England and Wales Lands Tribunal

Cawsand Ford Management Co Ltd v Stafford & Ors [2006] EWLands LRX_145_2005 (07 November 2006)

LRX/145/2005

LANDS TRIBUNAL ACT 1949

LANDLORD AND TENANT – appointment of manager – lessees with incorporeal rights over land outside the curtilage of the building – held power to include such land in management order – Landlord and Tenant Act 1987 section 24(1)

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE LEASEHOLD

VALUATION TRIBUNAL FOR THE SOUTHERN RENT ASSESSMENT PANEL

BETWEEN CAWSAND FORT MANAGEMENT CO LTD Appellant

and

MRS E M STAFFORD & OTHERS Respondents

Re: Land adjoining and Land comprising

Part of Cawsand Fort

Torpoint, Cornwall

Before: The President

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

on 1 November 2006

Guy Adams instructed by Carroll & Co, solicitors of Chepstow, for the appellant

Edward Denehan instructed by Nash & Co, solicitors of Plymouth, for the respondent

The following cases are referred to in this decision:

Denetower Ltd v Troop [1991] 1 WLR 945

Trim v Sturminster Rural District Council [1938] 2 KB 508

Methuen-Campbell v Walters [1979] QB 525

Maunder Taylor v Blaquiere [2003] 1 EGLR 52

DECISION

1. Cawsand Fort was built in about 1867 above Cawsand Bay at the western entrance to Plymouth Sound. It is a grade II listed building and an ancient monument. Within the mounded fortifications it contains former barracks and other buildings that served its original functions and, beneath a central mound, large chambers constructed for the purposes of cannon emplacements and magazines. The barracks and other buildings were, some years ago, converted into residential units, and further residential units were built. The work was carried out in two phases. Access is by means of a road leading up from road below the fort. There are car parking spaces both at surface level and in the chambers beneath the mound. The mound itself is grassed over as an amenity area.
2. On 5 October 2005 the Leasehold Valuation Tribunal for the Southern Rent Assessment Panel on the application of the respondents under section 24 of the Landlord and Tenant Act 1987 appointed Mr Martin Woodhead as manager for a period of 3 years in respect of property described as The Fort, Cawsand, Torpoint, Cornwall, PL10 1PL. A plan appended to the order identified the property as extending to the whole of the fort. The appellant appeals against the decision of the LVT pursuant to permission granted by this Tribunal. It does not appeal against the appointment of the manager per se, but it asserts that the LVT exceeded its jurisdiction under section 24 of the 1987 Act because the extent of the property in respect of which the LVT's order was made includes premises to which Part II of the 1987 Act does not apply.
3. The appellant is and since 10 June 2002 has been the freehold owner of those parts of the fort which have not been sold off. After 1987 a previous owner of the appellant's property Michael Peacock, developed part of the fort for residential purposes, creating 30 residential units in two phases. There are 11 freehold units, units 3 to 12 inclusive, and the unit once known as "The Belvedere" and now known as "The Gatehouse". There are 19 leasehold units, units 1, 2 and 14 to 30, inclusive. Units 1 to 12, inclusive, were built as phase 1. They consist, for the most part, of terrace units on 2 floors. Unit 1 is a bungalow extending partly over the ground floor of unit 2. The Gatehouse is an end of terrace unit on 3 floors. Units 14 to 30, inclusive, were built as phase 2, and consist of maisonettes on 2 floors, with single storey flats above, each spanning 2 maisonettes. All the phase 1 units, namely units 1 to 12, inclusive, are connected to mains sewerage. The Gatehouse and units 14 to 30, inclusive, are connected to a septic tank sewerage system. All the units enjoy access over the common roadways, which are coloured blue on their respective plans, footpaths coloured yellow and common land coloured green. The leasehold properties also have rights to use the sewerage system, either granted expressly under the leases or by necessary implication. The sewerage system comprises a septic tank and soakaway and a macerator. The respondents are the tenants and joint tenants of 17 of the leasehold units.
4. All the leases of units were granted between 1988 and 1998 by Michael Peacock. An example lease is that of unit 17 dated 12 January 1998 made between Mr Peacock as "Transferor" and Mr and Mrs Williams as "Transferee". Mr and Mrs Williams are respondents to this appeal. The lease demised:

"… the maisonette, comprising the ground and first floor and garage erected thereon or on some part therefore being numbered 2 and parking bay on the Transferor's Estate … (hereinafter called "the Estate" which shall in this Lease mean all the land now formerly comprised within the above mentioned Title) and including the balcony to the said dwellinghouse and known or to be known as Number 17 Cawsand Fort aforesaid AND TOGETHER WITH the rights set out in the First Schedule hereto."

