Decision Nº LRX 29 2017. Upper Tribunal (Lands Chamber), 06-07-2017 , [2017] UKUT 0277 (LC)
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Neutral Citation | [2017] UKUT 0277 (LC) |
| Date | 06 July 2017 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 29 2017 |
UPPER TRIBUNAL (LANDS CHAMBER)
Neutral Citation Number: [2017] UKUT 0277 (LC)
Case No: LRX/29/2017
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – SERVICE CHARGES – dwelling – student accommodation comprising demised bed-sits with shared use of lounges, kitchens and dining space – whether bed-sits “part of a building intended to be occupied as a separate dwelling” – whether tribunal having jurisdiction in relation to service charges – s.38, Landlord and Tenant Act 1985 – appeal allowed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF
THE FIRST-TIER TRIBUNAL (PROPERTY CHAMBER)
BETWEEN:
JLK LIMITED
Appellant
and
EMMANUEL CHIEDU EZEKWE
(and others)
Respondents
Re: Alexander Terrace
Hatton Garden
Liverpool L2
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Martin Rodger QC, Deputy Chamber President
Royal Courts of Justice, London WC2A
22 June 2017
Justin Bates, instructed by EAD Solicitors LLP, for the Appellant
Adrian Carr, instructed by Bury & Walkers LLP, for the Respondents
The following cases are referred to in this decision:
Baker v Turner [1950] A.C. 401
Cole v Harris [1945] 1 KB 474
Horford v Lambert [1976] Ch. 39
King v Udlaw Ltd [2008] L. & T.R. 28
Llewellyn v Hinson [1948] 2 K.B. 385
Morgan v. Kenyon (1913) 110 L.T. 197
Neale v Del Soto [1945] 1 KB 144
Oakfern Properties Ltd v Ruddy [2007] Ch. 355
R(N) v Lewisham London Borough Council [2014] UKSC 61
St Andrews Place (Liverpool) RTM Company Ltd v JLK Ltd (unreported, first-tier tribunal, 21 January 2016)
Uratemp Ventures Ltd v Collins [2002] 1 AC 301
Williams v Perry [1924] 1 KB 936
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Alexander Terrace is a large building mainly on four floors which was erected in the nineteenth century as the headquarters of the Liverpool Fire Brigade. In 2012 it was converted to provide 93 units of residential accommodation intended for occupation by students. All but six of the units comprise a bed-sitting room with en suite facilities (the remainder have the use of shared showers and toilets). Each of the units is let on a long lease which demises the unit together with the right to use communal kitchens, lounges, showers and toilets situated on the same floor.
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The issue in this appeal is whether the First-tier Tribunal (Property Chamber) (FTT) has jurisdiction under the Landlord and Tenant Act 1985 to determine the amount of the service charges which the leaseholders of the units are liable to pay. The FTT will only have jurisdiction, and the leaseholders will only be entitled to the protection afforded by sections 18 to 30 of the 1985 Act, if the units are “dwellings” within the meaning of section 38. Amongst other protections the relevant sections of the 1985 Act limit service charges to sums reasonably incurred for works or services of a reasonable standard, require the provision of information and prior consultation with tenants on major works, impose time limits on the recovery of service charges and provide access to independent tribunals to determine disputes.
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In a decision given on 29 November 2016 the FTT decided that the units were “dwellings” and ruled that it therefore had jurisdiction to determine two applications under section 27A of the 1985 Act brought by 56 leaseholders concerning the service charges payable for the years 2014, 2015 and 2016 to their landlord, JLK Ltd, under the leases of 65 of the units. Recognising that developments of this type are not uncommon in the student accommodation sector, and that the issue is therefore one of wider practical significance, the FTT granted permission to appeal.
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At the hearing of the appeal both sides were represented by counsel: Justin Bates for the appellant and Adrian Carr for all 56 respondents who are named in the appendix to this decision. I am grateful to them both for their helpful submissions.
The relevant facts
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Planning permission was not required for the conversion of the former fire station to residential use but listed building consent was, and it was obtained on behalf of the appellant’s predecessor in title, Middle England Developments Ltd, in September 2011. The consent described the proposal as the conversion of the existing building to student accommodation.
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The work was certified as having been completed in accordance with the Building Regulations on 22 May 2012.
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The FTT inspected the building and described the accommodation as follows:
“There are 93 units of accommodation (“Units”), or “Pods”, as they were referred to by the Respondents’ Counsel, each Unit consisting of one single bedroom, a wardrobe and desk. Save for six Units, or Pods, each bedroom has an en suite shower, washbasin and WC. Some of the en suite bathrooms are adapted for use by a disabled occupant. The six units not having an en suite bathroom have the use of communal bathrooms on the same floor as the relevant accommodation.
Each cluster of five Units, or Pods, has the use of a communal kitchen, consisting of a sink and drainer, an electric hob and electric oven, all built into the kitchen units. Thus, on the ground floor twenty units are served by four kitchen areas, each identically having the above facilities. Each unit also has the use of a communal living area, usually adjacent to the kitchen area. All living areas have smoke alarms, emergency lighting and extractor fans. There are no locks on any of the internal doors other than those to the individual units.
Hot water and heating to the Property is supplied from a communal boiler in a plant room in the basement. Although there is gas supplied to the building for heating purposes, no gas is supplied to any Unit and the individual units are not separately metered for electricity or water.
Two lifts serve the three floors to the Property. The original staircase has been retained. The tribunal were informed that there had been a communal laundry room in the basement in which there were coin operated washing machines. There was also a gymnasium. The equipment for both these facilities had been removed at the time of inspection. There was also a manager’s office. The communal corridors and staircases have cctv.”
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After its conversion Alexander Terrace was occupied by students, but at the time of the FTT’s inspection it was entirely vacant. The original developer had gone into administration and the appellant had acquired the building from the administrator on 5 February 2014. Although it is not referred to by the FTT, I was informed that on 17 April 2014 a prohibition order under section 20, Housing Act 2004 was made by the local housing authority. The reason for this extreme step was that the communal boiler in the building had ceased to function and there was no longer any supply of hot or cold water. From that date the use of the building was prohibited and it became an offence for any person to use or permit the building to be used in contravention of the order. For a time after the students moved out squatters moved in.
The leases
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Before practical completion of the building had been certified almost all of the units of accommodation had been let by the original developer on leases for terms of 250 years. I was shown the lease of Unit F21 on the first floor of the building which was granted to Mr Ezekwe, the first respondent, on 5 October 2011.
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The lease is at a peppercorn rent and was granted in return for a premium. The only property demised by the lease is the unit itself (referred to as “the Property”) but the letting is with the benefit of rights specified in Part I of the Second Schedule. Those rights are expressed to be exercisable in common with all other persons having a similar right and include the right to use “the Facilities” on the same floor of the building or, at the discretion of the landlord, those elsewhere in the building. The “Facilities” are defined as “the kitchen, bathroom, shower and other areas provided for communal use by the owners of the Units in the Building”. An additional overlapping right is granted to use any facilities or things provided for common use, including the gymnasium in the basement.
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The lease includes a covenant on the part of the tenant to pay an annual maintenance charge, being a proportion of the sums spent from time to time by the landlord in the maintenance and administration of the building. It also includes a covenant requiring that:
“no part of the Property shall be used for any purpose other than as or incidental to a private dwelling in the occupation of one household only.”
The statutory provisions
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Section 18 to 30 of the 1985 Act are concerned with service charges, which are defined in section 18(1) as “an amount payable by a tenant of a dwelling”...
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