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||Neutral Citation Number:  EWCA Civ 1549
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL
||Royal Courts of Justice
Wednesday, 16th October 2002
B e f o r e :
LORD JUSTICE WARD
LORD JUSTICE MUMMERY
LORD JUSTICE JONATHAN PARKER
||DIDIER J R VILLATTE
||38 CLEVELAND SQUARE MANAGEMENT LIMITED
Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited
190 Fleet Street London EC4A 2AG
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(Official Shorthand Writers to the Court)
Mr D Villatte appeared in person (attended by his solicitors, Christopher Wright & Co, Twickenham).
Mr D Mabb QC (instructed by Messrs Trowers & Hamlins, London EC3) appeared on behalf of the Respondent.
HTML VERSION OF JUDGMENT
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LORD JUSTICE WARD: I will ask Lord Justice Jonathan Parker to give the first judgment.
LORD JUSTICE JONATHAN PARKER:
- This is an appeal by Mr Didier Villatte, who appears in person, against an order of the Lands Tribunal dated 6 November 2001, whereby it dismissed Mr Villatte's appeal against a decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel given on 21 August 2000 in respect of service charges payable by Mr Villatte as a long leaseholder of a first and second floor maisonette known as Flat 2, 38 Cleveland Square, London W2 6DA ("the property").
- The applicant in the proceedings (the respondent before us) is a company called 38 Cleveland Square Management Ltd ("the company"), which, as its name implies, is a company formed to manage the property. The company was incorporated in September 1989. Under its constitution, the members of the company are the tenants for the time being of the four flats in the property.
- The property is a substantial mid-terrace house comprising six storeys, including a basement. It was built around 1830. It has since been converted into four self-contained flats, which are let on long leases. The leases contain provisions for the levying of a service charge by the landlord. Prior to 31 March 1991 the landlord (who owned the freehold of the property) was GMS Estates, but on that date the company bought the freehold and became the landlord of the four flats.
- Currently, the tenant of Flat 1, comprising the ground floor and basement, is Miss Joely Richardson. As already indicated, Mr Villatte is the tenant of Flat 2. The tenant of Flat 3, on the third floor, is Mr Michael Lloyd. The tenant of Flat 4, on the fourth floor, is Miss Caron Barter. Miss Barter is the secretary of the company.
- In 1999 a dispute arose between the tenants of Flats 1, 3 and 4 on the one hand and Mr Villatte on the other as to the reasonableness of service charges which the company had sought to levy under the terms of the leases, resulting from the incurring of substantial expenditure on projects of maintenance and repair to the property. By October 1999 Mr Villatte was in arrears with payments of service charge. The other tenants accordingly agreed that the company should make an application to the Leasehold Valuation Tribunal under section 19(2A) of the Landlord and Tenant Act 1985 to determine the reasonableness of the service charges, as a preliminary to forfeiture proceedings should Mr Villatte continue to refuse to pay the charges in full.
- Section 19(2A) provides as follows:
"A tenant by whom, or a landlord to whom, a service charge is alleged to be payable may apply to a leasehold valuation tribunal for a determination -
(a)whether costs incurred for services, repair, maintenance, insurance or management were reasonably incurred,
(b)whether services or works for which costs were incurred are of a reasonable standard, or
(c)whether an amount payable before costs are incurred is reasonable."
- On 29 October 1999 Miss Barter, as secretary of the company, submitted an application to the Leasehold Valuation Tribunal in the name of the company seeking a determination under the subsection in relation to the service charges which were disputed by Mr Villatte. The statement of reasons accompanying the application gave as the reason for the application:
"There are arrears of service charge in respect of Flat 2, the first and second floor maisonette, at [the property] owned by Didier Villatte. Mr Villatte has indicated he disputes the service charge ..."
- By its order dated 7 March 2000, made on a pre-trial review, the Leasehold Valuation Tribunal directed Mr Villatte to lodge, by 7 April 2000, a statement of case "containing full particulars of the service charge items in dispute and addressing all relevant points of law relating to the application together with such documentation that he may have in support of the statement". The order further directed that the application would be heard on 27 June 2000.
- Mr Villatte did not comply with the direction to lodge a statement of case. Instead, on the morning of the substantive hearing on 27 June 2000 he produced a 20-page document entitled "Application for Dismissal". In that document he raised for the first time the contention that the company had been operating since 1993 without a validly appointed board of directors, and (by implication, if not expressly) that the application was accordingly made without the company's authority.
