Exploring the Intermediate Track: A Path to Efficient Case Handling

In the ever-evolving landscape of legal proceedings, a new “intermediate track” has emerged as a valuable framework for case management within the court system. This track offers a balanced approach, ensuring cases are handled effectively while not overburdening the legal system and allows for greater predictability regarding the costs of litigation.  In this article, we’ll delve into what the intermediate track encompasses, the criteria for cases to be eligible, what it excludes, and the advantages of using this track.

Understanding the Intermediate Track

When a claim is issued, the judge will allocate the claim to a specific ‘track’. In allocating the case to a track, the court will have regard to the value and complexity of the claim.

On 1 October 2023, the new intermediate track was introduced to the system, designed to create a more efficient and responsive mechanism for handling cases. The intermediate track occupies a middle ground between the small claims track and the fast track and the multi-track.

Importantly, the fixed recoverable costs regime applies to the intermediate track meaning, the costs you can recover will be fixed. Recoverable costs will be dependent on which band of complexity the claim has been assigned to and the stage of litigation achieved. Generally, the higher the complexity band and the closer towards trial, the greater the cost recovery will be. To find out the amount of fixed costs that you will be able to recover, click here and look at Table 14, on pages 13-19.

Criteria for Intermediate Track

Cases eligible for the intermediate track must meet certain criteria:

  1. The claim includes a claim for monetary relief, the of value of which is at least £25,000 but, no more than £100,000.
  2. The trial will not last more than 3 days.
  3. Oral expert evidence at trial is likely to be limited to two experts per party.
  4. There are no more than 3 parties to the proceedings.

The cases that may be typically appropriate for the intermediate track include cases where liability is relatively straightforward, for example personal injury claims with clear evidence of fault, cases of moderate complexity not requiring extensive and time-consuming discovery proceedings and those where both parties are willing to engage in alternative dispute resolution.

Even where a case does not meet the outlined criteria, the court may allocate a claim to the intermediate track where it considers that it would be in the interest of justice to do so.

Exclusions from Intermediate Track

Not all cases are suited for the intermediate track. Cases which will be typically excluded from this track will include those involving great complexity, extensive discovery, or those with a history of contentious litigation. Cases in which the relief sought includes non-monetary relief, will not normally be allocated to the intermediate track unless the court considers it in the interest of justice to do so.

There are some specific exclusions for when a claim should not be allocated to the intermediate track including criminal offences such as felonies or a claim for damages in relation to harm, abuse or neglect of children or vulnerable adults. Similarly, a claim for clinical negligence would normally not be suitable for the intermediate track unless the claim is one which would normally be allocated to the intermediate track and both breach of duty and causation have been admitted.

Advantages of Using the Intermediate Track

The intermediate track offers several advantages, making it an attractive option for many claimants and legal professionals:

  1. Resolution Focus: One of the most significant benefits is that this track encourages parties to focus on resolution rather than adversarial litigation, which can be beneficial in maintaining relationships and reducing legal expenses incurred.
  2. Cost Savings: Since the fixed recoverable costs regime applies to the intermediate track, there is greater predictability regarding the amounts winning parties can recover.
  3. Efficiency: Another significant benefit is the time saved. By avoiding lengthy trials, cases can be resolved more swiftly, reducing the burden on the court system.

In conclusion, the intermediate track has emerged as a valuable framework in the landscape of legal proceedings. It balances the need for efficient case resolution with the demand for thorough examination and encourages early settlement reducing legal expenses. Parties must strategically consider when to choose the intermediate track, as it can save time, money, and court resources.

This article has been fact-checked and authorised by the Head of the Real Estate Litigation team, and Training Partner Michael Lewis. If you have any questions or thoughts, please reach out to him by clicking here.

Break Clauses: Balancing Business Aspirations and Tenant Rights

Erin, a trainee solicitor in our Dispute Resolution team, explores the recent judgment in BMW (UK) Ltd v K Group Holdings Ltd highlighting the balancing act required in respect of a landlord’s business aspirations and a commercial tenant’s rights when negotiating break clauses in a lease.

Introduction

The realm of commercial leases is a complex landscape governed by legal provisions aimed at balancing the interests of both landlords and tenants.

One such provision that plays a pivotal role in commercial lease agreements is the break clause.

Break clauses in a commercial lease are provisions that allow either the tenant or the landlord to terminate the lease before its designated end date. These clauses offer flexibility within the lease agreement, allowing parties to adapt to changing circumstances or business needs.

However, a recent decision in the County Court highlighted the difficulties that landlords can face when seeking a break clause for their business needs in a renewal lease protected by Part II of the Landlord and Tenant Act 1954 (the Act).

