The London Borough of Hounslow v Waaler
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Burnett,Lord Justice Patten |
| Judgment Date | 02 February 2017 |
| Neutral Citation | [2017] EWCA Civ 45 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: C3/2015/1293 |
| Date | 02 February 2017 |
[2017] EWCA Civ 45
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL, LANDS CHAMBER
LRX/30/2014
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Lord Justice Lewison
and
Lord Justice Burnett
Case No: C3/2015/1293
Mr Wayne Beglan (instructed by the Legal Services Dept LB Hounslow) for the Appellant
Mr Graham Coyle (Lay Representative) for the Respondent
Hearing date: 24 January 2017
Approved Judgment
The London Borough of Hounslow owns an estate in Isleworth called the IvyBridge Estate. It consists of 4 tower blocks, 23 four and five storey blocks of flats, 13 houses and a block of sheltered accommodation. It was built in the late 1960s on a landfill site. About 850 residents on the estate are secure tenants and 140 are long leaseholders whose leases were created under the right to buy scheme. Ms Waaler is the lessee of 347 Summerwood Road which is within one of the block of flats (Block U) on the estate. Block U is four storeys high and contains 19 flats. It was originally constructed of concrete load bearing frames, floor and flat roof. It had painted timber windows with double thickness glazing. The flat roof was asphalt covered.
Under the terms of her lease both Hounslow and Ms Waaler had obligations. Hounslow's obligations included:
"(b) That the Council will keep in repair and redecorate when necessary the structure and exterior of the Flat and the Building including the drains gutters and external pipes thereof and will make good any defect affecting the structure….."
(c) That the Council will keep in good repair and condition all other property over or in respect of which the Lessee has been granted rights under the Second Schedule hereto"
Ms Waaler's obligations included:
"(c) Pay to the Council in every Financial year a sum on account of the Service Charge attributable to the Flat in that Financial year demanded by the Council in accordance with the provisions of the Sixth Schedule hereto by equal monthly instalments in advance….."
The sixth schedule provides that:
"The Service Charge attributable to the Flat for the Financial Year shall be a proportionate part of the costs or estimated costs…. incurred or to be incurred in that year by or on behalf of the Council in connection with the provision of services repairs maintenance or the Council's costs of management and including:-
(a) the costs of complying with the Council's covenant in clauses 5(b) and (c) of this Lease and with any similar obligations affecting any part of the Premises ….
(c) the costs of providing a reasonable reserve to finance future capital costs falling within sub-paragraphs (a), (b) and (c) hereof."
Finally, Ms Waaler also had an obligation:
"(e) If and whenever the Council shall make any improvement affecting the Flat or the Premises or any part thereof upon the service of a written demand pay to the Council a fair proportion of the cost of the improvement based on a comparison of the rateable value of the Flat …"
By the early to mid 1990s it was clear that significant work was required to the estate and on 18 November 2004, Hounslow served a notice of intention to carry out works to 10 of the blocks. It was stated that the total estimated rechargeable cost was £8,326,139.48 with Miss Waaler's estimated charges being £61,134.01. The works were carried out in phases, those to Block U falling within Phase 7 which was conducted simultaneously with Phase 8. These began on 10 January 2005 and practical completion was achieved on 21 May 2006. The final account with the contractor was signed on 17 December 2007. Four and half years later, on 23 March 2012 a demand was issued to Miss Waaler in the sum of £55,195.95.
Ms Waaler and two other lessees applied to the First Tier Tribunal under section 27A of the Landlord and Tenant Act 1985 for a determination of their liability to pay the requested service charge. The FTT held that in substance Hounslow was entitled to recover the claimed service charge. Ms Waaler then appealed to the Upper Tribunal which allowed her appeal in part.
The two principal items in issue in the Upper Tribunal were:
i) The replacement of a flat roof with a pitched roof; and
ii) The replacement of the original wooden-framed windows with new metal framed units, which in turn required the replacement of the external cladding and removal of asbestos.