- At the commencement of the hearing before the Leasehold Valuation Tribunal, Mr Villatte's counsel, Mr Maurice Rifat, requested the tribunal to dismiss the application, alternatively to stay it. Counsel appearing for the company, Miss Zia Bhaloo, opposed the application. On pages 4 and 5 of its decision, the tribunal recorded Mr Rifat's submission as follows:
"Mr Rifat said that for the Tribunal to proceed with the application would be an abuse of process. He argued that the Applicant, being an incorporated limited company, could not bring proceedings before a Leasehold Valuation Tribunal since the decision to do so had not been ratified at an AGM. He said that although it was possible that such ratification could be obtained at an AGM, there was also a possibility that it would not. If the Tribunal did not agree to dismiss the application, which Mr Rifat maintained was flawed, then at least proceedings should be stayed until the outcome of the AGM."
The tribunal then went on to consider the submissions made by Miss Bhaloo, and it continued in its decision as follows:
"Ms Bhaloo, counsel for the Applicant, argued that the Respondent should not be permitted to raise issues at this late stage when he had not done so at the Pre-Trial Review on 7 March 2000. She said that at the Pre-Trial Review, it had been made very clear to the Respondent by the Chairman that the Respondent had to set out his case, both in relation to any items of dispute and on any points of law. This he had not done. Ms Bhaloo also said that even if there had been any invalidity, any deficiency had been ratified by acquiescence. The Respondent had been well aware that proceedings were to be taken against him even before they were issued and `no steps whatsoever' had been taken by him. He had therefore acquiesced and he was estopped by convention.
After a short adjournment to consider the representations made by counsel for both sides, the Tribunal determined that it had an unfettered power to regulate its own procedures. The application in this matter was dated 29 October 1999 and despite the Directions and letters to the Respondent from the Clerk to the Tribunal with a request to observe the Directions, nothing had been heard from the Respondent until the morning of the Hearing. This being the case, it was determined that any deficiency in the application had been acquiesced by the Respondent. The application before the Tribunal was therefore not to be either dismissed or stayed."
- The tribunal then went on to consider the substantive issues which arose on the application, and resolved them in favour of the company.
- For reasons which will appear, we are not concerned on this appeal with the substantive issues, but rather with the issue as to the authority of the company to make the application and to be represented at the hearing of it (and hence the jurisdiction of the tribunal to entertain it), and with procedural issues.
- On 21 September 2000 the tribunal refused Mr Villatte leave to appeal, but on 14 December 2000 leave was granted by the Lands Tribunal. The leave was conditional, but the condition was waived at the commencement of the hearing of the appeal.
- On 8 March 2001 Mr Villatte applied for a preliminary hearing before the Lands Tribunal to address the preliminary issue as to jurisdiction. In paragraph 4 of his application he said this:
"... I ask the tribunal to determine that it has no jurisdiction to hear an application made by a corporate landlord who has no directors or officers capable of instituting proceedings and instructing solicitors."
- The application for a preliminary hearing was opposed by the company's then solicitors.
- On 12 April 2001 the Lands Tribunal extended to 27 April 2001 the time for Mr Villatte to lodge his statement of case, and directed that a pre-trial review be held. Mr Villatte lodged a statement of case on the last day; that is to say, on 27 April 2001. The statement of case was directed at the substantive issues, but it also repeated the submission that the Lands tribunal had no jurisdiction.
- At the pre-trial review, which took place on 9 May 2001, Mr Villatte's request for the hearing of a preliminary issue was refused by the Lands Tribunal.
- Subsequently, a number of extensions of time were granted to Mr Villatte for service of witness statements.
- On 7 September 2001, on the hearing of an application by counsel on behalf of Mr Villatte for a further extension of time, counsel, on instructions, gave undertakings to lodge one statement (said to have already been prepared) by 10 September and others (said to be in the course of preparation) by 14 September. By paragraph 3 of its order dated 7 September 2001, the Lands Tribunal directed that Mr Villatte be debarred from giving evidence at the hearing of his appeal if his witness statements had not been served and lodged by 4.00pm on 14 september 2001.
