Urwick & another v. Pickard [2019]
(1) RICHARD URWICK (2) CAROLINE YRAZU-BAJO v GARY PICKARD (2019)
Anthony Tanney was responding on behalf of a Manager appointed under the LTA 1987 to an appeal brought by the leaseholders of some of the flats on the estate to which the Management Order applied.
The purchaser of a property for valuable consideration, on registration of the disposition, took it free of a First-tier Tribunal's order that had appointed a manager for the property under the Landlord and Tenant Act 1987 Pt II, whether or not the order was mentioned on the register of title.
The appellant tenants appealed against a First-tier Tribunal's order varying a management order it had made under the Landlord and Tenant Act 1987 s.24.
The tenants lived in a block of flats on an estate that shared communal grounds with six houses. The management company of the estate had failed in its duties and the tribunal had appointed a manager and directed the outgoing company to register the management order against the freehold title of the estate, which the company failed to do. A year later, the tenants exercised their right of collective enfranchisement, set up a company and nominated it to acquire the freehold of the flats and the immediate grounds on their behalf. They then applied to the tribunal to vary the management order to exclude the land comprised in the nominee's newly acquired title. The tribunal found that the purpose of the collective enfranchisement had been to evade the management order, the tenants were in breach of their obligations under the order and, notwithstanding it had not been registered, the order expressly bound successors in title. To remedy the non-registration, it varied the order by incorporating a reference to the nominee's title and requiring the tenants to procure that the nominee should observe and perform the terms of the management order.
The tenants submitted that the failure to register the original management order rendered it void, and the tribunal was not entitled to vary it in the way it had.
HELD: Effect of non-registration of management order - The 1987 Act contained no bespoke provisions concerning the effect of a change of ownership of premises that had been made the subject of a management order. Instead, s.24(8) directed that the Land Registration Act 2002 applied in relation to a management order as it applied to an order appointing a receiver or sequestrator of land. Under s.87 of the 2002 Act, the only way of protecting an order appointing a receiver or sequestrator, and by extension a management order, was by the entry of a restriction. Restrictions did not provide priority for the rights to which they related; they created a procedural barrier to the registration of a disposition. Under s.29(1) of the 2002 Act, unprotected orders were postponed if a registrable disposition was made for valuable consideration. Accordingly, the consequence of registration of the transfer of the flats and portion of the grounds to the tenants' nominee was that the management order was postponed to the nominee's interest under the disposition, and the nominee was not bound by it (see paras 25, 31-36, 45 of judgment).
Tribunal's variation of management order - The steps taken by the tenants up to the date of registration of the transfer of the freehold to their nominee were breaches of their obligation under the management order not to interfere with the exercise of the manager's functions. The tribunal could have ordered the entry of a restriction on the registered title of the estate the practical effect of which might have been that the tenants could not exercise their right of collective enfranchisement without obtaining the manager's consent or a tribunal order discharging him. Section 24(8) of the 1987 Act implicitly contemplated the registration of a restriction, and the order made by the tribunal provided for an unspecified form of restriction to be employed. However, the tribunal did not have jurisdiction to make its management order effective via the indirect route of ordering a variation requiring the tenants to procure that the nominee should observe and perform the terms of the management order. It could make a new management order under s.24 of the 1987 Act, but only with prospective effect and only if the necessary procedure was implemented, which had not occurred in the instant case (paras 55-56).
Further observations - (1) The tribunal's original management order had directed the outgoing management company to register the order against its freehold estate. However, only legal estates and interests could be registered under the 2002 Act. A restriction could have been entered on the register, but a direction to do so would have been inadequate without a further direction as to what the restriction should say. The instant tribunal identified a number of problems in trying to achieve a restriction's intention, which stemmed from the policy choice that, for the purpose of land registration, management orders should be treated in the same way as orders appointing receivers (paras 66-76). (2) The Land Registry had produced guidance on the circumstances in which a request might be made for the entry of a restriction that was not in one of the standard forms found in the Land Registration Rules 2003 Sch.4, where those standard forms were not appropriate. The tribunal might wish to consider liaising with the Land Registry to devise a suitable non-standard restriction to provide clarity for managers in the event of a disposition of the property that they had been appointed to manage, which could then be included as part of a management order (para.77).
Appeal allowed.
Anthony Tanney, instructed by Dean Wilson LLP, acted for the respondent and Christopher Heather QC, instructed by Fladgate LLP acted for the appeallents. Click below to read the judgment.
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