Decision Nº LRX 33 2011. Upper Tribunal (Lands Chamber), 05-01-2012
| Jurisdiction | UK Non-devolved |
| Judge | George Bartlett QC President |
| Date | 05 January 2012 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 33 2011 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2012] UKUT 1 (LC)
LT Case Numbers: LRX/33/2011
LRX/34/2011
LRX/76/2011
LRX/102/2011
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – administration charges – charge for consent to underletting – whether precluded by statute – held that it was not – whether precluded if no provision for it in lease – held that it was not – reasonableness – Landlord and Tenant Act 1927 s 19(1)(a) and(b) – appeals allowed
IN THE MATTER OF APPEALS AGAINST DECISIONS
OF LEASEHOLD VALUATION TRIBUNALS FOR THE
EASTERN RENT ASSESSMENT PANEL
and
CHERRY LILIAN NORTON Respondent
Re: 9 Mortimer Way
Witham
Essex CM8 1SZ
and
JESSICA RUDNAY Respondent
Re: 20 Marshall Road
Banbury
Oxon OX16 4QR
BETWEEN FLAMBAYOR LIMITED Appellant
and
ANDREW HILL Respondent
Re: 17 Boroughbridge
Oakhill
Milton Keynes MK5 6FY
and
JAMES KNIGHT Respondent
Re: 3 Shelley Court
46 London Road
Reading RG1 5DG
No cases referred to
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These four appeals arise from decisions given in almost identical terms on applications under paragraph 5 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 in relation to administration charges made by landlords. The LVT panel was the same in each case. The issue in each case is whether the landlord has the right to charge the tenant a fee for consenting to the underletting of the property. There are two particular questions, raised because of the basis on which the LVT determined the applications: the first, which arises in all four cases, concerns the construction and application of section 19(1)(b) of the Landlord and Tenant Act 1927; and the second, which arises in two of the cases, concerns the construction and application of section 19(1)(a).
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The short facts relating to each of the appeals are these (I will refer to them for short as “Norton”, “Samnas”, “Flambayor” and “Knight”):
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In Norton the respondent holds the subject property for a term of 155 years from 1 December 2004 as successor in title under a lease dated 25 February 2005 made between Barratt Homes Limited (“the Developer”), Jason John Watson (“the Lessee”) and the appellant (“the Company”), under which the Developer demised to the Lessee a newly-built flat. The consideration was stated to be the payment of “the Premium”, which was specified as £123,295. The Lessee’s covenants were made with the Company, and they included a covenant not to underlet the property without the consent of the Company, such consent not to be unreasonably withheld (paragraph 9(c) of the Third Schedule), and a covenant “To pay all reasonable costs and expenses of the Company (including all solicitor’s and surveyor’s costs and fees) incurred in granting any consent under this Lease” (paragraph 16 of the Third Schedule). The respondent, wishing to underlet the property, sought the consent of the appellant, who sought to charge her a fee of £105 for this (as well as £75 for the preparation of a deed of covenant and £75 for registration of the underletting).
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In Samnas the respondent holds the subject property for a term of 125 years from 1 January 2006 under a lease dated 30 March 2007 from Barteak Developments Limited. The appellant is the successor in title of Barteak Developments Limited. The property was newly built. The demise was stated to be in consideration of the Premium, which was specified as the sum of £122,000, and the rents and covenants reserved by the lease. There is a covenant with the landlord, clause 4.3.2, not to underlet without the landlord’s written consent, such consent not to be unreasonably withheld. Under clause 4.4 the tenant is required within four weeks after any underletting to give notice in writing and deliver to the landlord or its solicitors a certified copy of any instrument of underletting and to pay to the landlord’s solicitors a reasonable fee, not being less than £40, for the registration of any such notice. The respondent, wishing to underlet the property, sought the consent of the appellant, who sought to charge her a fee of £105 for this (as well as £75 for registration of the underletting).
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In Flambayor the respondent holds the subject property for a term of 125 years from 1 July 2005 under a lease dated 3 May 2007 from Fairclough Homes Limited. The property was newly built. The demise was stated to be in consideration of the Premium, which was defined as the sum of £166,000, and the rent reserved by the lease. Also a party to the lease was Oakhill View Management Company Limited. There is a covenant, enforceable by the lessor and the management company (paragraph 25.2), not to underlet the demised premises without the prior written consent of the lessor and the management company, such consent not to be unreasonably withheld or delayed. The respondent, wishing to underlet the property, sought the consent of the appellant, who sought to charge her a fee of £135 for this (as well as £75 for registration of the underletting).
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In Knight the respondent holds the subject property for a term of 125 years from 1 April 1998 under a lease dated 18 December 1998 from Barratt Homes Limited. The respondent is successor in title to the tenant under the lease. The property was newly built. The demise was stated to be in consideration of the Premium, which was defined as the sum of £104,995. The appellant was also a party to the lease. Under paragraph 8.2 of Schedule 4 Part II of the lease the tenant covenants with the landlord, the management company and the other tenants or owners of the 39 flats forming part of the estate being developed by the landlord not to underlet the demised premises without the consent in writing of the management company, such consent not to be unreasonably withheld. Under paragraph 8.3 there are notification and other requirements where there is an underletting other than one at a rack rent without charging a premium and for a period not exceeding seven years. The respondent let the property under an assured shorthold tenancy agreement from 28 January 2010 at a rent of £750 per month, and the appellant sought from him a fee of £135 for consent to an underletting and a notice fee of £75.
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In each case the LVT held that the landlord was not entitled to charge a fee in respect of its consent to the underletting. (In Norton it also held that £75 for the deed of covenant was unreasonable and that £75 for registration was unreasonable but that £50 would be reasonable; in Samnas it held that £75 for registration was unreasonable, but that £40 would be reasonable; and in Flambayor it held that £75 for the registration of a shorthold tenancy was unreasonable and not payable; and in Knight it held that, since the property was let at a rack rent for less than 7 years, the lease itself excluded the registration process. Nothing arises in relation to these parts of the decision.) In Norton the LVT concluded that, despite the covenant in the lease for payment of the reasonable costs of granting consent, the landlord was precluded from charging for such consent by the provisions of section 19(1)(b) of the 1927 Act. It applied this reasoning in the other three cases also, but in addition in Samnas and Flambayor it held that, in any event, neither lease contained any provision entitling the landlord to charge for consent to underletting; and it concluded that section 19(1)(a) had no application in the absence of such a provision in the lease. In each case the tribunal granted permission to appeal against its decision on the entitlement of the landlord to charge a fee for consent to underletting.
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Section 19(1) provides as follows:
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In all leases whether made before or after the commencement of this Act containing a covenant condition or agreement against assigning, under-letting, charging or parting with possession of demised...
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