(1) Octagon Overseas Ltd (2) Canary Riverside Estate Management Ltd v Alan Coates [2017] EWHC 877 (Ch)

By Ranjeet Johal, Solicitor at Mills Chody LLP & Jeff Hardman, Barrister at New Square Chambers

Summary

The recent High Court decision in Octagon Overseas Limited v Coates provides noteworthy commentary on the jurisdiction of the County Court to enforce the terms of a management order, made pursuant to s24 of the Landlord & Tenant Act 1987 and obtained in the First-tier Tribunal, by taking the draconian step of granting an interim injunction and attaching a penal notice.  

The Facts

This genesis of the most recent dispute between the parties can be traced to a successful application, brought by a number of sub-lessees residing at the large residential complex, to appoint the respondent as manager in place of the incumbent management regime.  

On 4 October 2016, the manager applied to the County Court to enforce the terms of the management order and sought an injunction restraining the appellants from changing locks, moving any property or interfering with the respondent’s obligations under the management order. HHJ Madge sitting at the County Court at Central London granted the injunction and, thereafter, broadened the terms of the injunction on the return date.

The Appeal

Permission to appeal was granted on grounds contending, inter alia, there was no cause of action which could be enforced by the injunction. HHJ Walden-Smith, sitting as a Deputy Judge of the High Court, re-iterated the long standing principal that injunctions are incidental to a cause of action save in rare circumstances where it was possible that an injunction could be free-standing.

The judge drew a distinction between seeking to enforce the terms of a management order and applying to the County Court for an injunction with a penal notice attached. The latter went further than the former by creating new rights not provided in the management order. The Judge noted that it was for the tribunal to decide how the management order was to operate and how the manager was to fulfil his obligations pursuant to the terms of the management order. In this particular case, the management order gave the respondent the right to apply to the tribunal for further directions, including where there had been a failure to comply.

The Judge found that the intervention by the County Court amounted to a variation or extension of the management order, something which was outside of the County Court’s jurisdiction. Interestingly, the Judge considered it open to the tribunal to attach a penal notice to the management order itself. In referring to section 24(4) LTA 1987, the Judge held that it was sufficiently broad enough to imbue the tribunal with the power to do it.

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