Decision Nº LRX 145 2010. Upper Tribunal (Lands Chamber), 10-04-2012
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Nicholas Huskinson |
| Date | 10 April 2012 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 145 2010 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2012] UKUT 86 (LC)
Case Number: LRX/145/2010
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charge – reserve funds – lease providing that reserve funds could be used to meet any temporary deficiencies in monies available for general expenditure – whether LVT should have embarked on any consideration of the question of whether monies from the reserve funds had been so spent and (if so) whether any legally sufficient reasons given for its conclusions on this point and related points (raised by LVT) under Article 1 of First Protocal of ECHR and under the Unfair Terms in Consumer Contracts Regulations 1999 – jurisdiction of LVT – whether LVT entitled to disagree with and to refuse to follow a High Court decision regarding application of s.20(B) Landlord and Tenant Act 1985 – reasonableness of service charges - costs
IN THE MATTER OF AN APPEAL AGAINST A DECISION
OF A LEASEHOLD VALUATION TRIBUNAL FOR THE
MIDLAND RENT ASSESSMENT PANEL
LIMITED
(2) HOLDING & MANAGEMENT (SOLITAIRE) LIMITED
and
DR STEPHEN HOLDEN & OTHERS Respondents
Re: Properties at Weekday Cross Buildings,
Weekday Cross,
The Lace Market,
Pilcher Gate,
Nottingham, NG1 1QF
Before: His Honour Judge Nicholas Huskinson
Sitting at 43-45 Bedford Square, London, WC1B 3AS
on 14 February 2012
Justin Bates, instructed by Eyvind Andresen of Peverel Property Management, on behalf of the appellants
Dr Stephen Holden appeared on behalf of himself and the other respondents
The following cases are referred to in this decision:
London Borough of Newham v Khatun [2004] EWCA Civ 55)
Leicester City Council v Master LRX/175/2007)
Gilje v Charlgrove Securities Limited [2003] VWHC 1284 (Ch)
Pepper v Hart [1993] AC 593
English v Emery Reimbold & Strick Limited [2003] 3 All ER 385 at paragraphs 18-20.
Halliard Property Company v Belmont Hall & Elm Court RTM Company Limited (LRX/130/2007)
Ridehalgh v Horsefield [1994] 3 All ER 848.
Sisu Fund Limited v Tucker [2005] EWHC 2321 (Ch)
Re Edward Pryor [2009] UKUT 131 (LC).
Holding & Management (Solitaire) Ltd v Sherwin (LRX/67/2009, 10 December 2010)
Swanlane Estates Ltd v Woods (LRX/159/2007)
Sisu Fund Limited v Tucker [2005] EWHC 2321 (Ch)
Sinclair Investments (Kensington) Limited v The Lands Tribunal [2005] EWCA Civ 1305
Holding & Management (Solitaire) v Sherwin [2010] UKUT 412 (LC).
DECISION
Introduction
1. The appellants appeal to the Upper Tribunal, with permission, from a decision of the leasehold valuation tribunal for the Midland Rent Assessment Panel (the LVT) dated 6 September 2010 whereby the LVT gave certain determinations upon an application which had been made to it by the respondents under section 27A of the Landlord and Tenant Act 1985 as amended in respect of certain service charges.
2. The properties with which the case is concerned are at Weekday Cross Buildings and they comprise a new building containing 98 flats and a listed building containing 22 flats. At all material times the respondents held their respective flats upon long leases from the second appellant as landlord. The first appellant was at all material times until 31 July 2009 the managing agent for the second respondent.
3. There had been previous proceedings between the parties before the LVT which had resulted in (a) a decision of the LVT determining the service charges for the listed building for the service charge years prior to that commencing on 1 April 2007; and (b) a decision of the LVT that a new manager (Mr Bulmer) should be appointed from 1 August 2009.
4. The respondents’ applications to the LVT asked the LVT to determine the service charges in respect of the years (for the new building) 2005/6, 2006/7, 2007/8, and 2008/9 and in respect of the years (for the old building) 2007/8 and 2008/9.