- On 3 October 2001 the Lands Tribunal wrote to Mr Villatte saying that, by reason of his failure to comply with its directions, he was debarred from calling evidence without further order. No further application for an extension of time was made and no witness statements were served by Mr Villatte prior to the commencement of the substantive hearing of the appeal on 24 October 2001.
- At the hearing, and in the absence of any evidence in support of his appeal, the Lands Tribunal was unable to address any of the substantive issues sought to be raised by Mr Villatte in relation to the reasonableness of the service charge. The Lands Tribunal accordingly addressed only Mr Villatte's contention as to the procedural defects in the administration of the company, in that (as he contended) the company had had no directors since 1993 and accordingly could not validly authorise the making of an application in its name.
- As to what happened at the conclusion of the hearing (that is to say, before the decision was handed down), I read from paragraph 4 of the Lands Tribunal's decision:
"After the hearing of the appeal, so limited, had been concluded and we had announced that we proposed to set out in this formal Decision our reasons for dismissing the appeal on the surviving ground, counsel for the Appellant asked that instead we should adjourn the hearing of the appeal and admit evidence which had after the commencement of the hearing that morning been lodged with the Tribunal. That application was made without notice. It was not supported by any explanation as to why the previous directions of the Tribunal had not been complied with nor why the application had not been made in response to the Tribunal's letter of 3rd October or at the beginning of the hearing. The reasons for such conduct could however be inferred from the submission that counsel made that the Tribunal had been wrong to refuse to order that the first ground of appeal should be treated as a preliminary issue. It seems that the Appellant determined, in defiance of that ruling, so to conduct the appeal as to achieve the same result. It appeared to us that the Appellant's failure to comply with the directions of the Tribunal, although they had been made in response to an undertaking given on his behalf was, in all the circumstances, to be regarded as contumelious, and it was entirely inappropriate that he should be relieved of the consequences of his failure. The application was accordingly refused and the scope of the appeal was limited as accepted by counsel at the beginning of the hearing."
- The decision, which is dated 26 October 2001, goes on to address the alleged "procedural defects" in relation to the appointment of directors of the company.
- However, as a preliminary to a consideration of this part of the decision, it is convenient to turn at this point to examine the constitution of the company and the factual history in relation to the appointment of directors of the company.
- I turn first, therefore, to the articles of association of the company. Article 1 provides that the regulations contained in Table A in the schedule to the Companies (Tables A to F) Regulations 1985 shall apply to the company save in so far as they are excluded or varied by the articles.
- Article 15, under the heading "Directors", provides that the number of directors shall be not less than two.
- The relevant regulations in Table A (which are not varied or excluded by the articles) are regulations 65 and 69 (relating to alternate directors), regulation 79 (which confers power on the directors to appoint an additional director), and regulation 92 (under the heading "Proceedings of Directors").
- These regulations are in the following terms:
Any director (other than an alternate director) may appoint any other director, or any other person approved by resolution of the directors and willing to act, to be an alternate director and may remove from office an alternate director so appointed by him.
Save as otherwise provided in the articles [of association of the company], an alternate director shall be deemed for all purposes to be a director and shall alone be responsible for his own acts and defaults and he shall not be deemed to be the agent of the director appointing him.
The directors may appoint a person who is willing to act to be a director, either to fill a vacancy or as an additional director, provided that the appointment does not cause the number of directors to exceed any number fixed by or in accordance with the articles as the maximum number of directors. A director so appointed shall hold office only until the next following annual general meeting and shall not be taken into account in determining the directors who are to retire by rotation at the meeting. If not reappointed at such annual general meeting, he shall vacate office at the conclusion thereof.
All acts done by a meeting of directors, or of a committee of directors, or by a person acting as a director shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any director or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a director and had been entitled to vote."
- It is also necessary at this stage to note three provisions of the Companies Act 1985. First, section 285 provides (so far as material) that the acts of a director are valid notwithstanding any defect that may afterwards be discovered in his appointment. Second, section 366 provides (by subsection (1)) that a company must hold an annual general meeting every year, and (by subsection (3)) that not more than 15 months must elapse between one annual general meeting and the next. Third, section 372(2)(c) provides that, unless the articles provide otherwise, a proxy for a member is not entitled to vote except on a poll.
- I can now turn to the factual history. The relevant facts are these.
- The original directors of the company were three representatives of the then landlord, GMS Estates; namely, Mr Gibbon, Mr Rogers and Mr Burdon-Cooper.
