Decision Nº LRX 25 2014. Upper Tribunal (Lands Chamber), 30-09-2014
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Judge Gerald |
| Date | 30 September 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 25 2014 |
UPPER TRIBUNAL (LANDS CHAMBER)
UT Neutral citation number: [2014] UKUT 0416 (LC)
UTLC Case Number: LRX/25/2014
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charge – whether “lift” maintenance costs and directors’ expenses recoverable under the service charge provisions of the lease
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF
THE FIRST-TIER PROPERTY CHAMBER
(RESIDENTIAL PROPERTY)
BETWEEN:
SOLARBETA MANAGEMENT COMPANY LTD
Appellant
andMS ADETINUKE AKINDELE
Respondent
Re: Flat 1, Beta Court,
117 Sydenham Road,
Croydon
Surrey
CR0 2EZ
His Honour Judge Nigel Gerald
Determinations on Written Representations
© CROWN COPYRIGHT 2014
The following cases are referred to in this decision:
Billson v Tristrem [2000] L&TR 220 (CA)
Campbell v Daejan Properties Limited [2012] EWCA Civ 1503
Rapid Results College v Angell [1986] 1 EGLR 53
Gilje v Sharlgrove Securities Limited [2001] EWCA Civ 1777
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The appellant management company appeals against the 25 November 2013 decision of the First-tier Tribunal Property Chamber (Residential Property) (“the FFT”) that the costs of maintaining a lift and also the appellant’s directors’ expenses were not recoverable from the respondent under the service charge provisions of the 30 November 2006 lease of his Flat 1 at Beta Court, 117 Sydenham Road, Croydon.
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Permission to appeal those two aspects of the FFT’s decision was granted by the FFT itself on 22 January 2014. The appellant has filed a detailed statement of case to which the respondent has responded by statement of case to which the appellant has replied also by statement of case.
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By way of background, in 2006 Ruskin Homes Limited developed Solar Court, Beta Court and Gamma Court. Gamma Court contains social housing; Beta and Solar Courts are private residential. Solar and Beta Court respectively comprise 23 and 2 flats each which have been let out on long leases which are in, as I understand it, substantially the same form as the respondent’s long lease. The two Beta Court flats are on the ground floor of the same building as Gamma Court but have no access to Gamma Court or to any of the grounds serving it. Instead they have access to the grounds of Solar Court, but have no use of the lift situated within and exclusively serving Solar Court.
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The management of the private part of the development, namely Solar and Beta Courts, is vested in the appellant management company, each long lessee being or entitled to become a member of the appellant management company. Indeed not only does the lease recite that the tenant, namely the respondent, has agreed to become a member of the management company, but by clause 4.14.2 he can be required to become a member of the management company, which is a not-for-profit company vested with the management of the private residential parts of the Estate.
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Owing to part of the development or estate forming social housing the service charge provisions of the lease are not as straight forward as they might be. However for these purposes it is only necessary to refer to those parts of the service charge provisions of the lease which give rise to this dispute.
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The lease contains the following definitions:
“ ‘the Estate’ means the land within or formerly within Title No. SGL622600 being the buildings and gardens and grounds surrounding the same for use of the owners and occupiers thereof… and which are capable of employing the services to be provided by the Management Company
“ ‘the Buildings’ means the buildings constructed on the land edged blue of which the Premises form part
“ ‘the Premises’ means the premises edged red on the Plan … known as Flat 1, Beta Court, 117 Sydenham Road, Croydon
“ ‘Common Parts’ means all parts of the Buildings not intended to be included in the lease of any separate apartment including any Service Media used in common
“ ‘the Parking Area’ means the parking spaces, accessway, forecourt, electric access gates and any other ancillary facilities for use in connection with the parking spaces.”
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By clause 5 of the lease the tenant covenants to pay the “Service Charge” which is defined by clause 1.12 so far as is material as being
“… 1.58%... of the expenditure incurred by the Management Company [the appellant] in the performance of its obligations in this Lease excluding obligations specific to the Parking Area on the Estate.”
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By clause 6.2 the Management Company covenants “to provide and perform the Services”, namely, “the services set out in the Fourth Schedule” (clause 1.14). The Fourth Schedule, described as being “Services to be provided and obligations to be discharged by the Management Company”, provides so far as material as follows:
“1. To contribute from time to time an appropriate share of the cost of the repair maintenance renewal or replacement of any party walls or other facilities used in common by the tenants of the Estate and the owners of occupiers of any adjoining or neighbouring property
“2. So far as practicable to keep clean and reasonably well lighted the entrance hall to the Premises within the Buildings and to maintain any entry phone system at such entrance to the Buildings
“3. To provide such other services and discharge such other obligations or functions as the Management Company shall reasonably from time to time consider necessary or expedient for the use and occupation of the flats in the Buildings and the Landlord’s adjoining premises
“4. To keep full accounts and records of all sums expended in connection with the matters set out in this part of this Schedule and to prepare and serve upon the tenants of all the flats in the Buildings and the landlord’s adjoining premises from time to time the Certificate and such other documents as are required to be served by the Management Company on the Tenant
“…
“9. Such other services or functions as the Management Company shall think fit for the upkeep and enhancement of the Estate or for the benefit of the flats thereon”.
The respective cases-
It is the appellant’s case that the costs of maintaining and repairing the lift situated within Solar Court are recoverable as part of the Service Charge falling within paragraph 3 or paragraph 9 of the Fourth Schedule to the lease. It is the appellant’s case that it is of no materiality that the lift is located within Solar Court and therefore of no benefit to the respondent in Beta Court as it is plain from these paragraphs of the Fourth Schedule that the tenant must pay his 1.58% share thereof. It is the respondent’s case that the maintenance and repair of the lift can not be covered under either of those paragraphs because they do not fall within their wording and furthermore the lift is of no benefit to him or indeed his immediate neighbour, the only other long leaseholder of Beta Court, and therefore cannot sensibly be regarded as an obligation falling upon either of them.
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It is the appellant’s case that the expenses of the directors of itself, i.e. of the Management Company (as defined in the lease), are recoverable under clause 6.2 alternatively under paragraph 9 or 3 of the Fourth Schedule, particularly bearing in mind that the Management Company is a not-for-profit company owned by the 25 tenants of Solar and Beta Courts and charged with their management. It is the respondent’s case that those costs are not recoverable, being out-with any of those provisions of the lease.
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Surprising as it may seem the issue of whether or not the costs of maintaining and repairing the lift are recoverable under the instant Service Charge provisions has been decided on no less than three separate occasions by the FFT, or the LVT as it was previously known. In 2009 the LVT determined that the costs of maintaining and repairing the lift could not be recovered via the Service Charge from the respondent. In 2012 the LVT decided that they could be recovered under the Service Charge provisions In 2013 the FFT decided that they could not be recovered: it is that decision which is being appealed.
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The material parts of the FFT’s decision are to be found in the following paragraphs of the decision.
“53. Paragraph 3 [of the Fourth Schedule] contains an obligation on the management company to “provide such other services and discharge such other obligations or...
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