Decision Nº LRX 135 2014. Upper Tribunal (Lands Chamber), 06-07-2015 , [2015] UKUT 0379 (LC)
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Nicholas Huskinson |
| Neutral Citation | [2015] UKUT 0379 (LC) |
| Date | 06 July 2015 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 135 2014 |
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2015] UKUT 0379 (LC)
UTLC Case Number: LRX/135/2014
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charges -- landlord's failure to serve a copy of its budget estimate when demanding on account payments -- whether nothing payable by tenants -- construction of an unusually drafted lease
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
BETWEEN MARK SKELTON AND OTHERS Appellantsand
DBS HOMES (KINGS HILL) LIMITED Respondent
Re: 1,4,5,8 and 9 Burton Pynsent House,
West Common Road,
Bromley,
BR2 7BY
Before: His Honour Judge Huskinson
Sitting at: Upper Tribunal (Lands Chamber), Royal Court of Justice,
Strand, London WC2A 2LL
on
29 June 2015
Mark Skelton, the first named appellant, appeared on behalf of all of the appellants
Denis Minns MSc FRICS appeared on behalf of the respondent
The following cases are referred to in this decision:
London Borough of Brent v Shulem B Association Limited [2011] EWHC 1663 (Ch)
Warrior Quay Management Limited v Joachim [2008] PLSCS 56
Akorita v Marina Heights (St Leonards) Limited [2011] UKUT 255 (LC)
Leonora Investment Company Limited v Mott Macdonald Limited [2008] EWCA Civ 857
The London Borough of Southwark v Woelke [2013] UKUT 0349 (LC)
Burr v OM Property Management Limited [2013] EWCA Civ 479
Gilje v Charlegrove Securities [2003] EWHC 1284 (Ch).
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This is an appeal from the decision of the First-tier Tribunal Property Chamber (Residential Property) (“the F-tT”) whereby the F-tT decided that the service charges payable by the appellants for the service charge years 2010-11, 2011-12, 2012-13 and 2013-14 were payable in full as demanded. The present appeal is not concerned with the year 2010-11.
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So far as concerns the years 2011-12, 2012-13 and 2013-14 the dispute between the parties was not upon any question such as regularly arises under section 19 of the Landlord and Tenant Act 1985 as amended regarding whether costs had been reasonably incurred, or had been incurred in relation to the provision of items to a reasonable standard. Instead the question was whether anything was payable at all by the appellants (as lessees) to the respondent (as lessor) in respect of their premises for these years. In summary the argument that nothing was payable was based upon the contention that the respondent had failed to comply with the provisions of the lease regarding service charges, that therefore such demands for payment as had been made were invalid and that it was now too late to make any fresh demand having regard both to the provisions of the lease and also, separately, to the provisions of section 20B of the Act.
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The appellants are all lessees of their respective flats at Burton Pynsent House. I was told at the hearing that this is a luxury block of flats surrounded by grounds which has been recently constructed – the works being completed in about 2010. Mr Skelton, the first named appellant, is the original lessee of flat 4 pursuant to a lease dated (apparently) 4 February 2011 between the respondent as lessor and himself as lessee whereby flat 4 was demised to him for a term of 125 years from 29 September 2008 upon the terms and conditions therein contained. I shall refer to certain provisions of Mr Skelton’s lease in due course. The case proceeded before the F-tT and before the Upper Tribunal upon the basis that the position of the other appellants is effectively exactly the same as Mr Skelton’s position and that there is nothing in their leases or in the facts relating to them which indicates there should be any different result as between the respondent and them as compared with the position between the respondent and Mr Skelton.
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At the hearing Mr Skelton represented himself and spoke also on behalf of the other appellants. The respondent was represented by Mr Denis Minns MSc FRICS. There was therefore no legal representation on behalf of either party.
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The problems in the present case arise principally from a combination of two factors, namely:
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the fact that the service charge provisions in the lease are in various respects ill-drafted and in other respects curiously drafted; and
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the fact that the respondent has failed to comply with these provisions.
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The Lease
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I have said that the lease is apparently dated 4 February 2011 because, as one of the leases various deficiencies, this date is written on the cover page but under the heading of Particulars on page 5 the date of the lease is stated as being 4 January 2011.
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The lease contains various definitions including the following:
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Accounting Date |
The 1st day of April in each year or such other date as the Landlord may from time to time substitute for that date.
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Accounting Period |
The period commencing on the day immediately after each Accounting Date and ending on the following Accounting Date
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Estimate |
An Estimate prepared under the provisions of paragraph 3.1 of part 1 of schedule 6.
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Interim Charge |
The Tenant’s Proportion of the amount of the Estimate for each Accounting Period
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Services |
The Services and works specified in part 3 of schedule 6
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Service Charge |
The Tenant’s Proportion of the amount of the Service Costs for each Accounting Period
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Service Costs |
The amounts and items specified in part 2 of schedule 6 |
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The lease reserves a rent and the payment of the Service Charge (clause 4.4). The lease in clause 5.1.2 contains a covenant by the tenant with the landlord to pay the Service Charge to the landlord in respect of each year of the term on the basis set out in part 1 of schedule 6. The lease contains in clause 6 certain covenants by the landlord in favour of the tenant including in clause 6.4 a covenant to provide the Services for all the occupiers of the building upon the basis there set forth. The covenant to provide the Services is not made conditional upon the receipt by the landlord of monies by way of payment of the Service Charge. The landlord is to provide the services to a standard consistent with the use of the building as high class flats.
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Schedule 6 makes provision regarding the payment of service charge. It is appropriate to set out the whole of paragraphs 1-5 of part 1 of schedule 6:
Schedule 6
Provisions relating to Service Charge
Part 1
Computation, certification and payment
1. Purpose of Service Charge
1.1 The Tenant shall pay to the Landlord a Service Charge (and an Interim Charge on account) in accordance with the provisions of 1.2 and 1.3 hereof, the purpose of which is to enable the Landlord to recover from the Tenant the Tenant’s due proportion of all expenditure overheads and liabilities which the Landlord may incur in and in connection with carrying out works on the Building and providing present and future services to its occupiers (but not including expenditure on those parts of the Premises which the Tenant is liable to repair and maintain under the terms of this Lease and the corresponding parts of the other Lettable Areas in the Building).
1.2 Service Charge all the expenditure overheads costs and liabilities incurred by the Landlord in carrying out its obligations under clauses 6.3 and 6.4.
2. Definitions
In this Schedule the following definitions apply in addition to the definitions set out in clause 1 of this lease:
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Accountant |
an accountant or firm of Accountants who shall be Qualified as specified in s28 of the LTA 85 |
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Certificate |
a certificate issued by the Accountant under the provisions of paragraph 5 of this schedule
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Estimate |
an estimate prepared under the provisions of paragraph 3.1 of this schedule
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Independent Surveyor |
a surveyor appointed by the landlord but he shall not be member or employee of the Landlord or its managing agents.
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Payment Days |
1st April and 1st October in each Year
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Reserve Fund |
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