- On 12 July 1991 Mr Villatte was appointed as an additional director.
- On 12 December 1991 the second annual general meeting of the company took place. It is Mr Villatte's contention that he was reappointed as a director at that meeting (as required by regulation 79), although the minutes of the meeting contain no record of that.
- On 14 August 1992 Mr Gibbon and Mr Rogers resigned as directors, and Miss Barter and Mr Michael Lloyd were appointed directors in their place.
- On 17 August 1992 Mr Burdon-Cooper resigned as a director. The board at that stage consisted of Mr Villatte (assuming that he was reappointed at the previous AGM), Miss Barter and Mr Michael Lloyd.
- 11 March 1993 was the last day on which an AGM could have been held, in compliance with section 366 (being 15 months after the AGM held on 12 December 1991). In fact, no further AGMs were held until 16 May 2001.
- On 6 April 1995 Mr Suleyman (the predecessor in title of Miss Richardson as tenant of Flat 1) was purportedly appointed a director.
- On 19 September 1996 Mr Michael Lloyd purportedly appointed Mr Christopher Lloyd as his alternate, pursuant to regulation 65.
- On 16 October 1998 Mr Suleyman purportedly resigned as a director and was purportedly replaced by Miss Richardson.
- During this period there were also a number of purported board resolutions authorising the works the subject of the disputed service charge and approving the expenditure and accounts in relation to them.
- It appears that Mr Villatte may not have attended many board meetings (or purported board meetings) from about 1995 onwards, but he was supplied with copies of the minutes of such meetings. At no time prior to his counsel's application to the Leasehold Valuation Tribunal on 27 June 2000 (an application which was made without notice) did Mr Villatte indicate that the validity of the directors' acts was challenged in any respect. He complained continually about the way in which the directors were managing the company's affairs and discharging their duties as directors, but at no stage did he suggest that they were not validly appointed and that they accordingly had no directorial duties to discharge. I shall return to this aspect later in this judgment.
- On 20 July 1999 a purported board meeting was held at which Miss Barter, as secretary of the company, was authorised to issue the application to the Leasehold Valuation Tribunal. The minutes of that meeting record that those present were Mr Christopher Lloyd (as alternate for Mr Michael Lloyd) in the chair and Miss Barter.
- On 6 October 2000 (that is to say, shortly after the Leasehold Valuation Tribunal had refused Mr Villatte leave to appeal from its decision) Messrs Trowers and Hamlins, the company's solicitors, advised the company that the directors' appointments were defective, but that their acts remained valid.
- On 16 May 2001 an extraordinary general meeting of the company was held, attended by Mr Christopher Lloyd (as proxy for Mr Michael Lloyd), a Mr Midgley (as proxy for Miss Richardson) and Miss Barter, at which it was resolved to ratify and confirm the appointment of Miss Richardson as a director and the appointment of Mr Christopher Lloyd as alternate director for Mr Michael Lloyd. It was further resolved that Miss Richardson be appointed as alternate to Mr Michael Lloyd with effect from 19 June 1996. The meeting went on to resolve to ratify all previous acts of persons purporting to act as directors of the company and all previous resolutions of purported board meetings.
- Immediately thereafter an AGM of the company was held, attended by the same persons and in the same capacities, at which it was resolved that all the directors retire by rotation and be re-elected as directors of the company.
- Finally, so far as the factual history is concerned, it is convenient to mention at this point an event which occurred after the decision of the Lands Tribunal. On 14 March 2002 an extraordinary general meeting of the company was held (the attendance being the same as at the previous extraordinary general meeting) at which it was resolved that Miss Richardson, Mr Michael Lloyd and Miss Barter be appointed directors of the company. Further resolutions were passed ratifying all previous acts and resolutions of such persons when purporting to act as directors of the company.
- I can now return to the decision of the Lands Tribunal. Before the Lands Tribunal (as before the Leasehold Valuation Tribunal) it was Mr Villatte's contention that the company has had no directors since 11 March 1993, on the footing that the then directors must be treated as having vacated office on that date, and that in consequence all subsequent acts of the purported directors (including the appointment of Mr Christopher Lloyd as an alternate director) were of no effect. It was accepted by Miss Bhaloo, counsel for the company, that all the then directors had indeed vacated office by 12 March 1993, but she disputed that the consequence was that their subsequent acts were invalid.
