Singh v Rainbow Court Townhouses Ltd

This appeal concerns the management of a development of townhouses known as Rainbow Court in the area of Sunrise Park, Trincity. The appellant, Shirlanne Sacha Singh, is the owner of unit 18 on which she is alleged to have carried out work without approval as required by her lease. The main issue is whether she established an arguable case that the management company acquiesced in the work or otherwise deprived itself of the right to injunctive relief.

Home Construction Ltd (“the lessor”) was the developer of Rainbow Court and is the lessor of the townhouses. The appellant is the owner of unit 18, under a lease granted to her predecessor on 6 June 2005 for a term of 199 years. Recital C of the lease indicated that the leaseholds within the development were being sold under a building scheme, in which the covenants would be mutually enforceable.

The respondent (“the company”) is a company formed for the purpose of managing the development, and is described in the lease as the Townhouse Management Company. By a deed dated 8 March 2012 the lessor appointed the company as its agent, among other things, to fulfil its obligations under the leases of the townhouses and enforce their terms, but did not transfer any interest in the property which remained vested in the lessor. (Although the lease had envisaged that the lessor would transfer certain “reserved property” to a management company, this was never done.)

Under the Fifth Schedule to the lease, the lessee covenanted with the lessor (para 9) not to make any alterations or additions in or on the property without first obtaining the lessor’s written approval, and (para 15(i)) to comply with any reasonable rules and regulations of the company. The company produced a document called the “Townhouse Community Guidelines” (“the guidelines”), which, among other things, required that before making alterations to townhouses, lessees should seek the company’s written approval; and set out certain “guidelines for maintaining the architectural standards for your Townhouse”.

There is nothing in the document, or the papers before the Board, to indicate in terms its precise legal status or when and how it was adopted or made known to the individual owners. Under article XI “General Administrative Guidelines” it is stated:

On or about 3 November 2014 the appellant started to carry out works to the property. She had not sought or obtained the company’s consent, but, according to her defence, she had orally informed two officers on or about 26 October of her intention to carry out works. On 18 November 2014 the company’s board wrote to her referring to the “exterior construction” which had been taking place at the property:

The appellant replied by letter dated 20 November 2014. She asserted (inter alia) that the guidelines were not valid in law, that the works were consistent with other works to townhouses within the development to which no objection had been taken by the board, and that in any event the works had been agreed by the board “through the verbal assurances of its agent(s)”, or objections had been waived. She added that works were substantially complete, and that finishing them would not cause dust or disturbance. The letter concluded:

On 25 November 2014 the company wrote repeating the complaints as to carrying out of works without consent and resulting nuisance, demanding that she submit a written request for approval of the works, and threatening legal proceedings.

On 28 November 2014 the company issued the present claim for declarations, injunctions and damages. An ex parte interim injunction granted by Pemberton J on 2 December 2014 was discharged by the judge on the appellant’s application on 7 January 2015 on the ground that it had become otiose following completion of the work, but she ordered the appellant to pay the company’s costs.

The company’s case was set out in detail in a re-amended statement of case dated 23 January 2015. Under the heading “Particulars of the claimant’s mandate and responsibility” (para 4), it asserted (inter alia) that the lessor had transferred its remaining interests in the townhouses to the company to assume all rights and duties of the lessor for the townhouses. It referred to the relevant covenants in the Fifth Schedule to the lease, including the requirement for written approval for alterations or additions, and to the relevant provisions of the guidelines. It gave particulars of “unauthorised usage and/or illegal construction works”. The list included allegations both of specific works and of various forms of nuisance or disturbance. The offending works were described as follows in para 8:

It was also alleged that “as a result of the breach of covenants and guidelines” by the appellant, the company had been put to expense or suffered loss, of which particulars were given as follows:

The relief sought included claims for declarations in respect of the alleged breaches, and mandatory injunctions in these terms:

The tiled over are[a] of the common walk way;

The erected pillars (columns) in the front and the back of the property;

The installed electrical fixtures which has made changes to the front of the erected pillars in which brightly coloured decorative lights are on nightly;

The window to the kitchen;

The doors at the front and back of the property which has completely changed the appearance of the building;

By her Defence, the appellant, inter alia, put the company to “strict proof” of para 4 of the claim (“mandate” of the company). She denied the nuisance allegations. She admitted carrying out the works described (with minor qualifications) but made specific responses, which can be summarised as follows (taking the lettering from the claim).

