Brent Borough Council v Shulem B Association Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 29 June 2011 |
| Neutral Citation | [2011] EWHC 1663 (Ch) |
| Docket Number | Case No: Appeal no 2011/0401 |
| Court | Chancery Division |
| Date | 29 June 2011 |
[2011] EWHC 1663 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Morgan
Case No: Appeal no 2011/0401
Ms Marie-Claire Bleasdale (instructed by Bude Nathan Iwanier) for the Appellant
Mr Nicholas Grundy (instructed by Legal Services London Borough of Brent) for the Respondent
Hearing dates: 14 th and 15 th June 2011
Introduction
This is an appeal against the decision of Judge Cowell in the Central London County Court. The appeal raises issues about the degree of formality which is required as to a lessor's demand for a service charge under a lease and further issues as to the construction of section 20B of the Landlord and Tenant Act 1985, which imposes a time limit within which a lessor can serve a valid demand for a service charge. The issues arising in relation to section 20B of the 1985 Act have been the subject of a number of decisions in the County Court and in various tribunals but those decisions are not wholly consistent.
Miss Bleasdale appeared on behalf of the appellant, Shulem B Association Ltd ("Shulem") and Mr Grundy appeared on behalf of the respondent, the London Borough of Brent ("Brent").
The facts
Brent is the freehold owner of five blocks of flats at Gloucester Close, Stonebridge Park, Willesden, London NW10 8EG. These five blocks form the whole or part of a residential estate at Gloucester Park. The blocks are of very different sizes. The first block comprises flats 1 and 2; the second block comprises flats 3 and 4; the third block comprises flats 5 to 37; the fourth block comprises flats 38 to 41 and the fifth block comprises flats 42 to 47.
Shulem is the lessee, under fifteen separate leases, of fifteen of the flats at Gloucester Close. It is not necessary to give the individual numbers of the flats. Shulem is the lessee of one flat in the first block, one flat in the second block, eleven flats in the third block, no flats in the fourth block and two flats in the fifth block.
I have been shown the lease of flat 1 and the parties are agreed that I can proceed on the basis that all fifteen leases are, so far as material, in the same terms as the lease of flat 1. The leases were, when granted, under-leases but it is accepted that the reversion on the under-leases is now vested in Brent as freeholder and the terms of the leases are now vested in Shulem.
The lease of flat 1 is dated 26 th November 1974 and demised flat 1 for a term of 90 years less 10 days from the 25 th August 1956. The lease reserved a rent of £50, payable by quarterly instalments on the usual quarter days. The lease also reserved by way of further rent a sum which was to be a fair proportion of the monies expended by the lessor in insuring the building of which the demised premises formed a part. The lease reserved, again by way of further rent, a further sum which was to be a fair proportion of the cost and expense of cleaning and lighting the entrance hall and the staircase in, it appears, the building of which the demised premises formed a part. The sums payable in relation to insurance and cleaning and lighting as described above were payable once a year on demand.
By clause 2 (6), the lessee covenanted with the lessor in the following terms:
"At all times during the said term to pay and contribute a rateable or due proportion of the expenses of making, repairing, maintaining rebuilding and cleansing and lighting the exterior of the flat and the building of which it forms part and including the roof walls timbers sewers drains pipes watercourses cisterns gutters gas water and electric pipes or installations and entrances passages staircases pavements manholes roads party walls party structures fences and the land garden and pathways coloured brown on the said plan and other conveniences which shall belong to or serve or be used for the flat hereby demised and the said building such proportion in case of difference to be settled by the Surveyor for the time being of the Lessor whose decision shall be final and to be paid to the Lessor on demand".
Clause 2 (6) refers to various expenses. The expenses must relate to the flat and the building of which it forms part together with the services and facilities etc. which relate to the flat or such building. Accordingly, whilst the repair of the roof of the building in which the individual flat is to be found is within clause 2 (6) of the lease of that flat, clause 2 (6) does not require the lessee of such a flat to pay towards the cost of repairing the roof of another building on the estate.
Clause 2 (6) is an early form of service charge clause. A typical service charge clause in a modern lease of a flat would be more elaborate. These days, one expects a service charge clause to contain a detailed, often lengthy, list of service charge items and to contain detailed procedural provisions as to the collection of service charge contributions from the lessee. It is now typical for service charges to be computed by reference to a financial year, for a lessor to provide an estimate of likely costs to be incurred in the next financial year, for the lessee to be obliged to contribute towards the estimated expenditure, even in advance of the expenditure being incurred by the lessor and then for the lessor to prepare a final account following the end of the relevant financial year and to make adjustments depending upon whether the actual costs incurred exceed or are less than the estimated costs. These matters are not of any real relevance to the true construction of clause 2 (6) of the lease but the typical form of a service charge clause in a modern lease may form part of the background to the interpretation of the statutory provisions which have been enacted to regulate a lessor's right of recovery of a service charge from a lessee.
