BRUCE MAUNDER TAYLOR v BlLESH JOSHI LRX/107/2005

UPPER TRIBUNAL
LANDS CHAMBER
LRX/107/2005Case No LRX/107/2005
Between
BRUCE MAUNDER TAYLORApplicantBlLESH JOSHIRespondent
Before
His Honour Judge HuskinsonDate 4 August 2006Property: 9 Mapesbury Road, London NW24HXCatchwords: LANDLORD AND TENANT – manager of the relevant building appointed by LVT under section 24 of the Landlord and Tenant Act 1987 as amended – manager applying to LVT regarding the recoverability of charges for his own remuneration for certain steps undertaken by him – LVT disallowing such charges under section 27A of the Landlord and Tenant Act 1985 as amended on ground that the terms of the lease made no provision which was sufficiently wide to justify a landlord including such charges within the service charge to the lessees – whether manager’s power to recover such charges is limited by terms o
[1]The Appellant appeals to the Lands Tribunal, with permission, from the decision of the Leasehold Valuation Tribunal (“LVT”) for the London Rent Assessment Panel dated 8 August 2005 whereby the LVT made certain decisions upon an application made to it by the Appellant dated 11 February 2005. This application asked for a determination as to liability to pay service charges, pursuant to the provisions of section 27A of the Landlord and Tenant Act 1985. The building with which the case is concerned is 9 Mapesbury Road, London NW2 4HX which is divided into several flats. The freehold is owned by Mrs Trupti Joshi who is the wife of the Respondent. The Respondent himself is the leasehold owner of two of the flats, namely flats 3 and 4. The application was made to the LVT by the Appellant for the purpose of resolving certain disagreement which had arisen between him and the Respondent regarding the payment of certain sums which the Appellant was seeking to recover by way of service charge for the years ending 31 March 2004 and 31 March 2005. The decision of the LVT was to the effect that the service charges made by the Appellant for the years ending 31 March 2004 and 24 March 2005 (sic – presumably 31 March 2005 is intended) were reasonable and had been reasonably incurred and that the amounts sought by the Appellant were therefore reasonable, save in respect of certain specific items which are summarised in paragraph 59 and dealt with in more detail in paragraphs 50 and following of the LVT’s decision.[2]Both parties invited the Lands Tribunal to deal with this case by way of written representations. The President ordered that this should indeed be the manner in which the case proceeded to a decision.[3]The reason why the Appellant, who seeks recovery of the relevant sums, is someone different from the freeholder is as follows. The Appellant, who is a Chartered Surveyor and a Partner in the firm of Maunder Taylor, was appointed as manager of 9 Mapesbury Road (hereinafter “the Building”) by an Order dated 22 January 2003 and made by the LVT pursuant to the powers contained in section 24 as amended of the Landlord and Tenant Act 1987.

(c) of the Act:

“.....the Manager is entitled to reasonable remuneration in respect of all work done under this Order as Manager of the Building and to be reimbursed any reasonable costs and expenses, to be paid by the lessees in accordance with the proportion the rateable values of each of the demised premises have to be aggregate rateable value of the Building, namely ....”
