Decision Nº LRX 121 2011. Upper Tribunal (Lands Chamber), 01-10-2012
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Judge Gerald |
| Date | 01 October 2012 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 121 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2012] UKUT 339 (LC)
UTLC Case Number: LRX/121/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charge – “qualifying long term agreement” – sections 20 and 20ZA Landlord and Tenant Act 1985
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF A
LEASEHOLD VALUATION TRIBUNAL FOR THE LONDON
RENT ASSESSMENT PANEL
BETWEEN:
and
GLS PROPERTY MANAGEMENT LIMITED Respondent
Re: Block of Flats,
Poynders Court,
Poynders Road,
London SW4 8NL
Determination on written representations
Sitting at:
© CROWN COPYRIGHT 2012
The following cases are referred to in this decision:Paddington Walk Management Limited v The Governors of Peabody Trust [2010] L&TR 6
London Borough of Hammersmith & Fulham v Monk [1992] 1 All ER 1
The following cases were cited but not referred to in this decision:
Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896
Daejan Investments Limited v Benson [2011] EWCA Civ 38; [2011] 1 WLR 2330
Majorstake Limited V Curtis [2008] UKHL 10; [2008] 1 AC 787
Paddington Basin Developments v West End Quay [2010] EWHC 833; [2010] 1 WLR 2735
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The landlord-Appellant appeals against the 4th February 2011 decision (the “Decision”) of the Leasehold Valuation Tribunal (the “LVT”) that the 13th September 2005 management agreement (“Management Agreement”) it had entered into with Bells Commercial Limited (“Bells”) to manage the subject premises is a “qualifying long term agreement” within the meaning of sections 20ZA(3) of the Landlord and Tenant Act 1985 (“the 1985 Act”).
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On 20th October 2011, the LVT having refused permission to appeal, the President of the Upper Tribunal (Lands Chamber) granted permission to appeal because “there is a realistic prospect of success, and the issue is potentially of wide implication”. It was ordered that the appeal be by way of review only and by way of written submissions which have been filed by both parties.
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There are limitations on the recovery of costs from tenants via service charges where a “qualifying long term agreement” has been entered into unless the landlord has complied with the certain consultation requirements or those requirements have been dispensed with: section 20 of the 1985 Act.
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A “qualifying long term agreement” (“QLTA”) “means … an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than 12 months” section 20ZA(3) of the 1985 Act. In this case, the LVT applied the statutory cap on the recovery of costs because the landlord had not complied with the consultation provisions before entering into the Management Agreement.
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In paragraph 8 of its Decision, the LVT summarised the relevant terms of the Management Agreement thus:
“8. … The fees under the agreement are £175 per annum per unit plus VAT and this totals £5,000 plus VAT. Clause 10.9 states that “Fees would be reviewable after a two year period and thereafter annually, subject to there being no changes in relevant legislation”. The agreement does not specify the period of the agreement. However, it does state in clause 12.1 that “Either party can terminate this Agreement on three month’s written notice”.
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The reasoning of the LVT is to be found in paragraph 22 of its Decision:
“22. The main issue for the Tribunal to determine is whether or not the management agreement is a “Qualifying Long Term Agreement”. It would appear that the agreement that we are considering is in very similar terms as that agreement considered in LVT decision in Karen Griffiths v Stayton Homes Limited (LON/00AC/LSC/2009/0711). We are not bound by the decision of another Tribunal. In the agreement under current consideration there is no stipulated term and [it] would appear to be a rolling contract, subject to a break clause. It could be envisaged that this is a contract that would go beyond an initial twelve month period. That would appear to be the intention of the parties, particularly when clause 10.9, which allows for the fees to be reviewed after two years, is considered. This Tribunal is satisfied that by taking all the elements of the contract together, that there was an intention that it was to be for a period of greater than one year and is therefore a Qualifying Long Term Agreement.”
The parties’ arguments-
The Appellants submitted that the Decision was wrong because the term of the Management Agreement was not fixed from the outset as being more than 12 months but was a “rolling contract” which did not fall within the section 20ZA(3) definition. Whilst the Management Agreement contemplated a duration exceeding 12 months, there was no “agreement” that it would last more than 12 months. If the test is mere “contemplation” then that would cover all manner of services such as utilities, cleaning and so on.
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Reliance was also placed upon Paddington Walk Management Limited v The Governors of Peabody Trust [2010] L&TR 6 which held that a contract “for an initial period of one year from 1 June and will continue on a year-to-year basis with the right to termination by either party on giving three months’ written notice at any time” was not a QLTA. It was pointed out that the Management Agreement could be terminated at any time before (or after) one year.
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The Respondent submitted that the Management Agreement should be construed in its factual matrix from which it was clear that the parties intended that it last more than 12 months.
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The Management Agreement is silent as to its term or duration in the sense that it does not explicitly define how long it is to last. However, its effect is that Bells has contracted or agreed to provide the services therein...
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