Leasehold reform — Application for approval of management scheme under section 70 of the Leasehold Reform, Housing and Urban Development Act 1993 — Whether provisions relating to repairs and management fees reasonable and lawful
The applicant
landlord applied under section 70 of the Leasehold Reform, Housing and
Urban Development Act 1993 for approval for a scheme of management for their
Mayfair estate in London. The scheme included provisions for three-yearly
external decorations, recovery of costs in considering applications for
altering premises and a management fee for the scheme’s administration. It also
contained a right of re-entry upon breach of its provisions.
There was a need in accordance with section 70(2) of the 1993 Act for an estate
management scheme for the Mayfair estate in order to maintain adequate
standards of appearance and amenity and to regulate the redevelopment of the
area. It was reasonable to impose on the freeholders the redecorating and
repairing obligations. The proposed index-linked management charge was not
unreasonable and came within the provisions of the Act.
The following
cases are referred to in this report.
Calthorpe
Estate, Edgbaston, Birmingham, Re; Anstruther-Gough-Calthorpe v Grey (1973) 26 P&CR 120
Sherwood
Close (Barnes) Management Co Ltd, In re [1972] Ch
208; [1971] 2 WLR 902; [1971] 3 All ER 1293; (1971) 22 P&CR 1031
Peter E W
Scoble, solicitor, of Boodle Hatfield appeared for Grosvenor Estate (Mayfair)
London; Andrew Arden QC (instructed by Portner & Jaskel) represented
Leasehold Enfranchisement Association and Association of Residents in Mayfair;
Leo Walters FRICS represented Residents’ Association of Mayfair; Richard Harris
Associates represented South Street Management Co; Titmuss Sainer Dechert,
solicitors, represented Elfin (Mayfair) Ltd.
Giving their
decision, THE TRIBUNAL said: This is an application for the approval by
the tribunal, under section 70 of the Leasehold Reform, Housing and Urban
Development Act 1993 (the Act) of an estate management scheme for Grosvenor
Estate (Mayfair).
Before the
scheme was presented, Mr David Jeffreys, on behalf of Leasehold Enfranchisement
Association (LEA), applied for an adjournment of the proceedings, having first
confirmed that the association represented a number of residents in Mayfair of
whom some were ‘persons interested’, ie members who had already made
representations to the tribunal in accordance with section 70(4)(b) of the Act.
While acknowledging that an estate management scheme for Mayfair was accepted
in principle, Mr Jeffreys said the association needed more time to enable them
to make further representations in relation to the most recently agreed
amendments to the scheme. The tribunal were urged to construe section 70(4)(b)
of the Act widely when deciding what amounted to ‘reasonable’ notice in which
‘persons interested’ could make representations to the tribunal. Negotiations
were still in progress and he maintained that it was in the interest of
everyone that the greatest possible agreement should be reached before the
scheme was submitted to the tribunal for approval. Mr N C Wiggins, a
leaseholder and a ‘person interested’ through representations made on his
behalf by Richard Harris Associates supported the application for a
postponement.
Mr Peter
Scoble solicitor, on behalf of Grosvenor Estate, opposed the application as did
Mr Leo Walters [FRICS], on behalf of the Residents’ Association of Mayfair
(RAM). Mr Scoble pointed out that any further delay would unnecessarily hold up
claims to enfranchise under the Act and he felt that three months was adequate
for ‘persons interested’ to make representations to the tribunal. He considered
that the requirements of section 70(4) of the Act had been complied with:
(a) by
individually addressed letters sent by post to all occupiers as well as
delivered by hand to each property in the area covered by the proposed scheme;
(b) in
addition, by notices dated March 4 1994 attached to lampposts; and
(c) by
advertisement in the Westminster and Pimlico News, Mayfair Times
and Evening Standard.
Very few
people had availed themselves of this opportunity to make representations. In
addition section 70(5) of the Act had been complied with. Of those who had
registered an interest by June 10 1994, ie within a three-month period, a good
proportion supported the scheme; moreover, Grosvenor Estate had, to a great
extent, incorporated the suggested amendments from those ‘persons interested’
who had raised objections to some of the provisions of the scheme. He had also
entered into substantial negotiations with organisations such as RAM and LEA,
neither of which had, in fact, submitted representations within the time-limits
set out in the notices.