- The Lands Tribunal addressed this issue in paragraphs 8 to 12 of its decision as follows:
"There have been produced before this Tribunal a number of resolutions purporting to be resolutions of the Board of Directors of the Respondent, authorising the works the subject of the disputed service charges, approving the expenditure and the accounts in respect of them and finally approving the making of the application to and instructing of solicitors and counsel at the LVT. It is however agreed that these steps were taken by a Board which was not properly constituted, because the last two properly appointed directors had `vacated office' in accordance with Article 79 of Table A, which is applied to the company by its Articles of Association.
In our judgment however that fact does not invalidate any of the acts upon which the Respondent had to rely, in order to proceed with the application to the LVT. Article 92 covers the position with the following words:
`All acts done by a meeting of directors ... or a person acting as a director shall, notwithstanding that it be afterwards discovered that ... any of them ... had vacated office ... be as valid as if every such person ... had continued to be a director ...'
Mr Rifat, on the mistaken basis that this Article was identical to the Article which fell to be considered in Morris v Kanssen  AC 459, submitted that it did not apply to validate the acts of a director whose term of office had expired. That submission falls in the face of the words of the present article. Nor, as Mr Rifat suggests, can `all acts' be construed as being limited to acts which he categorises as not `fundamental'. His alternative argument that a director who has vacated office in consequence of Article 79, which uses those very words, has not vacated office within the meaning of Article 92 is equally hopeless.
The one relevant qualification to the effect of Article 92 is that the discovery of the defect which would otherwise invalidate the acts must be after the acts, so that once it is appreciated that the office has been vacated the directors' further acts are no longer validated. After the hearing before the LVT the Respondent sought advice as to the effect of its admitted failure to hold regular AGMs. By letter dated 6th October 2000 it was advised that `the appointments of all the directors are defective'. It was also given advice, contained in a bundle called bundle 5, as to how to regularise the position. Once that advice had been received, until the position was properly regularised, the Respondent was not entitled to rely on the validation of its acts by Article 92. Indeed, since it may be said to have been put on inquiry by the submission made on 27th June, it may be that it was thus disentitled from an earlier date. It seems to us however that there is no basis for suggesting that it discovered its incapacity before the application was made to the LVT, or before those acting for it before the LVT were authorised to do so, nor in our judgment was the period of the hearing before the LVT a sufficient period in which it should have completed any inquiry which the submission to the LVT on the first day of its hearing raised. We cannot infer from the fact that Mrs Barter had had to acquaint herself with some of the provisions of Table A in order to carry out her duties as Secretary to the company, that she realised that the failure to hold AGMs had the result which is now agreed.
Accordingly, we conclude that the application to the LVT was validly made on behalf of the Respondent, and that the LVT was right to entertain it and that the Appellant's sole surviving ground of appeal fails and the appeal must be dismissed."
- The Lands Tribunal went on to deal with costs.
- By virtue of section 3(4) of the Lands Tribunal Act 1949 an appeal lies to the Lands Tribunal on a point of law but, subject to that, the decision of the Lands Tribunal is final.
- On 30 November 2001 Mr Villatte issued his appellant's notice in the present appeal, in which he sought permission to appeal to the Court of Appeal. The grounds of appeal as set out in section 7 of his appellant's notice read as follows:
"1.The Leasehold Valuation Tribunal and, on appeal, the Lands Tribunal have exceeded their jurisdiction by refusing to dismiss an action instituted by an incapacitated company: the respondent company had no board of directors and was trading illegally without holding AGMs, submitting accounts for approval and appointing auditors annually.
2.The Lands Tribunal has acted in breach of the CPR and the appellant's rights to a fair hearing by refusing to hear the jurisdictional issue as a preliminary to any trial preparations, by striking out the appellant's statement of case and refusing to hear his evidence.
3.The Lands Tribunal has acted in breach of the Human Rights Act implementing Article 6(1) of the ECHR [European Convention on Human Rights] during the pre-trial preparations and at the trial hearing.
4.The Lands Tribunal has wrongly and unjustly awarded costs against the appellant on the ground that the respondent company had regularised its constitution and ratified the proceedings before the trial hearing: the whole regularisation process is a nullity."
