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Di Marco v Morshead Mansions Ltd [2013] EWHC 1068 (Ch): No Civil Remedy Available So No Entitlement To Mandatory Injunction

Summary: There is no civil remedy available in respect of ensuring compliance with s.21 and s.22 of the Landlord and Tenant Act 1985 (“the 1985 Act”).  Accordingly, a tenant was not entitled to a mandatory injunction compelling the landlord to supply him with a written statement of costs which form part of the service charge (s.21) or to provide him with reasonable facilities for inspecting the documents which support the summary (s.22).

Facts: The appellant tenant (T) was one of 104 long-lease tenants of a block of flats. The respondent landlord (L) was the freehold owner of the building. Each of the leases contained service charge provisions. Article 16 of L’s articles of association contained a provision entitling L to levy charges. L raised funds purely through art.16 demands rather than through the service charge.

In previous proceedings, T had unsuccessfully resisted L’s claim based on an art.16 demand on the ground that it was an attempt to recover service charges, which could be subject to challenge under the 1985 Act. The Court of Appeal dismissed T’s appeal (Morshead Mansions Ltd v Di Marco [2008] EWCA Civ 1371, [2009] 1 B.C.L.C. 559).

The instant proceedings were two actions brought by L, claiming rent and two art.16 demands. T challenged the validity and propriety of using art.16 to deal with service charge matters and the use of money raised without compliance with the 1985 Act. T counterclaimed for an order for information to be provided pursuant to s.21 and s.22 of the 1985 Act

First Instance: The judge ordered summary judgment in respect of rent and interest and struck out part of T’s defence relating to art.16. As regards T’s counterclaim, the judge considered the statutory provisions and held that on their true construction they did not give rise to a duty which could be enforced in a civil suit because the statute provided for a criminal sanction and because the instant case was not one where the legislation was for the benefit of a class of individuals. Accordingly, T had not shown that he had a cause of action.

Issue: T appealed against the decision striking out his counterclaims. L submitted that the judge was right to find that there was no statutory duty; the remedies for breaching the duties in s.21 and s.22 were criminal and not civil and it was unlikely that Parliament intended to create a statutory duty enforceable in the courts.

Decision of Appeal: Mann J held, on the true interpretation of the 1985 Act, a tenant had a right to apply to the court for the information which the landlord had to produce under s.21 and s.22. Those sections created a duty to the tenants in respect of which they had a direct civil enforcement remedy. Tenants with qualifying tenancies were a class of persons who suffered harm if there was a breach. The duties were not owed to the public at large. They were designed to achieve a situation in which the class of persons had certain information which members of that class needed in order to be able to check that their interests in paying no more than they should was properly restricted and given effect to. While the criminal sanctions provided an incentive to comply with the provisions, they were less likely to achieve the intended result, namely the production of records and information, than injunctive relief which was specifically framed and geared to the provision of information. Whilst there had been some prosecutions under s.25 for failure to comply with s.21 and s.22, Parliament did not consider that to be the only enforcement route. Nor did the prospective introduction of the additional sanction of the right to withhold rent support L’s case as to Parliament’s intention. Parliament intended the duties to be enforceable in the same manner as other civil duties, namely on application to the civil courts.

The judge erred in his reasoning and the basis for striking out part of the counterclaim could not stand. T’s claims for information under the Act ought not to have been struck out on the footing that there was no statutory tort or statutory cause of action. Since that was the only basis on which the judge struck them out, those claims should be reinstated.

 

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