Having
carefully considered the application, the tribunal declined to grant an
adjournment, on the grounds that the residents of Mayfair had been properly
notified in accordance with section 70 of the Act and that three months was
sufficient time within which to communicate representations to the tribunal. In
reaching this decision the tribunal also had regard to the fact that those who
were seeking to enfranchise under the Act should know within a reasonable time
whether or not a scheme for Mayfair was to be approved. Moreover, having regard
to the fact that a number of residents had either supported the scheme or had
not registered objection to it, the tribunal did not consider it was in the
interest of the residents, as a whole, to postpone consideration of the
proposed scheme further. However, in declining the application for adjournment,
it was explained that the tribunal were not seeking to preclude further
amendment to the proposed scheme during the course of the proceedings from
‘persons interested’, who had put in representations before June 10 or from
those whose later representations had not been objected to by Grosvenor Estate.
In presenting
the management scheme for Grosvenor Estate
1967 Act as there was not enough residential use at that time. He defined the
area covered by the proposed scheme. It embraced roughly one-third of the area
commonly known as Mayfair, which since 1711 had been developed and managed by
the Grosvenor family to an exceptionally high standard. No rebuilding or
redevelopment commenced until well into the 19th century, since when,
rebuilding had been carried out to meet the needs of a continuing, evolving
society. Apart from Grosvenor Square, the area contained three additional
communal gardens, a number of churches and three high-class hotels. The area
also incorporated 10 blocks of flats, designed as artisans’ dwellings, which
had been retained by the estate to provide social housing within the area. The
estate had always worked closely with the local planning authority and with
such bodies as English Heritage in order to maintain and improve the individual
structures and overall street scene. It was also responsible for the upkeep of
the communal gardens. Virtually the whole area of the Mayfair estate had been
designated a conservation area and the continuation of single ownership or
control afforded the best means of endorsing the protection of the character of
the area. The estate regularly consulted with local amenity and residents’
groups and its policy reflected the Department of the Environment’s draft
planning policy with regard to conservation areas. Mr Scoble considered a
management scheme would provide for tighter control over the use and alteration
of premises within the area than would be possible for a planning authority. He
maintained, moreover, that a single coherent management was the only way to
ensure that the 235 Grade I and II listed buildings were maintained as intended
by the listing. The close interest taken historically by the Grosvenor family
had ensured the quality of the area which could have easily been eroded as
individual freeholds were sold.
Belgravia,
still acknowledged as one of the most desirable areas of London, had benefited
from a management scheme granted by the High Court in December 1973. Single
management control was said to be of unquestionable benefit to the landlord,
local authority, residents’ association and English Heritage in achieving the
implementation of respective conservation policies. Newly enfranchised
freeholders and lessees also benefited from the enhanced standards of their
holdings, as well as a better local environment. Mr Scoble observed that by
providing for the existence of management schemes, the Act acknowledged the
advantage to the community of retaining control which would otherwise be lost
as the result of individual enfranchisement of properties. He concluded that it
was in the general interest for the directors of Grosvenor Estate (Mayfair) to
retain power of management in order to ensure the character of the area was
guaranteed for future generations. In the circumstances he felt that the
considerations of section 70(2) and (3) of the Act had been satisfied and that
Mayfair was a suitable area for a management scheme. Mr Scoble presented
letters in support of the proposed scheme for Mayfair from, among others, Lord
Ezra, chairman of Belgravia Residents’ Association, Civic Trust, English
Heritage and Residents’ Association of Mayfair in a letter dated February 14
1994.
Mr Colin
Redman [FRICS], one of the directors of Grosvenor Estate (Mayfair), briefly
outlined how the Belgravia estate management scheme had been organised for over
21 years. He explained that Grosvenor Estate had worked very much in
partnership with the freeholders and had only had to enforce the power of
control over use of a dwelling on two occasions, at the behest of occupiers of
nearby properties.