In relation to the claim for damages, she said that she had painted the gate in 2011 with the express permission of the company’s then President; she denied removing the plants save as noted above; and the repairs to the roof were done by private arrangement with the company’s contractor and at her own expense.

At para 13 she referred to works done at ten other properties in Rainbow Court, with which her works were “consistent”, and which had been carried out without consent but without attracting objection or proceedings. For example, she described the following works at Townhouse 1:

With regard to the work in November 2014, she said that on about 26 October 2014 she had had oral discussions with the company’s property manager and a director, and had informed them of the proposed works, and had received no complaint, objection or request for an application for approval; but that on 5 November 2014, after the works had started, the company had supplied her, for the first time, with a copy of its guidelines. She also referred to the company’s letter of 18 November 2014, as evidence that the company had waived any objections to the works.

There were no further pleadings. On 15 April 2015 the company applied for an order striking out the defence as disclosing no grounds of defence and for summary judgment for the relief claimed. The supporting affidavit, sworn by the company’s attorney, relied on her admission of carrying out the works without consent. There was no substantive response to her allegations in respect of works to other townhouses, which were categorised as “a red herring”, as were her allegations about targeted malice. The draft order attached to the affidavit provided for the statement of case to be struck out “and/or an order for summary judgment dismissing the defendant’s case”. It did not in terms specify any substantive relief.

There followed an exchange of detailed submissions by counsel on each side. First, the submissions for the appellant discussed the case law relating to striking out and summary judgment. She was said to have a realistic prospect of success based on issues of acquiescence and whether some of the alleged breaches actually occurred, raising questions of fact requiring investigation at trial. Reference was made to Shaw v Applegate [1977] 1 WLR 970, and Gafford v Graham (1998) P & CR 73. The defence of acquiescence or estoppel relied on three matters (para 37): works done since 2011 without prior objection; the letter of 14 November 2014; and works done by other residents ostensibly in breach of covenants but without any action being taken. No point was taken on the standing of the company as claimant; nor was any specific reference made to the allegations of malice. In the company’s submissions in response (signed by Mr Hallpike of counsel, who has appeared also before the Board), it was argued that the matters relied on did not establish an arguable case of acquiescence. It is notable that counsel for neither party seems to have thought it necessary to discuss the terms of any order or issues relating to relief.

So far as appears from the agreed statement of facts, and the papers before the Board, the next event was the issue of the judgment of Pemberton J on 7 December 2015. This decision was made on the papers without any form of hearing. It is unnecessary to do more than refer to the main points in the judgment. The judge noted without further discussion the interest of the company, to which the lessor had “assumed all rights, duties and obligations concerning the … townhouses” (para 1). Summarising the claim she said (paras 6-8) that the company’s complaint revolved around “[the appellant’s] construction and/or modification to the external part of the leased unit” and the work which “saw the erection of four pillars/columns which [the company] says has completely changed the appearance of the building, detracting from the uniformity of the Community …”. These works had been commenced “without receiving prior consent from its board of directors, which was in breach of the covenants and guidelines contained in the ‘Townhouse Community Guidelines’”. She added:

She then summarised the defence as one of “acquiesce and estoppel” (sic) based on the fact that the appellant had received the Townhouse Community guidelines only two days after the works were commenced; on “her oral discussions with ‘persons’ who were allegedly servants and/or agents of [the company], and that they knew and could have seen that the works were being performed”; and that the company did not object to the conduct of the complained works, or notify her that she had to make a formal request”. She added: “[the appellant] also alleged several other issues, but to my mind they are not of moment to this matter” (para 11). (The matters of “no moment” seem to have included the alleged works at other houses, which were not further referred to in the judgment.)

In the following paragraphs she discussed the defence as she understood it, including the authorities relied on, arriving at “the inevitable conclusion” (para 30) that the facts as pleaded could not support the position that the company was “acquiescent in the offending actions and is therefore estopped from bringing the action”. Under the heading of “Relief” (para 34), she noted the forms of relief claimed, including the mandatory injunctions, and observed that the appellant “did not see the need to treat with any of these reliefs claimed” and had never denied the company was entitled to the reliefs claimed. She accordingly made an order in the terms sought, which was duly issued by the court on 4 March 2016.