- On 29 May 2002 an oral hearing of Mr Villatte's application for permission to appeal took place before my Lord, Lord Justice Ward. Mr Villatte was represented at that hearing by Mr Rajeev Thacker of counsel, acting pro bono. After hearing Mr Thacker's submissions, my Lord granted permission to appeal on the first of Mr Villatte's four grounds of appeal, which my Lord described as "the company point". He adjourned the application for permission in relation to the second and third grounds to be heard on notice to the company, and he refused permission to appeal on the fourth ground (costs).
- On 26 June 2002 the company filed a respondent's notice setting out additional grounds for upholding the decision of the Lands Tribunal on the issue as to whether the proceedings were authorised by the company. Those grounds are: (1) that from 1992 until 27 June 2000 the members of the company informally assented to or acquiesced in Miss Barter, Mr Michael Lloyd and Mr Villatte continuing as directors of the company, and in Mr Suleyman being a director of the company from 6 April 1995 until 16 October 1998, and to the validity of their acts (including the taking of the present proceedings); (2) that the resolutions passed on 16 May 2001 were effective to ratify all previous acts of such persons as directors; and (3) subsequent ratification at the EGM on 14 March 2002.
- Hence there are before us today, first, Mr Villatte's appeal on the first of his four grounds (the only ground in respect of which he has permission to appeal) and, second, his application for permission to appeal on his second and third grounds. The application for permission is listed, as I understand it, on the basis that the substantive appeal on those grounds will follow if permission is granted.
- Mr Villatte, as I have said, appears in person, although he was until very recently represented by counsel (not Mr Thacker). The company is represented by Mr David Mabb QC.
- As I understand it, on Monday of this week, 15 October 2002, Mr Villatte notified the Court of Appeal that he would be acting in person, and he sought an adjournment for the purpose of submitting various documents and instructing leading counsel. That is an application which he has repeated orally before us today. We refused that application for the reasons given by my Lord, Lord Justice Ward, in his judgment. We accordingly proceeded to hear the appeal and the application for permission.
- In support of his first ground of appeal, Mr Villatte has repeated a number of his criticisms as to the way in which the affairs of the company have been managed. He makes those criticisms on the basis that the directors were not properly discharging their duties as directors and on the basis that he was himself a director of the company. He describes the renovation project as "preposterous" and the company as "a farce". He submits that there can be no acquiescence or consent to a lack of jurisdiction and he submits that he was the victim of a denial of justice in so far as the Leasehold Valuation Tribunal refused to deal with the jurisdictional point properly. He submits that both tribunals were under a duty to ensure that the company had the right to bring the application and that they should have dealt with that issue immediately and as a preliminary issue. In support of this submission, he relies on a passage from the judgment of Kerr LJ in a decision of this Court reported at  BCLC p.359, where Kerr LJ says that an issue as to the authority of the plaintiffs to bring the proceedings is one which must be raised at the outset "and it must therefore be dealt with at the outset". Mr Villatte submits that the Lands Tribunal did not operate according to law in making the "unless" order in relation to the filing of witness statements and in subsequently adhering to that order.
- Mr Villatte also relies on the written skeleton argument which was submitted by Mr Thacker in support of his partially successful application for permission to appeal, and I must therefore refer to the submissions contained in that skeleton argument.
- In support of the first ground of appeal, Mr Villatte submits (via Mr Thacker's skeleton argument) that, although regulation 92 is in wider terms than the article considered in Morris v Kanssen, nevertheless it extends only to cases where there has been what he describes as a "genuine administrative failure". He submits that it cannot cover cases where, as here, there has been a complete failure to follow the basics of running a company. He further submits that the acts of the purported directors have not been effectively ratified. Not only was the purported ratification unspecific as to the particular acts which were to be ratified, but, he submits, the two "proxies" were not entitled to vote on the resolutions since, under section 372(2)(c) of the 1985 Act quoted earlier, a proxy is not entitled to vote except on a poll unless the articles of the company otherwise provide, and here they do not do so. Mr Villatte further submits that the company has been on notice of the procedural defects on which he relies since about 1996, in that he has repeatedly complained of the informal and incompetent way in which the company has organised its affairs. Accordingly, he submits, the Lands Tribunal was wrong to conclude that the company had not had a sufficient opportunity to rectify the defects.
