Management order – Estate comprising residential and commercial premises – Appellant residential tenants seeking management order – Concession that commercial elements required to be excluded – Leasehold valuation tribunal (LVT) refusing management order after considering unfeasibility of splitting management functions between residential and commercial elements – Later application refused partly on ground of issue estoppel – Whether second application an abuse of process – Whether LVT erring in view of the law – Appeal allowed
The respondent was the head leaseholder of an estate that comprised four residential tower blocks, a hotel and a building containing a health club, swimming pool and restaurant. In 2003, the appellants, who were tenants of a flat on the estate, applied to the leasehold valuation tribunal (LVT), on behalf of themselves and other residential tenants, for the appointment of a manager in respect of the entire estate, pursuant to section 24 of the Landlord and tenant Act 1987. The application alleged breaches of the leases by the respondents, including unreasonable service charge demands.
Following a submission by the respondent, the appellants conceded that the LVT had no jurisdiction to include the commercial elements of the estate within a management order. After considering the feasibility of separate residential and commercial managers regarding various functions on the estate, and finding that certain functions could not conveniently be divided, the LVT concluded that it would not be “just and convenient”, within section 21(2) of the Act, to make a management order in respect of the residential elements only.
In 2006, the appellants made a further application under section 24. Trying preliminary issues, the LVT determined that: (i) it had no jurisdiction to appoint a manager over property extending beyond the “building” as defined in the appellants’ lease and appurtenances to (particularly the gardens and lower car park as sought by the appellants); and (ii) it was in any event precluded from appointing a manager because the issue was res judicata or an abuse of process by reason of the 2003 LVT decision. The appellant appealed. In the meantime, the LVT’s decision on issue (i) was superseded by the decision of the Court of Appeal to the contrary in Cawsand Fort Management Co v Stafford [2007] EWCA Civ 1187; [2008] 1 WLR 371.
Held: The appeal was allowed
The question when considering a claim of issue estoppel was whether, in the circumstances of the particular case, considerations of justice required that a party be stopped from reopening an issue previously determined. The judgment had to be a broad, merits-based decision-taking into account public and private interests and focusing upon the crucial question of whether the party seeking to reopen the matter was abusing the process of the court. The relevant provisions of the 1987 Act were intended to benefit tenants and did not seek to limit the number of applications a tenant could make. The public interest in seeing a conclusion to litigation was of little weight in circumstances where the lease or the statute contemplated the possibility of repeated examinations of the same issues: Arnold v National Westminster Bank plc [1991] 2 EGLR 109; [1991] 30 EG 57, Johnson v Gore Wood & Co (No 1) [2001] 2 WLR 72 and Bradford & Bingley Building Society v Seddon [1999] 1 WLR 1482 applied. With regard to applications to the LVT under section 24 of the 1987 Act, a cautious approach should be taken to the principles of issue estoppel that, if applied, would present a complete bar to relitigation unless there were materially different or special circumstances; the LVT should instead focus upon abuse of process, which would involve a consideration of all the facts and circumstances and could be decided on the merits at the time.
Moreover, a change in the law was capable of bringing a case within an exception to issue estoppel. The decision in Cawsand had established that Part II of the 1987 Act provided jurisdiction to confer management functions in respect of all property over which tenants had rights, even though it was not physically part of the building or within its curtilage, provided that there was a causal link or nexus between the functions to be carried out by the manager and the premises as defined in section 21. That decision made it clear that the words “in relation to” premises in section 24 were intended to permit the LVT to confer wide powers on a manager. A causal link could be established where land served both the residential premises of the tenants and other land in non-residential or commercial use. Although, in 2003, the LVT had considered it unfeasible to divide certain functions, such as the provision of utilities, between the residential and commercial parts, that might not be necessary on an application of Cawsand; the LVT could, if practicable, appoint a manager to take charge of those functions for both the residential and commercial premises. Accordingly, the 2003 decision might have been based upon a mistaken view of the law, which could have made a difference to its decision. Its conclusions had in turn been relied upon in the 2007 decision. In those circumstances, the 2003 decision should not found a claim of res judicata or issue estoppel. The appellants’ application was not doomed to failure and it was not appropriate to dismiss it as an abuse of process.
The appellants appeared in person; Timothy Fancourt QC and Oliver Radley-Gardner (instructed by Eversheds) appeared for the respondent.
Sally Dobson, barrister