There is then set out in the Order a list of each flat and the rateable value attributed to it and the percentage contribution attributable to that flat. 2[4]The order of the Lands Tribunal granting permission to appeal, which is dated 12 December 2005, states:
“Permission to Appeal is GRANTED limited to the question of whether the fees and costs as reduced in paragraph 56 of the Leasehold Valuation Tribunal’s decision are relevant costs. For the following reason:- The question of the effect of the Order appointing the Manager upon the entitlement to recover the costs of the management by way of service charge requires review”
[5]The fees and costs referred to in paragraph 56 of the LVT’s decision appear to be those referred to in paragraph 55, namely certain fees of the Appellant in connection with the present application to the LVT and in connection with one or more other such applications. The LVT examined the quantum of these charges and, for the reasons given in paragraph 56, reduced the charge from £4846.87 (including VAT) to £3525 (including VAT). Having made this ruling regarding quantum the LVT further ruled that these charges under paragraph 56 (which are hereafter referred to as “the paragraph 56 charges”) were not recoverable at all by the Appellant as part of the service charge but should instead be recovered from the Respondent personally. The reason for this decision was that there was no sufficiently wide provision in the relevant leases to permit costs such as the paragraph 56 charges to be recovered under the terms of the leases as part of the service charge. The result of this order (if correct) is of course that the Respondent is less happily placed (because he has to pay the whole of these charges) than he would be if the ruling was wrong and he only had to pay a proportionate part of these paragraph 56 charges through the service charge.[6]The question raised in the grant of permission to appeal to the Lands Tribunal is a question which, in some cases, may be of substantial importance, namely whether charges levied by a manager appointed by an LVT fall with the definition of “relevant costs” and constitute part of a service charge (see section 18 of the Landlord and Tenant Act 1985 as amended) or whether they fall outside those provisions. However for the reasons set out below I do not consider that, for the purpose of deciding this present appeal, it is either necessary or appropriate for me to reach a conclusion on this point:[1]I am asked to decide this case on written representations. Neither party’s written representations specifically address the question of whether charges such as the paragraph 56 charges form part of the relevant costs within section 18.[2]Instead the Appellant in his statement of case goes straight to the Order appointing him as Manager and he refers to the Court of Appeal decision in Maunder Taylor v Blaquiere [2002] EWCA Civ 1633 and he argues that his ability to charge the relevant charges arises not under the terms of the lease but under section 24(5) of the 1987 Act and under the terms of the Order appointing him as manager. This is a view with which the Respondent appears expressly to agree, see on page 2 of his statement of case under the heading “Blaquiere applied” where he writes “This Appointed Manager is under a duty to take reasonable care in the management of the building within the confines of his appointment ...... It 3 follows that he should remunerated in accordance with the terms of the Order.”[3]For the reasons indicated below I agree and I conclude that the ability for the Appellant to charge the various lessees with the paragraph 56 charges does indeed depend upon section 24(5) of the 1987 Act and on the terms of the Order appointing him manager. I reach this conclusion whether the paragraph 56 charges are part of the relevant costs (within section 18 of the 1985 Act) or whether they are not.[4]Accordingly in order to decide this particular appeal, being an appeal on the written representation procedure, it is not necessary for me to reach a final conclusion on the specific point raised in the grant of permission to appeal.[7]Before proceeding further I should emphasise that the only question raised on the appeal before me is the limited question regarding the paragraph 56 charges identified in the grant of permission to appeal. The statement of case submitted by the Respondent is extensive and covers much wider matters of apparent disagreement between himself and the Appellant and annexes a large amount of documentary material most of which is irrelevant to what I have to decide.[8]Clearly if the paragraph 56 charges do not form part of the “relevant costs” within section 18 of the 1985 Act and do not form part of a “service charge” within that Act, the LVT cannot disallow the recovery of the paragraph 56 charges by exercise of its jurisdiction under section 27A of the 1985 Act (which deals with the LVT’s jurisdiction in relation to service charges).[9]However even if the paragraph 56 charges do form part of the “relevant costs” and part of a “service charge” for the purposes of the 1985 Act, I nonetheless conclude that the Appellant is not limited to recovering the paragraph 56 charges as though he was standing in the landlord’s shoes and seeking to recover them through the service charge provisions in the lease. This is the only basis on which the LVT disallowed the recoverability of these costs. Thus the LVT in paragraph 56 concluded there was no direct provision in the lease for recovery of such costs by way of service charge, and they referred back to their analysis in paragraphs 51 and 54 of their decision. I conclude that the LVT was, with respect, wrong in finding that the recoverability of the paragraph 56 charges was limited in this manner. My reasons are as follows.