Court of Appeal decides important case on the operation of management orders under the Landlord & Tenant Act 1987
22nd March 2021
Oung Lin Chaun-Hui & Others v K Group Holdings Inc & Others  EWCA – Aldford House
Jonathan Upton acted for the Appellants and Michael Walsh acted for the Respondents in this important decision on the operation of Part II of the Landlord and Tenant Act 1987. The Court of Appeal decided that:
- Payments made to a manager under a management order are ‘service charges’ within the meaning of section 18 of the Landlord and Tenant Act 1985 (§50).
- The right of a manager to recover payments from the tenants is derived from the Tribunal’s management order but is superimposed on the existing contractual framework of the lease. The contractual obligations of the parties remain in place, subject to the terms of the management order, and are not disapplied or modified (§56).
- Where the terms of the management order and the lease conflict, it is the management order that prevails (§56).
- At the conclusion of the term of the management order, the arrears owed by tenant for service charges during the manager’s appointment are automatically revested in the landlord (or whoever is entitled to recover the service charge) (§58).
- This can be distinguished from the situation if there is a surplus at the end of the manager’s appointment, where the manager should prepare an account and, if necessary, seek direction from the Tribunal (§59) (Kol v Bowring  UKUT 530 (LC) applied).
- Accordingly, the landlord (within the meaning of section 30 of the LTA 1985) was entitled to sue on the arrears that accrued during the manager’s appointment without a further direction of the Tribunal or an assignment of the debt (§60).
The appeal was dismissed.