- As to procedural unfairness, his second and third grounds of appeal, Mr Villatte submits (again via Mr Thacker's skeleton argument, as expanded by him in his oral submissions this morning) that he was given no opportunity to comment on the propriety of the "unless" order made on 7 September 2001, and that that was thoroughly unfair and in breach of his human rights. He submits that in any event the decision to make an "unless" order was disproportionate, and that the Lands Tribunal ought to have addressed the issue whether it was possible to have a fair trial. He further submits that the Lands Tribunal failed to deal with the parties in an even-handed manner, in that, despite striking out the substance of his case for failure to comply with the "unless" order, the Lands Tribunal permitted the company to adduce evidence of ratification shortly before and at the hearing. He points out that the signed minutes of the extraordinary general meeting held on 16 May 2001 were not produced until the day of the hearing.
- Mr Villatte has also put before us at the commencement of this hearing a 67-page document headed "Statement of Case", which we have also considered over the short adjournment.
- In opposition to the first ground of appeal, Mr Mabb, in his written skeleton argument, submits, in effect, that the Lands Tribunal's conclusion on the issue as to whether the proceedings were authorised by the company was right for the reasons it gave. He submits that regulation 92 governs the situation and has the effect of validating the acts of those who were initially validly appointed but who are to be treated as having subsequently "vacated office" by virtue of the application of the principle laid down in Re Consolidated Nickel Mines Ltd  1 Ch 883 (see also Re New Cedos Engineering Co Ltd  1 BCLC 797 at p.810e-g per Oliver J). He submits that it will also apply to the acts of Mr Suleyman and to those of Mr Christopher Lloyd, who were appointed (Mr Suleyman as a director and Mr Christopher Lloyd as an alternate director) by former directors after those former directors had "vacated office".
- Following the respondent's notice, Mr Mabb further relies on assent and/or acquiescence on the part of Mr Villatte and ratification. In the context of assent/acquiescence, Mr Mabb submits that the equitable doctrine of laches applies, with the consequence that Mr Villatte is in effect barred by delay from taking a point as to the validity of the appointment of directors.
- I do not, for my part, find it necessary to have recourse to regulation 92 in order to resolve the issue which arises on Mr Villatte's first ground of appeal. Not only is Mr Villatte's case as to the validity of the directors' appointment wholly devoid of merit, but, even if one were to assume in his favour that, on purely technical grounds, it may have some mileage in it, it must nevertheless fail, in my judgment, for two main reasons.
- In the first place, although as a matter of form the proceedings have been launched in the name of the company, the dispute which fell to be resolved by the Leasehold Valuation Tribunal, and which underlies this appeal, is in substance a dispute between Mr Villatte on the one hand and the tenants of the other three flats in the property on the other. By the present proceedings, the tenants of the other three flats (Miss Richardson, Mr Michael Lloyd and Miss Barter) seek to enforce Mr Villatte's obligation to pay his share of the service charges. As it was put in the statement of reasons submitted with the original application:
"Given that the Board has exercised its best endeavours in the interests of the building as a whole, the Board does not see why individual shareholders should be prejudiced by the non-payment of their service charge contribution by any one tenant."
- I am bound to say, nor do I.
- Given that section 19(2A) of the Landlord and Tenant Act 1985 enables a tenant by whom a service charge is payable to apply to the Leasehold Valuation Tribunal for a determination as to the reasonableness of the service charge, I see no reason why, should it be necessary to do so, the proceedings could not as a matter of form be reconstituted as an application by the tenants of Flats 1, 3 and 4 against the tenant of Flat 2, with the company being added as an additional, and nominal, respondent. That would reflect the real nature of the dispute. Whereas to allow the proceedings to founder on a technical ground related to the internal workings of the management company would, in the circumstances, be to countenance a triumph of form over substance.
- But I do not find it necessary to resort to such procedural niceties in order to achieve substantial justice in this case, since in my judgment the equitable doctrine of laches applies, so as to prevent Mr Villatte from challenging the validity of the directors' appointments in these proceedings.
- In Re Bailey, Hay & Co Ltd  1 WLR 1357, an associated company of a company purportedly in voluntary liquidation sought to dispute the validity of the resolution for winding up. Brightman J held that it was debarred from doing so by laches. At p.1367D he said this:
"Secondly, the fertilizer company [the associated company] is, in my view, barred by laches from now disputing that the company is in liquidation. The fertilizer company is setting up a positive case against the liquidator, a case which inevitably involves a claim that the liquidator has no status whatever and is wrongly in possession of the company's assets. In my judgment, the equitable doctrine of laches is applicable to that situation just as if the fertilizer company were seeking a remedy against the liquidator.