Mr Scoble
continued by observing that many of the objections to the proposed scheme
originally communicated to the tribunal had been met and some objections had,
in any event, been withdrawn. LEA, ARM and RAM all supported a scheme in
principle and the proposed scheme had now been modified to accommodate most of
their criticisms; for example, although not required by the Act, provision for
a consultative body had been incorporated into the proposed scheme to represent
interests of the residents. Although the proposed scheme contained provisions
for external redecoration every three years in practice they were not rigidly
enforced. They did, however, provide a safeguard against deterioration in the
general appearance of a building or terrace of buildings. In any event, the
repair and redecorating provisions incorporated in the proposed scheme imposed
no greater burden on the enfranchised freeholder than already had existed in
their leases.
Mrs J South,
on behalf of LEA, had stated in a letter to the tribunal in September 1994 that
retaining the right of entry under the proposed scheme was inconsistent with
the spirit of freehold ownership. However, section 69(3)(d) of the Act
specifically allowed for such a provision, which, in an attempt at a reasonable
compromise, had been amended to permit access to a freehold dwelling upon
reasonable notice and with no right of entry without reasonable belief that a
breach in the provisions of the scheme had occurred. Mr Scoble could not accept
the suggestion that Grosvenor Estate should not be reimbursed where an owner
had been in breach of the terms of the scheme, or for costs incurred in
considering applications to alter a property within the Grosvenor Estate. Nor,
in his view, was it unreasonable to require a management fee for the day to day
administration of the proposed scheme as a whole. He could not accept that the
Act intended that Grosvenor Estate should be out of pocket in carrying out its
duties under the scheme and that the sum provided for was reasonable and in
line with the fee included in the Belgravia scheme. Referring to section
69(4)(b) of the Act, Mr Scoble considered that Grosvenor Estate had gone some
way to meet LEA’s criticisms relating to the transfer of ownership. To require
reference to a leasehold valuation tribunal, should ownership be transferred to
some group of companies within Grosvenor Estate, would be superfluous and
unnecessary.
Mr Milne, a
director of Grosvenor Estate (Mayfair), confirmed he was responsible for the
day to day management of the Mayfair estate and had frequent dealings with both
RAM and ARM. He observed that the proposed scheme did no more than formalise
the existing on-going consultation between Grosvenor Estate (Mayfair) and its
residents.
In conclusion,
Mr Scoble said that the proposed scheme made provision for variation or
termination with the approval of a leasehold valuation tribunal. He had
incorporated a number of suggested amendments both from those representative
bodies and ‘persons interested’, who had submitted oral or written submissions
and he undertook to provide the tribunal with copies of the proposed scheme
incorporating the latest amendments and commended the scheme as amended for the
approval of the tribunal.
The hearing of
the application resumed on January 24 1995, on which occasion Mr Andrew Arden
QC represented LEA, ARM and four ‘persons interested’. Mr Scoble continued to
represent Grosvenor Estate. Mr L Walters, who was accompanied by Sir Michael
Clapham, represented RAM.
Mr Walters,
said that the membership of RAM included at least 350 households in Mayfair and
confirmed that the association fully supported the scheme as now amended.
Outlining his
case, Mr Arden referred the tribunal to the purpose of the Act, which he said
was intended to liberate leaseholders from the power of the landlord. The law
of the land already had wide powers over property owners regarding the use and
development of premises. Thus, any approval of a scheme had to be in the
general interest and not just in the interest of the landlord. He considered
that the provisions of section 69 of the Act should be regarded as a concession
to the general presumption against any interference with the rights of the
enfranchised freeholders. In support of his arguments he drew the tribunal’s
attention to the High Court decision in respect of the Re Calthorpe Estate,
Edgbaston, Birmingham; Anstruther-Gough-Calthorpe v Grey (1973) 26
P&CR 120 at p125 in which Foster J referred to an earlier judgment of
Goulding J in respect of In re Sherwood Close (Barnes) Management Co Ltd*.
