Villatte v 38 Cleveland Square Management Ltd

The equitable doctrine of laches may prevent a party from challenging the validity of corporate appointments or acts where delay, conduct and the resulting practical injustice make the challenge inequitable. The inquiry is fact-sensitive and turns on the balance of justice, including whether the challenger has acted as though the corporate arrangements were valid.

An appellate court will rarely interfere with justified tribunal case-management decisions. A litigant who disregards procedural directions, including orders concerning evidence, risks being bound by the consequences.

A long leaseholder challenged service charges sought by the management company for a building containing four flats. The company applied to the Leasehold Valuation Tribunal under section 19(2A) of the Landlord and Tenant Act 1985. The tribunal rejected the leaseholder's late contention that the company lacked authority to bring the application because its directors had not been validly appointed.

The Lands Tribunal dismissed his appeal. It held that the company's acts were validated by its articles and rejected his further procedural objections. The leaseholder appealed on the corporate-authority point and sought permission to advance additional grounds alleging procedural unfairness. The central issue was whether he could invalidate the proceedings by challenging the status of those who had acted as the company's directors.

1. Appeal dismissed unanimously. Jonathan Parker LJ, with whom Mummery and Ward LJJ agreed, held that the challenge to the authority of the company and its directors was barred by laches.

2. The court applied the equitable approach stated in Re Bailey, Hay & Co Ltd [1971] 1 WLR 1357. Laches depends on practical justice, not a technical time limit. Relevant matters include the delay, conduct which can amount to waiver, changes during the period of delay, and the balance of justice between the parties.

3. The leaseholder had not challenged the other directors' appointments before the hearing in the Leasehold Valuation Tribunal. He had instead repeatedly held himself out as a director and referred to the other persons as directors. Even if a technical defect in the appointments were assumed in his favour, it would be a gross injustice to the other leaseholders to permit the challenge in these proceedings.

4. It was therefore unnecessary to decide whether regulation 92 of Table A validated the acts of the purported directors, or whether later resolutions effectively ratified them. Jonathan Parker LJ also observed, without relying on the point, that the substance of the dispute was between the leaseholder in arrears and the other leaseholders; section 19(2A) of the Landlord and Tenant Act 1985 could permit proceedings to be reconstituted to reflect that reality.

5. Permission to appeal on the alleged procedural-unfairness grounds was refused. The tribunal's decisions were case-management decisions with which the Court of Appeal would only rarely interfere. Its treatment of the leaseholder's failure to obey directions as contumelious was justified.

• Court of Appeal (Civil Division) — dismissed the appeal and refused permission to appeal on the additional procedural grounds: [2002] EWCA Civ 1549.
• Lands Tribunal — dismissed the leaseholder's appeal from the Leasehold Valuation Tribunal, rejecting the surviving challenge to the authority of the management company.
• Leasehold Valuation Tribunal — determined the disputed service-charge issues in the management company's favour and declined to dismiss or stay its application for alleged lack of corporate authority.