On 11 January 2016 the appellant filed a notice of appeal to the Court of Appeal, challenging the judge’s rejection of the possible defences of acquiescence or estoppel, and claiming that there were serious issues to be tried. By an amended notice dated 10 February 2016 she alleged in addition that the company had failed to establish its locus to bring the claim, and also that the judge had “failed to apply the appropriate principles which govern the grant of discretionary relief”, in particular the need for evidence.

The appellant’s appeal and application for leave to appeal out of time were heard by the Court of Appeal (Archie CJ, Narine and Jones JJA) on 9 May 2016. The court seems not to have been supplied with copies of the record of appeal, and so had to make do with a single copy provided by counsel to the Chief Justice. The Board has the transcript of the argument, at the end of which the Chief Justice gave a short extempore judgment in these terms:

At a contested hearing on 6 June 2016, the Court of Appeal (Jamadar, Smith and Bereaux JJA) granted the appellant conditional leave to appeal to the Privy Council, and suspended the order of the judge pending determination of the appeal.

The following issues have been agreed for determination by the Board:

It is convenient first to dispose of the last point which in the Board’s view is without merit. Mr Strang, counsel for the appellant, submits that the company itself, having no interest in the land, had no title to bring the claim. It should have been brought in the name of the lessor, for which the company was agent. Technically, no doubt, Mr Strang is right. He is also right that the case relied on by the Court of Appeal (89 Holland Park (Management Ltd) v Hicks [2013] EWHR 391 (Ch)) does not assist, since it was concerned only with the rights of successors in title or owners and occupiers for the time being (under section 78 of the Law of Property Act 1925), neither of which categories applies to the company. However the point was not taken in the High Court by counsel then instructed for the Appellant, probably for the good reason that the defect had caused no prejudice and (as Mr Strang accepts) could have been corrected by amendment. In the Board’s view it was too late to take the point for the first time in the Court of Appeal, and in any event it could and should have disposed of it on the same basis.

Turning to the issue of acquiescence or waiver, questions (i) and (iii) are closely linked and best considered together. As will be seen, where the relief sought is mandatory in nature, analogous (and sometimes overlapping) equitable principles come into play in determining both the entitlement to relief and its form. For the appellant, Mr Strang submits in short that the judge failed to understand or properly address the defence of acquiescence, and its relevance both to entitlement to relief and to its form. She thought it enough that the appellant knew of her obligations under the lease, and that the respondent had not misrepresented the facts or the nature of the covenants. In particular she wrongly regarded as irrelevant the assertion that the ten other residents had carried out “consistent” alterations without approval or objection. She also gave equitable relief in the form of mandatory injunctions without adequately investigating the nature and effect of the alleged breaches or their circumstances.

Mr Strang relies principally on the law as stated by Farwell J in Chatsworth Estates Co v Fewell [1931] 1 Ch 224. In that case properties within the estate were subject to covenants, enforceable by the company, preventing their use other than as private dwelling houses. The defendant was using his property as a guest-house which was admittedly in breach of the covenants. He relied on the acts and omissions of the company and its predecessors as a bar to equitable relief by way of an injunction. The evidence showed that the company or its predecessors had permitted breaches of covenants in several cases, including permitting conversions to flats, and permitting at least four houses to be turned into boarding-houses or hotels, and in other cases failing to prevent (in some because they did not know of) houses being used as boarding houses or guest houses. The judge noted references in the authorities to concepts such as waiver or acquiescence, and continued, at p 231:

Mr Strang also relies on the fact that here, unlike in that case, the order sought was mandatory rather than prohibitory in form. He cites the well-known statement by Buckley J in Charrington v Simons & Co Ltd [1970] 1 WLR 725, 730:

That passage was cited with approval by Megarry J in Shepherd Homes Ltd v Sandham [1971] Ch 340, 351, where he said:

In considering these linked issues, the Board will start by looking at the general principles, before turning to the detail of the alleged breaches and the order made in respect of them. On the issue of waiver or acquiescence the Board is content to adopt the approach of Farwell J in the Chatsworth Estates case. It finds the authority of direct assistance, because like the present case it concerned enforcement of covenants by an estate company for the protection of an estate as a whole, rather than by an individual property owner against a neighbour (as in other cases cited below, such as Gafford v Graham (1998) 77 P & CR 73).