Mr Arden
the general interest required more than the normal controls and safeguards
already provided by the general law. Section 70(3), he said, required a
tribunal, in considering a scheme, to balance the benefit to the general
interest with what was reasonable to impose on enfranchised freeholders. Among
the impositions included in the proposed scheme were the power of entry and the
payment of management charges. Mr Arden drew attention to the Landlord and
Tenant Act 1985, in which lessees were given increased power to exercise
control over the landlord with regard to the charging of costs. Enfranchised
freeholders would not have such powers under the provisions of the proposed
management scheme. Referring to section 69(3) of the Act, Mr Arden maintained that
the use of the word ‘may’ in that section did not mean ‘must’ and that a
tribunal should always have regard to section 70(2) of the Act in order to
satisfy themselves that a provision in the scheme was justified. He considered
section 69(3) imposed limits as to the costs that could be claimed by the
landlord under the scheme, namely that the landlord was confined by the wording
of section 69(3)(c) to claiming only those costs relating to any matters within
the definition of section 69(3)(b). With regard to the public interest need for
a scheme, Mr Arden argued strenuously that there was no public interest in
fettering the rights of new freeholders, who should have the freedom to operate
under the common law, including the right to receive compensation on
withholding objection to a planning application. Mr Arden considered the
management scheme should avoid the allowance of the exercise of discretion on
the part of the landlord and should only contain provisions which were strictly
required by the Act.
*Editor’s
note: Reported at [1972] Ch 208.
Mr Arden then
proceeded to make observations or objections to the individual clauses of the
proposed scheme which, during the course of the hearing, resulted in a number
of further amendments agreed to on behalf of Grosvenor Estate. He regarded the
repair and decoration clauses as patronising and excessive, as well as placing
too onerous a burden on the freeholders, which ultimately would affect the
resale value of their property. Moreover, he considered there was sufficient
power within the normal legal system for access to be gained and costs claimed
if a freeholder was in breach of repairing or decorating terms. So far as a
notice of inspection was concerned, anything less than 28 days would be
unreasonable. Mr Arden challenged the provisions of clause 7(2), which could
impose burdens on a leaseholder rather than the owner in circumstances where a
leaseholder had not had an opportunity to comply with notices of repair. Clause
7(2) laid on the enfranchised freeholder a more onerous structure for the
recovery of costs for breaches of repair and decoration than was required under
the Landlord and Tenant Act 1985 in respect of leaseholders. Costs recoverable
under the 1985 Act were confined to what was fair and reasonable. He repeated
the assertion referred to earlier by Mrs South, that arbitration before
chartered surveyors was not a suitable forum for resolving disputes between the
landlord and the enfranchised freeholder.
Clause 7(3),
in Mr Arden’s view, was redundant and overbearing. A freeholder was entitled to
maximum standards of treatment available known to law, and that it was
reasonable that there should not only be a requirement that consent to
alterations should not be unreasonably withheld, but that there should be no
unreasonable delay in the granting of such consent or, in the event of refusal
or the imposition of conditions, the landlord should provide reasons.
While
acknowledging that the restriction on use had been amended to ‘household’ at
the request of LEA, Mr Arden considered that the clause was still too
restrictive and ‘occupation as a single private dwelling-house’ was sufficient.
He also objected to the restriction on the use of a garage.
Mr Arden
reserved strong criticism for clause 12(1) and (2) of the scheme. In his view,
section 69(3)(c) did not permit the landlord to recover general costs or a
management charge under a management scheme, nor did it allow the landlord to
recover costs either in respect of any damage or diminution in value of
neighbouring premises belonging to the landlord, or in respect of the recovery
of professional expenses reasonably incurred in connection with consent to
alterations.
The provision
for access to premises for the purpose of maintenance of trees or executing
repairs to a neighbouring property was suitably provided for by the Access to
Neighbouring Land Act 1992 and therefore it was unnecessary to include it in a
management scheme.
In Mr Arden’s
view, the costs of the proposed scheme’s requirements regarding transfer of
ownership were unnecessarily onerous and did not come within the provisions of
section 69. A simple letter of notification, he maintained, would be
sufficient.
The provision
for consultation in clause 23 did not provide an effective safety net for the
enfranchised freeholders, who were given no power under the scheme in the
decision-making structure. Nor did the scheme make proper provision for the
freeholder to express dissatisfaction with the management, since variation of
any of the provisions with the approval of a leasehold valuation tribunal only
came into effect in the event of a change of circumstances.
In his final
conclusions Mr Arden said that while in principle, there was support for a
scheme, there was no obligation on the part of the landlord to apply the
provisions of the proposed management scheme to voluntary disposals and in the
light of the many criticisms that had been made, it was his submission that the
scheme as presented did not fulfil the criteria required by the Act and that it
should not be approved by the tribunal.
