ST MARY’S MANSIONS LIMITED v J IANNACCONE & OTHERS LRX/11/2001

UPPER TRIBUNAL
LANDS CHAMBER
LRX/11/2001Case No LRX/11/2001
Between
ST MARY’S MANSIONS LIMITEDApplicantJ IANNACCONE & OTHERSRespondent
Before
The PresidentVenue 48/49 Chancery Lane, London WC1A 1JRDate 22 May 2001Hearing 25 April 2001 © CROWN COPYRIGHT 2001Property: Block of Residential Flats, St Mary’s Mansions, St Mary’s Terrace, London W2 1SQCatchwords: SERVICE CHARGES – application for leave to appeal against interlocutory decision of LVT – whether right of appeal against such decision under para 2 of Schedule 22 to Housing Act 1980 – whether LVT’s decision fixing hearing date lawful – held right of appeal extends to any decision or order of LVT – LVT decision not unlawful – need for new Lands Tribunal Rules
[1]I refused leave to appeal on this application for leave to appeal against a decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel. These are my reasons for doing so. I start by explaining the background. The Tenancies[2]St Mary’s Mansions is a block of 125 flats at St Mary’s Terrace, Paddington, London W2. The freeholder is Metropolitan Properties Company Ltd (“Metropolitan”). The head lease is vested in the present applicants (“SMML”). The lease structure is as follows. Each flat is subject to a long lease for a term of 99 years less 3 days granted by Metropolitan. On 9 March 1988 Metropolitan granted to Limegate Investment Co Ltd (“Limegate”) separate reversionary leases over each of 41 of the flats (“the Limegate flats”). On 10 March 1988 Metropolitan granted SMML a headlease of the building subject to the Limegate reversionary lease. Thus there is a relationship of landlord and tenant between Limegate and the 41 Limegate long lessees; between SMML and Limegate in relation to those 41 flats; and between SMML and the remaining 84 long lessees. The tenants of those 84 flats are shareholders in SMML. The LVT proceedings[3]On 12 December 1999 the long lessees of 13 flats applied to the LVT for a determination of reasonableness of service charges pursuant to section 19(2A) of the Landlord and Tenant Act 1985. 12 of the flats were Limegate flats and the respondent was named as Limegate. On the same day the lessees of three other flats (one of them a Limegate flat) made a similar application with SMML named as respondent. The applications were treated by the LVT as a single application. On 5 April 2000 the long lessees of 13 flats (nine of them Limegate flats) applied to the LVT for the appointment of a manager under section 24 of the Landlord and Tenant Act 1987. The county court proceedings[4]Shortly before the section 19(2A) applications, on 22 November 1999, SMML had issued proceedings against Limegate in the Central London County Court claiming forfeiture of the long lease of flat 77 and possession of the flat on the basis of arrears of service charges and rent. On 19 January 2000 Limegate served a defence and a part 20 claim against the occupants/lessees of 20 flats. It said that some service charges had not been paid to Limegate by the long lessees of the Limegate flats, including 77, because the lessees asserted that the charges were not properly due; that Limegate did not know whether the objections were valid or not; but that, to the extent that the objections were valid, Limegate was not obliged to pay the service charge demanded by SMML, and, to the extent that they were not valid, Limegate was entitled to payment of the service charges due from the part 20 defendants and was 3 obliged to pay those service charges to SMML. Thus in reality the dispute was between SMML and the Limegate long lessees who had withheld service charge payments. The occupant lessees of 17 of the 41 Limegate flats, were ordered to be joined as part 20 defendants. Of those, 12 are parties to the LVT proceedings and 5 are not. Interlocutory proceedings[5]In the county court action four case management conferences, direction hearings or PTRs have been held. The part 20 defendants have served a Scott Schedule, which SMML have responded to, and a supplementary Scott Schedule. The LVT has held three PTRs, most recently on 13 February 2001. It is in relation to an order made following that PTR that the present application is made.[6]The first LVT PTR was held on 7 March 2000. At the hearing Mr Golstein, SMML’s solicitor, submitted that the county court action should be the lead proceedings and should go first. Since some of the parties to the county court action were not parties to the LVT s19(2A) application they could not be bound by the LVT decision on that application. Unless the county court action went ahead first there would be duplicated arguments, extra preparation time and cost, and the prospect of diverse findings. The suggestion, therefore, was that the county court action should go first, with the LVT later dealing with the balance of the dispute – effectively the (then anticipated) section 24 application.