time talking to callers, so we have their secretaries deal with them”.

Here are a few comments and observations on these responses.

The Rota Issue - With the Bob and Sally rota example, this sort of administrative-led process is fine, assuming that both Bob and Sally get broadly similar results in terms of their conversion rates. However, what if Bob gets three times better results? Surely, as a matter of commercial common sense, it is ludicrous for Sally to handle as many of the leads as Bob. 4

So, as mentioned, my recommendation and strategy is simple and dramatically and instantly effective. Select your ‘A Team’. Monitor, track and find out who gets the best telephone quotes handling conversion rates and then do whatever you have to do, to make sure that this person handles the majority of enquiries.

By the way, the best person to handle telephone enquiry calls is not automatically the most senior or technically competent lawyer. Just because someone is the most ‘experienced’ conveyancer, doesn’t mean that they are the best at getting callers to want your firm.

The best person to handle telephone enquiries is the person who is able to make callers feel helped and wanted, and who has the best conversion rate.

Yes, there may well be legal questions they can’t answer, but part of their skill and training needs to be to know when it is time to pass a caller onto someone else who can.

The Fee Earning Target Issue – I was once told, at a seminar on this topic, that their best quotes person had a 60% conversion rate, but if she were to handle most quotes calls she would not have the time to meet her fee-earning targets of £130,000 per year.

Exploring this a little further, we discovered from the sheer volume of quotes calls coming in, that the firm were actually dealing with over £1 million worth of potential business from their quotes calls. When I reminded them that they had someone who could convert 60% … actually worth £600,000 … of business … they realised that their £130,000 target was not at risk!

What is behind the flawed thinking in many firms is the, almost unwritten, assumption that whoever gives the ‘quote’ is the person that has to do the job. This is simply not the case, unless the caller specifically asks for a particular individual whom they know.

The “This Is A Low Level Task Mistake” – As mentioned from the sample responses above, there is also the notion that ‘quotes’ calls are so low level in importance, that anyone can handle them.

It should be remembered that dealing with the ‘quotes calls’ is a skill and that, in reality, whoever is dealing with them is wearing a ‘sales hat’. Too many firms spend their time worrying about keeping certain people away from the phone.

The reality is that having the wrong people spend time and resources giving out quotes is false economy.

I went to help a firm some months ago who handled 1,272 quotes in the last year and got only a 27 % conversion rate. In resource terms, this equates to at least, 212 hours in total, which is around nine full days on the phone. Not a great use of time when you consider all this time is spent actually losing 73% of the business opportunities!

TIPS AND SUGGESTIONS TO CONSIDER: Track and monitor your current results.

You need to know each quotes handler’s personal conversion rate. This way you can get your ‘penalty-taking A team’ in place.

Make sure you have trained this ‘A Team’ Don’t forget, handling these quotes calls is a skill. Like any other skill, make sure that they are properly trained. My team carries out this training, so that they have our special 5 Step System for success.

Getting this whole area right can be transformational.

I remember a firm whose average conversion rates went up in three months from 15% to almost 90% ... and the firm increased their fees as well.

Contact me if you want to know more about training, or have any questions:ian@iancooper.co.uk

5

FIRST COMMENT

Restrictive covenants

By Kevin Lee Hill Dickinson LLP

This case of interest to conveyancers is St Albans (Property) Guernsey Limited (Signature) v Wragg & others (2017) a case heard in the Chancery Division in June of this year, and the judgment of which was handed down in September. This was an application by a developer who wanted to knock down three detached houses and build a care home. Each of the plots was subject to restrictive covenants, imposed back in 1910, which restricted both density and use to one house per plot.

Signature argued that the covenants were no longer enforceable because mutual covenants given by the vendor at the time of the original conveyance in 1910, to limit the number of houses built on the other plots, had been broken. What had happened was that other plots have been sub-divided, so that although the area covered by the covenants were still all houses, the density covenants had clearly been broken. As a consequence, the developer argued that it would be inequitable for the current proprietors, on those breaching plots, to now enforce the benefit of the covenants against the care home provider.

HHJ Matthews dismissed the claim. The adjoining residential plot owners would not be precluded from restraining a breach by the claimant developer. Whilst the court accepted that, where an agreement consisted of undertakings between two parties, a person

6

the covenants against the claimant to restrain its development.

There was also an interesting point about pre-1925 restrictive covenants. Anyone old enough to have cut their teeth on unregistered conveyancing (such as the writer) will know that pre-1925 restrictive covenants were unregistereable. There was no Land Charges Act 1925 in 1910, and the doctrine of notice applied.