At the resumed
hearing on January 25 1995, Mr Walters, vice-chairman of RAM, put
representations in the light of what had been said on behalf of LEA and ARM. He
said he was a chartered surveyor with 30 years’ experience and utterly rejected
the remarks that had been made concerning surveyors who, as a profession,
represented both tenants and landlords. RAM had been formed over 20 years ago
and had 350 household or family members and 50 business members. It was an
active association with 10 council members, who met monthly on a Tuesday. ARM
was a breakaway group, which set up their organisation some four years ago.
Westminster City Council recognised RAM as the amenity group for Grosvenor
Estate (Mayfair). Most of the amendments to the scheme now presented had been
achieved over many months as the result of negotiation between a number of
‘persons interested’ and Grosvenor Estate. The association had sought independent
legal advice and acknowledged help given by Mrs South in negotiating some of
the amendments which now formed part of the proposed scheme. He felt, however,
that negotiations had gone far enough now and he fully supported the scheme as
presented. RAM had never been neutral with regard to the proposed scheme, but
its members did not want it to be watered-down further. All 10 council members
of RAM were residents of Mayfair and recognised the proposed scheme was devised
for the people of Mayfair. Planning controls were not sufficient to safeguard
the present appearance of Mayfair, particularly as the ownership became more
fragmented.
Replying to
the submissions that had been made against the proposed scheme, Mr Scoble said
that the repairing and decorating clauses were necessary, but repeated they
were not and would not be rigorously enforced. Decisions with regard to the
state of repair and decoration of buildings within the Mayfair estate were for
the owners’ as well as the landlords’ protection. It had been necessary to
retain a right of access in clause 7(1), subject to the agreed LEA amendment,
because at times there was a need to go through properties to inspect the rear
of a building. Section 69(3)(d) did not require such modification to the right
of access, which was in fact a concession on behalf of Grosvenor Estate. The
same, or stronger rights already existed in the leases and Grosvenor Estate did
not enter a residential property unnecessarily.
Mr Scoble
rejected the arguments that it should be left to the courts to resolve disputes
of liability for costs with regard to repair and works undertaken. This, he
said, was an expensive option. There was no obligation in section 69 for a
scheme to provide for arbitration in the event of a dispute and the provision
of another quicker option
also rejected any suggestion that chartered surveyors nominated by the
president or a senior vice-president of the Royal Institution of Chartered
Surveyors were inappropriate to undertake such a role.
Mr Scoble was
not prepared to concede further with regard to those provisions requiring
consent. It was not Grosvenor Estate’s practice to delay matters and, in any
event, where refusals or conditions were imposed, the practice was to give
reasons.
The LEA
suggestion with regard to residential use already represented a relaxation of
the existing terms of the leases, any further extension of use was
unacceptable, although he was prepared to agree to a further amendment
concerning use of a garage. He rejected, however, the suggestion that court
proceedings should be used as a means of gaining access in the event of a
breach of the use of premises. This would merely add to the expense where
access was required, in accordance with section 69(3)(d) of the Act.
Mr Scoble did
not agree that the maintenance of the appearance of the Mayfair estate,
including the trees, could or should be left entirely to planning law. Such
further controls that were included in the proposed management scheme were
supported by bodies such as English Heritage.
He rejected
the suggestion that the Access to Neighbouring Land Act 1992 rendered
provisions in the proposed scheme allowing the landlord reasonable access to
execute repairs to a neighbouring property unnecessary. The law applied in any
case, but the provisions merely avoided the inconvenience of the landlord or a
freeholder having to go to court in the event of access being required.
He was
prepared to accept an amendment to clause 18 (transfer of ownership) in line
with the Dulwich College estate management scheme as approved by the High
Court.
On the
question of management charges, it was Mr Scoble’s contention that, even if he
were wrong in his interpretation of section 69, which in his view did not
restrict the inclusion of a management charge, other schemes approved under the
1967 Act by the High Court did include some form of management charge. He
maintained that Grosvenor Estate could not be expected to manage such a scheme
at its own cost. The charge was modest. Any other costs recoverable under the
scheme were triggered by some action or default on the part of the freeholder.
