Mostyn House Estate Management Company Ltd v Barry Youde and 39 Others
| Jurisdiction | England & Wales |
| Judge | Lady Justice Nicola Davies,Lady Justice Asplin |
| Judgment Date | 06 July 2022 |
| Neutral Citation | [2022] EWCA Civ 929 |
| Docket Number | Case No: CA-2021-001917 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 929
Sir Andrew McFarlane, PRESIDENT OF THE FAMILY DIVISION
Lady Justice Asplin
and
Lady Justice Nicola Davies
Case No: CA-2021-001917
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BUSINESS AND PROPERTY
COURTS IN MANCHESTER
PROPERTY TRUSTS AND PROBATE LIST (Ch)
His Honour Judge Cawson QC
[2021] EWHC 3786 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Allison and Rebecca Sage (instructed by Ozon Solicitors) for the Appellant
Lina Mattsson (instructed by Kleyman and Co.) for the First Respondents
The Second and Third Respondents did not appear and were not represented
Hearing date: 15 June 2022
Approved Judgment
This judgment was handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on 6 July 2022 .
This is an appeal from an order dated 21 August 2021, made by His Honour Judge Cawson QC, sitting as a judge in the High Court, by which he dismissed the Appellant, Mostyn House Estate Management Company Limited's Part 8 Claim. Mostyn House Estate Management Company Limited (the “Company”) sought a declaration that it is entitled to maintain the structure and exterior of two listed buildings which form part of the former Mostyn House School which has been developed into apartments demised on long leases to 45 leasehold owners and to require 40 freehold owners who have acquired properties forming part of the same development to contribute rateably to the cost of that maintenance, by means of a rent charge contained in the transfers to the freehold owners or their predecessors in title.
Overview
The background to this matter is set out in detail in the judgment ( [2021] EWHC 3786 (Ch)) and reference should be made to it there. For these purposes, it is necessary to note that the former school comprised two listed school buildings, a Grade II listed chapel, and a listed cricket pavilion, known as Jarrah House (together referred to as the “Listed Building”). On 11 July 2013, PJ Livesey Heritage Homes North West Limited (the “Developer”) obtained planning permission to develop the former school involving the creation of 45 leasehold apartments within the listed school buildings, the development of Jarrah House into a freehold house and the construction of 39 further freehold houses on the playing fields (the “Development”).
The planning permission was granted subject to the execution of a section 106 Agreement with the local authority. On 4 October 2013, such an agreement was entered into between the Cheshire West and Cheshire Borough Council, the original owners of the school, the Developer and the then mortgagee (the “2013 Section 106 Agreement”). It provided, amongst other things, that certain repair works be carried out to the Listed Building in tandem with the housing development, the Listed Building being in a serious state of disrepair.
The Company was incorporated on 14 January 2014, the same day as the Second Respondent, Mostyn House Freehold Management Company (“FMC”) which is controlled by the freeholder owners at the Development and the Third Respondent, Mostyn House Leasehold Management Company (“LMC”) which is controlled by the leaseholders. The Articles of Association of each of the Company, FMC and LMC, were in like terms.
The relevant leases in relation to the apartments in the two school buildings were granted by the Developer for terms of 240 years, at a premium, between 16 October 2014 and 22 January 2016 (the “Leases”). There was no list of freehold sales before the judge but the transfers available to him were dated May 2014, 30 October 2014 and 29 May 2015 (judgment below at [25]).
The First Respondent is, in fact, 40 named individuals, of whom Mr Barry Youde is the first. They are the owners of the freehold properties at the Development. The first to twenty-seventh and thirtieth to fortieth individuals and the Second Respondent, FMC, are represented by Ms Mattsson. The individual leaseholders were not parties to the Part 8 Claim and have not been joined in the appeal. Although the Third Respondent, LMC, which is controlled by the leaseholders, is a party to the proceedings, it was not represented before the judge, nor was it represented before us. The registered proprietor to the freehold reversion to the leases is Grey GR Limited Partnership. It was not a party to the Part 8 Claim nor has it been joined on appeal.