It will be sufficient for present purposes to cite a passage from the speech of Lord Blackburn in Erlanger v New Sombrero Phosphate Co (1878) 3 App Cast 1218, 1279:
`In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 239, it is said: "The doctrine of laches in courts of equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct done that which might fairly be regarded as equivalent to a waiver of it, or where, by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material. But in every case if an argument against relief which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy." I have looked in vain for any authority which gives a more distinct and definite rule than this; and I think, from the nature of the inquiry, it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it. The determination of such a question must largely depend on the turn of mind of those who have to decide, and must therefore be subject to uncertainty; but that, I think, is inherent in the nature of the inquiry.'
There is no period of limitation which applies to proceedings to declare invalid a purported resolution to wind up. Mr Millett concedes, and in my view rightly concedes, that there must be some limit of time which would bar those proceedings; in other words, that the doctrine of laches is relevant in such a case. It does seem to me that after this period of time it would be "practically unjust" to the creditors of the company and to Mr Tickler [the liquidator] to accede to the sort of relief which is sought here, assuming that I am wrong in the conclusion which I earlier expressed that the three corporators have in truth assented to the resolution. Additionally, therefore, to the first ground of my decision, I find also that the declaration sought by the fertilizer company is in any event barred by their laches."
- I return to the facts of the instant case. Not only did Mr Villatte not challenge the validity of the appointments of the other directors at any time prior to the application made on his behalf to the Leasehold Valuation Tribunal on 27 June 2000 (an application made without notice and made in the face of the terms of the order made on the pre-trial review, to which I referred earlier), but he held himself out to his co-directors as being himself a director (that is to say, a validly appointed director) of the company. Thus:
•On 2 April 1996 Mr Villatte wrote to Miss Barter saying that he would like to peruse the company's papers and correspondence "before making any decisions as a director".
•Further, on 15 July 1996 Mr Villatte wrote to Miss Barter saying:
"I am writing to state my official position on the matters for which you are seeking the immediate approval of the other directors of the management company. ...
It is unthinkable that you should ignore the limitations of your directorial powers ...
... my entitlements as a shareholder and a director of the freeholding company. ... Mr Suleyman, the fourth and last lessee, was not a director at the time ..."
•Then on 10 October 1997 Mr Villatte wrote to Miss Barter saying:
"Finally, it is not worth dwelling at length on the powers of any director of the freeholding company to attend personally to normal management duties and take action as appropriate to take care of the building ..."
- In all the circumstances of the instant case, it is plain to me that it would be not merely "practically unjust" but a gross injustice to the other tenants to allow Mr Villatte to challenge the validity of the directors' appointments in these proceedings.
- That conclusion makes it unnecessary for me to consider questions of ratification.
- For those reasons I would reject the first of Mr Villatte's grounds of appeal.
- I turn, then, to Mr Villatte's application for permission to appeal on his second and third grounds relating to procedural unfairness in the Lands Tribunal.
- I confess that I can see no substance whatever in these grounds of appeal. On the contrary, the decisions of both the tribunals (that is to say, the Leasehold Valuation Tribunal and the Lands Tribunal) on the procedural issues which arose before them seem to me to have been eminently justified. Moreover, the decisions of the Lands Tribunal which are sought to be challenged by these grounds of appeal were case management decisions, with which this Court will only rarely interfere. I can see no possible justification for interfering with those decisions in this case. Mr Villatte appears to have proceeded on the footing that he could ignore the directions of the respective tribunals as to the filing of witness statements and the refusal of the Lands Tribunal to accede to his application for the hearing of a preliminary issue. The Lands Tribunal was in my judgment amply justified in describing Mr Villatte's failure to comply with its directions as "contumelious". A litigant who flouts the tribunal's directions does so at his peril. I would refuse permission to appeal on the second and third grounds.
- Accordingly, I would dismiss this appeal.
LORD JUSTICE MUMMERY:
- I agree.
LORD JUSTICE WARD:
- I also agree.
Order: application for permission to appeal on other grounds dismissed and appeal dismissed with costs assessed on the standard basis.
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