Clause 2 (6) in the present case does not require the expenses of the lessor to be computed by reference to a financial year. Clause 2 (6) does not entitle the lessor to prepare an estimate of future expenditure nor oblige the lessee to make a contribution on account of that estimated expenditure. When clause 2 (6) refers to "the expenses", in my judgment, this requires the lessor to have actually incurred the expense in question. Following such expense being incurred by the lessor, the lessor is entitled to serve a demand under clause 2 (6) requiring the lessee to pay the appropriate proportion of the expense in question. Following the service of a valid demand under clause 2 (6), the lessee is obliged to pay the sum which is due under clause 2 (6). There is no limitation in clause 2 (6) as to the period of time which must elapse between successive demands by a lessor. The lessor is therefore entitled to raise a fresh demand under clause 2 (6) every time that the lessor has incurred an expense and wishes to recover a proportion of it from a lessee. No doubt, for reasons of convenience, a lessor may choose to calculate the relevant expenses at regular intervals and the lessor may even choose to calculate expenses by reference to a financial year.
In around 2003, the lessor in the present case took the view that extensive works were required to the blocks at Gloucester Close. The lessor instructed surveyors, Sanderson Weatherall, to act on its behalf. The surveyors drew up a specification of works to be carried out. In a subsequent report on tenders which I have seen, the works in question appear to have been broken down so that the works to the five blocks are separately described. The lessor invited tenders for the intended works and received four tenders in response. The tender sum in each case was a global sum for the totality of the work intended to be carried out to the five blocks. In February 2004, the lessor's surveyor prepared a tender report and recommended that a building contract be entered into with the lowest tenderer.
The works in question amounted to "qualifying works" within section 20 of the Landlord and Tenant Act 1985, as amended. I will refer to section 20 of the 1985 Act later in this judgment. The lessor then sought to comply with the consultation requirements imposed by section 20. On 12 th March 2004, the lessor wrote a standard form of letter to each lessee who was liable to contribute by way of service charge. I have been shown the form of letter addressed to the lessee of flat 1, which is typical of the letters which were sent. The letter is headed "Notice of Intended Works" and refers to section 20 of the 1985 Act. The notice informs the addressee that the lessor intends to carry out works "to your property". The intended works were described as works of external decoration and window replacement at Gloucester Close Estate. The letter then refers to three estimates which had been provided by three of the tendering contractors. The figures given are the global figures for the work to the five blocks on the estate. The letter stated that the lessor intended to accept the tender of the contractor which had tendered the lowest sum. The letter continued in these terms:
"When the works are completed you will be required to pay a proportion of the cost of the works. It is estimated that your proportion of the cost will be £19,359.81. This includes the charge for consultancy and management costs. If unforeseen work does arise which will raise the above estimate by more than 15% then you will informed. A breakdown of estimated costs is shown on the attached schedule.
The invoice for the estimated cost of the works will be raised to your service charge account once the works have been completed. The final invoice will be raised on receipt of actual cost of the works, and any adjustment...
To continue reading
Request your trial
-
Mark Skelton v Dbs Homes (Kings Hill) Ltd
...20B that the tenant has received the information that his landlord proposes to make a demand. As Morgan J held in London Borough of Brent v Shulem B Association Ltd [2011] EWHC 1663, [53], there must be a valid demand for payment of the service charge. In that case, the landlord had served ......
-
Decision Nº LRX 86 2012. Upper Tribunal (Lands Chamber), 21-10-2013
...Forcelux v Sweetman [2001] 2 EGLR 173 Johnson v County Bideford Ltd [2013] L&TR 18 London Borough of Brent v Shulem B Association Ltd [2011] EWHC 1663 (Ch) Weston v Ian Frances as liquidator of Axiom Workshops Ltd (in liquidation) (LON/00AG/LSC/2011/0470) Solitaire Property Management Compa......
-
No. 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd
...position in the present case: see [23] above. 25 I now turn to authority. In Brent London Borough Council v Shulem B Association Ltd [2011] EWHC 1663 (Ch), [2011] 1 WLR 3014, (“ Shulem”) one of the matters which Morgan J had to consider was whether a letter dated 23 February 2006 was a “d......
-
Decision Nº LRX 16 2013. Upper Tribunal (Lands Chamber), 28-05-2014
...[2005] LRX/26/2005 Levitt v London Borough of Camden [2011] UKUT 336 (LC) London Borough of Brent v Shulem B Association Limited [2011] EWHC 1663 (Ch) Gilje v Charlgrove [2000] 3 EGLR 89 Longmint v Marcus [2004] 3 EGLR 171 Joseph v Joseph [1967] Ch 78 DECISION The lease of a dwelling provid......
-
Did You See? You May Have Missed' No. 1 West India Quay (Residential) Ltd V East Tower Apartments Ltd [2021] EWCA Civ 1119
...the service charge had the period not expired. The Court expressly approved Brent London Borough Council v Shulem B Association Ltd [2011] EWHC 1663 (Ch); [2011] 1 WLR 3014 and its own previous decision in Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139; [2018] 1 W.L.R. 362. The C......
-
Did You See? You May Have Missed' No. 1 West India Quay (Residential) Ltd V East Tower Apartments Ltd [2021] EWCA Civ 1119
...the service charge had the period not expired. The Court expressly approved Brent London Borough Council v Shulem B Association Ltd [2011] EWHC 1663 (Ch); [2011] 1 WLR 3014 and its own previous decision in Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139; [2018] 1 W.L.R. 362. The C......