Sheffield City Council v Jackson
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE,LORD JUSTICE PETER GIBSON,SIR PATRICK RUSSELL |
| Judgment Date | 21 May 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0521-17 |
| Docket Number | QBENF 97/1250/1 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 May 1998 |
[1998] EWCA Civ J0521-17
IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION
SHEFFIELD DISTRICT REGISTRY
(Mr Justice Asti11)
Royal Courts of Justice
Strand, London WC2
Lord Justice Nourse
Lord Justice Peter Gibson and
Sir Patrick Russell
QBENF 97/1250/1
MISS B A ROGERS (instructed by Mr Mark Webster, City Solicitor and Head of Administration, Sheffield City Counci1) appeared on behalf of the Appellant Plaintiff.
MISS A HAMPTON (instructed by Messrs Irwin Mitchell, Hartshead, Sheffield) appeared on behalf of the Respondent Defendants.
Thursday, 21st May 1998
This is a dispute about the liability for service charges of owners of houses on the Jordanthorpe Estate in Sheffield whose freeholds have been purchased under "the right to buy" provisions of part V of the Housing Act 1985. On 24th July 1997 Mr Justice Astill, on the trial of a preliminary issue, held that a covenant by the purchaser in a standard form of conveyance to contribute to the costs incurred by the Sheffield City Council in "the upkeep of landscaping" was unenforceable on the ground that it was unreasonable. The Council now appeal against the judge's decision.
The principal defendants to the action are Ronald Jackson and his wife Mary Margaret Jackson. On 21st March 1987, as secure tenants, they began renting from the Council 23 Selly Oak Road on the Jordanthorpe Estate. By a conveyance dated 5th June 1989 and made between the Council of the one part and Mr and Mrs Jackson of the other part 23 Selly Oak Road was conveyed to Mr and Mrs Jackson for an estate in fee simple pursuant to the right to buy provisions of the 1985 Act at a price of £10,105. By clause 5(2) of the conveyance Mr and Mrs Jackson (for themselves and their successors in title) covenanted with the Council to pay to the Council:
"such reasonable contribution as the Council shall from time to time require (hereinafter referred to jointly as 'Contributions' and individually as a 'Contribution') to the costs expenses and outgoings lawfully incurred or to be incurred by the Council in respect of the upkeep or regulation for the benefit of the locality (that is to say the Housing Estate of the Counci1) of which the Property forms part or any part of such locality of any land building structure works ways or watercourse such Contributions to be made in respect of such of the benefits to the said locality or part thereof of the type described in the column headed 'The Benefit Referred to' of the SCHEDULE OF BENEFITS hereto annexed as are indicated by means of a tick or the word 'Yes' or other affirmative indication in the column headed 'Where applicable or not' as being applicable to such locality or part thereof and such Contributions to be determined in accordance with Part IV of the said Schedule hereto and collected by the City Treasurer or other duly authorised officer of the Council."
Part IV of the schedule to the conveyance contained regulations to be applied under clause 5(2) in relation to the contributions for which provision was thereby made.
The schedule of benefits annexed to the conveyance had the following sub-heading:
"Being a list of benefits enjoyed by the estate upon which the Property is situated towards the cost of which the Purchaser(s) will contribute in accordance with the provisions of Clause 5(2) of the Conveyance/Transfer".
The relevant applicable benefit was described as "Upkeep of landscaping and play areas", for which the basis of charge was expressed to be "Annual expenditure allocated in proportion to the number of properties served". The estimated cost of that benefit was stated to be £19.02, to which was added an administrative charge of £5, making a total of £24.02.
There are four other defendants to the action, each of whom has acquired the freehold of a house on the Jordanthorpe Estate by a conveyance in the same form. Indeed, that has been the standard form for all conveyances made by the Council pursuant to the right to buy provisions of the 1985 Act. Although there are similar disputes in many other parts of Sheffield, some of which it was hoped might also be dealt with, this action was restricted by the judge to freehold houses on the Jordanthorpe Estate. The claim made against Mr and Mrs Jackson is for £53.72 in respect of service charges between 1989 and 1992, the charge for landscaping running at about £14 a year as opposed to the estimate of about £19. We have been told that the total arrears of service charges outstanding in respect of the Jordanthorpe Estate are approximately £15,655 and in respect of Sheffield as a whole approximately £868,300.
