Landlord and Tenant Digest 19 (4)

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L&TR Digest Vol 19 (4) - Compiled by Piers Harrison and Daniel Dovar, Barristers

Commercial Update

Non-Domestic Rates – service of liability orders

Chuckwu v Redbridge LBC Unreported Ch D 21st May 2015

 Service of a summons for a liability order had not been effected when the address used was not the premises attracting rates nor the Defendants usual or last known place of abode, but was another business address of the Defendant.  However, the order would not be set aside as the underlying liability was not disputed.

 

Residential Update

Service Charges

Arnold v Britton [2015] UKSC 36

The service charge provision in several leases of chalets at a holiday park required the lessee to pay an initial annual service charge of £90, which increased annually at a compound rate of 10%. The Appellant argued that the clause should not be given that interpretation inter alia on the grounds that, after a number of years, the charge would significantly exceed the cost of providing the services. The Supreme Court rejected the appeal. When interpreting a written contract, the court must identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. While reliance must be placed on commercial common sense, this should not undervalue the importance of the language of the provision [17]. Commercial common sense cannot be invoked by reference to facts which arose after the contract was made; it is only relevant to ascertaining how matters would or could have been perceived as at the date of the contract. The fact that an arrangement has worked out badly or even disastrously is not a reason for departing from the natural meaning of the language; neither is the fact that a certain term appears to be very imprudent.

Ashleigh Court Right To Manage Company Ltd v De-Nuccio and others [2015] UKUT 258

Substantial compliance with the consultation requirements under the Landlord and Tenant Act 1985 was not sufficient and questions of prejudice were only relevant to the dispensation stage. On the facts of the case the requirements to state a place and hours of inspection for inspection of a description of works had not been complied with. In respect of two challenged items of expenditure the Upper Tribunal upheld the decision of the FTT on reasonableness.

Tedla v Cameret Court Residents Association Ltd [2015] UKUT 221

A service charge demand that contained the name and address of the landlord but which wrongly identified another party as the landlord did not comply with s. 47 LTA 1987:

“The statutory requirement is not simply that the name and address of the landlord must appear on any written demand. The tenant must be informed of the name and address of the landlord, hence the requirement that: “the demand must contain the following information”. A demand which provides the name and address of two or more different companies without identifying which of them is the landlord does not, in my judgment, provide the required information. The tenant is not to be left to guess which of two or more parties is the landlord, but is to be informed of the landlord's identity.”

Caribax Limited (and others) v Hinde House Management Company Limited [2015] UKUT 0234 (LC)

The leases of the flats in a residential block required that the landlord should establish a reserve fund to cover several designated items of expenditure and that the fund should be held in a specially designated trust fund. The lease further provided that the cost of those designated items should be met first from the reserve fund. The FTT accepted the Respondent’s submission that because the reserve fund had not been held in such a fund, there was no obligation on the part of the Respondent to meet the cost of the designated items first from the reserve fund. The Upper Tribunal reversed that decision noting that that interpretation amounted to allowing the landlord to take advantage of its own breach of covenant.

Union Pension Trustees Ltd v Slavin  [2015] UKUT 103 (LC)

In a service charge dispute, the landlord failed to provide invoices to establish the cost of significant works that had been undertaken.  The FTT found that it had not made out its case and awarded nothing in respect of the works.  The UT disagreed, finding that there was ‘ample’ evidence before the FTT that works had been carried out.  It was agreed that the work has been carried out.  The landlord had made a statement setting out the sums paid for the works. 

There was also a dispute as to whether legal costs were recoverable by way of service charge.  The relevant service charge provision was as follows:

“… any other costs and expenses reasonably and properly incurred in connection with the landlord’s Property including without prejudice to the generality of the foregoing (a) the cost of employing Managing Agents and (b) the cost of any Accountant or Surveyor employed to determine the Total Expenditure and the amount payable by the Tenant hereunder.”

The UT considered that this did not cover legal costs or the costs of proceedings.  There was no express reference to either lawyers or legal proceedings or professionals in this clause.  Whereas another clause made express reference to ‘professionals’ and another, in relation to s146 of the Law of Property Act 1925 which made express reference to solicitors’ and counsels’ fees incurred in legal proceedings.  Another relevant factor in construing the terms of the lease is to consider the factual matrix at the time of the grant; which in this case was 1981. 

Tintern Abbey Residents Association Ltd v Owen [2015] UKUT 0232 (LC)

A FTT failed to provide sufficient reasons for its decision on a service charge dispute.  However, the matter would not be remitted as the tenants had admitted the sums in question and so the FTT had no jurisdiction to hear the matter.

The UT outlined what a decision should contain:

“Rule 36(2) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 requires the FTT to provide written reasons for its decision.  Those reasons need not be elaborate. They should identify the issues for decision, and provide a summary of the tribunal’s basic factual conclusions.  They need not to recite the evidence in detail but they must briefly explain why the tribunal has arrived at its conclusions.” (para 20)

There was also an issue about the format of the demand.  The service charge demand contained two names and addresses without identifying which of the two was the landlord.  That did not comply with the requirements of the Landlord and Tenant Act 1987.

