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Posted 4 December 2014
by Paul Kelly

Parklaw newsletter – December 2014

Serving formal notices of breach

The Supreme Court have recently considered the case of Telchadder v Wickland Holdings Ltd and whether Wickland could terminate Mr Telchadder’s agreement under the Mobile Homes Act 1983. Their judgment contains valuable guidance to parks about the procedure to be followed when a homeowner breaches their agreement.

By the time the case reached the Supreme Court it was no longer in dispute that Mr Telchadder had breached the term in his agreement that prohibited nuisance behaviour and it would be reasonable for the agreement to be terminated if Wickland proved that they had complied with the law about notices.

The Court started by considering the nature of the breach and said that some behaviour was so serious it could not be put right and in those circumstances the most the park owner might need to do was to give formal notice it was applying to the court rather than giving the homeowner a further opportunity. However few breaches would fall into this category and the breach in question did not. It may also be relevant that the Judge who originally heard the case had decided that Mr Telchadder had not intended to kill anyone when he made his threats.

The Supreme Court decided that he could remedy his breach in 2006 and considered whether he had done so “within a reasonable time”. They decided Wickland would have been justified in relying on the notice served in 2006 if further anti-social behaviour had taken place within weeks or months of the original behaviour. However they decided the gap of almost three years was “very long” and were unanimous in deciding that Mr Telchadder had complied with the 2006 notice.

This decision has implications for both residential and holiday parks.

Residential parks

In almost all cases a breach can be put right by a homeowner. In all those cases notice should be served and if there is a further breach the park owner must consider how much time has elapsed before deciding whether to issue proceedings for possession. A further notice will be necessary if more than a “reasonable time” has passed.

If there is a further breach but the park owner decides against issuing proceedings they should always consider whether to serve a further notice.

The Supreme Court considered that there may be cases where the park owner can in effect go straight to court. Legal arguments about whether this is possible are likely to continue and a park should consider doing so only in exceptional circumstances and with the benefit of legal advice.

Holiday parks

Many holiday home licences, including the industry standard, contain clauses allowing the park to terminate immediately in the event of an irremediable breach. In other cases a notice of breach must first be served and termination is only possible if that notice has not been complied with. The industry standard licence requires a reasonable time for compliance to be specified which in most cases will mean giving an actual date.

While the Telchadder case concerned a residential agreement, the Judges’ reminder that very few breaches are not capable of being put right will apply equally to holiday licences. It will almost always be safer to serve a notice.

Recovery of site licence fees in residential park pitch fee reviews

Tozers acted for the park owner in two recent applications to the First-tier Tribunal (Property Chamber) (“the Tribunal”) for determination of the pitch fee review for two adjoining parks in the same ownership. In Elms Caravan Co Ltd v. Mr and Mrs McMillan & others (1) and Elms Caravan Co. Ltd –v- Mrs V Colley & Others (2) the Tribunal confirmed that the park owner was allowed to recover the site licence fee imposed by the local authority in the pitch fee review.

Residents had objected to this fee being recovered on the basis that they considered it was an overhead that the park owner should bear the cost of.

The Tribunal disagreed and held that the fee would be a stand-alone part of the pitch fee to which the RPI could not be applied in future years and which could only be increased in future years if the fee was increased by the local authority. They also provided that if the fee was reduced or not repeated in future it should be removed from pitch fee.

When deciding on the amount of the annual site licence fee to be included within the pitch fee the Tribunal divided the fee by the number of authorised pitches. It is likely that future Tribunals will also follow this approach, although they are not bound to do so. Our advice is that park owners follow this approach and divide the annual site licence fee by the number of pitches authorised under the park’s site licence and charge homeowners for one pitch.

Refusal order applications

In Hills Leisure UK Limited v Mr and Mrs Roalfe the park owner (Hills) had received a Schedule 2 Notice from the joint homeowners informing them that they intended to sell their home and that the purchasers intended to bring a dog to live with them. The park rule gave Hills an absolute discretion to refuse to allow new pets. The park owner sent an application to the Tribunal for a refusal order and on the same day wrote to one of the joint homeowners to say that they had made an application for a refusal order. The Tribunal determined that notice of the application should have been given to both homeowners and the fact that it had not meant that notice had not been given within the 21 day period as required and the sale could therefore proceed.

Park owners need to be very careful that they serve any notice on all parties to the agreement entitling the occupiers to station their home on the park rather than just the first named. Tour advice would be to apply this to all notices, not just those served in respect of an application for a refusal order. The Tribunal has also found recently in another case that a pitch fee review notice letter and form which were addressed to only the first named of the joint occupiers was also invalid despite, as in the Hills case, the second named occupier being aware of the notice

Do on call workers, who are not at their workplace, still need to be paid at least the National Minimum Wage?

There has been much case law over recent years about when on call workers are entitled to be paid. The Scottish EAT has now added to the vast amount of case law on the matter, by hearing the case of Truslove and another v Scottish Ambulance Service.

Although there are some inconsistencies in the case law, the previous position, which is still correct in light of the new case, is broadly that where a worker is specifically required to remain at the workplace and be available for work, this time is likely to attract the minimum wage. This is the case even if the worker is allowed to sleep.

In Truslove and another v Scottish Ambulance Service, the employees were paramedics and the employer required staff to work at different stations from their normal, daily station. The employer set response targets for staff of three minutes and employees were able to stay at alternative accommodation within three miles.

The question for the EAT was this; were the paramedics entitled to be paid, at least the National Minimum Wage, for all of their time spent on call subject to these restrictions?

The answer was yes. The reason for this was that the employer had control over the employees, even though the paramedics were not at the workplace.