The UT held that the FTT were entitled to find that the replacement of the flat roof with a pitched roof gave rise to a recoverable service charge; but were wrong to have held that the replacement of the windows and cladding did likewise. In essence, the UT held that the replacement of the windows and cladding was an improvement. Although the lease gave Hounslow the right to make improvements, and obliged the lessee to contribute to their cost, Hounslow ought to have taken particular account of the extent of the interests of the lessees, their views on the proposals and the financial impact of proceeding. The UT therefore decided that only part of the amount claimed under this head was recoverable and remitted the question to the FTT to determine how much. The decision of the UT is at [2015] UKUT 17 (LC), [2015] L & TR 24.
With the permission of the UT Hounslow appeals against the decision relating to the windows and cladding. Ms Waaler, represented by her partner Mr Coyle, seeks permission to appeal against other parts of the UT's decision on the following grounds:
i) In considering whether costs were reasonably incurred the UT was wrong not to have considered the totality of the costs involved;
ii) The UT failed to address the question whether Ms Waaler's arguments about the reasonableness of the works to the roof (which was not supported by her expert witness) ought to have been taken into account by the FTT;
iii) The UT was wrong not to interfere with the FTT's decision refusing to disallow the costs of the proceedings to be recovered through the service charge.
The FTT found the following facts about the replacement of the windows and cladding. The windows were not in disrepair although they had an inherent design problem. Two substantial panes of glass were installed in the tilt section of the window which placed an unreasonable strain on the hinges. This was a potential safety issue. There had been hinge failure over the years and although Hounslow had tried to use the hinges taken from other windows in the development, these were no longer available and it was not possible to obtain replacement hinges from the source in Sweden. That had been tried in earlier phases of the works but it had not solved the problems with the hinges. The FTT seems to have found that equivalent hinges were available at a cost of £140 per pair. But those, if they were the same as the original hinges, would in due course suffer the same problems unless works were done to the windows to lighten the weight. The latter would require removing the windows and replacing them, which would not in the FTT's view have been a simple job, and there would have been the associated scaffolding costs which might require to be in situ longer than just the straight replacement of the whole unit. The removal and replacement of the windows also resulted in the inevitable replacement of the asbestos and the cladding. The cost of the windows was not insubstantial. However, the aluminium window units which were in fact used would have a life span of twice that of the uPVC ones which might have been used at a lower cost.
The FTT continued:
"The question we have to determine is whether the Council's course of action was reasonable, whether the standard of works was reasonable and whether the costs were acceptable. Doing the best that we can on the information that is available to us, which we have to say from the Council's point of view was not as good as it should have been, we have come to the conclusion, albeit with some reluctance, that the Council were reasonable in seeking to replace the windows as a fresh unit and that the cost of replacing the cladding was an inevitable consequence. There is no doubt from the photographs of the development that the replacement of the windows and the cladding has again added to the aesthetic appeal of the black. We bear in mind also that the costs of the windows will also fall to be met by the Council. We were told that there were approximately 1,000 properties of which 140 were leasehold. We accept, therefore, that the upgrading of the windows has incurred substantial costs to the Council and although these may in part have been met by grant monies, the information we have been given is that the grant is repayable. It will also of course avoid the recurrence of problems that have affected the windows with the sheer weight and the hinges and should, therefore, ensure that the future costs are considerably reduced. Having accepted that the windows were to be replaced, the costs that flow with regard to the cladding and asbestos seems to us to be wholly reasonable and were not in truth challenged."
The statement that the cost of the windows would be "met by the Council" meant no more than that Hounslow would meet the cost of the windows in the 850 dwellings that were occupied by secure tenants who did not pay service charges rather than long leaseholders who did.
I do not believe that the following propositions are controversial in the context of contractual liability:
i) The concept of repair takes as its starting point the proposition that that which is to be repaired is in a physical condition worse than that in which it was at some earlier time: Quick v Taff-Ely BC [1986] QB 809.
ii) Where the deterioration is the product of an inherent defect in the design or...
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