Morshead Mansions has been involved in a quite astonishing amount of litigation. Bailii throws up 13 hits (here), cases in the LVT, Lands Tribunal, High Court and Court of Appeal. It’s really must be the most awful burden on all those involved. And now, there is another case to add to the list, Di Marco v Morshead Mansions Ltd [2013] EWHC 1068 (Ch).
Morshead Mansions Ltd is a lessee-owned company. It holds the freehold of (appropriately enough) Morshead Mansions, a block of 104 or so flats. It has two different ways of raising money. The first (and most common) is via the service charge. It seems that, at some stage in the past, Morshead Mansions Ltd became dissatisfied with this arrangement and started using the second method, i.e. collecting money via the articles of association. Despite the objections of Mr Di Marco, the Court of Appeal (broadly) endorsed this approach in 2008 ([2008] EWCA Civ 1371 see our note here), or, at least, held that it was a valid way of collecting monies and did not engage the service charge provisions of the Landlord and Tenant Act 1985.
In the present claim, Morshead Mansions had sued for various sums due under the lease (ground rent, I think) and under the articles. Mr Di Marco counterclaimed, including, for an injunction to compel the landlord to give him a summary of expenditure and to allow him to inspect the underlying documentation. Those rights are found in ss.21, 22, Landlord and Tenant Act 1985. Now, nowhere in the Act does it say that they are enforceable by injunction. To the contrary, provision is made (s.25) for criminal enforcement.
For our purposes, we’re interested in this aspect of the counterclaim (the case goes much wider and talks about many other issues, but they seem largely on their facts). The county court refused to make an injunction, holding that there was no right to one. The judge relied on Lonrho Ltd v Shell Petroleum Co Ltd No 2) [1982] AC 173, where it was held that, “… where an Act creates an obligation, and enforces the performance in a specified manner … that performance cannot be enforced in any other manner …” In the present case, the Act provided for criminal sanction and that was the only remedy.
The High Court disagreed. A tenant could seek an injunction to compel compliance with these provisions. The duty to provide accounts and documents was owed to tenants as a class. Access to information was crucial if they were to be able to check that they were paying no more than was properly due. Criminal sanction was less likely to effectively vindicate those rights and Parliament could not have been presumed to have excluded the normal civil remedy.
This is a very helpful case for leaseholders. Sections 21 and 22 are widely acknowledged to be rubbish – indeed, both the Commonhold and Leasehold Reform Act 2002 and the Housing and Regeneration Act 2008 provided for their abolition and replacement. For various reasons, neither the 2002 nor 2008 reforms are ever likely to come into force, meaning that leaseholders are stuck with the original provisions. There are very few local authorities who would prosecute for non-compliance (Westminster are, so far as I am aware, one of the few who might) and, without this information, tenants simply cannot start to vindicate their rights. Whilst it would clearly be better for the information to be provided free and as of right, a civil injunction is obviously preferable to criminal proceedings.
[Edited by J – first, we can’t give advice on individual cases via the blog; secondly, I have no idea if what you’re saying is true or not and, if not true, it was potentially defamatory, so I’ve removed it].