Decision Nº LRX 16 2013. Upper Tribunal (Lands Chamber), 28-05-2014
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Date | 28 May 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 16 2013 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0163 (LC)
UTLC Case Number: LRX/16/2013
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charges – tenant to pay fair proportion of landlord’s expenditure – fair proportion to be determined by landlord’s surveyor – surveyor’s determination to be final and binding – whether apportionment void – whether first-tier tribunal having jurisdiction to substitute different apportionment - Landlord and Tenant Act 1985 ss. 18, 19, 27 – appeal dismissed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
NORTHERN RENT ASSESSMENT PANEL
BETWEEN:
WINDERMERE MARINA VILLAGE LIMITED Appellant
and (1) IAN WILD(2) GILLIAN LESLEY BARTON
and others
Respondents
Re: Flat 39 and Boathouse,
Windermere Marina Village,
Bowness on Windermere
Before Martin Rodger QC, Deputy President
Sitting at Manchester
on
11 April 2014
David Gilchrist instructed by Harrison Drury & Co solicitors, for the Appellant
Eleanor d’Arcy instructed by Aaron & Partners LLP, for the Respondents
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Campbell v Edwards [1976] 1 WLR 403
Schilling v Canary Riverside Development Properties Limited [2005] LRX/26/2005
Levitt v London Borough of Camden [2011] UKUT 336 (LC)
London Borough of Brent v Shulem B Association Limited [2011] EWHC 1663 (Ch)
Gilje v Charlgrove [2000] 3 EGLR 89
Longmint v Marcus [2004] 3 EGLR 171
Joseph v Joseph [1967] Ch 78
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The lease of a dwelling provides for the tenant to pay a fair apportionment of the cost of services, such apportionment “to be determined by the surveyor for the time being of the Lessor whose determination shall be final and binding”. Section 27A(6) of the Landlord and Tenant Act 1985 (“the 1985 Act”) renders void an agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) in so far as it purports to provide for a determination in a particular manner or on particular evidence of any question which may be the subject of an application under sub-sections (1) or (3) of section 27A of the 1985 Act. Such questions include the amount of the service charge payable by the tenant. The principal issue in this appeal is whether section 27A(6) renders void the agreement in the lease that the landlord’s surveyor’s decision on the apportionment of the service charge is to be final and binding.
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The appeal is against a decision of a Leasehold Valuation Tribunal of the Northern Rent Assessment Panel (“the LVT”) dated 14 November 2012 in which it substituted its own apportionment of the cost of services payable by the tenants of 26 dwellings at the Windermere Marina Village (“the Marina”) for a previous apportionment determined by a surveyor appointed by the appellant, which owns the freehold interest in the Marina.
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Permission to appeal the LVT’s decision was granted by the Tribunal on the grounds that the issue identified in paragraph 1 above was a point of principle potentially of wide application. The appeal was directed to be dealt with as a review with a view to a rehearing, but after receiving legal submissions from Mr Gilchrist for the appellant and Miss d’Arcy for the respondents at the review stage of the appeal I was satisfied that no rehearing was required.
The facts
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The Marina is a mixed development on the banks of Windermere at Bowness, comprising moorings for 350 boats alongside a series of jetties, together with a variety of flats, boathouse apartments, holiday cottages, houses, a marina centre with offices for boat sales, a boatyard, car parking and other facilities. The lead respondents are tenants of flat 39, referred to as a “boathouse apartment” because in addition to living accommodation at first floor level the property overhangs the water of the Marina and encloses a mooring for a small boat.
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On 6 September 2011 the respondents commenced proceedings before the LVT under section 27A of the 1985 Act, seeking a determination of their liability to pay service charges for grounds maintenance and security in the years from 2008 to 2011. The respondents were subsequently joined in their application by the tenants of a further 24 dwellings on the Marina. The appellant later made a cross-application of its own seeking a final determination of the respondents’ liability in respect of all service charges in the same years.
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The lease of the respondents’ boathouse apartment was granted by the appellant on 29 July 1965 for a term of 99 years from 1 July 1962. At that time the 18 boathouse apartments were the only dwellings which had yet been developed on the Marina and the other houses, flats and cottages were built much later. The respondents’ lease is in the standard form used for all the original boathouse apartments. It granted them rights of way along a roadway leading from the demised premises to the main road together with the right to use a car park on adjoining land. A schedule to the lease contained tenants’ covenants of which the only one of significance for the purpose of this appeal is at paragraph (2), by which the tenants agreed:
“To pay a fair proportion (to be determined by the Surveyor for the time being of the Lessors whose determination shall be final and binding) of the expense of all communal services including the re-constructing, repairing, maintaining, re-building, cleansing and dredging of all Estate walls, fences, sewers, drains, roads, car parks, waterways and piers and other things the use or enjoyment of which is or shall be common to the demised premises and other premises PROVIDED ALWAYS that the Lessees shall be under no obligation hereby to pay any contribution towards the cost of making good any damage thereto caused in the course of any future development work of the Lessors”
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I make the following comments about the tenants’ covenant at this stage. It is apparent from the proviso to paragraph (2) that future development work on the Marina was anticipated at the time the lease was entered into. It was also obviously appreciated that there might in future come to be additional premises on the Marina making use of the communal services. It must also therefore have been expected that the proportion of the expenses of communal services which it would be fair for the tenants of the demised premises to pay might vary over time as the future development of the Marina evolved. The task of determining that fair apportionment was entrusted by the parties to the Lessors’ surveyor for the time being, and it was specifically agreed that the surveyor’s determination would be final and binding.
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Not all of the dwellings on the Marina are let on long leases, but those which are include service charge provisions under which the contribution payable by the lessees is also a fair proportion, determined by the appellant’s surveyor whose decision is final and binding, of the appellant’s total expenditure on communal services. Other dwellings are operated by the appellant on a time share basis or as holiday cottages, and neither these dwellings nor the boat moorings (which are also operated by the appellant as part of its own business) are expected to pay a service charge.
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Until 2007 the only expenses which the appellant sought to collect from the tenants of the boathouse apartments related to the provision of drainage and sewerage services, and these were minimal. Latterly, however, the growth of the Marina created a need for further services including additional lighting, landscape maintenance and security arrangements. In 2007, with a view to recouping a proportion of these additional expenses from the respondents under paragraph (2) of the schedule to their leases, and from the other long leaseholders on the Marina, the appellant engaged a chartered surveyor, Mr D Pogson FRICS, to consider for the first time what would be a fair apportionment of the costs of communal services among the various users of the Marina who benefitted from them. It was the appellant’s intention that the long leaseholders they would be expected to contribute towards the expense of providing the services in the proportions determined by Mr Pogson; to the extent that the services benefitted the users of the...
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