BMW (UK) Ltd v K Group Holdings Ltd

The case concerned a car showroom in Mayfair, demised under four separate leases from the landlord, K Group Holdings Limited, to the tenant, BMW (UK) Limited.

These leases were subject to renewal proceedings under the Act and therefore, were to be granted on essentially the same terms as the previous leases.

The previous leases did not, however, contain a landlord break option. Accordingly, the onus was on the landlord to demonstrate the proposed terms were fair and reasonable and should be granted. 

If a break clause was to be included, the landlord accepted that it would have to prove a ground of opposition under s30(1) of the Act in order to exercise the break option.

HHJ Monty KC, in considering whether to grant a break clause, made it clear that the court must try and strike a balance “between granting a reasonable degree of security to the tenant on the one hand, and not preventing the landlord from recovering possession if one of the statutory grounds can be proved on the other”.

Section 30(1)(g) – Landlord’s intention to occupy the premises for the purpose of a business to be carried on by the landlord

The relevant ground in this case was ground (g), namely that on termination of the tenancy, the landlord intends to occupy the property for the purposes of a business to be carried on by the landlord.

The renewal leases themselves were unopposed and so it was for the landlord to prove that they would be able to establish ground (g) at some point in the future when exercising the break option. That is, the landlord needed to show a bona fide intention to operate the break clause if one was granted.

When giving evidence, the landlord agreed that a car business would be an entirely new business for K Group Holdings Ltd. It was further contended by the landlord’s witness that members of his family who controlled entities within the same group as the landlord were only a “little bit inclined to have a study and see the possibilities” of the electric car market. 

In this case, the landlord’s inadequate evidence and the effect the break clause would have on the tenant meant that the court found in favour of the tenant in refusing the inclusion of the landlord’s proposed break clause.

Practical considerations

This decision highlights the raising of the bar in respect of the landlord’s intention to exercise a break option, particularly where the landlord may have aspirations to start a new business venture or expand an existing one.

A landlord should ensure they can evidence a real intention that the operation of the break clause is more than a vague possibility. Therefore, evidence of any steps taken to progress the possibility of occupation for the purpose of a business would be worth documenting.

Although a complete and comprehensive business plan may not be required, the landlord should seek to substantiate any request for a break clause with supporting evidence detailing any “genuine and workable” intention to occupy the premises.

Sherrards’ Real Estate Litigation team

This article has been fact-checked and authorised by the Head of the Real Estate Litigation team, and Training Partner Michael Lewis. If you have any questions or thoughts, please reach out to him by clicking here.

Our Real Estate Litigation team can support you with an entrepreneurial, commercial and considered approach to break options to help you achieve your goals. Our specialist team can advise you on your options, including, where appropriate asking the court to determine the matter.

For advice and assistance, contact the Real Estate Litigation team at Sherrards.

Real Estate Litigation team and Counsel lead City Surveyors to victory in two day trial

Another successful result for Real Estate Litigation, Mike Lewis had victory in a two-day trial for a leading firm of City Surveyors against Spink (the international auction house) at Central London County Court. It was a most interesting case as to when an agent was the “effective cause” of a negotiated rent for a lease renewal. 

Full copy of Judgment delivered can be viewed here.

Counsel on the case George Woodhead, Selborne Chambers stated:

“Mike and George managed the case superbly from pre-action letters to trial.  They looked after our client’s interests throughout by giving astute advice and ultimately, ensuring that the necessary evidence was available and effectively presented at trial.  A deserved result reflecting both our client’s hard work and Sherrards’ well-known litigation prowess.”

Mathew Bailey, Partner at Angerman Goddard Lloyd Surveyors:

 “This was a fantastic result exceeding our expectations and fully justifying our decision to pursue the claim. Mike and his team provided expert advice throughout the process and George, our barrister, argued our case with the upmost skill. A great team and a great victory”

Mike Lewis, Partner:

“It was great to work with our long-standing client surveyors AGL and achieve such a fantastic result for them. The Judge accepted the significant levels of work that they had undertaken in assisting with lease negotiations and awarded the maximum remuneration. Working with Mathew Bailey at AGL was a pleasure. I have worked with Counsel George Woodhead on numerous cases and once again his support and input throughout the case was excellent and his performance at trial was outstanding.”

 

Recovering Commercial Rent Arrears and The Commercial Rent (Coronavirus) Act 2022 – Where Are We Now?

As detailed in our previous article, as a result of the Covid-19 pandemic the Government implemented The Coronavirus Act 2020 which, amongst other things, offered protection to Tenants of commercial premises by imposing a moratorium preventing Landlords exercising most of the usual remedies for the recovery of rent arrears. A lot has happened since then, but where we are now?

