Decision Nº LRX 174 2011. Upper Tribunal (Lands Chamber), 25-09-2012
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Judge Gerald |
| Date | 25 September 2012 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 174 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2012] UKUT 321 (LC)
UTLC Case Number: LRX/174/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – administration charges – charges for consent to underletting – whether precluded if no provision for it in lease – held that it was not – reasonableness – jurisdiction to determine issues not raised by the application – held there was none – Landlord and Tenant Act 1925 s144 - Landlord and Tenant Act 1927 s19(1)(a) - paragraphs 1 and 5 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 - Landlord and Tenant Act 1988 s1(5) - appeal allowed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL
BETWEEN:
and
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MAHESH SACHDEV
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SEEMA SACHDEV
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KAMLESH SACHDEV
Respondents
Re: 5 Foxtail House
Taylor Close
Hounslow
TW3 4BZ
His Honour Judge Gerald
Determination on written representations
© CROWN COPYRIGHT 2012
The following case is referred to in this decision:
Holding and Management (Solitaire) Limited v Norton and others [2012] UKUT 1 (LC); LRX/33/2011
Country Trade Limited v Noakes [2011] UKUT 407 (LC), LRX/118/2010
Birmingham City Council v Keddie LRX/54/2011
The following case was referred to in written submissions:
Gorjifar v Peverel Properties Limited BIR/00CN/LAC/2012/0003
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This is an appeal by the Appellant landlord against the decision of the Leasehold Valuation Tribunal (“the LVT”) that it was not entitled to make a charge for the costs incurred in consenting to underletting the demised premises and the finding that £135 not the £165 sought by the Appellant would be the reasonable costs therefore.
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The Appellant discovered that the Respondent tenants had underlet the whole of the demised premises in breach of lease dated 8th September 1995 (“the Lease”) so required an application for retrospective consent to underlet in respect of which the Appellant required payment of their standard £165 charge to cover their costs of consenting to underlet. By clause 2(8)(b) of the Lease the lessee covenants with the lessor “not to underlet the whole of the Premises without first obtaining the written consent of the Lessor such consent not to be unreasonably withheld”.
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On 1st July 2011 the Respondents applied to the LVT (“the Application”) seeking inter alia a determination that the £165 charge was unreasonable under paragraph 1 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). In their pre-issuance email dated 9th June 2011, the Respondents had stated that they were “not averse to paying an administration charge” but did not agree to the amount of the £165 charge sought for the initial grant of permission or the £130 to be sought upon annual renewal which, in their 28th July 2011 letter, they suggested warranted a one off administration charge of £50 to £100.
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The relevant parts of paragraphs 1 and 2 of Schedule 11 to the 2002 Act provide:
“Meaning of ‘administration charge’
“1(1) In this Part of this Schedule ‘administration charge’ means an amount payable by a tenant of a dwelling as part of or in addition to the rent which is payable, directly or indirectly-
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for or in connection with the grant of approvals under his lease, or application for such approvals…
“1(3) In this part of this Schedule “variable administration charge” means an administration charge payable by a tenant which is neither-
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specified in his lease, nor
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calculated in accordance with a formula specified in his lease”
“2 A variable administration charge is payable only to the extent that the amount of the charge is reasonable.”
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In its 16th August 2011 Statement of Case, sought to justify the initial £165 standard charge as being reasonable on the basis that
“The procedure adopted by the [Appellant’s] agents when an application is received to sub let a property is extensive as a subletting affects all lessees in a block and so the agents will undertake a perusal of a copy of the assured shorthold tenancy to ensure the appropriate covenants are contained within that tenancy and, once completed, registering full details of the tenancy in their records and passing the appropriate information to the Property Managers as a full record of occupants of all flats will be needed by those manager especially in the event of an emergency. The documents will be reviewed by the agent’s legal department and once they are satisfied a consent document will be issued. The charge for this work is … £165 and it is estimated that an administrator would spend approximately two hours in dealing with the application [for permission to underlet] including input of information and the legal department approximately one hour”.
It went on to state:
“As fees are quoted in advance which is for the benefit of the [Respondent] and [Appellant] it is submitted that this is a fair and reasonable method of dealing with such an application. If every application was dealt with purely on time spent together with extra charges for letter, telephone calls and emails no figure could be quoted until a transaction had been concluded, this would not assist an applicant. In this case this charge would certainly have been higher as the [Respondent] had underlet the property in breach of covenant and without correspondence from the [Appellant] may have remained in breach.”
The Appellant’s Administration Charges Sublet Guidelines was also adduced into evidence which explains that the charge was to:
“…cover reviewing tenancy agreements to ensure that they comply with the terms of the lease and that tenants are suitable, issuing consent documentation, receipting notices, updating our database, storing copies and making changes to correspondence addresses.”
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On 27th September 2011, the LVT issued its decision (the “Decision”), made on a paper hearing, in which it held inter alia that the Appellant was not entitled to charge for its costs of consenting to underletting and in any event £165 was unreasonable. Its reasons are contained in the following paragraphs:
“12. In its statement of case the [Appellant] does not identify the provision in the lease upon which it relies as imposing an obligation on the lessee to pay fees or charges to the landlord in connection with a request for a written consent pursuant to clause 2(8)(b) of the lease.
“13. It is trite law that service charges and administration charges are only payable by lessees of residential leases to the extent that the lease imposes a clear and unambiguous obligation on them to do so.
“14. The [Appellant] has not identified in the lease the obligation to pay a charge for a consent and we can find none.
“15. The [Appellant] is under the statutory duty imposed by section 1 of the Landlord and Tenant act 1988 [(“the 1988 Act”)] to give consent to a request for an underletting of the whole of the demised premises unless it is reasonable not to give consent and the landlord has a duty to give written notice of his decision within a reasonable time. Those statutory duties are not in any way qualified or made subject to a precondition that the tenant is obliged to pay the landlord’s costs of considering an application.
“16. In these circumstances we find that the lease does not oblige the tenant to pay costs or charges to the landlord for or in connection with a request made for written consent to underlet.
“17. However, in case it be held that we are wrong in our principle finding we have considered the rival arguments of the parties as to whether a fee of £165 is a reasonable charge for the landlord to impose if it were entitled to recover a costs (sic) or to make a charge.
“18. In its statement of case the [Appellant] sets out the tasks involved, or which might be involved, in considering and processing a request to underlet. In principle we accept those submissions although we do find that the estimated time incurred on them is rather overstated. Drawing on the accumulated expertise and experience of members of the Tribunal in these matters we find that a charge in the region of £135 is within the bracket that can be considered reasonable, albeit that it is at the top end of the bracket.”
7. On 10th...
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