The Company's shareholders were intended to be the 40 owners of the freehold properties at the development and the 45 leaseholders. In 2017, those of the directors who were freehold owners were removed, placing the Company in the control of the leaseholders and leaving it free to bring the Part 8 Claim from which the leaseholders will benefit if the cost of maintaining the school buildings must be borne rateably by the freeholder owners. The Company is represented by Mr Allison and Ms Sage.
The form of the declaration which was sought in the Details of Claim to the Part 8 Claim was as follows:
“The claim is for declaratory relief in terms:
(1) The Company is entitled to maintain the structure and exterior of Mostyn House to a good state of repair;
(2) The Company is entitled to require each leasehold owner and each freehold owner to pay to the Company a rent charge/service charge, including an equal proportion of the cost of maintaining the structure and exterior of Mostyn House School to a good state of repair and calculated by dividing the total of such expenditure by the total number of residential properties on the Development.”
Before the judge, however, Mr Uff, who appeared on behalf of the Company, made clear that the declaration sought did not extend to the leasehold owners. To be clear, therefore, it does not include the words “each leasehold owner and” in the first line of the second paragraph. It refers solely, therefore, to the alleged obligation of freeholders to pay a proportion of the cost of maintaining the structure and exterior of Mostyn House School. I will refer to the amended version as the “Declaration”.
It is alleged that the Company is entitled to the Declaration under the terms of paragraph 6 of Part 12 and paragraph 1.3 of Part II of Part 15 of the transfers of the 40 freehold titles which were all in identical form (the “Transfers”). It was said that the natural and ordinary meaning of the words used, particularly when read together with the 2013 Section 106 Agreement and the provisions of the Transfers as a whole, gave rise to the entitlement set out in the Declaration.
In short, the freeholders argued that under the provisions of the Transfers and those of the Leases, the terms of which mirrored one another, the primary maintenance obligations fell upon FMC, LMC and the freehold and leasehold owners themselves, with FMC and LMC having a right to recoup the cost of such maintenance against the freehold and leasehold owners respectively in respect of their maintenance obligations under the appropriate recoupment provisions. It was said that whilst the Company might have a residuary entitlement to carry out maintenance work in some circumstances and recover the costs from both freehold owners and leaseholders, it was not an absolute entitlement of the kind contained in the Declaration.
It was also argued that it would not be appropriate to grant the Declaration for a number of reasons. First, it was in general form and did not relate to particular repairs and secondly, not all proper parties were before the court and the court could not be satisfied that all sides of the argument had been fairly and fully put. Further, at trial there was no suggestion that any particular repairs were in fact required to the structure and exterior of the former school buildings; or that any party had acted in default in effecting repairs to their structure or exterior; or that there was any ongoing breach of the 2013 Section 106 Agreement or the two subsequent section 106 agreements dated 23 February 2015 and 19 February 2016 respectively. It was common ground that the subsequent agreements were, as far as they were relevant, in like terms to the 2013 Section 106 Agreement. I shall refer to them together, where necessary, as the “Section 106 Agreement”, as did the judge.
Structure of the Documentation
In order to understand the judge's decision and the issues on appeal, it is necessary to have an overview of the central provisions relating to the Development. The relationship between the different parts of the Development was the subject of finely calibrated documents. The judge sets out these central provisions in his judgment and reference should be made to them there. For ease of reference and understanding, I will set out the essential provisions again here.
— 2013 Section 106 Agreement
The relevant provisions of the 2013 Section 106 Agreement are set out at [18] of the judgment. The relevant definitions are as follows: the “Chapel” was defined by reference to a plan and was the original chapel at the former school; the “Chapel Maintenance Fund” means “the sum of £100,000 which was to be used solely for the maintenance of the Chapel”; “Development Site” means “the site the subject of the Planning Application” which was also defined by reference to a plan; “Listed Building” means “the buildings known as Mostyn House School, the Chapel and Jarrah House, which is situated on the Development Site”; “Management Company” means “the company set up in accordance with Clause 5.5 of this Agreement to manage the dwellings in the Listed Building and...
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