Mr Scoble did
not interpret clause 24 of the proposed scheme as giving solely the landlord a
right to seek the approval of a variation in the terms. Any single owner had
the same right under the provisions of the scheme and the clause would be
amended accordingly for the avoidance of doubt.
He did not
accept the three further main suggestions put forward by Titmuss Sainer Dechert
to clauses 4, 8(1)(c) and 20(1). However, some of the suggestions to clause
21(2) were considered reasonable and were amended accordingly.
After further
adjournment for discussion, Mr Scoble and Mr Arden agreed the wording of
amendments to clauses 16, 18 and 24.
Replying to
the earlier reference made to the Dulwich estate management scheme, Mr Arden
maintained that, as the point with regard to general management charge was not
addressed by the court in that case, it could not be used as authority allowing
Grosvenor Estate to recoup costs other than in accordance with section 69(3)(c)
of the Act. He urged the tribunal not to be influenced either by RAM’s or ARM’s
change of mind with regard to the acceptance of the scheme since October 1994.
Both had changed their minds and both had entered into negotiations. Nor, in
his view, should they be influenced by any point with regard to the size of
membership: ARM was a properly constituted residents’ association of Mayfair
and, although its membership was lower than that of RAM, it nevertheless
reflected the views of its 150 members and represented a sizeable proportion of
the residents of Mayfair.
Inspection
The tribunal
made a comprehensive inspection of Grosvenor Estate (Mayfair) on February 14
1995, bearing in mind the representations made concerning, among other things,
the history, layout, redevelopment, land uses, amenities, control of external
appearance and the requirement for access by the landlord.
Conclusions
The tribunal
were satisfied that Grosvenor Estate had complied with section 70(1) and (4) of
the Act. They were also satisfied that although a very small number of
individuals registered an interest before the date specified, namely June 10
1994, in the light of those who did make representations and having regard to
those put forward by the two residents’ associations and LEA, the interests of
the residents, as a whole, were properly represented at the hearing, which was
held in public over a period of three days.
It has been
stressed by Mr Arden that the tribunal had a dual function: to look at the
general interest and to determine whether a scheme was appropriate for the
area. That any decision on the general interest should be subject to the
condition that it would be reasonable to impose a scheme on newly-enfranchised
freeholders in accordance with section 70(3)(b) of the Act. Moreover, it was
said the tribunal’s power was further constrained by the requirements of
section 70(7) in that they should approve a scheme if it was fair and practical
and did not give the landlord control out of proportion to that previously
exercised or required for the purposes of the scheme.
They were
satisfied that there was a need in accordance with section 70(2) of the Act for
an estate management scheme for the Mayfair estate in order to maintain
adequate standards of appearance and amenity and to regulate the redevelopment
of the area in the event of tenants acquiring the landlord’s interest in a
property, and that it was in the general interest that the landlord should
retain powers of management as conferred by an estate management scheme. The
tribunal were assisted in reaching this conclusion by the resolute acceptance
by RAM of the need to have a scheme of management for the Mayfair estate and by
the expressions of agreement, or agreement in principle, indicated by some of
those ‘persons interested’, who had made representations within the three-month
time-limit. They also bore in mind the more qualified acceptance in principle
to a scheme by LEA and ARM and concluded that the proportion of residents who
had indicated strong objection to the scheme was very small and
unrepresentative of the general opinion of those living in Mayfair. The
tribunal also had regard to the expressions of support for a scheme from such
bodies as English Heritage and Civic Trust.
One of the
main arguments put forward on behalf of LEA and ARM, was that even where it was
in the general interest, the provisions contained in a management scheme had to
be justified within the constraints of section 69 and 70 of the Act. The
tribunal considered, however, that the constraints imposed on them when
deciding whether or not to approve an estate management scheme were not as
great as had been suggested. Section 69(1) expressly states that, in the event
of the tenants acquiring the landlord’s interest under the Leasehold Reform Act
1967 or the Leasehold Reform, Housing and Urban Development Act 1993 the
landlord will retain powers of management in respect of a house or
premises and will have rights against the house and premises in respect
of benefits arising from the exercise elsewhere of his powers of management, if
a scheme is approved by a leasehold valuation tribunal under section 70 of the
Act. This mandatory provision however is subject to the tribunal having regard
to section 70(2) and (3) of the Act.