However, that consideration tends to point against Mr Strang’s submission. Farwell J recognised that the company had not been “unduly insistent” on the observance of the covenants, nor had it made its business to conduct inquisitorial examinations unless a matter was drawn to its attention by complaints of neighbours or otherwise (p 230). The issue was not whether breaches had been overlooked in individual cases but whether those omissions could be said to amount in effect to a representation that the covenants were no longer enforceable. On the facts of the case, Farwell J held that the company was not disentitled by its past actions from an injunction to restrain the defendant’s use. Not only were there particular explanations for at least some of the cases, but to debar relief would make it extremely difficult for the company in future to prevent other persons carrying on guesthouses. Further, it was a clear case for an injunction without the need to show substantial damage, at p 233:

Applying that approach to the present case, the Board agrees with the judge and the Court of Appeal that the exchanges in October and November 2014 cannot possibly be interpreted as amounting to representations by the company that the covenants in the lease requiring approval for works were no longer effective either in general or in relation to the appellant’s proposed works. The mere failure of two officers to make immediate objection in October 2014 when notified of works due to start within in about a week, without any detailed information of their nature cannot be interpreted as a representation of any kind on behalf of the company. The letter of 18 November 2014 contained no such representation, express or implied, and in any event cannot have been relied on as such by the appellant, being received at a time when most of the work had been completed.

It is however unfortunate that the judge and the Court of Appeal failed entirely to address the allegations relating to works permitted or not objected to on other parts of the estate. Had they been referred to the Chatsworth Estates case, it is unlikely that they could have simply dismissed them as irrelevant. It is also unclear to what extent the judge had regard to the detail of the alleged breaches, apart from the “erection of four pillars/columns”, which she specifically identified as having changed the appearance of the building and detracted from the uniformity of the Community. That is a proposition which she thought amply demonstrated by the photographs. On that aspect the Board, having been shown the photographs, sees no reason to disagree. The works to other properties specified in the defence include some columns at the rear, but nothing apparently comparable at the front.

However, the same clarity cannot be attached to the other works of which complaint is made. As has been seen they included works to the rear of the building and to the interior. They also included works which, according to the Appellant, had been carried out without objection two years before. On the face of the pleadings there was an arguable case that these were no different in kind to works which had been accepted without objection on other properties. Whether or not this gave rise to a case of waiver in the sense defined by Farwell J, they were at least arguably relevant to the scope of any mandatory order. It is difficult to see how fairness (in the sense described by Megarry J) would be served by an order which required the Appellant to carry out such works without any investigation of their significance, or how they compared to works accepted without objection on other properties on the estate. In so far as the guidelines are incorporated into the terms of the injunctions, there may also to be an issue as to their status and effect, and whether they were adequately drawn to her attention in advance of the works.

Mr Hallpike did not seriously dispute the fact that works as described in the defence had been carried out without objection at other properties, but he emphasised that the company’s real concern was with the prominent works to the front of the building. If that is so, it is unfortunate that when formulating its detailed case, and applying for summary judgment, the company made no attempt to draw such distinctions. Symptomatic of the same lack of discrimination seems to be the inclusion at that stage of the claims for damages, the factual basis of which was obscure, and in respect of which the Appellant had raised apparently arguable defences (such as that gate had been painted with express permission).

This is not a case which should have found its way to the Board. Although hard-fought it was a conventional neighbourhood dispute, raising no significant issue of general law or policy. The Board regrets the cost and delay with has resulted. With hindsight it seems unfortunate that the decision was made to deal with it without any form of hearing even on the detail of the relief. The Board was given no information about the legal basis of the procedure, and it notes that no objection appears to have been taken to it by either party at the time. However, that did not absolve the judge of her duty to consider, not just the principle of the claim, but also the detail of the alleged breaches and of the relief sought.

On what may have been seen as the main issue - the carrying out of prominent works to the front of the building - the judge was entitled to find that the defence had no merit. However, some at least of the overlapping issues of liability and relief relating to other alleged breaches were much more arguable. They were left unaddressed by both the judge and the Court of Appeal. To this extent the appeal must succeed, and the case must be remitted to the High Court for resolution of the disputed issues.

The Board has considered whether it would be appropriate to leave in place the mandatory injunction in respect at least of the four pillars at the front of the building. However, it does not feel able, on the material before it, to make a principled distinction between the different parts of the mandatory injunction, no such distinction having been drawn in the statement of case or by the judge. Furthermore, if the Appellant is to be required to carry out substantial works of reinstatement, it seems fair to her (and perhaps preferable for her neighbours) that the full extent of her obligation is clearly defined at the outset and that she is able to do the works at one time.

For these reasons, the appeal will be allowed and the case remitted to the High Court.