[7]The solicitor for Limegate and the solicitor representing those of the part 20 defendants who were represented agreed to this proposed course and the LVT also agreed. It ordered that the section 19(2A) application be adjourned generally with liberty for either party to restore.[8]The second LVT PTR (specifically related to the section 24 application) was held on 12 June 2000. Since the first PTR there had been a directions hearing and a case management conference in the county court action. An order was made that there should be a preliminary hearing on the amount of service charges payable and the trial of the preliminary issue was fixed for 25 September 2000 with a time estimate of 3 weeks. At the LVT hearing the section 24 applicants were represented by Mr Maunder Taylor, their surveyor, who submitted that the application should proceed immediately. The LVT rejected that submission. On 19 June 2000 they issued directions that both the section 19(2A) application (which had not been formally before them) and the section 24 application should be listed for November “in view of the fact that a determination is awaited from the county court” in September. Directions for a statement of case by the section 24 applicants and a reply by SMML were given, and there was a direction that the case would be heard on 13 November 2000 with an estimated hearing time of 2½ days.[9]In the event the county court trial date was vacated and so was the LVT hearing. The third LVT PTR was held on 13 February 2001. It was held in response to a request from Mr Maunder Taylor, who sought a direction that the section 24 application should be listed for hearing. A fortnight before the hearing, on 29 January 2001 a directions hearing in the 4 county court action had been held. The county court fixture for the hearing of the preliminary issue, listed for 13 November 2000, had been vacated and the district judge directed that there should be a full trial of the action – and not just the trial of the preliminary issue – to be listed in a 2-month period commencing 16 July 2001. Expert evidence was to be filed by 12 March 2001 and witness statements by 27 April 2001. The parties were to attend a listing hearing on 27 February 2001 and a PTR on 4 April 2001.[10]Although the LVT PTR on 13 February 2001 was held for the purpose of deciding the lessees’ request for a direction that the section 24 application should be listed for hearing, the LVT in fact considered the question of the listing of the section 19 application as well. This is clear from witness statements from Alexander John Payne on behalf of SMML and Bruce Roderick Maunder Taylor on behalf of the lessees. Mr Payne told the LVT that it had previously been agreed and decided that the LVT application would abide the outcome of the court proceedings and he argued that it would be inequitable for matters to be heard in the LVT because of the duplication of work, cost, and the risk of disparate findings. Mr Maunder Taylor’s recollection is that in the course of the hearing the chairman said that the issues on the reasonableness of services charges could be heard either in the LVT or the county court, and it would assist the county court to have a determination by the LVT on the reasonableness issues. The day after the PTR the LVT sent out a letter of directions. The application was to be heard on 29 May 2001 with an estimated hearing time of 2½ days.[11]On 4 April 2001 there was a listing appointment at the county court, and the trial was fixed for 22 October 2001 with a time estimate of 2 weeks. The Lands Tribunal’s appellate jurisdictions[12]The Lands Tribunal has two principal types of appellate jurisdiction – rating appeals from valuation tribunals, and appeals from leasehold valuation tribunals. Jurisdiction in rating matters was created by the Lands Tribunal Act 1949 itself, which transferred to the Tribunal the appellate jurisdiction that had been given to county courts under the Local Government Act 1948. The right of appeal from valuation tribunals is now provided for by regulation 47 of the Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993, made under the Local Government Finance Act 1988.[13]Appeals from leasehold valuation tribunals were first provided for in paragraph 2 of Schedule 22 to the Housing Act 1980 in relation to the determination of the enfranchisement price and certain other matters under the Leasehold Reform Act 1967. Up to that point it had been the Lands Tribunal that had exercised original jurisdiction in such matters. Paragraph 2 of Schedule 2 to the 1980 Act remains the provision under which appeals are made to the Tribunal. It now applies not only to the LVT’s jurisdiction under the Leasehold Reform Act 1967 but also to its jurisdictions under Parts I and III of the Landlord and Tenant Act 1987 (tenants’ right of pre-emption of landlord’s interest and the terms of compulsory acquisition of landlord’s interest), section 19 of the Landlord and Tenant Act 1985 (service charges) and section 24 of the 1987 Act (appointment of manager). In the case of the last two jurisdictions (service charges and appointment of manager) leave to appeal is required from the LVT or the Lands Tribunal. There is no requirement for leave in the other jurisdictions. 