Decision Nº LRA 148 2013. Upper Tribunal (Lands Chamber), 03-06-2015 , [2015] UKUT 0288 (LC)
| Jurisdiction | UK Non-devolved |
| Judge | Sir Keith Lindblom, President |
| Neutral Citation | [2015] UKUT 0288 (LC) |
| Date | 03 June 2015 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 148 2013 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2015] UKUT 0288 (LC)
UTLC Case Number: LRA/148/2013
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LEASEHOLD ENFRANCHISEMENT – Flat – Leasehold Reform, Housing and Urban Development Act 1993 – grant of new lease – section 57(6) – modification of term of existing lease – lessee’s liability to service charge contribution on fixed percentage basis
IN THE MATTER OF AN APPEAL AGAINST A DECISION
OF THE FIRST-TIER TRIBUNAL (PROPERTY CHAMBER)
and
THE CROWN ESTATE COMMISSIONERS
Respondents
Re: Flat 124A
4 Whitehall Court
London S.W.1
Before: The President, Sir Keith Lindblom
Sitting at: Upper Tribunal (Lands Chamber), Royal Court of Justice, Strand,
London WC2A 2LL
on 28 January 2015
The appellant in person
Mr Jonathan Upton, instructed by Pemberton Greenish LLP, for the respondents
The following cases were referred to in this decision:
Morgan v Fletcher [2009] UKUT 186 (LC)
Rossman and others v Crown Estate Commissioners, LON/00BK/LVL/2011/0013, unreported
Kilmartin SCI (Hutton House) Limited v Safeway Stores Plc [2006] EWHC 60 (Ch)
Lucie M. v Worcestershire County Council and Evans [2002] EWHC 1292 (Admin)
Havering London Borough Council v MacDonald [2012] UKUT 1454 (LC)
Howard de Walden v Aggio [2009] 1 A.C. 39
Gordon v Church Commissioners for England LRA/110/2006, 25 May 2007, unreported
Director General of Fair Trading v First National Bank [2001] UKHL 52
Davies v Howard de Walden Estates Ltd., 14 October 1998, unreported
Cadogan v Chelsea Properties Ltd., 25 June 2008, unreported
Waitt v Morris [1994] 2 E.G.L.R. 224
Burchell v Raj Properties Ltd. [2013] UKUT 0443 (LC)
R. (on the application of Khatun) v Newham London Borough Council [2005] Q.B. 37
Introduction
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The main issue in this appeal is whether, under section 57 of the Leasehold Reform, Housing and Urban Development Act 1993, the term of an existing lease which apportions the lessee’s liability to a service charge contribution on a fixed percentage basis ought to have been modified in his new lease to what he contends would be a fair proportion based on the floor space of his flat, given that the aggregate of service charge contributions for which the lessees are liable is now well in excess of 100% of expenditure.
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The appellant, Mr Michael Rossman, is the lessee of Flat 124A at 4 Whitehall Court, London S.W.1. The respondents, the Crown Estate Commissioners, are the freehold owners of the building. Mr Rossman appeals against the decision of the First-tier Tribunal (Property Chamber), dated 23 September 2013, by which it decided the terms of acquisition of a new lease of Flat 124A under section 48(1) of the 1993 Act.
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Permission to appeal against the First-tier Tribunal’s decision was granted by the Deputy President on 26 February 2014.
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At the hearing Mr Rossman presented his appeal himself. The Crown Estate Commissioners were represented by Mr Jonathan Upton.
Section 57 of the 1993 Act
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Chapter II of Part I of the 1993 Act gives the tenant of a flat the right, subject to paying a premium, to be granted a new lease of the flat in substitution for the existing lease, for a term expiring 90 years after the term date of the existing lease. Section 57, “Terms on which new lease is to be granted”, provides:
“(1) Subject to the provisions of this Chapter (and in particular to the provisions as to rent and duration contained in section 56(1)), the new lease to be granted to a tenant under section 56 shall be a lease on the same terms as those of the existing lease, as they apply on the relevant date, but with such modifications as may be required or appropriate to take account –
(a) of the omission from the new lease of property included in the existing lease but not comprised in the flat;
(b) of alterations made to the property demised since the grant of the existing lease; or
(c) in a case where the existing lease derives (in accordance with section 7(6) as it applies in accordance with section 39(3)) from more than one separate leases, of their combined effect and of the differences (if any) in their terms.
