Part II of the Landlord and Tenant Act 1987 is a problem-solving jurisdiction whereby lessees can apply to the tribunal for the appointment of a manager. Where a manager is appointed under s24, the manager is a court-appointed official who is not necessarily confined to carrying out the duties of the landlord under the lease, and who performs the functions conferred on him by the tribunal in his own right.
In Oung Lin Chuan-Hui & Others v (1) K Group Holdings Inc (2) Aldford House (Park Lane) Maintenance Trustee Limited (3) Park Lane Holdings Inc [2021] EWCA CIv 403 [2021]PLSCS 58 such a manager had been appointed to manage Aldford House, Park Lane in Mayfair, a high-end property with a significant problematic history of management. When the manager’s period of appointment came to an end there were arrears in the region of £650,000. The appellate lessees did not dispute that the sums claimed were reasonable. They sought to argue that during the period that the manager had been appointed the monies payable were not service charges within the Landlord and Tenant Act 1985 and further that arrears which accrued during that period could not subsequently be collected by the payee under the leases. The Court of Appeal was not persuaded.
Service charges are defined in the Landlord and Tenant Act 1985. The fact that a court-appointed manager was in place and that the source of the obligation to pay such a manager was therefore a court order did not mean the payments were outwith the statutory framework of the 1985 Act. Indeed, if it did that could give rise to the absurd conclusion that the appointment of a manager under s24 of the 1987 Act had the result that the detailed scheme enacted by parliament in relation to service charges would immediately cease to apply in its entirety. Maunder Taylor v Blaquiere [2002]EWCA Civ 1633 [2003]1 EGLR 52 is not authority that sums paid as service charges to a manager lose their character as such for the purposes of the 1985 Act. Comments in Kol v Bowring [2015] UKUT 530 (LC) by Judge Gerald that “monies paid to the manager are by dint of statutory and tribunal authority and are not paid as service charge under the terms of the lease” were made in relation to a point not fully argued before him. Also, his judgment contains passages which suggest that the service charge regime in the 1985 Act would continue to apply to service charges falling within the definition in section 18 which are payable to a manager appointed under the 1987 Act. If monies payable during the period of management met the definition of service charges within the 1985 Act they were service charges.
Further, the underlying contractual framework of leases remains in place during the management period. There is therefore no difficulty in concluding that the right to sue for arrears automatically re-vests in the party entitled under the lease. The contractual obligation to pay remains in place throughout and to the extent it was displaced during the management period that displacement comes to an end when the management period expires.
This case also raised questions as to whether a purported deed of assignment between the manager and payee under the lease had been properly pleaded but the issue did not have to be decided.
An interesting side note is that the original order appointing a manager purported to extend the appointment to “such other person appointed from time to time of [the managing agent]”. This was presumably done to assist block management going forwards but the approach was irregular and criticised. It is for the tribunal to be satisfied as to the competence of the manager and that responsibility could not be delegated.
Elizabeth Haggerty, barrister