Cinnamon Ltd & Ors v Morgan

For the purposes of the service-charge provisions in Part I of the Landlord and Tenant Act 1985, “landlord” is an inclusive concept. A management company may be a landlord where it has a right to enforce payment of charges for services, repairs or maintenance and those charges vary according to its costs. The lessor may also remain a landlord. The statutory scheme can therefore apply where relevant costs are incurred by a management company rather than directly by the lessor. Obiter observations in an earlier case concerning whether the management company was landlord to the exclusion of the lessor did not determine that issue.

The tenant occupied premises under a lease from Cinnamon Ltd. Plantation Wharf Management Ltd, the estate management company, sought to recover service charges. The tenant contended that the management company’s costs were not “relevant costs” under section 18(2) of the Landlord and Tenant Act 1985, because they were not incurred by or on behalf of the landlord.

The County Court decided the preliminary issue against the tenant, considering itself constrained by observations in Berrycroft Management Co Ltd and others v Sinclair Gardens Investments (Kensington) Ltd [1997] 22 EG 41. On appeal, the parties consented to declarations that the management company was a landlord for section 18(2) purposes and that section 18 applied. The Court of Appeal had to determine whether the lower court’s decision was wrong.

1. Appeal allowed by consent. The Court could make the agreed order only after satisfying itself that the County Court’s decision was wrong, as required by CPR Part 52 and paragraph 13.1 of the practice direction.
2. Section 30 of the Landlord and Tenant Act 1985 provides an inclusive definition of “landlord”, extending to any person with a right to enforce payment of a service charge. The management company had such a right under the lease in relation to charges for services, repairs and maintenance.
3. The definitions in sections 18(1), 18(2) and 30 have some circularity, but the legislative intention was sufficiently clear. A person entitled under a lease to enforce a charge which varies according to that person’s costs in providing services under the lease is a landlord for the service-charge provisions.
4. It was unnecessary for there to be only one landlord. The lessor could be a landlord in relation to insurance charges, while the management company could also be a landlord in relation to charges for other services. The relevant charges therefore fell within Part I of the Act and were subject to the reasonableness requirements in section 19.
5. The observations in Berrycroft Management Co Ltd and others v Sinclair Gardens Investments (Kensington) Ltd [1997] 22 EG 41 were obiter on the question whether the management company was landlord. They concerned a tenancy under which the tenant was not required to insure and did not address whether the management company could be landlord alongside the lessor. The County Court was therefore wrong to regard them as determinative.

The parties were directed to lodge a signed draft minute of order.

• Court of Appeal (Civil Division): [2001] EWCA Civ 1616 — appeal allowed by consent; the County Court’s preliminary ruling was set aside.
• Wandsworth County Court sitting at Brentford: order dated 18 August 2000 — decided that the management company did not come within the relevant definition of “landlord”.