The latter
provides that a tribunal, when considering whether or not to approve a scheme
should primarily have regard to the benefit likely to result from the scheme to
the area as a whole and the extent to which it is reasonable to impose, for the
benefit of the area, obligations on the tenants acquiring the freehold
interest. If the tribunal considers a scheme satisfies these conditions, they
are bound in accordance with section 70(7) of the Act to approve the scheme as
originally submitted, or amended, if it appears to the tribunal to be
fair and practical and appears not to give the landlord a degree of
control out of proportion of that previously exercised by him or required for
the purpose of the scheme.
Moreover, the
tribunal were satisfied that, whether or not because of recent legislation,
lessees had acquired increased control over such matters as management costs,
referred to above, the provisions within the proposed amended scheme did not
appear to the tribunal to impose a degree of control out of proportion to that
previously exercised.
Grosvenor
Estate, through its legal representatives, up until the close of the third day
of the hearing had been prepared to negotiate with regard to certain provisions
contained in the proposed scheme in order, it appeared, to satisfy the
objections and anxieties being expressed with regard to the imposition of a
management scheme. In so doing Grosvenor Estate seemed to recognise the need
for the proposed management scheme to have regard to both reasonableness and
fairness to the individual as well as to the practicalities of operating the
scheme. For example, the hostility to one provision which had been understood
to give only the landlord the right to make an application to vary the terms of
the proposed scheme was the result of a possible misunderstanding and the
clause was amended accordingly.
As the result
of submissions put by Titmuss Sainer Dechert, RAM, ARM and LEA, prior to and
during the first day of the hearing, substantial amendments had been made to
the proposed scheme; yet further amendments were incorporated after submissions
put on behalf of LEA and ARM during the course of the second and third day of
the hearing.
The principal
areas of dispute where there appeared to be no possibility of negotiation were
in relation to:
Clauses 5
& 6, ie the external repairing and decorating
provisions;
Clause 7, ie the arrangements in the event of a dispute regarding the
landlord’s right of entry; and
Clause 19 the provision of a management charge.
Having
considered the representations as a whole and in the light of their inspection,
the tribunal were satisfied that it was reasonable to impose on the
freeholders, for the benefit of the area, the decorating and repairing
obligations set out in the proposed scheme. Moreover, having regard to the
character and nature of the area it appeared to the tribunal to be fair and
practical to impose such provisions on the freeholders which they thought were
properly required for maintaining the existing high standard of appearance of
the area. In their view, the retention of these clauses was of benefit to the
freeholders, the landlord and the general interest. They also thought that the
provision for consultation with the recognised residents’ association afforded
sufficient safeguards for the individual freeholders.
The tribunal
thought there was little merit in the objection to clause 7, which appeared to
provide a quick and relatively inexpensive machinery for settling disputes that
might arise under this provision.
So far as
clause 19 was concerned, although persuasively argued, the tribunal did not accept
the submission that the effect of section 69(3) of the Act was to prevent the
landlord recovering costs from the freeholders otherwise than in accordance
with section 69(3)(c). The tribunal were inclined to the view that while
the proposed scheme included provisions provided for in section 69 of the Act,
their inclusion did not prevent further clauses being incorporated provided it
was reasonable to impose such further obligations on a freeholder for the
benefit of the area and that it appeared fair and practical to do so and did
not give the landlord a degree of control out of proportion to that previously
exercised; or to not give a degree of control out of proportion to that
required for the purpose of the scheme. In this respect the proposed index-linked
management charge was not regarded as unreasonable and appeared to be a fair
and practical method of remunerating the landlord for administrating the
proposed scheme. In the light of the views expressed above and the observations
made with regard to the schemes approved by the High Court and referred to at
the hearing, the tribunal observed that all contained some provision for a
management charge and that even if the consideration of these schemes fell
short of amounting to direct authority on the point, the tribunal nevertheless
considered they provided a guide as to whether such a provision came within the
requirements of section 70 of the Act.
In all the
circumstances, the tribunal are satisfied that the proposed scheme meets the
statutory requirements as set out in Part I of Chapter IV of the Leasehold
Reform, Housing and Urban Development Act 1993 and accordingly approve the
modified estate management scheme for Grosvenor Estate (Mayfair).