5. There is before the Tribunal a document which I was told was a typical form of lease. I proceed on the assumption that all leases are in the form of this lease, which is dated 11 December 2003 and constitutes a lease of flat No. 217 at Weekday Cross. The following terms of the lease should be noted:
(1) Clause 1.7 provides a definition of the service charge in the following terms:
“the Service Charge” means a sum equal to the Service Charge Proportions (or such other proportions as may be determined pursuant to Part II of the Fourth Schedule) of the aggregate Annual Maintenance Provision for the whole of the Block for each Maintenance Year (computed in accordance with Part III of the Fourth Schedule.) ”
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By clauses 3.2 and 3.3 the lessee covenanted in the following terms:
“3.2 In respect of every Maintenance Year to pay the Service Charge to the Company by two equal instalments in advance of the Half yearly Days provided that in respect of the Maintenance Year current at the date hereof the Lessee shall on execution hereof pay a due proportion of the Current Service Charge.
3.3 To pay the Company on demand a due proportion of any Maintenance Adjustment pursuant to paragraph 3 of Part III of the Fourth Schedule.”
(3) The Fourth Schedule in Part I provided for what the service charge proportions were to be and Part II made provision for the variation of such proportions (neither of these provisions are relevant to the present case). Part III of the Fourth Schedule dealt with “calculation of Annual Maintenance Provision” in the following terms:
“1. The Annual Maintenance Provision in respect of each Maintenance Year shall be computed not later than 31 March immediately preceding the commencement of the Maintenance Year (other than the Maintenance Provision for the current Maintenance Year which has already been computed) and shall be computed in accordance with paragraph 2 hereof.
2. The Annual Maintenance Provision shall consist of a sum comprising:
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the expenditure estimated as likely to be incurred in the Maintenance Year by the Company for the purposes mentioned in the Fifth Schedule together with
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(in the second and each successive Maintenance Year) an appropriate amount as a reserve for or towards those of the matters mentioned in the Fifth Schedule as are likely to give rise to expenditure after such Maintenance Year being matters which are likely to arise either only once during the then unexpired term of this Lease or at intervals of more than one year during such unexpired term including (without prejudice to the generality of the foregoing) such matters as the decorating of the exterior of the Block the repair of the structure thereof and the repair of the Conduits.
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a reasonable sum to remunerate the Company for its administrative and management expenses (including a profit element) such sum if challenged by any lessee to be referred for determination by an independent Chartered Accountant appointed on the application of either party by the President of the Institute of Chartered Accountants in England and Wales acting as an expert and whose fees and disbursements shall be paid as the said independent Chartered Accountant shall direct
3(a) After the end of each Maintenance Year the Company shall determine the Maintenance Adjustment calculated as set out in the next following sub-paragraph
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the Maintenance Adjustment shall be the amount (if any) by which the estimate under paragraph 2(i) above shall have exceeded or fallen short of the actual expenditure in the Maintenance Year.
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the Lessee shall be allowed or shall on demand pay (as the case may be) the proportion of the Maintenance Adjustment appropriate to the Flat.
4. Subject to provisions of paragraph 2 (iii) of this part of this Schedule a certificate signed by the company and purporting to show the amount of the Annual Maintenance Provision or the amount of the Maintenance Adjustment for any Maintenance Year shall be conclusive of such amount.
5. The Company shall arrange for accounts of the Service Charge in respect of each Maintenance Year to be prepared and shall supply to the Lessee a summary of such accounts.”
(4) The Fifth Schedule made provision for the purposes for which the service charge was to be applied. No point in the present case turns upon the precise wording of anything in the Fifth Schedule.
(5) Clause 8 of the lease dealt with what was described as “the Company’s Powers of Investment.” It should be noted that Holding & Management (Solitaire) Limited (i.e. the second respondent) was a party to the lease and was therein referred to as “the Company”. Clause 8 was in the following terms –
8.1 The Company hereby declares that it will hold all service charges until the same are spent in trust for the lessees of the Units in the Estate in the same proportions as such service charge shall have been paid.
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