Maunder Taylor v Blaquiere

A manager appointed under Part II of the Landlord and Tenant Act 1987 acts in an independent, court-appointed capacity. The manager’s right to demand rent and service charges arises from the appointment and its order, not from the landlord’s lease. The manager may have functions wider than enforcing the landlord’s covenants. A tenant cannot set off damages claims against the landlord against the manager’s demand because the claims lack mutuality. The statutory trust for service charges applies only to sums actually paid by contributing tenants, so it does not govern sums merely claimed. The appeal was dismissed.

Mr Blaquiere was a tenant in premises owned by Hyde Park Estates (Guernsey) Ltd. After alleged breaches of the landlord’s repairing obligations, the Leasehold Valuation Tribunal appointed Mr Maunder Taylor as manager under section 24(1) of the Landlord and Tenant Act 1987. The manager claimed rent and service charges for repair and management costs. Mr Blaquiere counterclaimed damages against the landlord and sought to set those damages off against the manager’s claims.

The Central London County Court held that the manager did not owe the landlord’s equivalent repairing obligations and that set-off was unavailable. The appeal concerned only set-off. The central issue was whether the statutory manager’s claim had the same legal character as a landlord’s claim and could be impeached by a damages claim against the landlord.

The appeal was dismissed unanimously. There was no appeal against the conclusion that the manager did not owe duties equivalent to those of the landlord.

1. Equitable set-off. General equitable set-off requires an equitable ground for protection against the demand. The cross-claim must impeach the title to the legal demand, assessed by the relationship between the claim and cross-claim. The fact that claims arise from the same transaction is insufficient by itself. A tenant’s claim arising from the landlord’s breach would have had the necessary connection against a claim by the landlord.
2. Statutory capacity of the manager. Part II of the Landlord and Tenant Act 1987 enables a tribunal to appoint a manager to act in relation to premises and to perform management or receiver functions specified in the order. Those functions are not confined to enforcing the landlord’s lease covenants. Section 24(11) confirms that management includes repair, maintenance and insurance. Section 24(5)(a) contemplates that contractual rights and liabilities may become those of the manager.
3. No mutuality. A manager appointed under section 24 acts in his own capacity as a court-appointed official. He is not appointed to carry on the landlord’s business. Even where the order defines his functions by reference to the leases, that does not alter his capacity. His right to the sums claimed arose from the appointment, not from the lease. The tenant’s claim against the landlord therefore lacked mutuality with the manager’s claim, so equitable set-off was unavailable.
4. Authorities and statutory trust. William H. Parsons v The Sovereign Bank of Canada [1913] AC 160 concerned an ordinary receiver carrying on a company’s business and was distinguishable. The statutory manager under Part II was intended to provide a fresh management scheme, enabling service charges to be collected and used for repairs. Allowing tenants to set off claims against the landlord would frustrate that purpose. The court rejected the alternative reasoning based on section 42 of the Landlord and Tenant Act 1987: the statutory trust applies to sums actually paid by contributing tenants, not to sums merely claimed by a landlord or manager.

• Court of Appeal: On 14 November 2002, the court dismissed the appeal unanimously. It held that a manager appointed under Part II of the Landlord and Tenant Act 1987 claimed in an independent capacity and that the tenant could not set off claims against the landlord against the manager’s claims. [2002] EWCA Civ 1633
• Central London County Court: Mr Recorder Hamlin answered the preliminary questions in favour of the manager. He held that the manager did not owe duties equivalent to the landlord’s repairing obligations and that set-off was unavailable.