Decision Nº LRX 133 2011. Upper Tribunal (Lands Chamber), 14-03-2013
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Nicholas Huskinson |
| Date | 14 March 2013 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 133 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2013] UKUT 0133 (LC)
LT Case Number: LRX/133/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – variation of leases – Landlord and Tenant Act 1987 Part IV as amended – service charges – proportionate contributions totalling less than 100% of relevant costs – section 35(2)(f) and (4) – whether order under section 38 varying the leases can be effective from a date earlier than the date of application to the leasehold valuation tribunal.
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL
and
PAUL BOTTEN Respondent
Re: 17-64 Carlton Mansions
Holmleigh Road
London N16 5PX
Before: His Honour Judge Nicholas Huskinson
Sitting at: 45 Bedford Square, London WC1B 3DN
on 6 March 2013
Gary Cowan, instructed by Wallace LLP on behalf of appellant
The respondent did not appear and was not represented
© CROWN COPYRIGHT 2013
The following case is referred to in this decision:Daejan Investments Ltd v Benson [2009] UKUT 33
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This is an appeal from the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“the LVT”) dated 27 July 2011 whereby the LVT made an order under section 38 of the Landlord and Tenant Act 1987 as amended varying certain long leases of flats at Carlton Mansions, Holmleigh Road, London N16 5PX. The variations made to the leases were as sought by the appellant, as landlord, save in one respect, namely the date as from which the variations of the leases were to take effect. The LVT ruled that the variations should take effect from the date of the LVT’s order. It is from that decision that the appellant appeals, contending that the variations can and should take effect from a substantially earlier date.
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Flats 1-64 Carlton Mansions are contained within eight blocks, there being eight flats in each block. I was told that in fact the block containing flats 9-16 was never owned by Daejan Properties Limited (“Daejan”), who was the appellant’s predecessor in title. Daejan owned seven blocks comprising a total of 56 flats. Daejan granted long leases at low rents of many of these flats (but retained certain flats in hand) and in these leases Daejan included provisions for Daejan to undertake the repair and maintenance etc of the buildings and to recover the appropriate amount from the various lessees through the service charge provisions in the leases (with Daejan itself bearing the proportion of the costs properly attributable to the flats kept in hand by Daejan). The appropriate proportions in respect of the various flats was based upon the rateable values of those flats and was so framed so as to ensure that the proportion attributable to each flat (including the proportions attributed to the flats kept in hand by Daejan) when added together came to 100%. Thus Daejan maintained etc the buildings and recovered 100% of the costs of doing so from the lessees and from its own notional contribution of the due proportion in relation to the flats kept in hand by Daejan.
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In 2006 certain qualifying tenants exercised their rights to collective enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993 in respect of one of the blocks, namely that containing flats 1-8. Daejan transferred the freehold of this block to the nominee purchaser on 10 November 2006 (“the Transfer Date”).
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In consequence of this transfer away of the block containing flats 1-8, the total expenditure incurred by Daejan in maintaining etc the remaining six blocks of flats was less than it would have been if Daejan had been obliged to continue to maintain etc seven blocks rather than six. Thus the total expenditure by Daejan which was capable of being recovered through the service charge provisions decreased. A further consequence concerned the relevant proportions paid by each of the lessees in the remaining six blocks. If the proportions for each of these flats (including the proportions attributable to the flats kept in hand by Daejan) were added together they now added up to less than 100%. In fact they came to 85.55% - the missing 14.45% was the total of the proportions which had previously been attributable to flats 1-8, which were now no longer the concern of Daejan because of the enfranchisement. Thus if after the Transfer Date the provisions of the leases were operated in accordance with their existing terms Daejan would not be able to recover 100% of the costs of management etc of the remaining six blocks but instead would only be able to recover 85.55% thereof. This is just such a circumstance as is envisaged in section 35(2)(f) and (4) of the Landlord and Tenant Act 1987 as amended (as to which see below) as being circumstances in which an application can be made to the LVT to vary the leases so as to ensure that the aggregate of the amounts recoverable should equal the whole of the relevant expenditure rather than be less than this whole.
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Daejan decided to seek the agreement of the lessees in the remaining six blocks to a variation of their leases so as to bring the total of the relevant proportionate contributions up to 100%. The details of the steps taken can be briefly summarised, because in paragraph 14 of its decision the LVT stated that it was satisfied that Daejan consulted with the relevant lessees (i.e. the respondents to the application before the LVT) and informed all of them of the steps they were taking, including informing assignees of any of flats that were assigned after the process started. In summary what Daejan did was as follows:
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By a letter dated 12 June 2007 to the various lessees Daejan pointed out the problem which had arisen, drew attention to the powers contained within the Landlord and Tenant Act 1987 Part IV whereby an LVT can order the variation of a lease, and asked for agreement to enter into deeds of variations so as to amend the proportions payable for each flat to a proportion based upon the original proportion but adjusted upwards so that the total became 100% (I understand this was done by taking the original proportion and dividing by 85.55 and multiplying by 100). A schedule of the old and proposed proportions was enclosed with the letter.
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Daejan received representations to the effect that these proportions, based upon the old rateable values of the flats, were no longer appropriate. In the result Daejan recalculated the percentages based upon the gross internal area of each flat. Daejan then sent a further letter of 8 August 2007 inviting a variation of the leases so as to amend the relevant proportions to a new proportion based upon gross internal area of the flat in question – with the intention once again that the total of all the proportions should add up to 100%. Once again a schedule of the existing and the proposed proportions was enclosed. Once again Daejan made reference to the fact that, if consent to a variation was not given, Daejan would have no alternative but to make an application to the LVT for a variation of the lease.
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Daejan received few responses to this proposal. By a letter dated 14 November 2008 to the various lessees Daejan pressed for a response and stated that if no such response was received by a certain date then Daejan would proceed with a reference to the LVT making the lessee in question a respondent.
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In fact only three lessees did actually enter into a deed of variation in the terms sought by Daejan. The last of these deeds was dated January 2011.
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On 4 January 2010 Daejan granted 999 year headleases to the appellant in respect of the various buildings at 17-64 Carlton Mansions. In consequence the rights and obligations of the lessor under the various long leases of the flats became vested in the appellant.
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On 27 April 2011 the appellant applied to the LVT under Part IV of the Landlord and Tenant Act 1987 for orders varying the leases of flats:18, 19, 21, 22, 23, 25, 28, 30, 33, 34, 35, 36, 37, 38, 39, 40, 42, 44, 45, 46, 49, 50, 52, 53, 57, 58, 60 and 64. The lessees of each of these flats were made respondents to the application. The application to the LVT sought a variation of the...
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