Landlord and tenant – Appointment of manager – Restriction on register – Property acquired by nominee on behalf of appellant lessees exercising right of collective enfranchisement – Freeholder failing to register management order against freehold estate as directed by tribunal – Tribunal varying management order – Appellants appealing – Whether nominee taking free of management order – Whether participating lessees in breach of management order – Appeal allowed
Ditton Place School, at Brantridge Lane in Balcombe, West Sussex was a Grade II listed country house set in extensive grounds. The main house and an adjoining coach house were converted by a developer into twelve self-contained flats and let on 999-year leases. The lessees shared communal grounds and gardens with the owners of six freehold houses within the original grounds. All the residents contributed to the upkeep of the grounds through rent charges or service charges; the leaseholders’ service charges also provided for maintenance of the main house and the coach house.
On the application of several lessees, including the appellants, the First-tier Tribunal (FTT) appointed a manager under section 24 of the Landlord and Tenant Act 1987 for a term of three years to carry out the management responsibilities of the freeholder in respect of the main house, the coach house and the grounds. The order expressly applied to the freeholder and any successor in title. The freeholder was directed to register the order against its freehold estate. The freeholder and the lessees were also required to cooperate with the manager and prohibited from interfering with the exercise of any of his powers and duties.
Some lessees, including the appellants, served an initial notice under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 to exercise their right of collective enfranchisement by acquiring the freehold of part of the estate. A nominee company (DPF) acquired the freehold on their behalf. The participating lessees then made an unsuccessful application to vary the management order and the respondent sought clarification that he was still required to manage the whole estate. When it became apparent that the management order had not been registered against the freehold title, the FTT varied the order to try to avoid the consequences of it being thwarted. It added a penal notice in an attempt to ensure compliance complied. The appellants appealed.
Held: The appeal was allowed
(1) As a result of section 87 of the Land Registration Act 2002, a restriction on the register was the only way to protect an order appointing a manager. Therefore, the direction that the management order should be registered against the freehold estate must have required a restriction to be entered on the register. The consequence of registration of the transfer of the main house, the coach house, and the grounds included in the new title to DPF was that, in accordance with section 29(1), the management order was postponed to the interest of DPF which was not bound by it. The usual effect of postponement under section 29(1) was that, in most cases, the postponed interest would be eliminated. The manager was still obliged to manage the amenity land and bound to continue to collect arrears of service charges which had fallen due up to the registration of DPF’s interest, including by pursuing court proceedings, and was entitled to charge for those services. The participating lessees were still bound by the management order, so far as it affected them. But the respondent was not in a position to carry out his obligations so far as they related to DPF’s property because it was not bound by the management order. He derived his powers from the order and once it ceased to bind the owner of part of the land, he was necessarily discharged from further performance in respect of that part. He would be committing a trespass if he entered DPF’s property to carry out any of his functions without its permission and he could not authorise others to enter the land to undertake cleaning, gardening, maintenance or any other function.
(2) For all practical purposes, the management order ceased to apply to DPF’s land because the company was not bound by it and the respondent ceased to be in a position to discharge the functions conferred on him by the order. Nothing in 2002 Act, the 1987 Act or the management order itself provided that the order would be discharged in the event of postponement in favour of a purchaser, but in practice the order became ineffective, except as regards the amenity land. The order was incapable of binding successors in title to DPF without some additional mechanism to join such a successor to the proceedings and make it the subject of a direction by the FTT that it comply. In the absence of such a mechanism, section 29 of the 2002 Act left DPF unconstrained in its own management of its property. Whatever the continuing effect of the management order, as between the respondent and the participating lessees, the order became ineffective.
(3) The FTT did not have jurisdiction to make its original order effective by the indirect route of variation. It could make a new management order, but only with prospective effect and only if the procedure under Part II was implemented. An order under section 24(1) of the 1987 Act appointed a manager to carry out functions “in relation to any premises” to which Part II applied. Such an order might only be made if a preliminary notice under section 22 had been given to the landlord or other person with management responsibilities (section 22(1)), or the need for such a notice had been dispensed with (section 22(3)). No notice had ever been served on DPF, which was not even a party to the application to vary the order. The fact that the participating lessees had breached the terms of the management order was not capable of dispensing with the jurisdictional hurdles which limited the tribunal’s powers under section 24. Accordingly, on registration, a purchaser of property for valuable consideration took it free of a tribunal’s order appointing a manager under Part II of the 1987 Act, whether or not the order was mentioned on the register of title. It followed that DPF was not bound by the management order and the respondent’s functions were limited to the management of the amenity land and the collection of historic arrears.
Christopher Heather QC (instructed by Fladgate LLP) appeared for the appellants; Anthony Tanney (instructed by Dean Wilson LLP, of Brighton) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Urwick and another v Pickard