This action was commenced in the Sheffield County Court on 19th January 1993. Subsequently, it was transferred to the High Court. Shortly stated, the principal defences raised are the following:
(1) The covenant to pay service charges is void for uncertainty, further or alternatively, is unenforceable on the ground of unreasonableness.
(2) The Council have not shown that the charges have been reasonably incurred.
(3) The works have not been carried out to a reasonable standard.
By an order made by District Judge Lambert on 20th March 1996 it was ordered that the issue raised by the first of those defences should be tried as a preliminary issue. The trial of the issue took place before Mr Justice Astill on 18th and 19th June and 11th July 1997, when judgment was reserved. In giving judgment on 24th July, the judge held that the covenant was not void for uncertainty. On the question of unreasonableness, he rejected all the arguments raised by the defendants, except for one. That, however, was enough to entitle them to succeed.
The convenient course is to go at once to the provision of the 1985 Act on which the outcome of the appeal principally depends. Section 139(1) provides that a conveyance of the freehold executed in pursuance of the right to buy shall conform with parts I and II of schedule 6. Paragraph 5, in part I of that schedule, provides:
"Subject to paragraph 6, and to Parts II and III of this Schedule, the conveyance or grant may include such other covenants and conditions as are reasonable in the circumstances."
It is agreed that the covenant contained in clause 5(2) of the conveyance is a covenant falling within that paragraph. However, the Council's primary contention is that the reasonableness of any such covenant can only be challenged by the purchaser before he enters into it on the execution of the conveyance. Once the conveyance has been executed, the challenge comes too late. In order to assess the validity of that contention it is necessary to consider several other provisions of the 1985 Act with some care.
A start can be made with section 125, subsection (1)(a) of which provides that where, as here, a secure tenant has claimed to exercise the right to acquire the freehold and that right has been established the landlord shall within eight weeks serve on the tenant a notice complying with the section. Subsection (2) provides that the notice shall describe the dwelling-house, shall state the price at which, in the opinion of the landlord, the tenant is entitled to have the freehold conveyed to him and shall, for the purpose of showing how the price has been arrived at, state, amongst other things, "(a) the value at the relevant time". Subsection (3) provides:
"The notice shall state the provisions which, in the opinion of the landlord, should be contained in the conveyance or grant."
Subsection (4)(a) provides that where the notice states provisions which would enable the landlord to recover service charges from the tenant the notice shall also contain the estimates and other information required by section 125A.
The Council duly complied with section 125 in Mr and Mrs Jackson's case, their notice proposing a price of £10,105 and stating that the conveyance would include a power to recover service charges. The notice continued:
"In accordance with Section 125(4) and the Housing Act 1985 the attached schedule of Benefits states (a) the Council's estimate of the average annual amount (at current prices) which would be payable in respect of each head of charge (b) the aggregate of these estimated amounts."
The attached schedule of benefits was in the same form as the schedule of benefits later annexed to the conveyance of 5th June 1989. Mr and Mrs Jackson accepted the price proposed and the other provisions referred to in the Council's notice.
On receipt of a notice under section 125, the tenant has the right to have the value of the house redetermined under section 128, subsection (1) of which provides that any question arising under part V as to the value of a dwelling-house at the relevant time shall be determined by the district valuer in accordance with that section. I will read subsection (2), which in due course will be seen to be material to the Council's primary contention:
"A tenant may require that value to be determined, or as the case may be redetermined, by a notice in writing served on the landlord not later than three months after the service on him of the notice under section 125 (landlord's notice of purchase price and other matters) or, if proceedings are then pending between the landlord and the tenant for the determination of any other question arising under this Part, within three months of the final determination of the proceedings."
Section 127(1) provides that the value of a dwelling-house at the...
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...issue is important. Mr Hanoman's position in the court below was that the effect of this court's decision in Sheffield CC v. Jackson [1998] 1 WLR 1591, in the context of what covenants ought to have been included in the conveyance pursuant to s139(1) and schedule 6, para. 5 of the 1985 Act,......
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