This case will impact parks in cases where park owners recruit on call wardens, as wardens who are subject to similar accommodation restrictions may now find it easier to claim the minimum wage for all on-call hours.

Getting the paperwork right

The Mobile Homes Act 2013 (“the 2013 Act”) introduced a new procedure which all park home owners and their purchasers are required to comply with when they sell their park homes and assign their Mobile Homes Act 1983 compliant agreements set out in their Written Statements.

The procedure, which is set out in the Mobile Homes Act 1983 (as amended) ( “the 1983 Act”) and implied into all residential agreements by that Act, requires homeowners to use prescribed forms produced by the Government (or a form substantially to the like effect) https://www.gov.uk/government/collections/park-homes which include a Buyer’s Information Form, a Notice of Proposed Sale, an Assignment Form and a Notice of Assignment Form. The home owner is obliged to fill in these forms with certain required information. A failure to follow this procedure would be a breach of the implied terms in the home owners’ agreements set out in their Written Statement and could also have adverse effects on the park owner.

There are various different consequences that could arise from a failure to obtain and provide and complete and serve the correct documentation during a park home sale.

Firstly, if certain documents are not completed and served, such as the Assignment Form (or a form to substantially the like effect), there may potentially have been no legal assignment of the agreement. If there has been no legal assignment the buyers would not be obliged to pay the commission or pay any pitch fees but would not be entitled to live in the home on the park. If the agreement has not been assigned then the occupier and owner of the home will not be the person with the right to occupy the home and station it on the pitch. Technically, as the owner (the seller) will not be living in the home as their main or only residence the park owner could apply to the County Court for permission to terminate the agreement.

Furthermore if a park owner does not receive the required documentation such as the Notice of Proposed Sale and Notice of Assignment forms they cannot ascertain that the buyers comply with their park rules regarding age, pets and vehicles in time to make an application for a refusal order if they are not compliant. Nor will they be able to confirm that they have received the correct amount of commission.

For these reasons it is important that park owners are familiar with the documentation they are entitled to receive and move swiftly to request that their homeowners complete it and serve it on them in accordance with the implied terms of their Mobile Homes Act 1983 (as amended) Written Statement.

Tax efficient wills for married couples

It is currently very difficult to predict with accuracy whether a holiday or residential park business will qualify for Inheritance Tax Business Property Relief. We are still seeing cases where the relief is allowed but they are becoming the exception rather than the rule.

If you leave business property to your children by your will, and the relief is not granted, your estate can face a substantial Inheritance Tax liability. If you leave business property to your spouse there is generally no liability for Inheritance Tax, but if the property qualifies for the relief you may have wasted a valuable opportunity to pass the business assets to your children free of tax.

A will setting up a flexible trust for your spouse may be the answer.   On your death the right sort of trust in favour of your spouse generally means that no Inheritance Tax is payable. The trustees are given power to terminate the trust completely, or in part, in favour of your children. This can be done if the property qualifies for relief. Even if it doesn’t, the transfer of all or part of the property to your children from the trust is treated as a gift by your spouse and is free of Inheritance tax if he or she survives a further seven years. Once the gifts to the children have been made the trust has served its purpose so all other assets can be transferred to your spouse and the trust can be terminated. Your spouse can be one of the trustees so that he or she retains control of the funds.

Wills written in these terms offer married couples the best chance of reducing their liability for Inheritance Tax without having to decide, when making the wills, whether or not Business Property Relief will be allowed.

Validity of pitch fee review notice and form signed by agent of the site owner

Paragraphs 17(2A) and 17(6A) of Chapter 2 Part 1 Schedule 1 of the Mobile Homes Act 1983, as amended, provide that a pitch fee review notice proposing an increase will be of no effect if it is not accompanied by a document which complies with paragraph 25A. Paragraph 25A provides the document must be in the form prescribed by regulations.

The Mobile Homes (Pitch Fees)(Prescribed Form)(England) Regulations SI 2013/1505 provides that the form set out, or one substantially to the like effect, must be sent with the pitch fee review notice.

Section 6 of the form is headed “signature of the site owner(s)” and consequently, in the absence of a Tribunal decision as to whether as agent’s signature would be sufficient, we have advised park owners to personally sign the form. For park owners with many residents this has been an onerous task so a recent decision of the Tribunal is to be welcomed.

In this case an employee of the park owner, who had had responsibility for completing the pitch fee review notices for the previous 6 years and who would in all probability be known to the residents, had signed the form on behalf of the park owner. The park owner’s position was that the person who had signed had done so as an authorised signatory.

The pitch fee review had been disputed and an application made to the Tribunal for determination and the validity of the pitch fee notice and form had been questioned on a number of grounds and the validity was to be determined as a preliminary issue.

The Tribunal’s decision was that the notice was valid. As regards the signature on the notice letter the Tribunal noted that the legislation required a written notice setting out the park owner’s proposals in respect of the new pitch fee and the letter did this. They noted that there is no statutory requirement for a signature on the notice.

The Tribunal commented that although section 6 of the form is entitled “signature of the site owner” there is nothing in the Act or regulations that suggests the form must be signed personally by the park owner. They also noted that it is a matter of general law that a document can be signed by an agent who is authorised to do so; that the authority does not have to be on the face of the document and there is no legal requirement for the use of “pp” or “for and on behalf of”. The recipient of the document is entitled to assume the person signing is authorised to sign on behalf of the park owner.


Further parklaw advice

If these issues could affect you and you want advice please  contact the parks team on 01392 207020 or email parks@tozers.co.uk

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About the author

Paul Kelly

Partner

Paul is the managing partner of the firm