Decision Nº LRX 100 2013. Upper Tribunal (Lands Chamber), 19-11-2014
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Nicholas Huskinson |
| Date | 19 November 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 100 2013 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0510 (LC)
LT Case Number: LRX/100/2013
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – SERVICE CHARGES – works to upgrade fire alarm system – Leasehold Valuation Tribunal finding landlord contractually entitled to charge for such works (subject to any implied term preventing this) – LVT also finding landlord had complied with consultation requirements and that the costs were reasonably incurred upon works to a reasonable standard (so that there was no impediment under Landlord and Tenant Act 1985 as amended in making the charge) – question of whether LVT was correct in implying a further term limiting the sums chargeable to amounts which were reasonable for the tenants to pay and to items which (notwithstanding a contractual entitlement for the landlord to charge for such items through the service charge) it was reasonable to expect the tenants to pay for
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
MIDLAND RENT ASSESSMENT PANEL
BETWEEN:
THE ANCHOR TRUST Appellant
andMR TOM CORBETT (and Others) Respondents
Re: Flats at Elliott Gardens,
Lickey Road,
Rednal,
West Midlands,
B45 8US
Before His Honour Judge Huskinson
Appeal determined upon written representations
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Finchbourne v Rodrigues [1976] 3 All E.R. 581
The Moorcock (1889) 14 PD 64 at 68
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This is an appeal from the decision of the Leasehold Valuation Tribunal (LVT) dated 9 May 2013 upon the question of whether the appellant was entitled to charge the respondents, through the service charge provisions of their tenancy agreements, with the costs of upgrading the fire alarm system at the development at Elliott Gardens.
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The development is a retirement complex comprising 36 residential units, namely 28 flats and 8 bungalows. It is an older style development dating it seems from the 1960s. The development was built to meet the special needs of retired people. A typical tenancy agreement contemplated that the occupants may be people with low or no income. The tenants all hold assured monthly tenancies with a requirement to pay rent and pay service charge.
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In August 2010 the appellant contacted the tenants (including the respondents, who comprise the tenants of 28 of the units) to advise that the fire alarms in the development did not comply with the latest standards and that they wished to upgrade the system at an estimated cost of just over £50,000. The appellant made clear it was not proposing to charge all the money at once but instead intended to spread the cost among the tenants over the following 15 years, such that this would result in an extra service charge of £7.77 per month for each unit. The work was carried out and the total cost rose to £57,311 resulting in a proposed charge of £8.85 per month for each unit for the next 15 years. The tenants objected and made an application under section 27A of the Landlord and Tenant Act 1985 as amended to the LVT to determine whether the amount requested to be paid as service charge by the appellant was reasonable in accordance with legal requirements.
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There were before the LVT copy agreements for six of the flats. The LVT observed that there were minor differences in the wording of some of the agreements but the substance was similar. The LVT continued in paragraphs 11, 12 and 13 as follows:
“…Clause 3(b) of the agreement says that the monthly charge is made up of three elements, rent, service charge and rates although the present application is only in respect of this one item of the service charge.
The paragraph covering service charges says:
“This is your contribution towards the costs we incur, or expect to incur, providing services for your home. These costs may be incurred before, during or after the month we are charging you for. An explanation of these charges is attached. They include a contribution of a reasonable amount to a sinking fund to cover future costs.
We review the service charge each year according to the income we received and the costs we incurred during the previous 12 months. We may also take account of any reasonable known or expected costs for the next 12 months. When we review the service charge, any variation in the cost of any of the services provided to your home will be divided equally between you and other tenants receiving the services in question and living in similar Anchor homes…(our italics in both paragraphs).”
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The tenancy agreement also contained a schedule of services which stated:
“Not all our schemes have all these services – the range of services provided will depend upon the nature of each particular scheme.”
Within this schedule of services there was included in paragraph 5 under the heading “Provision for renewal of equipment.” The following matters namely:
“Fire detection alarm and smoke dispersal system
Fire-fighting equipment.”
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Various objections were raised by the respondents to the making of the proposed charge by the appellant (i.e. the charge phased over 15 years) in respect of the fire alarm works. These objections included arguments that the new alarm system was unnecessary as the existing system had been upgraded in 2009; that the appellant had failed properly to consult the tenants regarding the proposed works; and that the works represented poor value for money.
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In response to these objections the appellant stated that fire safety standards had increased; that they were now covered by a 2005 Order; and that a fire risk assessment had been carried out in 2010 when it was found that the previous fire detection equipment at Elliott Gardens did not comply with the latest statutory requirements such that a number of areas needed upgrading including the fire detection and warning system, smoke detectors in common areas, emergency lighting and illumination to show alarm points and other matters. The appellant contended that as a responsible landlord and a housing association it had no alternative but to comply with the report’s recommendations and upgrade the system. As regards consultation the appellant said that it had fully complied with all the relevant requirements of section 20 of the 1985 Act. As regards costs the appellant said that the work had been advertised and put out to tender.
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The LVT analysed the question of whether the proposed service charges for the fire alarm system were recoverable under three headings, namely: were the charges recoverable as a matter of contractual liability upon the proper construction of the tenancy agreements; were the charges recoverable having regard to the statutory limitations upon and restrictions regarding the levying of service charges contained in the Landlord and Tenant Act 1985; and whether there was some common law restriction upon liability. The LVT concluded on the first question that (subject to the question of an implied term, see below) the appellant was contractually entitled to make the charges. As regards the second point the LVT concluded under section 19 of the Act that the work was “reasonably incurred” (I take this as a finding that the costs were reasonably incurred within section 19(1)(a)); that the works were carried out to a reasonable standard; and that the appellant had carried out full consultation with the tenants in accordance with statutory requirements. The LVT found (in reliance upon the appellant’s specialist report) that the fire alarm system needed renewal and improvement. However these findings were expressed by the LVT to be subject to the fact that the word “reasonable” appears twice in the relevant provisions of the tenancy agreement (see the words in italics which the LVT emphasised in the passage set out in paragraph 4 above).
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The LVT did not find that the proposed charge for the fire alarm works contravened the express contractual provisions of the tenancy agreement – i.e. the LVT did not find that either of the words “reasonable” which were expressly included in the relevant clause of the tenancy agreement (see paragraph 4 above) prevented recovery of the proposed service charge for the fire alarm works. However the existence of these two words “reasonable” appears to have...
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