[10]The Court of Appeal in Maunder Taylor v Blaquiere considered the position of a manager appointed by the court or an LVT under section 24 of the 1987 Act. The particular question was whether a tenant of a building, to which a manager had been appointed, was entitled to set off against the manager’s claim for arrears of rent and service charges a claim for damages for disrepair. The set off was disallowed. Paragraphs 41 and 42 in the judgment of Aldous LJ are in the following terms: 4 “41. In my view, the purpose of Part II of the 1987 Act is to provide a scheme for the appointment of a manager who will carry out the functions required by the court. That manager carries out those functions in his own right as a court-appointed official. He is not appointed as the manager of the landlord, or even of the landlord’s obligations under the lease. That being so, Mr Maunder Taylor was a court- appointed manager appointed to carry out those duties required by the order appointing him. He did not carry on the business of Guernsey. His claims were made in his capacity as manager.[42]As I have said, Mr Dowding relied upon the wording of the order appointing the manager. He submitted that it made it clear that the manager was acting as receiver of the moneys due to Guernsey and as a manager to carry out the duties of Guernsey under the lease. That submission is, I believe, inconsistent with the scheme of Part II, and, in particular, the effect of section 24 of the 1987 Act. The manager acts in a capacity independent of the landlord. In this case, the duties and liabilities laid down in the order are defined by reference to the lease, but do not alter his capacity. In my view, Mr Maunder Taylor’s right to the money claimed arose from his appointment, not from the lease. It follows that there was no mutuality between his claim and that of Mr Blaquiere. That being so, set-off is not possible.”[11]It therefore seems clear to me that the Appellant’s right to be paid the paragraph 56 charges arises from his appointment as manager and not from the terms of the lease. The only reason advanced by the LVT for disallowing the recovery of the paragraph 56 charges from the Respondent (ie the recovery of the rateable proportion attributable to the Respondent by reason of his holding flats 3 and 4) was because the LVT could find no charging provision in the lease which would have justified the landlord in recovering charges such as the paragraph 56 charges from the lessees if the landlord was trying to recover them through the service charge provisions in the lease. However in my judgment the LVT was wrong, having regard to the decision in Maunder Taylor v Blaquire, to reach this conclusion. The recoverability of the paragraph 56 charges depended upon the terms of the Appellant’s appointment as manager and upon section 24 of the 1987 Act. The charges have to be justified under those provisions. They do not have to be justified as being charges which the landlord could herself have charged through the service charge provisions in the lease.[12]This is not of course to say that there is no control over such charges raised by the Appellant as manager. He has to justify them within the terms of his appointment and such charges could be (and in the present case have been) reduced insofar as they are considered to be unreasonable – see paragraph 5 of the Order appointing him which makes clear that he may be reimbursed “any reasonable costs and expenses” and is entitled to “reasonable remuneration”. There is also power in the manager and any of the parties to apply to the LVT for any directions, including as to the manner in which the manager is discharging his duties. The LVT has jurisdiction under these provisions to reduce charges claimed by the Appellant as manager if, for example, they concluded that the charges were unreasonable or were being sought in respect of services or repairs which had not been done to a reasonable standard. However the fundamental point is that the manager is not constrained by the terms of the lease. He is not standing in the landlord’s shoes with precisely the same powers and ability to charge as the landlord would have. 5[13]I conclude therefore that the Appellant is entitled to recover the paragraph 56 charges in accordance with the charging provisions in the LVT’s order which appointed him manager. The Respondent is liable to pay his rateable proportions (in respect of his two flats) of these charges. The LVT was, with respect, wrong to disallow the recoverability of these rateable proportions and to order that instead the Appellant should recover the whole of these sums directly from the Respondent.[14]There is to my mind a potential uncertainty in the grant of permission to appeal as to the ambit of the charges the subject of the appeal. The Respondent framed his statement of case on the basis that it was only the charges specifically referred to in paragraph 56 itself which were the subject of the present appeal. The Appellant argued that it was not only the paragraph 56 charges but also the sums set out in paragraphs 50 and 53 which were the subject of the appeal. It would at present seem to me that the same arguments and analysis fall to be applied in respect of the paragraphs 50 and 53 charges as apply in relation to the paragraph 56 charges. Also it would appear it may be to the advantage of the Respondent to obtain an order of the Lands Tribunal recognising that this is so (such that he only has to pay a rateable proportion of the paragraphs 50 and 53 charges) rather than there being against him an unappealed order of the LVT which indicates that the totality of these sums should be recovered from the Respondent. The present decision is therefore provisional until I have received submissions as to whether the grant of permission to appeal should be read as extending to the paragraph 50 and paragraph 53 charges and (if it cannot be so read) whether I should extend permission so as to embrace those charges. The decision is also provisional until the question of costs has been dealt with. The parties should make any submissions they wish regarding what if any costs order should be made. I am of course aware of the limitation on the award of costs laid down in section 175 of the Commonhold and Leasehold Reform Act 2002. Any such submissions must be received by the Lands Tribunal no later than 31 August 2006. Dated 4 August 2006 His Honour Judge Huskinson 6