5. The lease, like all the other leases of units on the property, created a term of 999 years from 1 May 1989 and reserved the rent of a peppercorn. The First Schedule to the lease describes the following rights, easements and privileges granted to the Transferee:

"(a) The full right in common with all others entitled thereto at all times and for all purposes to pass and repass with or without vehicles over the roads and parking area coloured blue on foot only over the footpaths coloured yellow and common areas coloured green on plan B annexed hereto forming part of the Estate Subject to the payment from time to time of a rateable proportion of the costs of maintaining the repairing the same.

(b) The full right of free passage and running water soil (gas) and electricity in through and along any soil and surface water sewers soakaways drains pipes gutters wires and cables now existing or hereafter during the period … of twenty-one years commencing on the First day of January One thousand nine hundred and eight seven and during the twenty one years … to be made laid or placed in under or over any adjoining or neighbouring land included in the Estate together with the right of entry at all reasonable times (and at the times in case of emergency) upon such land for the purposes of inspecting repairing maintaining renewing and cleansing the said soil surface water sewers soakaways drains pipes gutters wires and cables and of repairing decorating and maintaining the said dwellinghouse and garage causing as little inconvenience as possible and making good all damage occasioned thereby.

(c) The full right as may be necessary of (i) eavesdrop (ii) protrusion and (iii) support over under and from the said adjoining land or any part of the said dwellinghouse and garage or the Estate."

6. Nine of the owners of freehold units and 17 of the owners of leasehold units entered into deeds of easement and covenant with the Appellant. Pursuant to these deeds the grantees were granted the right to enter upon and use what was referred to as the "Amenity Land" for recreational purposes. The appellant covenanted with the grantees to repair, maintain etc the amenity land.
7. Over the years the appellant has not been active in carrying out management obligations in respect of the amenity land under the deeds of easement and covenant. A number of tenants claim that in or about April 2000 Mr Peacock made a relevant disposal, namely the grant of an option, of his freehold interest within the meaning of section 4 of the 1987 Act without first having complied with the statutory duty to serve section 5 notices on the leasehold owners of units on the property. The tenants say that they served a section 11 notice on the grantees of the option (which is not accepted by the appellant company) and that the appellant failed to comply with it. The tenants commenced proceedings in the Plymouth County Court to enforce their rights under Part 1 of the 1987 Act on 7 November 2001. Whilst those proceedings were extant, what purported to be section 5 notices were served on the tenants. An issue arose as to the extent of the premises to which Part 1 of the 1987 Act applied. Accordingly on 14 September 2004 an application was made by the appellant to the LVT under section 13 of the 1987 Act for a determination of this issue, the parties agreeing for the purposes of the application only that the section 12B notice served by the tenants was valid. The LVT determined the issue on 18 March 2005, holding as follows:

(a) The "relevant premises" for the purposes of the 1987 Act are the buildings containing the dwellings and their appurtenances.

(b) "Appurtenances" include appurtenant property within the curtilage.

(c) Appurtenant property comprises "the pathway and gardens, the steps from the roadway (including the store underneath the steps) being all the freehold Title Number CL 183133, and also includes the garages and parking bays as demised in the various leases."

(d) The easements granted by the tenants' leases are appurtenant rights, but not "appurtenant land", which exist over land not within the curtilage of "the building". The easements should be enlarged into perpetual easements but the freehold of the land burdened by those easements should not be transferred to the tenants.

(e) The freehold of the mound should not be transferred to the tenants.

(f) The express and implied rights in respect of the sewerage system, "and any other services enjoyed with the buildings", be enlarged into perpetual rights but not to transfer the freehold of the land under which those easements are enjoyed.