…
(6) Subsections (1) to (5) shall have effect subject to any agreement between the landlord and tenant as to the terms of the new lease or any agreement collateral thereto; and either of them may require that for the purposes of the new lease any term of the existing lease shall be excluded or modified in so far as –
(a) it is necessary to do so in order to remedy a defect in the existing lease; or
(b) it would be unreasonable in the circumstances to include, or include without modification, the term in question in view of changes occurring since the date of commencement of the existing lease which affect the suitability on the relevant date of the provisions of that lease.”
The facts
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The essential facts are set out in the Crown Estate Commissioners’ statement of case. They are not in dispute.
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4 Whitehall Court is one of two blocks on the south side of a late Victorian development of several buildings overlooking the River Thames in Westminster. The buildings in the development now contain both residential accommodation and commercial uses. They have a basement, a ground floor, an upper ground floor and seven floors above, and further accommodation in towers and within the roof. Originally they contained serviced apartments, with communal facilities. In the 1960s and 70s many of the rooms and suites in the buildings were converted into self-contained flats and sold on long leases at a premium, with a ground rent and service charge. Initially, the aggregate of the fixed percentage service charge contributions amounted to 100%. Neither party to this appeal knows how the fixed percentages were calculated. Other space in the development, including the towers, was later adapted to provide more flats. These were also sold on long leases, with a ground rent and service charge. Some of the flats have since been combined to form larger dwellings, others re-arranged or sub-divided or enlarged to incorporate areas formerly within the common parts, sometimes – though not always – with an adjustment of the service charge contributions payable by the lessees.
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As I have said, the freehold of the building is now owned by the Crown Estate Commissioners. The intermediate landlord is Whitehall Court (Investments) Ltd., under a headlease dated 12 May 1987, made between (1) the Crown Estate Commissioners and (2) Whitehall Court (Holdings) Ltd. for a term from 5 January 1981 to 4 April 2086. The headlease was assigned to Whitehall Court (Investments) Ltd., which is a company associated with Whitehall Court (Holdings) Ltd., in September 1989. Whitehall Court (Investments) Ltd. is responsible for providing the services in the building, and it collects the service charge.
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Flat 124A is one of 115 flats at Whitehall Court now let on long leases. It was originally demised by an underlease dated 14 February 1969, made between (1) Clabon Developments Ltd. as “the Lessors”, (2) Molton Builders Ltd. as “the Lessees”, and (3) Whitehall Court (Holdings) Ltd. as “the Managers”, for a term of 61 years beginning on 24 December 1967. Clause 3(A) of the 1969 lease provided:
“The Lessees HEREBY COVENANT with the Managers that they the Lessees will in manner hereinafter provided pay to the Managers 0.8 per centum (hereinafter called “the Contribution”) of the reasonable costs and expenses incurred by the Managers in compliance with their obligations under Clause 5 hereof together with all other costs and expenses incurred in the management of the building and other … property of which the Flat forms a part (hereinafter called “the Expenditure”)”.
Clause 3(B) provided that the contribution had been “pre-estimated” at £248 per annum. Clause 5 provided for the services which were to be performed by Whitehall Court (Holdings) Ltd.. By a deed of re-grant and variation dated 4 August 1989, made between (1) Whitehall Court (Holdings) Ltd. as “the Lessors” and (2) Glen Richard Moreno and Cheryl Eschbach Moreno as “the Lessees”, Flat 124A was demised for a term of 99 years from 25 March 1987 on terms similar to those of the 1969 lease. Under...
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