Service Charges & Estate Management - December 2011 updates

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SERVICE CHARGES AND ESTATE MANAGEMENT

DECEMBER 2011 UPDATE

Freeholders of 69 Marina, St Leonards-on-Sea v Oram [2011] EWCA Civ 1258

This case concerns whether costs of proceedings in the LVT were recoverable under the lease.  The substantive decision is not important but practitioners should be aware of paragraph 12 of the judgment of the Chancellor (Sir Andrew Morritt).  It purports to suggest that, in every case where service charges are recoverable as rent following agreement or determination, the landlord must serve a s.146 notice before it can forfeit (notwithstanding s.146(11) provides it does not apply to forfeiture for non-payment of rent).  It is respectfully suggested that this is not part of the ratio of the decision, is obviously wrong and per incuriam.

For further analysis on the interaction between service charges, rent and s.146 see Service Charges and Management: Law and Practice, 2nd Edition, para 4-017.

John Lennon v Ground Rents (Regisport) Limited [2011] UKUT 330 (LC)

Issue: LVT’s jurisdiction on transfer of proceedings from county court

Summary: The landlord issued proceedings in the county court seeking to recover £624.42 plus interest of £36.62 and a court fee of £65. The tenant disputed the amount of the sums claimed for insurance premiums, contended that he had already paid a sum of £264.88 for which he should be given credit, and also disputed his liability to pay certain further sums which he described as a “management charge”.  The county court made the following order, the wording of which is of central importance to the appeal:

“IT IS ORDERED THAT

Transfer to the Leasehold Valuation Tribunal, 10 Alfred Place, London WC1E 7LR, for determination of the reasonableness of sum charged for insurance.”

Despite the wording of the County Court Order, the LVT went on to decide certain further points. In particular the LVT rejected the tenant’s contention that he had already paid £264.88 off the insurance for the service charge year 2008/2009. The LVT also considered the administration charges in paragraphs 42-45 of its decision. It decided that the total sum of £133.25 was relevant and reasonably incurred and properly chargeable to the service charge account.

Held: The LVT did not have jurisdiction to decide any point beyond the reasonableness of the sum charged for insurance. Those parts of the LVT's decision which decided points beyond the reasonableness of the sum charged for insurance were quashed.

Church Commissioners for England V Koyale Enterprises (unreported) (Central London County Court, HHJ Dight, Thursday, 22nd September 2011)

Summary: There is conflicting authority (all county court decisions) on whether a default judgment for arrears of rent or service charges (reserved as rent) is a final determination for the purposes of s.81 of the Housing Act 1996 (as amended).

Held: A default judgment for arrears of rent or service charges (reserved as rent) is a final determination for the purposes of s.81 of the Housing Act 1996 (as amended).

(Transcript is available on Lawtel.)

Comment: This case may be useful to landlords in forfeiture proceedings but, as it is persuasive but not binding, it does not provide absolute clarity to this vexed issue.  There are still arguments the other way (for example, see Hillbrow (Richmond) Ltd v Alogaily [2006] C.L.Y. 2707; (Wandsworth CC), the White Book and Woodfall).

JONATHAN UPTON

TANFIELD CHAMBERS

DECEMBER 2011