Decision Nº LRX 133 2009. Upper Tribunal (Lands Chamber), 09-05-2011
| Jurisdiction | UK Non-devolved |
| Judge | George Bartlett QC President |
| Date | 09 May 2011 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 133 2009 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2011] UKUT 178 (LC)
LT Case Number: LRX/133/2009
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charges – major works contract – costs incurred more than 18 months previously – whether notification given to tenant within that period – held it had been– appeal dismissed – Landlord and Tenant Act 1985 s 20B
IN THE MATTER OF AN APPEAL FROM A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL
and
THE MAYOR AND BURGESSES OF Acquiring
THE LONDON BOROUGH OF SOUTHWARK Authority
Re: 28 Stanwood Gardens
Sedgmoor Place
Camberwell
London SE5 7SQ
Before: The President
Sitting at 43-45 Bedford Square, London WC1B 3AS
on Wednesday 4 May 2011
Andrew Skelly instructed by direct access for the appellants
Simon Butler instructed by direct access for the respondent
The following cases are referred to in this decision:
Paddington Walk Management Ltd v Governors of the Peabody Trust [2010] L & TR6
London Borough of Islington v Abdel-Malek LRX/90/2006
Westminster City Council v Hammond, 19 December 1995
Holding & Management (Solitaire) Ltd v Sherwin [2010] UKUT 412 (LC)
Ember Homes Ltd v Lucas [2011] UKUT 42 (LC)
Gilje v Charlgrove Securities Ltd [2004] 1 All ER 91
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This is an appeal by the tenants against a decision of a leasehold valuation tribunal on an application made by the tenants under section 27A of the Landlord and Tenant Act 1985 in relation to their liability for service charges arising from major works carried out by the landlord, Southwark London Borough Council, in 2004 and 2005. The LVT determined that demands for payment had not been made in accordance with the terms of the lease, so that for the time being there was no liability on the part of the tenants in respect of the amount demanded for the major works; but that if and when proper demands were served the amount of £39,049.33, as claimed by the council, would be payable. In reaching this decision the LVT rejected the tenants’ argument that under section 20B of the Act none of the amount claimed was payable because the costs to which it related had been incurred more than 18 months earlier. It concluded that letters sent in 2005 and 2006 chasing payment for the major works satisfied section 20B(2). It is against this conclusion that the tenants now appeal, with permission granted by me.
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In 2004 the council proposed to carry out major works to Block One, 1-20 Stanswood Gardens, and Block Two, Stanswood Gardens. The tenants’ flat is in Block Two. The works included asbestos removal, roof works, the renewal of doors, windows and cladding panels and other works of renewal and repair. The council followed the consultation procedure prescribed under section 20 of the Act. On 27 July 2004 it gave notice under section 20 of the Act informing the tenants of the estimates received for the proposed contract. It said that, subject to the consultation exercise, it planned to proceed with the lowest tender, from Apollo London Ltd, at a sum of £1,279,344. The notice gave a description of the works to be carried out, and it identified as the cost chargeable to Block Two £612,960.62 and as the estimated contribution for the tenants’ flat £44,657.40. The tenants did not make any observations on the notice.
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The commencement date for the major works contract was 8 November 2004, and completion was on 27 August 2005. On 26 July 2005 Mrs Marie Jean-Paul completed a “Resident Satisfaction Questionnaire” provided by the contractor. She ticked the box opposite “1. Are you totally satisfied with the works?”.
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On 16 October 2004 the council had sent an invoice to the tenants for £44,657.40, giving as the account details “Estimate Charge: Refurbishment Stanswood Gardens.” Mrs Jean-Paul wrote to the council on 13 December 2004 raising a number of queries about the demand. The council responded to the queries in a letter of 17 February 2005, and it concluded by saying that “this matter will be put on hold until your dispute has been resolved.”
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On 17 March 2005 the council wrote to Mrs Jean-Paul as follows:
“I refer to our letter to you dated 17 February 2005, a copy of which is enclosed.
I confirm that the following sums remain outstanding on your major works account:
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£44,657.40 in relation to Refurbishment Works conducted on Standswood Gardens and invoiced in October 2004; and
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£500.00 in relation to other miscellaneous major works conducted on your property.
Kindly contact the writer within 14 days of the date of this letter to arrange for the payment of the sum of £45,157.40.”
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It appears that the council wrote again on 19 August 2005, because on 18 October 2005 a letter identical to that of 17 March 2005, but with the date “19 August 2005” in the first paragraph, was sent to Mrs Jean-Paul; and on 17 February 2006 a further identical letter, except that the date inserted (erroneously) in the first paragraph was 17 February 2006, was sent to Mrs Jean-Paul.
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Between 22 December 2004 and 24 August 2005 the council made eight payments under the contract, totalling £1,067,814.39. Further payments were made in March 2006 and March 2007. The council’s evidence to the LVT was that the final account was agreed with the contractor in June 2007, although it appears that the final account was not issued until September 2008. On 1 October 2008 the council wrote to the tenants with the final account for their flat. It adjusted downward their contribution to £39,049.43.
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The tenants hold their flat under a right-to-buy lease for 125 years from 11 June 1990. The Third Schedule to the lease contains the following provisions as to the payment of the service charge:
“1. (1) In this Schedule ‘year’ means a year beginning on 1st April and ending on 31st March
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Time shall not be of the essence for service of any notice under this Schedule
2. (1) Before the commencement of each year (except the year in which this lease is granted) the Council shall make a reasonable estimate of the amount which will be payable by the Lessee by way of Service Charge (as hereinafter defined) in that year and shall notify the Lessee of that estimate
(2) The Lessee shall pay to the Council in advance on account of Service Charge the amount of such estimate by equal payments on 1st April 1st July 1st October and 1st January in each year (hereinafter referred to as ‘the payment days’) …
4. (1) As soon as practicable after the end of each year the Council shall ascertain the Service Charge payable for that year and shall notify the Lessee of the amount thereof.
(2) Such notice shall contain or be accompanied by a summary of the costs incurred by the Council of the kinds referred to in paragraph 7 of this Schedule and state the balance (if any) due under paragraph 5 of this Schedule.”
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The LVT held that no liability to pay service charges arose on the basis of any of the invoice and requests for payment that I have referred to above. It said that there was a failure to comply with paragraph 4(1) in that the council had not ascertained the amounts payable for each individual service charge year. It also held that the demand of 16 October 2004 was not made in accordance with paragraph 2 because it did not refer to any one service charge year and therefore it did not create a liability to pay the amount demanded. The council does not seek to contest these conclusions.
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It should be noted also that Part II of the Third Schedule to the lease makes provision for a “Capital Expenditure Service Charge”, but the council did not purport to be following the procedure there laid down in making its demands for the payment in respect of the major works.
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Section 20B of the Act provides as follows:
“Limitation of service charges: time limit on making demands
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If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subjection (2)), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred.
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Subsection (1) shall not apply if, within...
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