The Commercial Rent (Coronavirus) Act 2022 (“the Act”)

The moratorium imposed by the Government expired at the end of March 2022.

To prevent Landlords taking immediate action in relation to outstanding arrears, the Government implemented the Act, which offered a further period of protection to Tenants, preventing Landlords from exercising their usual remedies in relation to ‘Protected Rent Debts’, those being rents due under a tenancy between 21 March 2020 and 18 July 2021 when the business in question was subject to a closure requirement.

The Act implemented an arbitration scheme which entitled both Landlords and Tenants to refer matters to an Arbitrator to decide whether the Tenant was entitled to relief in relation to their protected rent arrears, but the deadline for the matter to be referred to arbitration was 25 September 2022.

Beyond 25 September 2022

In the event either Landlord or Tenant did not refer the matter to arbitration by 25 September 2022, all protection offered by the Act in relation to the rent arrears is lost.

The result being that a Landlord could exercise their usual remedies (as set out below) and, irrespective of the financial position that the Tenant is in as a result of the Covid-19 pandemic, it could not use is it as a defence to any claim or remedy exercised by the Landlord.

This will be welcome news for Landlords of Tenants who, despite being in strong financial positions, have refused to settle arrears on the basis that the Act afforded them protection.

Tenants still in arrears who were reliant upon the protection of the Act and did not refer matters to arbitration should be conscious of their vulnerability to any of the remedies available to the Landlord.

Options for Landlords

Now that it is “open season” in relation to commercial rent arrears, Landlords should ensure they seek advice as soon as possible in relation to the outstanding arrears. Taking steps to recover the debt sooner, rather than later, will improve the likelihood of recovery and avoid further arrears accruing which may see the Landlord recover pence on the pound in the event of the Tenant becoming insolvent.

As a brief reminder, some of the options open to Landlords are:

 

  • Forfeiture of the Lease – however, Landlord’s will need to ensure that they have not waived their right of forfeiture in respect of the previously protected arrears before forfeiting the lease;
  • Issuing Court proceedings for the recovery of the debt;
  • Commercial rent arrears recovery (CRAR);
  • The service of a statutory demand and the subsequent presentation of a winding-up petition; and
  • Pursuing former tenants that are subject to an Authorised Guarantee Agreement and/or pursuant guarantors

If you would like any assistance in relation to issues relating to commercial rent arrears, please contact Mike Lewis of our Real Estate Litigation Team.

 

 

Karen Timon

She works closely alongside Michael Lewis, Arthur Byng Nelson, Charles Burrell and George Faulkner to assist their clients and ensure all matters are dealt with swiftly and to the Sherrards standards.

Enough said.

Erin Gibbs-Charles

We hope you found what you wanted.

Achieving vacant possession for our client.

Sherrards’ Real Estate Litigation and Residential teams worked together to help our client to get vacant possession.

Vacant possession means the property must be empty on the day you complete your purchase or sale of it. 

The £5million property in Kensington had been sold subject to contract, however, there was a tenant in the property who was refusing to leave which was jeopardising the sale.

Proceedings were issued in the High Court.

Michael Lewis and his team worked hand in hand with our Residential Real Estate department in order to provide vacant possession and a successful outcome for our client and the sale of their property.

Sherrards help client Global Infusion Limited with dilapidations claim

At the end of the Lease the Landlord served a substantial dilapidations claim. Mike and the team used arguments involving a section 18 valuation to significantly reduce the Tenant’s liability. 

The team worked closely with Brasier Freeth one of the leading surveyors in Hertfordshire to help resolve this matter for our client.

Sherrards’ Real Estate Litigation team advise property client obtain vacant possession from Rent Act Tenant

One property in the portfolio had a Rent Act tenant, but it was suspected that the Rent Act tenant no longer resided at the property.  A claim was issued on the basis of abandonment.  However, papers were served suggesting the tenant was returning from working abroad

Michael Lewis and the team issued proceedings and the matter went to the High Court. In the days before trial the team managed to agree a successful settlement for our client.

 

Sunira Patel

Sunira much prefers face to face or phone conversations with clients, to emails, finding it the most effective way to understand their concerns and objectives.

She is also enthusiastic about networking, evident from her involvement in Horizon Young Professionals Networking. She helps to organise the group, which brings together young professionals from Sherrards and other London firms, to share their experiences, ideas and contacts.

Sunira focuses on providing well-researched and pragmatic advice and building constructive working relationships with clients. Their comments suggest they appreciate her approach; we’d say that too, if you asked us.