5[14]The Lands Tribunal Rules 1996 (SI 1996 No.1022) make provision in Part III for the procedure to be followed in appeals. There is a requirement for notice of appeal, notice of intention to respond, appellant’s statement of case and respondent’s reply. There is, for each of these four stages, a 28-day time limit which can be extended, but cannot be reduced, by the Tribunal. Under the simplified procedure (rule 28), which can be directed with the consent of the appellant, the statement of case and reply are dispensed with; but at least 21 days notice of the hearing of the appeal must be given to the parties.[15]Part IIA of the Rules (inserted by Amendment Rules made in 1997) provides for applications for leave to appeal from leasehold valuation tribunals. Application must be made within 28 days of the refusal of leave by the LVT. There is provision for service of the application on each respondent and for notification to the respondent of the time limit, specified by the Tribunal, within which representations relating to the application must be made. If leave to appeal is granted, no notices of appeal (under rule 6) is served, but the provisions of rules 7 and 8 (notice of intention to respond, statement of case, reply) apply.[16]The rules contain no provision as to the orders that the Tribunal may make in respect of the lower tribunal’s decision. There is, for instance, no express power to remit a case or to stay proceedings in the lower tribunal.[17]It is, I think, clear that the Lands Tribunal Rules were framed as they were on the assumption that what the Tribunal had to deal with were appeals on decisions from VTs and LVTs that disposed of the subject-matter of applications to those tribunals, and that the decision of the Tribunal would itself dispose finally of the subject matter of such an application. That appeals in rating matters only arose when the local valuation court (the predecessor of the present valuation tribunals) had made a final decision was stated in Oswestry Corporation v Hudd (VO) [1966] 1 WLR 363 per Sellers LJ at 373 A-F.[18]In Re Sarum Properties Ltd [1999] 17 EG 136 I held that appeal from an LVT under the 1980 Act only arises where the LVT has made a decision that disposes of the subject-matter of the application. This conclusion was followed by the Member, Mr P H Clarke FRICS, in Re Speedwell Estates Ltd [1999] 27 EG 128. The correctness of these decisions was questioned in argument in a recent High Court case, R v London Leasehold Valuation Tribunal, ex parte Daejan Properties Ltd [2000] 3 EGLR 44. There the respondent landlord in proceedings before an LVT had sought judicial review of a decision of the LVT on a preliminary point of statutory construction. At the hearing before Sullivan J the LVT appeared as respondent and was represented by leading counsel instructed by the Treasury Solicitor. He argued that, contrary to what this Tribunal said in Sarum Properties and Speedwell Estates, the right of appeal to the Tribunal was not limited to final decisions, and the landlord could have challenged the decision of the LVT by that route. Sullivan J said (at 46 A-D) that it was unnecessary for him to decide whether those decisions were correct since the right of appeal would in any event not preclude challenge by way of judicial review in an appropriate case, and he considered that the Administrative Court was the appropriate forum to decide the particular dispute. In the present proceedings Mr Michael Daiches for the applicant advances an argument that was not raised in Sarum Properties and Speedwell Estates and is not recorded as having been raised in Daejan Properties. It is, I have to say, 6 an argument that seems to me to be plainly right. In order to understand it, it is necessary to note the following provisions.[19]Section 31A(1) of the Landlord and Tenant Act 1985 provides:
“The jurisdiction conferred by this Act on a leasehold valuation tribunal is exercisable by a rent assessment committee constituted in accordance with Schedule 10 to the Rent Act 1977 which when so constructed for the purpose of exercising any such jurisdiction shall be known as a leasehold valuation tribunal”
. Provisions in the same terms are to be found in sections 24A and 52A(1) of the Landlord and Tenant Act 1987 and in similar terms in section 91(1) and (3) of the Leasehold Reform, Housing and Urban Development Act 1993.[20]Paragraph 2 of Schedule 22 to the Housing Act 1980 as amended provides:
“2. No appeal shall be from a decision of a leasehold valuation tribunal to the High Court by virtue of section 11(1) of the Tribunals and Inquiries Act 1992 and no case may be stated for the opinion of the High Court in respect of such a decision, but any person who – (a) appeared before a tribunal in proceedings to which he was a party; and (b) is dissatisfied with its decision. may within such time as rules under section 3(6) of the Lands Tribunal Act 1949 may specify appeal to the Lands Tribunal.”
