Mostyn House Estate Management Company Limited v Barry Youde & Ors.

In construing a registered model transfer, the court must ascertain the objective meaning of the language read as a whole and the admissible background existing and known or reasonably available when the transfer was executed. Later leases cannot be used to give identical transfers different meanings. Publicly registered documents require a restricted approach to extrinsic material because future parties may rely on the register and lack access to collateral documents. General recitals and references to compliance with a planning agreement do not override a carefully allocated contractual scheme. Where one management company has primary responsibility for retained structural parts and another for communal areas, the latter does not acquire a parallel primary repair obligation or a right to recover costs from all owners without clear words.

Mostyn House Estate Management Company Limited appealed the dismissal of its Part 8 claim by His Honour Judge Cawson QC in the High Court, reported at [2021] EWHC 3786 (Ch).

The development comprised leasehold apartments in listed school buildings and freehold houses, including Jarrah House. The Company sought declarations that it was entitled to maintain the listed buildings and recover the cost rateably from the freehold owners under identical freehold transfers. The respondents contended that the transfers allocated primary repair obligations to the freehold management company, while the leasehold management company was responsible for the school buildings under the leases.

The appeal concerned whether the leases could form part of the admissible background to construction of the earlier transfers, the proper construction of the transfers without them, and whether a broad declaration should be granted.

1. Appeal dismissed. Lady Justice Asplin gave the judgment, with Lady Justice Nicola Davies and Sir Andrew McFarlane agreeing.
2. The first freehold transfer was executed in May 2014, before any of the leases were granted between October 2014 and January 2016. The leases therefore could not form part of the factual background existing at the date of the first transfer. There was no evidence that a standard form draft lease was then known or reasonably available. Identical model transfers could not acquire different meanings according to whether they were executed before or after the leases.
3. The transfers were public registered documents. Applying the approach in Cherry Tree Investments Ltd v Landmain Ltd [2012] EWCA Civ 736, a restricted approach to extrinsic material was required because future third parties might rely on the register without access to collateral documents. The judge was wrong to treat the leases as equally public and available for construction purposes. The Land Registration Act 2002 context reinforced that conclusion.
4. Construed as a whole, and in light of the admissible background, the transfers created a carefully calibrated allocation of responsibility. FMC was expressly responsible for the Retained Parts, including the structure and exterior of the school buildings, and for related obligations under the Section 106 Agreement. The Company’s obligations concerned the Communal Areas, Communal Facilities, Communal Services and specified Chapel obligations. General recitals and broad references to compliance with the Section 106 Agreement were insufficient to impose on the Company a primary obligation to maintain all listed buildings or to recover the cost from all owners.
5. The natural meaning of Communal Areas, Communal Facilities and Communal Services was confined to areas and facilities used by, or benefiting jointly, the freehold and leasehold owners. The separate rent-charge regimes showed that the obligations of the management companies were not interchangeable. The declaration was therefore unavailable on the proper construction of the transfers.
6. Although the issue did not arise, the court cautioned that discretion to grant declaratory relief should be exercised carefully where a proposed declaration is general and does not identify particular repairs or the circumstances generating repair expenditure.

• Court of Appeal (Civil Division): Appeal dismissed on 6 July 2022, [2022] EWCA Civ 929.
• High Court, Business and Property Courts in Manchester, Property Trusts and Probate List (Ch): His Honour Judge Cawson QC dismissed the Part 8 claim on 21 August 2021, [2021] EWHC 3786 (Ch).