When the plots were first registered - some as

late as the 1980’s - the 1910 conveyance had not been submitted to the Land Registry, most likely due to the reduction in the length of good root of title to a mere 15 years. Once a property is registered, what is on the title is all that matters, and if a covenant is not on the title then, once transferred for valuable consideration, the burden is lost for ever. As the restrictive covenants were not on some of the neighbours’ titles they were lost forever and so could never be enforced in any event.

cannot succeed in obtaining equitable relief to restrain a breach if at the same time they were in breach of their own obligations. An analysis of the facts revealed that any breach of the covenants had been committed by previous predecessors in title. The current neighbours would be free to enforce the covenants because they themselves were not in breach.

Any breaches of the identified covenants by predecessors have now been spent.

The current neighbours would be free to enforce the covenants because they themselves were not in breach.

The developer then argued, as an alternative, that a change in the character of the neighbourhood had meant that the covenants no longer had any practical effect. Again, this was rejected. The judge held that this only applied where there had been a complete change in the character of the neighbourhood so that the covenants had lost all value. In this case, the breaches that had taken place in the adjoining properties had not changed the character of the neighbourhood. The character remained residential in nature and, accordingly, the neighbours remained entitled to enforce

7

FIRST COMMENT

Welford v Graham [2017] UKUT 297 (TCC) In this case, Judge Elizabeth Cooke had been faced with an application based on the type of prescription known as ‘lost modern grant’. Lost modern grant allows a claim to succeed based on any 20 years’ use – not necessarily the last 20 years. In this case, an easement was being claimed based on ‘as of right’ use for 20 years prior to 2002.

Use ‘as of right’ i.e. without consent etc. could be proved from 1978 to 1988, but the next owner of the dominant land was now dead and therefore no evidence could be obtained that the use for the period after 1988 was without consent. The claim to the easement was therefore rejected as it could not be proved that there had been use without consent for the full 20 years required. A neat illustration of the evidential problems often inherent in claims based on long use.

Easements and policies

By Paul Butt Consultant Solicitor Rowlinson

Introduction In the summer – doesn’t that seem so long ago – I wrote about Prescription and Policies – the difficult rules surrounding a claim to a prescriptive easement and the importance of protecting such claims with a title insurance policy. But one of the cases I discussed has now been overruled on appeal, so we must return to it to deal with this further ‘clarification’ of the already complex rules governing prescription.

What remains unchanged, of course, is the importance of the policy.

8

On appeal, however, Mr Justice Morgan reversed this decision. He held that if the claimed right had been used openly for the necessary 20 year period so as to make it clear to a reasonable owner of the land being used that a right was being asserted, then there was a presumption in law that the use had been without permission. However, this presumption was rebuttable, i.e. it was now for the owner of the land affected to call evidence to show that permission had been given and not for the person claiming the right to prove that consent had not been given. On the facts, the owner of the servient land, as it is called, was unable to give such evidence, so the claim to the easement was upheld. Morgan J. also seemed to suggest that the requirement that the use was ‘without force’ would also be subject to a similar presumption.

The Judge reached his decision on two grounds.

First, he held that these evidential presumptions made “very good practical sense and the absence of such an evidential presumption would make little sense”. If there were not such evidential presumption, then a party claiming a prescriptive

easement would have to adduce evidence that there was no permission at any point during the period of use. This, he claimed, would render prescriptive claims almost impossible to prove. With respect, this is not so. Proof of the last 20 years or so should not be a problem in many cases – particularly when practice on a sale is to obtain a statutory declaration from the seller as to use ‘as of right’ during the seller’s period of ownership. Indeed, many people own land themselves for periods well in excess of 20 years.

Secondly, however, Morgan J was also able to rely on a number of authorities. He cited Campbell v Wilson (1803) 3 East 294, 102 ER 610 in which Lord Ellenborough CJ held at pages 300-301 that the case was like “the common case of adverse enjoyment of a way for upwards of 20 years, without any thing to qualify that adverse enjoyment” and that there was “no reason why the jury should not make the presumption, as in other cases, that the defendant acted by right“. Turning to more modern times, he cited the way the matter was described by Lord Hope in R (Lewis) v Redcar & Cleveland BC (No. 2) [2010] 2 AC 70 at [67]. This was a case involving a claim to land being a town or village green, such claims being based on a similar 20 year period of use “as of right”:

” … they must have been doing so “as of right”: that is to say, openly and in the manner that a person rightfully entitled would have used it. If the user for at least 20 years was of such amount and in such manner as would reasonably be regarded as being the assertion of a public right (see R (Beresford) v Sunderland City Council [2004] 1 AC 889, paras 6, 77), the owner will be taken to have acquiesced in it—unless he can claim that one of the three vitiating circumstances applied in his case. If he does, the second question is whether that claim can be made out. Once the second question is out of the way either because it has not been asked, or because it has been answered against the owner - that is an end of the matter.”

Mr Justice Morgan concluded that these comments would only make sense if there were evidential presumptions of nec precario and nec vi once 20 years’ of usage had been established. Such presumptions can win or lose cases – as indeed in this case.

