Decision Nº LRX 151 2011. Upper Tribunal (Lands Chamber), 22-04-2014
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Date | 22 April 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 151 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0144 (LC)
UTLC Case Number: LRX/151/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charges – lengthy delay by utility provider in delivering invoices to new landlord – invoices delivered to previous landlord - when costs “incurred” – section 20B Landlord and Tenant Act 1985 – service charge certificate conclusive of the amount of the service charge – whether landlord entitled to increase service charge for years previously certified – appeal allowed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL
(2) MR ANDREW GREENE
(3) MR WILLIAM ROSE Respondents
Re: Vista House, Independence House and Prospect House,
Chapter Way, Merton,
London SW19 2RY
Before: Martin Rodger QC, Deputy President
Sitting at: 43-45 Bedford Square, London WC1A 3AS
on
26 March 2014
Stephen Murch, instructed by BTMK, solicitors, for the Appellant
The Respondents in person
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Gilje v Charlegrove Securities Limited [2004] 1 All ER 91
Burr v OM Property Management Limited [2013] 1 WLR 3071.
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This appeal concerns a large bill for the supply of water to three blocks of flats, known collectively as Abbey Mills and individually as Prospect House, Vista House and Independence House at Chapter Way, Merton, London SW19. The bill, which exceeds £65,000, relates to water supplied to the three blocks between June 2005 and April 2011. It built up because for many years Thames Water Utilities Ltd delivered invoices for water consumed at two of the buildings to the developer originally responsible for their construction while the appellant, which acquired the freehold of Abbey Mills on 1 October 2006, received invoices only for the third building. The appellant’s managing agents, in the mistaken belief that the invoices they received related to all three buildings, apportioned those sums and collected them through the service charges payable by all 164 leaseholders of flats at Abbey Mills. The developer did not pay the invoices for the other two buildings delivered to it, nor did it pass them on to the appellant. Both the appellant and the individual leaseholders believed that all of the sums due from them in respect of water had been paid. The mistake was eventually discovered in 2010 and since then Thames Water has sought to recover the arrears from the developer and from the appellant, which in its turn has sought to pass them on in full to its 164 leaseholders.
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By a decision given on 6 September 2011 the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“the LVT”) decided that the leaseholders were not liable to contribute to the historic water bill through their service charge to the extent that the water invoices had first been raised before 30 January 2009. The LVT reached that decision because the appellant had first included the arrears of water charges in the service charges demanded in June 2010, and in reliance on section 20B(1) of the Landlord and Tenant Act 1985 (“the 1985 Act”) which provides as follows:
“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 sub-section (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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With the permission of the Tribunal granted on 31 July 2013 the appellant now appeals against the decision of the LVT on the grounds that the disputed water charges were only “incurred” by it when it was first sent an invoice for those charges by Thames Water in May 2010. The fact that invoices for the same charges had been sent to the appellant’s predecessor is, the appellant submits, of no significance when applying the 18 month limitation period provided for by section 20B of the 1985 Act.
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The appellant was represented before me by Mr Stephen Murch of counsel, while the respondents appeared in person. The respondents did not formally represent the remaining leaseholders who had been party to the proceedings before the LVT and who had not responded to the appeal, but in the course of the proceedings they made submissions which apply equally to all of those who have been asked to pay the water charges. I am grateful to all parties and counsel for their assistance.
The facts
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The LVT undertook a thorough investigation of the relevant facts, which were not contested by either side on the appeal. I therefore take the following summary of the relevant facts substantially from the LVT’s decision supplemented by the documents prepared for the appeal.
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Abbey Mills is a modern development of purpose built flats comprising Vista House (69 flats), Prospect House (55 flats) and Independence House (40 flats) making 164 flats in total. The development also includes an undercroft car park and external parking spaces. Abbey Mills was built by Countryside Properties (UK) Limited (“CPL”), the then freeholder. The earliest of the flats to be completed was occupied in about July 2005 and the last was completed and sold in September 2006. The freehold interest in Abbey Mills was transferred by CPL to the appellant in August 2006 and when the transfer was subsequently registered on 1 October 2006 CPL became landlord of the 164 flats.
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On 25 February 2004 Countryside Properties (Merton Abbey Mills) Limited (“Countryside”), an associated company of CPL, had entered into a “Common Billing Agreement” with Thames Water for a bulk metered water supply to be provided to Abbey Mills. The effect of the Common Billing Agreement was that Countryside (referred to in the agreement as “the consumer”) was responsible to Thames Water for the payment of all charges for water and sewage services supplied to Abbey Mills. The Common Billing Agreement provided that the consumer was not entitled to assign the benefit of the agreement without first obtaining the written consent of Thames Water.
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Thames Water installed three meters to record the consumption of water by the occupants of each of the three blocks and water first began to be supplied in June 2005.
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When CPL transferred its interest in Abbey Mills to the appellant it appears not to have assigned the benefit of the Common Billing Agreement, nor to have asked Thames Water for its consent to such an assignment.
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The leases of the flats at Abbey Mills are in common form and provide for the leaseholder to pay an agreed proportion of the total costs of certain services described in the fifth and sixth schedules which the landlord covenants to provide. The aggregate of those costs is referred to as “the Service Charge” and the leaseholder’s contribution is “the Proportion” which is made payable by clause 4.3 by half-yearly instalments in advance in accordance with the terms of the fourth schedule to the lease. The services listed in the fifth and sixth schedules include the supply of water.
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In each lease the demised flat is referred to as “the Property”. The provisions of the fourth schedule relating to the computation of the service charge provide, at paragraph 1, that the Service Charge is to be “a sum equal to the total cost of the aggregate Service Charge for the whole of the Block for each Service Charge Year (computed in accordance with this Schedule) and the sum due in respect of the Property shall be the Proportion.” Thus each leaseholder is responsible for paying the Proportion appropriate to his or her flat of the cost of providing the services.
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Paragraph 2 of the fourth schedule requires that the Service Charge for each year is to be computed in accordance with paragraph 3 of that schedule not later than the beginning of June immediately preceding the commencement of that Service Charge Year.
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Paragraph 3 provides for the Service Charge to consist of a sum comprising the aggregate of four components, including “the expenditure estimated as likely to be incurred in the Service Charge Year” by the landlord for the purposes...
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