In its original form it had included reference to section 13(1) of the Tribunals and Inquiries Act 1971, which made the same provision as section 11(1) of the 1992 Act.[21]The provision is expressly applied to an LVT exercising the jurisdiction conferred on it by the Landlord and Tenant Act 1985 (see section 31A(5) of that Act) or Part II of the Landlord and Tenant Act 1987 (see section 24A(6) of that Act) or Parts I and III of that Act (see section 52A(5)) or the 1993 Act (see section 91(10) of that Act).[22]Section 31A(6) of the 1985 Act provides:
“(6) No appeal shall lie to the Lands Tribunal from a decision of a leasehold valuation tribunal under this Act without the leave of the leasehold valuation tribunal concerned or the Lands Tribunal.”
A similar provision is contained in section 24A(7) of the 1987 Act.[23]Finally, in relation to these statutory provisions, it should be noted that section 31A(7) of the 1985 Act provides:
“(7) On any such appeal – 7 (a) the Lands Tribunal may exercise any power available to the leasehold valuation tribunal in relation to the original matter, and (b) an order of the Lands Tribunal may be enforced in the same way as an order of the leasehold valuation tribunal.”
Similar provision is made by section 24A(8) of the 1987 Act, but there is no equivalent provision in relation to Parts I and III of the 1987 Act or the 1993 Act.[24]Mr Daiches’s argument is based on the opening words of paragraph 2 of Schedule 22 to the 1980 Act which exclude appeal from a decision of an LVT to the High Court by virtue of section 11(1) of the Tribunal and Inquiries Act 1992. That subsection provides:
“(1) Subject to subsection (2), if any party to proceedings before any tribunal specified in paragraph…37…of Schedule 1 is dissatisfied in point of law with a decision of the tribunal he may, according as rules of court may provide, either appeal from the tribunal to the High Court or require the tribunal to state and sign a case for the opinion of the High Court.”
Paragraph 37 refers to “Rent assessment committees constituted in accordance with Schedule 10 to the Rent Act 1977”.[25]Mr Daiches points out that section 11(10) provides:
“(10) In this section ‘decision’ includes any direction or order, and references to the giving of a decision shall be construed accordingly.”