9

FIRST COMMENT The Rule in Harris v Flower Gore v Naheed & Ahmed [2017] EWCA Civ 369 Just to emphasise the complexities of the law relating to easements, we can look at this Court of Appeal decision. All conveyancers are - or should be – aware of the Rule in Harris v Flower, i.e. the rule of law that if you have an easement giving a right of way to access Plot A then you cannot use it to access Plot B – subject to a minor exception in relation to land to be used ancillary to Plot A. So if you have a house with a right of way to it and then buy a small extra piece of land to add to the garden this will be ‘ancillary’ and so use of the right of way to get to it is fine. But if you have a right of way to the house and then buy an adjoining piece of land on which a new house is to be erected, then the right of way cannot be used and the owner of the land over which the right of way exists would be entitled to bring proceedings for damages and an injunction to prevent the use for access to the new house.

The Court of Appeal Decision

that this ancillary use fell within the scope of the grant in the present case. The terms of the grant are, as I have indicated, arguably wider than those in Harris v Flower but they are certainly no narrower. In my view they are wide enough to include direct access to the Garage for parking in connection with the residential use of the Granary. For the reasons given earlier, I reject the submission (if that is what is being suggested) that in passing alongside cases, the use of adjacent land for parking is subject to a different approach in terms of the construction of the grant. In all cases the Court is required to construe the language of the grant having regard to the layout of the locus in quo to which it relates and all other material facts and circumstances.

There is no room in this process for any legal distinction to be drawn between passing through and passing alongside cases. The physical differences between the two situations are simply facts to be taken into account in determining whether the alleged right of access can be said to have been consented to by the original servient owner as part of the grant”.

The case involved a dispute over access to the rear of premises in Pangbourne, Berkshire. The property (known as The Granary) enjoys a right of way granted by a 1921 conveyance in the following terms:

Patton LJ (with whom Lewison LJ agreed) held that yes, Harris v Flower did prevent an easement being used to benefit a different piece of land UNLESS access to that land was for a use that was purely subsidiary or ancillary to that of the land that had the benefit of the right – and the Court of Appeal agreed with the Judge that was the case here.

However, the Court held that the judge’s order did need amending so as to make it clear that the right to obtain direct access to the Garage for parking was limited to its ancillary use in connection with the occupation of the Granary and would not extend to a tenant of the Garage alone.

“TOGETHER with the right for the Purchasers their respective heirs and assigns and others the owners and occupiers of the said granary ….. with or without horses or other animals carts or wagons laden or unladen to go and return along and over the private entrance road or way coloured yellow on the said plan for all purposes connected with the use and occupation of the said granary but not further or otherwise.”

Some previous cases had raised the possibility that different legal principles applied to ‘passing through’ cases, i.e. where the access to the extra piece of land involved passing through the dominant tenement, and ‘passing alongside’ cases, i.e. where access to the extra piece of land was obtained directly from the right of way. It was in this area that the Court of Appeal gave welcome clarification. To quote Patton LJ:

Conclusion

The area coloured yellow on the 1921 plan includes an area on which a garage had been erected in 1994. The claimant when he purchased the Granary also purchased the Garage land so that since then the position on the ground has been that the driveway effectively ended with the Garage.

“Judge Harris was entitled to find that the use of the Garage was ancillary to the use and enjoyment of the Granary. I do not accept that parking within the Garage by a resident of the Granary should be treated as the use of the Garage in its own right for a purpose independent of the use of the dominant tenement. It would, of course, be different if the Garage were let to or used by a third party separately from the occupation of the Granary. In my judgment, the judge was also correct to hold

The Case

It was common ground between the parties that the easement granted by the 1921 conveyance entitled the claimant to drive a car or other vehicle 10

to the door of the Granary and to park the car there for the purposes of loading and unloading. What was in dispute was the right to use the driveway to obtain direct access to the Garage for the purposes of parking a car in it. It was claimed by the defendants that to use the driveway for the purpose of parking in the Garage was outside the scope of the easement granted under the 1921 conveyance due to the decision in Harris v Flower (1904) 74 LJ Ch 127. The easement was being used to access a different piece of land. At the trial, Judge Harris QC made a declaration that the rights granted by the 1921 conveyance included the right for the claimant to pass over the driveway for the purpose of parking in the Garage and granted an injunction to prevent the future obstruction of vehicular access to the Garage. An award of damages was also made to compensate for previous obstructions.

The case includes a detailed evaluation of the decision in Harris v Flower and the cases interpreting it which is most useful for anyone involved in a dispute of this nature. But conveyancers must still remember the basic rule when assembling sites for development or otherwise: if you have a right of way to Plot A, you cannot use it to access Plot B. Equally, conveyancers should also remember the importance of lack of easement policies!

