Christopher Heather QC and Tim Hammond succeed in high profile High Court case
1st February 2018
On Tuesday 30 January 2018 Sir Geoffrey Vos, Chancellor of the High Court, handed down judgment in the matter of Victory Place Management Company Ltd v (1) Florian Kuehn (2) Gabrielle Kuehn  EWHC 132 (Ch). The case was an appeal from any earlier decision of His Honour Judge Donald Cryan sitting at the County Court at Central London. The case concerned consent and the application of a “no pet” policy by a management company at a gated residential development of maisonettes and apartments in Limehouse, London.
The management company is formed of 146 member leaseholders. The elected board of directors are themselves leaseholders. Mr and Mrs Kuehn are the owners of a penthouse apartment at the development. They are also the owners of a five year old Yorkshire/Maltese terrier cross called Vinnie. Therein lies the problem at the heart of the case.
Each lease on the development contains a clause that “no dog bird cat or other animal or reptile shall be kept in the Demised Premises without the written consent of the Phase Management Company”. The Kuehns applied to the management company for written consent to keep Vinnie in their apartment.
The management company confirmed that unless there were special circumstances a long-standing “no pet” policy would be applied. It was argued that continuation of the “no pet” policy was consistent with the wishes of the leaseholders and it was unreasonable for a voluntary non-expert board to have to consider each application for consent on its own merits. The Kuehns had indicated that they had medical reasons for needing Vinnie in the apartment, but those reasons were never properly evidenced (or explained). Their application for consent was subsequently refused upon the basis of the “no pet” policy. The Kuehns nonetheless moved Vinnie into the apartment.
The Kuehns argued that it was to be implied into their lease that when exercising their discretion the directors of the management company should act in good faith, and without being arbitrary, capricious or irrational. They argued that the “no pet” policy represented a blanket ban amounting to a clear predetermination in breach of that implied term.
The implication and scope of such a term has been addressed by the Supreme Court in the case of Braganza v BP Shipping Ltd  UKSC 17 in the context of employment contracts. Therein Baroness Hale (with whom Lord Hodge and Lord Neuberger agreed upon the issue) reviewed a developing body of appellate case law and held that (at least in the context of employment contracts) a term as to rationality (or reasonableness) would be implied and the scope of such a term would (taking inspiration from public law concepts) encompass both limbs of the two limb test set out in Associated Provincial Picture Houses v Wednesbury  1 KB 223 (the first limb concerning rationality of process, and the second limb concerning rationality of outcome).
HHJ Cryan at first instance, following Braganza, found that the full rigour of Wednesbury would apply even in the context of management company/tenant relations. He was persuaded however that the management company had in this instance acted rationally despite applying a “no pets” policy.
The Kuehns vehemently disagreed, appealing upon the basis that the management company had fettered its discretion by the application of the “no pets” policy. The management company cross-appealed upon whether, if a term were to be implied, its scope would encompass both limbs of the two limb test in Wednesbury.
In the event the Kuehns narrowed their appeal to rely solely upon the first limb of Wednesbury – rationality of process. The cross-appeal, described by the Chancellor in his Judgment as “an interesting question”, was not formally resolved. He did, however, provide some useful comments obiter dicta. He stated that his inclination would be to hold that an implied term as to rationality would encompass both a rational process and a rational outcome, but that “in the context of a lease such as this, these are not high thresholds to meet”. He also emphasised that whilst a concept borrowed from public law may inform the kind of term that may be implied in a private law context, public and private law concepts should not be confused.
Turning to the issue of process alone, the Chancellor considered that there could be a rational process if a “no pet” policy was subject, as here, to consideration of special circumstances. The Kuehns had not identified special circumstances and the management company was therefore entitled to refuse consent.
The case provides guidance as to the application of policies on developments (particularly in the context of pets) in circumstances where landlords or management companies retain discretions under leases.
Christopher Heather QC and Tim Hammond represented the successful management company.
A copy of the Judgment can be found here.
The case has also been widely reported, with articles in the Evening Standard and the Daily Mail.