So defined, he says, “decision” is clearly not confined to a final decision. The provision expressly says that it covers any decision or order. Where the word appears in the exclusion provision in paragraph 2 of Schedule 22 to the 1980 Act it can only be being used in this sense, and the right of appeal that is given in the same paragraph must be in respect of any decision for which the section 11(10) right of appeal is removed. For the tenants, Mr Edward Denehan does not advance any argument to the contrary related to the wording of the provision. He simply urges me to follow the decisions in Sarum Properties and Speedwell Estates.[26]In my judgment it is not possible to restrict the meaning of “decision”, where the definition says that it includes any decision or order, so as to exclude interlocutory decisions and orders or some other category or categories of decision or order. Given the wide definition in subsection (10), decisions and orders on interlocutory matters are, in my judgment, necessarily decisions within the meaning of the Act. Accordingly the applicant’s application for leave to appeal against the LVT’s decision was validly made and thus requires to be determined. The grounds of challenge 8[27]Mr Daiches accepts that the decision under appeal was a case management decision very much in the discretion of the LVT. He recognises that to succeed in an appeal against it he must show that it was wrong in law. He says that it was wrong in law in that the LVT failed to have regard to material considerations, come to a conclusion that was perverse, and failed to give reasons for its decision.[28]I take the reasons argument first. Mr Daiches relies on Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 and R v Immigration Tribunal ex parte Khan (Mohammed) [1983] QB 790 in support of a contention that the failure to give reasons constitutes a free standing ground of appeal. He refers also to Article 6 of the European Convention on Human Rights. I have to say that his argument does seem to me to be inconceivable since it ignores the provisions of section 10 of the Tribunals and Inquiries Act 1992, subsection (1) of which provides that where any tribunal specified in Schedule 1 (which would include a rent assessment committee sitting as a leasehold valuation tribunal) gives a decision – “it shall be the duty of the tribunal …to furnish a statement, either written or oral, of the reasons for the decision if requested, on or before the giving or notification of the decision, to state the reasons.”[29]Thus there is a statutory entitlement to reasons for a decision, but only if a request is made. The LVT were not asked to give reasons for their decision; and I do not see how in the absence of a request it can reasonably be argued that they were at fault in not giving reasons for a decision that consisted simply of fixing a date for a hearing. It is not to be expected that a tribunal will give reasons for every interlocutory decision that it makes. It must give reasons if it is requested to do so but the failure to give reasons will not, in the absence of a request, make its decision unlawful.[30]The absence of reasons on the part of the tribunal makes it difficult for the applicant to establish that the decision to fix the hearing date for 29 May was perverse or was unlawful because material considerations were left out of account. Effectively Mr Daiches is forced to say that, whatever the reasons might have stated, the decision could only have been perverse or, alternatively, that it is inconceivable that the LVT could have taken into account certain material considerations. He begins his submissions by saying that compliance with Article 6 of the Convention requires the LVTs apply the same overriding objective as applies in civil courts under CPR 1.1. I do not see that such a large leap is to be made. The most, I think, that can be said is that the matters set out in CPR 1.1 are matters which are material to the exercise of the powers of an LVT – not because of any requirement of Article 6 (although its requirements as to a fair hearing would be met as a result) but because they are simply relevant matters.[31]Mr Daiches’s submissions are in essence as follows. The county court and LVT proceedings had in common the question whether the costs on which the service charges were demanded and proposed were reasonable. On this depended the liability to pay the service charges demanded, which was a central issue in the county court proceedings; the section 19 application was concerned with this exclusively; and the question of reasonableness of the service charges was a significant issue in the section 24 application. The majority of the lessees who were defendants in the county court proceedings were 9 applicants in the LVT proceedings, and vice versa. In these circumstances it was obviously appropriate to have one set of proceedings as the lead proceedings. Parallel proceedings were to be discouraged. He referred to Synstar Computer Services (UK) Ltd v ICL (Sorbus) Ltd (The Times 1 May 2001) in which Lightman J had ordered a stay of proceedings under the Competition Act 1998 so that an appeal from the Director-General of Fair Trading could be made to the Competition Commission Appeal Tribunal for determination of a complaint of uncompetitive practices. In the present case the parties had agreed that the county court proceedings should be the lead proceedings, and this view had been endorsed by the LVT when, in June 2000, it had directed that both the LVT applications should be