Landlord and tenant – Service charge – Information – Landlord and Tenant Act 1985 – Respondent tenant seeking mandatory injunction against appellant landlord to compel it to provide information regarding service charge costs under sections 21 and 22 of 1985 Act – Whether civil remedy available to such tenant in addition to criminal sanction of fine prescribed by legislation – Respondent held to be entitled to seek such remedy – Appeal allowed
The respondent was the leaseholder of a flat in a mansion block. The building was owned and managed by the appellant, a company in which the leaseholders of the flats each held one share. The terms of the respondent’s lease provided for the payment of a service charge to the appellant by four quarterly instalments in advance. In parallel with those provisions, article 16 of the appellant’s articles of association entitled it to require its members to make contributions to the costs that it incurred in implementing its objectives, in such amounts and in such manner as its members should approve by ordinary resolution passed in general meeting.
In practice, the appellant used article 16 in order to fund its activities. In 2003, and between 2007 and 2009, it operated a dual system under which it sent out demands for service charge payable under the lease and also a demand for contributions levied under article 16, with payment of the article 16 demand being treated as satisfying the demand for service charges. From 2010, the appellant used only article 16 demands.
In litigation between the parties, the Court of Appeal determined that the sums the respondent was obliged to pay under article 16 in his capacity of shareholder, rather than in his capacity of tenant, were not “service charges” as defined by the Landlord and Tenant Act 1985: see Morshead Mansions Ltd v Di Marco [2008] EWCA Civ 1371; [2008] PLSCS 345.
The respondent contended that, in respect of the years where service charge demands had also been issued, the appellant had not complied with its statutory obligations, under sections 21 and 22 of the 1985 Act respectively, to provide him with a written summary of the costs that would form part of the service charge and to afford him, on request, reasonable facilities for inspecting the documents supporting that summary. He argued that, in addition to the criminal sanction of a fine provided by the legislation, he was entitled to seek a mandatory injunction in the civil courts to require the appellant to provide the required information.
The respondent’s claim was struck out at first instance on the ground that the relevant statutory provisions did not give rise to a duty enforceable by civil suit. That decision was reversed, and the claim reinstated, by the High Court on appeal: see [2013] EWHC 1068 (Ch); [2013] PLSCS 90. The appellant appealed.
Held: The appeal was allowed.
Where statutory provisions created a criminal offence, but were silent about the availability of a civil remedy, it was a question of interpretation of the statute as a whole as to whether such a civil remedy was available: Cutler v Wandsworth Stadium Ltd [1949] AC 398 applied. The starting point was a presumption that where an Act created an obligation and enforced its performance in a specified manner, then performance could not be enforced in any other manner. Where the only specified remedy was a criminal sanction, there were exceptions to that general presumption, one of which might apply if the legislation in question was passed in order to protect or benefit a particular class of individuals. However, even if no sanction at all was prescribed for failing to comply with a statutory duty, it did not necessarily follow that there was a private right of action. In the end, it remained a question of construction of the relevant legislation and, in deciding whether parliament intended to create a remedy in private law, the court had to examine the statutory landscape as a whole: St John Poulton’s Trustee in Bankruptcy v Ministry of Justice [2010] EWCA Civ 392; [2011] Ch 1 applied.
In order to fall within the exception for legislation benefiting a particular class of individuals, the legislation in question had to be intended to confer on members of the protected class a cause of action sounding in damages occasioned by the breach. The kind of damage that would qualify was personal injury, injury to property or economic loss; the mere fact that someone in the class would be adversely affected by the breach of duty was not enough, unless he suffered damage that the law regarded as recoverable in damages: Pickering v Liverpool Daily Post and Echo Newspapers plc [1991] 2 AC 370 applied. If, as a matter of construction, the legislation did not confer on the individual in question a right of action in damages, then the mere fact that the prohibited activity was a criminal offence did not entitle that person to an injunction to restrain the commission of the criminal offence. Entitlement to an injunction depended on the existence of an independent cause of action at common law or in equity.
No civil remedy was available to a tenant for a breach of sections 21 and 22 of the 1985 Act. The only explicit sanction for breach of the duties imposed by those sections was the potential for prosecution for the commission of a criminal offence. Although section 21A of the Landlord and Tenant Act 1985, as inserted by the Commonhold and Leasehold Reform Act 2002 and itself amended by the Housing and Regeneration Act 2008, would entitle a tenant to withhold service charges if the landlord failed to comply with its statutory duties under section 21, those new provisions had not yet been brought into force. Accordingly, if another remedy existed, it had to be by way of necessary implication. There was no room for such implication. Sections 21 and 22, or their predecessors, had remained on the statute book practically unchanged for more than 30 years, by contrast to the many changes made during the same period to the overall statutory regime of residential service charges. Those changes had seen a variety of civil remedies introduced for tenants whose landlords failed to comply with statutory requirements. Where parliament had explicitly provided for the making of a mandatory order in certain specified circumstances, it was very unlikely that it intended that same remedy to be available in different circumstances. It was significant that, until the recent amendments to the 1985 Act, which were not yet in force, no such remedies had been introduced directly in relation to a failure to comply with section 21 or 22. The civil remedy to be introduced under section 21A of the 1985 Act was a right to withhold service charge; parliament had not given the tenant either a right to sue in damages or the right to a mandatory injunction.
It was further relevant that a failure to comply with sections 21 or 22 would not cause personal injury or damage to property. It was difficult to see what claim for economic loss could arise, given that the landlord was precluded by other provisions of the 1985 Act from recovering service charges that were unreasonable in amount. Although a tenant might incur legal costs, for example on an application to the leasehold valuation tribunal, costs incurred in proceedings between the same parties were not generally recoverable as damages. Accordingly, sections 21 and 22 did not meet the requirements necessary to give rise to a civil remedy.
Philip Rainey QC and Edward Hicks (instructed by Payne Hicks Beach) appeared for the appellant; Mark Tempest (instructed by the Bar Pro Bono Unit) appeared for the respondent.
Sally Dobson, barrister
