Donath v Trustees of the Second Duke of Westminster Will Trust [PDF] is a first instance decision of the LVT. We do not normally reports such things but it concerns an application to vary an old-style estate management scheme. So rarely does one see estate management schemes litigated in practice that I felt we ought to give it a mention.
Unlike most other civilised legal systems, English law does not have any simple mechanism for requiring the owners of land to contribute to the costs of managing or maintaining other land from which they benefit. There are archaic exceptions, such as the easement of fencing, and various legally imaginative solutions which have never been properly tested and as such are unused, for example by creating freehold covenants from the enlargement of very long leaseholds — as proposed by Professor Edward Burn. Attempts to change this, whether by the Law Commission, or by pressing for an extension of the rule in Halsall v Brizell  Ch 169 that the one who takes the benefit must also take the burden have failed.
English lawyers have instead resorted, as they usually do, to bricolage: co-opting the leasehold estate as a means of imposing financial obligations. We are so used to this situation I suspect we fail to realise quite how ridiculous it is, but I remember the horror expressed by an American colleague that we were using time-limited (and as it happens highly precarious) forms of ownership as a way of managing apartment blocks, simply because we had nothing better to offer.
Thus when well meaning governments created the right for the leaseholder of a house to purchase their freehold, a problem was created for large landlords who had, hitherto, been able to manage large estates using leasehold covenants. With their former leaseholders now freeholders it would be difficult to impose any general obligations on them, or for the landlord to retain any significant rights over the freehold land in order to continue to manage “their” estate.
The solution was section 19 of the Leasehold Reform Act 1967, which allowed the creation of what we have come to know as an “estate management scheme”. Such a scheme could provide for a landlord to be given powers of management and to retain rights against the freehold houses, the owners of which were (or might in the future) exercising their right to buy the freehold. In order to create a scheme one needed a ministerial certificate and the approval of the High Court, which meant that very few were made. I suspect that the introduction of section 19 was motivated with a very small number of large estate owners in mind (I’d be interested in readers’ comments on this point – or what experience they have with such schemes).
Section 19(6) required that such a scheme should make provision for its variation or amendment, or by enabling such variation to be done with the approval of the High Court. The LVT has replaced the High Court in all such schemes as a result of s.75 of the Leasehold Reform, Housing and Urban Development Act 1993 (which also introduced new style estate management schemes that are rather easier to create).
Grosvenor Belgravia Estate Management Scheme was just such a scheme, adopted in 1974 for the benefit of the 2nd Duke of Westminster Will Trust. Mr Donath’s complaint was that the trustees had failed to prevent (or remedy) breaches of the scheme by residents, so that some properties were in need of repair and others had been converted into offices (which, one presumes, was contrary to one of the provisions of the scheme).
Mr Donath made an application to the LVT under 19 for the scheme to be varied so as to impose an obligation on the “landlord” to “use their best endeavours to maintain established standards in the area”. This to be done by informing property owners of any breaches of the scheme and using their powers under the scheme to enforce the relevant standards.
The respondent trustees position was that the LVT did not have jurisdiction to do so. Section 19, they said, envisaged a scheme being made entirely for the benefit of the landlord or former landlord and did not contain provisions for imposing obligations on the landlord. The LVT agreed and refused jurisdiction. An alternative argument of the trustees, that only the landlord had standing to bring a claim under section 19, was left open.
I think this must be the right conclusion – s.19 is clearly intended for the primary benefit of the landlord or former landlord. More generally I wonder how many schemes of this type exist and how well they are (or are not) enforced.