heard in November, with the county court proceedings due to be determined in September. Once the lead tribunal has been agreed on, says Mr Daiches, there has to be some good reason before the dormant tribunal can announce that it is going to be the lead tribunal. Moreover he points out that the time fixed for the hearing on 29 May, 2½ days, is the same as that fixed in June 2000 for the proposed November 2000 hearing, which would have taken place after the county court had determined the time-consuming issue of reasonableness of the service charges. More specifically, Mr Daiches says that numerous questions fell to be considered by the LVT before making a decision which had the practical consequence of making the LVT, and not the county court, the lead tribunal for the determination of the service charge issues. For example, what would the role of the county court be in relation to the service charge issues if the LVT effectively usurped to itself the role of lead tribunal to determine those disputes? Would the 3rd to 20th part 20 Defendants comply with the directions of the county court requiring them to prepare for trial? If not, would they be seeking a variation of the existing directions in the county court? What about all the costs which had been incurred in the county court to date? What about the part 20 defendants in the county court action who were not parties to the LVT proceedings and who would not be bound by any issue estoppel in the LVT proceedings?[32]There is, in my view, much force in what Mr Daiches says, but I do not think he is able to establish that the LVT’s decision was unlawful. The argument that it was inequitable in the circumstances for the LVT now to assume the mantle of lead tribunal was clearly the essence of Mr Payne’s submissions at the PTR. There is no question of this issue, and its background, having been left out of account. Moreover the chairman of the LVT at the PTR was the same as that at the PTR in June 2000. She, clearly, would have had the background in mind. Not all considerations would necessarily point to the continued primacy of the county court proceedings. It might, for instance, as Mr Maunder Taylor urged upon the LVT, be desirable for the manager appointment issue to be determined sooner than awaiting the county court decision would allow. This undoubtedly was something on which the LVT could reasonably have a view. The time of 2½ days fixed for the hearing is undoubtedly inadequate, as Mr Denehan accepts, given that the issues as to reasonableness of the service charges would not have been determined by the county court, but, whatever the explanation for it – and, since no reasons were asked for, there is none – I do not think that this can be relied on as showing that the decision to order a hearing in advance of the county court trial was perverse or otherwise unlawful.[33]While, therefore, as I say, I see much force in the contention that the county court should not now be ousted as the lead tribunal, it is not for me to substitute my discretion for that of the LVT, and I am quite unable to conclude that the LVT’s exercise of its discretion in fixing 10 a hearing date in advance of the county court hearing was unlawful. The application therefore fails. Powers of the Lands Tribunal[34]In these circumstances it is unnecessary for me to consider what the powers of the Lands Tribunal are in relation to an appeal of this nature. The Lands Tribunal Rules, as I have said, are silent on this matter. Mr Daiches submits that there is a general principle that, where an express statutory power is conferred, there are also conferred by implication such other powers as may be necessary to make the express power effective. He refers to DPP v Scarlett [2000] 1 WLR 515 per Beldam LJ at 532A and A J Bekhor & Co Ltd v Bilton [1981] QB 923 per Ackner LJ at 940G and Griffiths LJ at 949A. He points out that under section 31A(7) the Lands Tribunal may exercise any power available to the LVT in relation to the original matter. To make the Lands Tribunal’s appellate jurisdiction effective, he submits, it must at the minimum have the following powers: to set aside or to vary any LVT decision; to make any decision that the LVT could have made; to remit a matter to the LVT for further consideration; and to stay the proceedings before the LVT pending the determination by the Lands Tribunal of an interim decision of the LVT.[35]Had I concluded that the LVT’s decision was unlawful, it would have become essential to decide whether there was power to stay the LVT proceedings, since the periods prescribed in the Lands Tribunal Rules for pleadings would have made it effectively impossible for the appeal to be determined before 29 May, the day when the LVT hearing is to begin. In the event I do not have to decide this question or to express a view on Mr Daiches’s submissions on the implied powers of the Lands Tribunal. It is, however, clear that there is a need for new Lands Tribunal Rules that state what the Tribunal’s powers on appeal are (cf CPR Part 52.10). It is also important, given my conclusion that the right of appeal from LVT decisions is much wider than had previously been considered, that the Rules should make proper procedural provision for interlocutory appeals. The present Rules are, as I have said, clearly framed for the purpose of enabling the Tribunal to deal with appeals on substantive, final decisions of LVTs and valuation tribunals, and do not meet the needs of a case such as the present. Dated 22 May 2001 George Bartlett QC, President 11