8. The tenants did not acquire the freehold of the premises identified by the LVT pursuant to the Part I procedures, and they have not done so subsequently. Instead the respondents sought to take the management functions in respect of the property out of the hands of the appellant by applying for the appointment of a manager under Part II of the 1987 Act.
9. The respondents' preliminary notice under section 22 of the 1987 Act is dated 11 May 2005. It required that within 28 days (i) the 69 shares held by Mr Carroll be "returned to the Appellant Company" and reallocated so that each of the 30 leasehold and freehold properties have one share; (ii) Mr Carroll and Mr Groom resign as directors and from any other office of the appellant company; (iii) the removal of debts from the appellant company "imposed by Mr Groom and Mr Carroll" so that the financial burden is no more onerous than that shown in the balance sheet for 31 December 2000; and (iv) "that the freehold title of the land that [the Appellant Company] was originally supposed to manage on behalf of the residents should remain with the [Appellant Company] in order that the company can honour its obligations ... for which the residents will pay a price to be set by the LVT, reflecting the purchase price of the entire Premises of £8793 described in the Option and conditional upon proof that such a sum was paid."
10. The application to the LVT was made on 19 June 2005. The hearing took place on 13 September 2005. At the hearing the appellant did not object to the appointment of a manager "in relation to the buildings (referred to in the previous Tribunal's decision)". In its decision of 5 October 2005 the LVT held that it would be appropriate to appoint a manager and that Mr Woodhead was a suitable manager. It found as follows in respect of the extent of the property to be the subject of the management order:

"… the Tribunal finds it appropriate having regard to the unique and sensitive nature of the property (being not only a Listed Building but also a Scheduled Ancient Monument) for the Manager to undertake a Scheme of Management which should include the areas coloured red and blue on the plan in Appendix 5 of the Notice."

The plan shows coloured blue the whole of the fort, including all the freehold and leasehold residential properties, and the access drive and the land on either side of it. The areas coloured red were those containing, on the north side, the septic tank and soakaway and, on the south, the macerator. The order appointing Mr Woodhead as manager required him to manage the property in accordance with the respective obligations of the lessor and the lessees under the leases of the flats as supplemented by the deeds of easement and covenant, "and in particular, without prejudice to the generality of the foregoing, with regard to the repair, decoration, provision of services to and insurance of the Property". He was also required to manage the property in accordance with a programme of work, which was appended to the order. This included a scheme of management containing seven specific items, the first of which related to the maintenance, upkeep and management of the amenity land referred to in the deed of easement and covenant.

11. There is one issue in the appeal ... whether it was within the power of the LVT to include in the management order land in the ownership of the appellant that consists neither of residential buildings nor the curtilages of such buildings. There is no dispute that the amenity land and the rights of way over parts of the fort that owners and lessees of individual residential properties enjoy under their respective titles are outside the curtilages of the buildings.
12. The power to appoint a manger is contained in Part II of the 1987 Act. Section 21(1) provides that:

"....the tenant of a flat of any premises to which this Part applies may, subject to the following provisions of this Part, apply to a leasehold valuation tribunal for an order under section 24 appointing a manager to act in relation to those premises."

Under section 21(2) Part II of the Act applies to "premises consisting of the whole or part of a building if a building or part contains two or more flats."

13. Section 24(1) provides:

A leasehold valuation tribunal may, on an application for an order under this section, by order (whether interlocutory or final) appoint a manager to carry out in relation to any premises to which this Part applies –

(a) such functions in connection with the management of the premises or

(b) such functions of a receiver,

or both, as the court thinks fit."

Section 24(11) provides that references "to the management of any premises include references to repair, maintenance, improvement or insurance of those premises".

14. For the appellant Mr Guy Adams submits that the extent of the "premises" to which Part II of the Act applied is identical to that in Part I, which gives qualifying tenants rights of first refusal on disposals by the landlord. The definition of premises, he says, is essentially the same in both parts, each of them using the words "the whole or part of a building"; and in Denetower Ltd v Troop [1991] 1 WLR 945 the Court of Appeal held that "building" in the definition in Part I included the gardens of the flats and any other appurtenances of the flats that were expressly or impliedly included in the demise. The word appurtenance, says Mr Adams, is a term of conveyancing art, and, although originally only applying to incorporeal hereditaments, it has been held more recently to include appurtenant land, ie land within the curtilage of the building that goes with the building on a transfer without the need to refer to it specifically. He refers to Trim v Sturminster Rural District Council [1938] 2 KB 508 at 515-6 and Methuen-Campbell v Walters [1979] QB 525 at 535C-F. The extent of the physical premises to which Part II applies is, therefore, Mr Adams says, identical to that to which Part I applies, and that matter has been determined by the LVT's earlier decision under Part I. He accepts, however, that "premises" for the purposes of section 24 includes incorporeal rights, such as easements, as well as the physical premises themselves.
15. Mr Adams points out that the LVT's order appointing Mr Woodhead did not limit his management functions to the buildings containing the leasehold flats and their curtilages. It extended to areas of land within the appellant's title but outside the curtilages of the buildings and to other freehold properties that had been sold off by Mr Peacock. It extended also to large parts of the fort over which no tenants have any rights ... for instance the buildings within the central mound. In this respect, Mr Adams says, the LVT's order exceeded what they had power to order. As far as the incorporeal rights are concerned he says that a manager appointed in relation to the building might be authorised to manage the ancillary rights to the easements enjoyed by the tenants, but he could not be authorised to manage the servient hereditament itself.
16. For the respondents Mr Edward Denehan submitted that section 24 was expressed in the widest possible terms. A manager could be appointed to carry out functions "in connection with the management of premises". The purpose was to provide that the rights and privileges that the tenants enjoyed were preserved during the currency of the tenancy. No assistance was to be derived from the use of the term "premises" in Parts I and II, which were concerned with other matters. The question was not what the premises consisted of but what powers could be conferred on a manager under section 24 in relation to the premises. Mr Denehan drew attention to Maunder Taylor v Blaquiere [2003] 1 EGLR 52 in which Aldous LJ, with whom Tuckey and Longmore LJJ agreed, said:

"38. In my view Mr Fancourt is correct in his submission that the purpose of Part II of the Act is to enable the Tribunal to appoint a manager, who may not be confined to carrying out the duties of a landlord under a lease. The Tribunal is enabled, under subsection (1), to appoint a manager to carry out, in relation to any premises to which Part II applies, 'such functions in connection with management' of the premises as the Tribunal thinks fit. It is to be noted that the premises may be two or more (see section 21(4)) and that the manager will carry out the functions of management. As subsection (11) makes clear, that includes repair, maintenance or insurance. There is no limitation as to the management functions of the manager; in particular the functions are not limited to carrying out the terms of the leases. That is not surprising, since the manager will need to obtain estimates and do repairs. He need not use the landlord's surveyor as required by the lease in this case."

39. Subsection (2) restricts the ability of the tribunal to make orders. But subsection (2)(b) is of great width, in that it enables the tribunal to appoint a manager when satisfied that circumstances exist that make it 'just and convenient' to do so. That also suggests that the tribunal is concerned to provide a scheme of management, not just a manager of the landlord's obligations."

17. As I have said, Mr Adams accepts that "premises" for the purposes of section 24 includes incorporeal rights. Such rights in the present case include access over the common roadways and footpaths, the right to use the sewerage system and, in the case of 9 of the owners of freehold units and 17 of the owners of leasehold units, the right to enter upon and use the amenity land for recreational purposes. Mr Adams also accepts that under section 24 a manager appointed in relation to a building may be authorised to manage the ancillary rights to the easements enjoyed by the tenants, for example the right to enter and repair rights of way. He is in my judgment clearly right to accept this. However, what has to be recognised is that in performing works of repair a manager, although prompted by the tenants' right to enjoy an incorporeal right, would be carrying out functions in the form of physical works to the servient tenement. He would not, as Mr Adams put it, be repairing the rights of way, since the rights of way are incorporeal. He would be repairing the ways themselves, and these are part of the servient tenement. It seems to me for this reason to be inescapable that a management order "in relation to" premises that include easements may appoint a manager to carry out functions that may include works to the servient tenement. Those would, undeniably, be functions "in connection with the management of the premises". In these circumstances it is clearly the case that the "property" (to use the word in the management order) in respect of which the manager is appointed to exercise functions may properly include appropriate parts of the servient tenement. The principal concern that led to the respondents' application related to the amenity land over which they had incorporeal rights, and in my judgment the LVT had power to make an order that included this land in the property to which the management order related.
18. The contention of the appellant that the LVT had no jurisdiction to make a management order extending over parts of the fort that are not within the curtilage of the buildings containing the leasehold flats must therefore necessarily fail, and, since this is the only issue raised, the appeal must be dismissed. Mr Adams points out that the property as defined in the order included parts of the appellant's freehold over which the lessees have no rights (the buildings beneath the mound). It also included residential land that was in other freehold ownerships, although it is to be noted that there is apparently no objection on the part of those freehold owners to the inclusion of their properties. Under the programme of work the manager is required, among other things "to keep insured the land and buildings", which would therefore extend to land and buildings in relation to which the lessees have no rights. It appears to me that in some respects the order probably does go too far, although what parts of the servient tenement it is appropriate to include must be a matter for the LVT's judgment. The remedy of the appellant, now that the issue in the appeal has been resolved, is to apply to the LVT under section 24(9) to vary the order if it feels that its provisions go beyond what is reasonably necessary.

Dated 7 November 2006

George Bartlett QC, President