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Landlord & Tenant Digest Volume 19 (6)

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22nd October 2015

Commercial Update

Insolvency

ELB Securities v Love [2015] CSIH 67

Although a company was restored to the register following a dissolution, its lease was not restored to it. On dissolution the lease fell to the Crown as bona vacantia. The lease was subsequently disclaimed. The company was then restored.

Despite the general provisions of the Companies Act 2006, that on restoration, the company carried on as if the dissolution had not happened, those provisions were subject to the specific provisions in that Act. In this case, ss1012 to 1014 and 1020 to 1022 provided a result that the lease did not return to the company as it had come to an end when it was disclaimed.

Re SSRL Realisations Ltd (In Administration) [2015] EWHC 2590
A landlord was given permission to forfeit a lease of a company in administration where, following Re Atlantic Computer Systems plc [1992] Ch 505, the forfeiture would not affect the administration, particularly as the administrator was not able to demonstrate that they would be able to assign the lease for any value.

Repairs

Creative Foundation v Dreamland Leisure Limited [2015] EWHC (Ch)

This is the widely reported ‘Banksy’ case. The tenants claimed they were entitled to the Banksy as they had removed it in accordance with their repairing obligations under their lease. However, they were ordered to hand it back to their landlord.

The removal of part of a wall to remove graffiti was not compliant with the tenant’s repairing obligation; particularly when the graffiti could have been painted over or cleaned off. In any event, part of a building did not become the property of a tenant when it was removed in the course of complying with a repairing obligation. The removal and disposal of any chattels would usually be pursuant to an implied licence to do so under the terms of the lease, but only when they were of nominal value. There would not be any such implied licence when the chattel had value, such as when Banksy had painted a mural on it.

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Residential Update

Service Charges

Cain v Islington LBC [2015] UKUT 542 (LC)

A residential tenant who paid their service charges for a number of years without reserving their rights, was taken to have admitted payment for the purposes of section 27A (4) of the Landlord and Tenant Act 1985 and thereby precluded from subsequently challenging them in the Tribunal.

Sub-section (4) provides that no application for the determination of the payability of a service charge can be made when those charges have been agreed or admitted. However, sub-section (5) expressly states that ‘the tenant is not taken to have agreed or admitted any matter by reason only of having made any payment.’

HHJ Gerald considered that s27A(5) could be overcome and an admission established by multiple payments “Putting it another way, the making of a single payment on its own, or without more, will never be sufficient; there must always be other circumstances from which agreement or admission can be implied or inferred. And those circumstances may be a series of unqualified payments over a period of time which, depending upon the circumstances, could be quite short, it always being a question of fact and degree in every case.””

In addition to this point, the Judge also commented on limitation issues that had been raised. Firstly, he considered that the limitation was not 6 years as this was not a claim for repayment of service charges, but for a determination as to payability under s27A. It also followed that the doctrine of laches did not apply as this was a claim under statute.

Ingram v Church Commissioners [2015] UKUT 495 (LC)

A landlord had outsourced its staffing obligations under a lease. In doing so, it had incurred VAT on the provision of those services and was entitled to pass those onto the tenant under the service charge regime. The services were not exempt from VAT as they were in relation to charges paid by a landlord to a third party for the supply of services.

Cowling v Worcester Community Housing Ltd [2015] UKUT 496 (LC)

A FtT did not have jurisdiction to entertain a challenge to the service charges under s19 of the Landlord and Tenant Act 1985, when the sums under scrutiny had already been the subject of a money judgment in the County Court and had already been determined to be a fixed charge and not a variable service charge.

Sadeh v Mirhan [2015] UKUT 428 (LC)

This was an appeal made by leaseholders in a mixed use building from a decision of the FTT about service charges. The service charges had been demanded by a manager appointed by the LVT. The Tribunal found that the FTT had failed to give adequate reasons on some points and had reached the wrong conclusions in others. The decision considered in part the receipt by the manager of a commission from the provider of insurance. The Tribunal held that the FTT had erred in saying that the onus was upon the appellants to prove that the manager was liable to account for the commission. The situation was the reverse, it was for the manager to prove that the sum which included commission should be treated as the cost reasonably incurred for insuring the building.

Clacy v Sanchez [2015] UKUT 387

This was an appeal by long leaseholders of flats from a decision of the FTT to the effect that the provision of a certificate was a condition precedent to liability in respect of payment of service charges. Held by the Upper Tribunal that the provision of a certificate was not a precondition to liability and that in any event there had been a course of conduct over 19 years which gave rise to an equitable estoppel precluding the lessees from asserting that certificates were necessary, alternatively the right to insist on certificates had been waived.

Elysian Fields Management Company Limited v John Nixon, Patricia Nixon, Imperial Buildings Management Company Limited v John Nixon [2015] UKUT 0427(LC)

This was an appeal by long leaseholders of flats from two decisions of the FTT to the effect that the timely calculation of a balancing charge and the provision of a notice certifying the amount due was a condition precedent to liability in respect of payment of service charges. The Upper Tribunal held that there was no basis upon which the FTT could properly decide that the consequence of a breach of the implied term to calculate the balancing charge within a reasonable time was the total loss of the right to charge any service charge for the year in question.

Assured Tenancy; Rent Determination

North Lincolnshire Homes Ltd v Amy Bentley [2015] UKUT 0451

On an application to the FTT to determine a market rent the Tribunal made a reduction for outstanding repairs notwithstanding that the tenant had prevented the landlord from obtaining access. The Upper Tribunal quashed the decision and remitted the matter: “In my judgment the condition of the Property is directly referable to the Respondent’s failure to allow access… In such circumstances, on this review I find that the F-t T erred in law in reaching the conclusion it did on this point. The matter should be remitted to the Tribunal for reconsideration of their decision as to the market rent to be determined in respect of this Property.””

Leasehold Enfranchisement; Valuation

Trustees of the Alice Cooper-Dean Charitable Foundation v Greensleeves Owners Limited [2015] UKUT 320 LC

Where an intermediate interest had a negative value as a consequence of prior individual lease extension claims, it was right in a subsequent collective enfranchisement claim to deduct the value of the intermediate interest from the value of the freehold.
Breach of covenant

Vine Housing Co-operative v Smith [2015] UKUT 0501 (LC)

The tenants tenancy contained a condition that he remain a member of the Co-operative. He was expelled as a member. The landlord sought a determination of breach under s168 of the Commonhold and Leasehold Reform Act 2002. The FtT considered that this was not a breach as he had not voluntarily relinquished his membership but had had it taken away from him. The Upper Tribunal disagreed, it was a breach. The tenant questioned the landlord’s motivation behind seeking the determination, the Upper Tribunal did not consider that was a relevant matter for the FtT. That was for the landlord and the County Court to be concerned about.

Lease Variation

Simon v St Mildreds Court Residents Association Ltd [2015] UKUT 508 (LC)

This matter concerned the threshold necessary under s35 of the Landlord and Tenant Act 1987 for a leasehold variation order. The 75% threshold needed to be met when the application was issued. It was not good enough to reach that threshold later when it was heard.
Legislation

Prescribed section 21 notices have been made under the Assured Shorthold Tenancy Notices Prescribed Requirements (England) Regulations 2015 (SI 2015/1646) and have already been amended by a subsequent amendment regulation (SI 2015/1725).

This material was first published by Thomson Reuters Professional (UK) Limited in Landlord and Tenant Review vol. 19 (6) and is reproduced by agreement with the Publishers.

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