Alma Property Management Limited v Richard George Crompton & Anor.

An estoppel arising from a shared assumption that a receiver’s management responsibilities have ended does not, without sufficient detrimental reliance, prevent the landlord later enforcing the receiver’s continuing tenant covenants. The equitable remedy of specific performance for repairing obligations is available in principle, but remains exceptional. Where the landlord can carry out the works and recover the relevant contribution, and the tenant is entitled to an indemnity, damages and the landlord’s contractual step-in rights may provide adequate remedies.

Under the Landlord and Tenant Act 1988, the reasonableness of a condition attached to consent to assignment must be assessed as a condition actually imposed. A landlord cannot justify an unreasonable condition by arguing that it could instead have refused consent. A condition requiring former receivers to guarantee an assignee’s obligations was unreasonable where it enhanced the landlord’s position at their expense.

The claimant freeholder sought specific performance of the defendants’ repairing obligations under a common parts lease of a residential and commercial tower. The lease had been vested in the defendants while they acted as fixed-charge receivers of the claimant’s property. The receivership ended in 2016, but the lease remained vested in the defendants.

The defendants relied on estoppel, the receivers’ agency relationship and an indemnity. They also challenged the claimant’s condition that consent to assign the lease to the residential tenants’ management company was conditional on authorised guarantee agreements. The issues were whether the claimant was estopped from enforcing the repairing covenants, whether specific performance should be granted, and whether the guarantee condition was reasonable.

1. Estoppel. The communications and handover arrangements created a common understanding that the defendants’ responsibility to manage the building and provide services had ended. The understanding crossed the line between the parties and was relied upon. It did not extend to an assumption that the lease had ceased to be vested in the defendants or that they were no longer bound by its tenant covenants.
2. The defendants were estopped from alleging breach in respect of the period between October 2016 and a reasonable time after March 2020. However, they suffered no sufficient detriment to prevent the claimant, after reasonable notice, enforcing the repairing obligations prospectively. The increased cost of the works was recoverable from the claimant and NTRML. The claim therefore failed on estoppel.
3. Specific performance. Following Rainbow Estates Ltd v Tokenhold Ltd, specific performance of repairing obligations is available in appropriate circumstances, but remains rare and must not cause injustice or oppression. The claimant could itself carry out the works under the lease and exercise associated rights to recover contributions. Damages were adequate for any loss.
4. The defendants obtained the vesting order in the exercise of their receivership powers. Taking the lease was sufficiently connected with the charged freehold and was within the broad power in paragraph 17 of Schedule 1 to the Insolvency Act 1986. The defendants therefore acted as agents for the claimant, subject to their overriding duties to the lender, and owed the claimant an account when the receivership ended.
5. The defendants were entitled to an indemnity against the expense of performing liabilities arising from the lease’s vesting in them as receivers. Section 37 of the Insolvency Act 1986 did not exhaust their wider equitable right to indemnity. It was therefore inappropriate and unfair to order them to repair the building. Specific performance was refused.
6. Assignment condition. Under section 1 of the Landlord and Tenant Act 1988, the issue was whether the condition actually imposed was reasonable. The claimant could not rely on reasons that might have justified refusal of consent but did not justify the particular guarantee condition. Nor could it later require unspecified additional components of the authorised guarantee agreements.
7. A reasonable landlord could have required financial security from NTRML, given the importance and duration of the repairing obligations and the claimant’s lack of control over NTRML. But it was unreasonable to require these defendants to provide that security. They held the lease for the claimant’s benefit and were entitled to an indemnity. The condition therefore enhanced the claimant’s rights at the defendants’ expense. The defendants were entitled to assign the lease to NTRML without consent.