111

FIRST COMMENT

Easements; a new right

By William Goodwin Commercial Underwriter

There are all manner of rights which, over the years, have been determined by the courts as valid easements. In a recent Court of Appeal decision; Regency Villas Title Ltd (“Regency”) v Diamond Resorts (Europe) Ltd (“Diamond”) a new right was added to the list. The court was faced with a decision of whether an easement could exist to use leisure facilities, such as a swimming pool and tennis court. The Court of Appeal upheld a decision of the High Court and recognised the validity of certain recreational rights as easements.

What is an Easement?

The leading case on determining whether a right is an easement was considered in Re Ellenborough Park. This case suggested four key requirements must be present: •

12

There must be dominant land (to enjoy the benefit of the easement) and servient land (over which the easement is exercised).

•

The right must accommodate or benefit the dominant land.

•

The dominant and servient land must be owned by different people.

•

The right must be capable of forming the subject matter of a grant.

When considering whether a right fulfils the final requirement in Re Ellenborough Park three further questions should be asked:

The Case Regency was the freehold proprietor of a timeshare holiday park. Diamond owned an adjacent estate on which various leisure and sporting facilities were located; including tennis and squash courts, swimming pool and golf course. In 1981 the holiday park was sold, the transfer included the following grant: “for the Transferee its successors in title its lessees and the occupiers from time to time of the property to use the swimming pool, golf course, squash courts, tennis courts, the ground and basement floor of Broome Park Mansion House, gardens and any other sporting or recreational facilities… on the Transferor’s adjoining estate.”

•

Whether the right is expressed in terms that are too wide or vague.

•

Whether the right would amount to a right of joint occupation or substantially deprive the servient owners of legal possession of their land.

Decision

•

Whether the right would constitute merely a right of recreation and therefore have no quality of utility or benefit.

The court held that the rights to use the facilities did take effect as easements. The first three requirements in Re Ellenborough Park were easily met. There was clearly dominant and servient land (the holiday park and the neighboring

estate with the facilities on it), both were held in separate ownership and the rights clearly benefitted the dominant land as the use of the facilities clearly benefitted the users of the holiday park. The question therefore was whether the fourth requirement could be met and so the three additional questions were asked.

The rights were not vague or excessive as they were clearly drafted to extend to all leisure facilities on the estate, the use of the facilities by Regency would not amount to a right of joint occupation or substantially deprive Diamond of legal possession of their estate. The key question on this case was whether the rights would constitute merely a right of recreation and therefore have no quality of utility or benefit. The court decided that the rights clearly enhanced the enjoyment of the holiday park users and were therefore valid easements.

This case provides the first authority on whether the use of recreational, leisure or sporting facilities can take effect as easements and highlights that the class of possible easements is not closed.

13

FIRST COMMENT

Product Case Study:

Adverse Possession On behalf of the team at First Title, we would like to thank you for your support throughout 2017.

Background The insured was seeking to purchase a property and proposed to construct a double oak framed garage and store room (pursuant to permitted development requirements or regulations deemed necessary by the Local Authority) on land that was not registered to them at Land Registry. The insured sought an insurance policy in perpetuity that could be kept with their deeds in the event that a third party challenged this construction on land that did not properly vest in them.

We wish you and your team a Merry Christmas, and we look forward to working with you in 2018.

Ramifications of risk Having completed their due diligence of the property the insured and their solicitor discovered that part of the construction of a new garage and store room would encroach on a sliver of land that was not legally registered to the seller. According to the legal boundary shown on the title plan

Call:

provided by Land Registry, the insured area of land fell outside the seller’s ownership.

Consequently, the seller provided a statutory declaration confirming that they had owned the property since 2013 and that there had been physical possession of this adversely possessed sliver of land within fenced boundaries since the late 1990s. The fenced boundary had never been challenged by the adjoining owner and the sliver of land was occupied without objection, payment, or interruption.

Outcome The transaction was supported by a Known Risk title insurance policy for Adverse Possession to protect the purchaser in the event of a claim by the legal title owner that the construction of the new garage and store room encroached on their adjoining registered title.

+44 (0)207 160 8100

Email: info@firsttitle.co.uk Visit:

www.firsttitle.co.uk

First Title Insurance plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. First Title Insurance plc is registered in England under company number 01112603.

Registered office: ECA Court, 24-26 South Park, Sevenoaks, Kent, TN13 1DU.

Leading Title Insurance

15

To find out more about our products and services email info@firsttitle.co.uk or call +44 (0)20 7160 8100

www.firsttitle.co.uk

First Title Insurance plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. First Title Insurance plc is registered in England under company number 01112603.

Registered office: First Title Insurance plc, ECA Court, 24-26 South Park, Sevenoaks, Kent TN13 1DU.