In Riverside CREM 3 Ltd v Unsdorfer and others [2022] UKUT 98 (LC); [2022] PLSCS 61, Martin Rodger QC did not permit the appellant Riverside CREM 3 Ltd (Riverside) to raise an issue of jurisdiction which had not been raised when the First-tier Tribunal, Property Chamber (FTT) had made an order varying the appointment of a manager under s24 of the Landlord and Tenant Act 1987.
Completed in 2000, Canary Riverside (the estate) was a mixed prime residential and commercial development in Canary Wharf which included (amongst other things) 325 apartments in four towers and a gym.
By s24(1), the FTT has power to appoint a manager by final or interlocutory order to carry out in relation to any premises to which Part II of the Act applies such functions in connection with the management of the premises or such functions of a receiver (or both) as the tribunal thinks fit. In 2016, residential leaseholders of the estate succeeded (on their third attempt) to have a manager appointed. The management order made by the FTT made the manager responsible for managing the shared services to both the residential and the commercial parts of the estate.
In 2018, as part of a corporate restructuring, the company that held the freehold assigned a number of commercial leasehold interests of the estate to Riverside, and the lease of the gym (of which Virgin Active Health Clubs Ltd was the lessee) became vested in Riverside. Notice of the assignment to Riverside was given to the then manager by letter (the letter) which stated: “Liability for service charge payments is with… [Riverside] going forward.” There were various alterations and extensions of the management order, including a change of manager.
When a company which held the leasehold interests in some of the residential premises became aware of the assignment to Riverside, it made an urgent application to the FTT to have Riverside joined as a party to the proceedings under the 1987 Act. This was to ensure that Riverside would be bound by the management order. In response to a direction by the judge, Riverside’s solicitors gave what was understood to be an unequivocal acceptance (the assurance) that Riverside was already bound by the management order, and the application to join Riverside was withdrawn.
Early in 2021, Virgin gave notice that it wished to avail itself of Companies Act arrangements with creditors and restructure. This had the potential to create a £355,000 shortfall in the service charge paid by Virgin to the manager. The manager made an urgent application to the FTT under s24(9) of the 1987 Act to vary the management order to insert a new paragraph permitting him to recover any service charge owed by Virgin from Riverside.
This variation in the management order was made, causing Riverside to seek and obtain permission to appeal on a point that was not taken below. It wished to argue that as it acquired its interest in the estate after the management order had been made, it was not bound by the order and the FTT lacked the jurisdiction to vary the management order to impose restrictions on Riverside. In line with Urwick v Pickard [2019] UKUT 365 (LC); [2019] PLSCS 229, the only way the manager could acquire rights against Riverside would be to serve the necessary preliminary notice and apply for a new management order. However, the UT would not allow this new point to be raised.
In accordance with the principles set out in Singh v Dass [2019] EWCA Civ 360, the appellate court would be cautious about allowing new points on appeal. It would not generally permit new points if the point was such that it would have necessitated new evidence or would have resulted in the hearing(s) below being conducted differently. Even if the point could be ascribed as a pure point of law, it would only be permissible if: (a) the other parties had adequate time to deal with it; (b) the other parties had not acted to their detriment; and (c) the other parties can be adequately protected in costs. These principles were explained in greater detail in Prudential Assurance Co Ltd v HMRC [2016] EWCA Civ 376.
The UT commented that it seemed notice under s22 of the 1987 Act was a requirement that the party to whom notice should be given could waive but found that there was no need to finally decide this issue as the variation of the management order was an order the FTT was entitled to make. The appellant’s criticisms of the variation were more properly described as procedural rather than jurisdictional. There was no cogent explanation as to why the point had not been taken earlier. Looking at how the dispute would have developed had Riverside adopted its current position earlier was significant. The financial arrangements to the transfer would likely have been amongst issues investigated before the FTT. The letter had reassured the then manager and given no indication that active steps would be required to ensure contributions. If the assurance had not been given (or had been withdrawn), steps could have been taken to ensure that the manager was not faced with the situation for which Riverside now contended. It would be “grossly unfair” to allow Riverside “to wriggle out” of the assurances which it willingly gave.
Riverside was not permitted to raise the new point on appeal. Although practitioners may have found a decision on the issue of whether Riverside was bound by the management order interesting, the facts of this case made such exploration academic.
Elizabeth Haggerty is a barrister