“A demand which provides the name and address of two or more different companies without identifying which of them is the landlord does not, in my judgment, provide the required information.  The tenant is not to be left to guess which of two or more parties is the landlord, but is to be informed of the landlord’s identity.” (para 37)

However, that was not fatal for recovery of the service charges as a failure to comply with section 47 was suspensory only in nature. 

 

RTM

Post Box Ground Rents Ltd v The Post Box RTM Company Ltd [2015] UKUT 230

The Upper Tribunal held that where an RTM company has issued an application in the FTT seeking to acquire the right to manage, the withdrawal of an application does not, without more, bring that application to an end. The application ends only when the tribunal formally dismisses it (R (O Twelve Baytree Limited) v Leasehold Valuation Tribunal and Others [2015] 1 WLR 276 considered).

 

Mutual Housing Associations

Southward Housing Co-operative Ltd v Walker [2015] EWHC 1615 (Ch)

A tenancy granted by a fully mutual housing association had been caught by the rule against uncertain terms if Mexfield Housing Co-operative Ltd v Berrisford [2011] UKSC 52 were followed that would have the effect of creating a 90-year tenancy under the Law of Property Act 1925 s.149(6). However as that was directly contrary to the parties' intentions and fundamental aspects of the agreement, it was to be treated as a contractual licence (Mexfield distinguished). The provisions in the Housing Act 1985 and the Housing Act 1988 excluding fully mutual housing co-operatives' tenancies from security of tenure did not have to be read down so as to comply with  ECHR art.8 and  art.14

 

Rent Act 1977: Fair rent

Trustees of the Israel Moss Childrens's Trust v Bandy [2015] UKUT 276 (LC)

The FTT had failed to give adequate reasons for its deductions to the market rent which exceeded the deduction contended for by the respondent. It amplified its decision when permission to appeal was sought but the Upper Tribunal held that the reasoning was still defective. The matter was remitted to a differently constituted FTT for a fresh determination.

 

Leasehold enfranchisement

Rossman v Crown Estate Commissioners [2015] UKUT 288

On an application for lease renewal the existing lease apportioned the lessee's liability to a service charge contribution on a fixed percentage basis. The tenant argued that it ought to have been modified in his new lease to a fair proportion based on the floor space of his flat, given that the aggregate of service charge contributions for which the lessees were liable was well in excess of 100% of expenditure. The Upper Tribunal agreed, set aside the decision of the FTT and remitted the matter for consideration of the terms of modification.

 

Improvement Notices

Hastings BC v Braear Developments Ltd  [2015] UKUT 145 (LC)

Where all the long lessees of a five flat block were collectively in receipt of the rack rents, they were ‘persons having control’ of a building and were the correct party for a local authority to serve an improvement notice under the Housing Act 2004 on in respect of hazards arising out of the condition of common parts in an unlicensed HMO.  The notice should not have been served on either the RTM company or the freeholder.  The Upper Tribunal went on to give some guidance as to who improvement notices should be served on.  

“An improvement notice in respect of the common parts of a building containing one or more flats which is not an HMO is required by paragraph 4(2) to be served on a person who is an owner of the specified premises concerned (i.e. the common parts), and who in the authority's opinion ought to take the actions specified in the notice. It is not necessary that the notice should be served on all owners.

The expression “owner” in relation to premises means the freeholder (referred to in s. 262(7)(a) as “a person (other than a mortgagee not in possession) who is for the time being entitled to dispose of the fee simple of the premises whether in possession or in reversion”) and also includes both the lessor and the lessee under a lease which the unexpired term exceeds three years. By paragraph 4(3) the “owner” of common parts also includes any owner of the building or part of the building or (in the case of external common parts) of the particular premises in which the common parts are comprised.

Applying these provisions to a self contained building which is not a section 257 HMO, but which is under the management of an RTM company, I suggest that the following persons might properly be the recipients of an improvement notice given under paragraph 4. First, the freeholder, who satisfies the description of “owner” in s. 262(7)(a) , as being entitled to dispose of the fee simple of the premises in reversion. Secondly, some or all of the lessees of individual flats with leases for unexpired terms exceeding 3 years, each of whom is “an owner of … part of the Building” in accordance withs. 262(7)(b) . Every such lessee is also within the extended definition of owner in paragraph 4(3) in relation to common parts. The RTM company itself is not an owner and cannot be the recipient of an improvement notice.”

 

Introductory Tenancies

Gorman v Newark and Sherwood Homes Unreported Court of Appeal (Civil Division) 3rd June 2015

The Local Authority had, under the Housing Act 1996, adopted an introductory tenancy regime at the time when the tenant was granted an introductory tenancy and so tenant was an introductory and not a secure tenant.