Tag Archives: Leasehold Valuation Tribunal

Payment of lease extension completion statement did not oust LVT’s judgement on costs

By section 60 of Leasehold Reform Housing Urban Development Act 1993 (the 1993 Act) it is the enfranchising residential tenant who must pay the costs of the extension lease. Where those costs are in dispute there is a mechanism for completion to take place without resolution of that dispute. This is provided by section 56(3) of the 1993 Act.

Whether the Leasehold Valuation Tribunal (LVT) has jurisdiction depends, to some extent, on section 91(1) of the 1993 Act. It says the LVT only has jurisdiction “in default of agreement” as to the amount of costs recoverable under section 60.

In the Upper Tribunal (Lands Chamber) case of Friends Life Ltd & Anor v Jones [2014] the central issue was whether a binding agreement as to the amount of the solicitors’ conveyancing fees occurred, or was made, when the residential tenant’s solicitor paid, without demur, the completion monies requested by the intermediate and head landlords, at completion of the extension lease, on 22 March 2013.

The Tribunal determined that there was no agreement as to costs because by its surveyor the residential tenant had five weeks earlier issued an application in the LVT under section 92(1)(d) of the 1993 Act seeking determination of the reasonable costs payable and, a week prior to the completion of the extension lease, the LVT had issued directions without hearing requiring the intermediate and head landlords to send a detailed statement of the costs which they sought under section 60(1) of the 1993 Act.

Seen in that context, the payment of the completion monies could not amount to an unequivocal acceptance of the 22 March 2013 cost figure. Rather, the payment of the full completion fees accorded with section 56(3) of the 1993 Act, which requires that where the amount of costs is not agreed the tenant cannot require completion of the extension lease without tendering the amount “so far as ascertained” of the costs for which the tenant is liable under section 60. Here the amount of the costs was “ascertained”, and full payment had been tendered and made, even if the amount of the costs had not been “agreed” because any costs in excess of £722 plus disbursements and VAT were disputed as was clear from the residential tenant’s surveyor’s section 92(1)(d) application.

In short, the payment of the costs on 22 March 2013 was merely the provision of full “security” so as to enable completion of the extension lease to take place pending the outcome of the residential tenant’s surveyor’s section 92(1)(d) application to the LVT. The fact that the tenant was acting by two representatives, or agents, did not affect that conclusion. Their separate acts were to be treated as the joint acts of the principal i.e. the residential tenant.

So the LVT had jurisdiction to decide the cost issue. That jurisdiction had not been ousted by any “agreement” as to the amount of costs recoverable under section 60.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Landlords not final say on share of residential service charge

Section 27A(6) of the Landlord and Tenant Act 1985 (“the 1985 Act”) makes void any agreement (other than a post-dispute arbitration agreement) by the tenant of a dwelling in so far as it claims to oust the Leasehold Valuation Tribunal (LVT)’s jurisdiction to determine anything which may be the subject of an application under sub-sections (1) or (3) of section 27A of the 1985 Act. Such questions include the amount of the service charge payable by the tenant.

The fact that sub-section (4) specifically excludes from the scope of sub-section (1) an application in respect of a matter which has been the subject of a post-dispute arbitration agreement demonstrates that dispute resolution provisions in general are not afforded any exemption from these anti avoidance provisions.

In the Upper Tribunal (Lands Chamber) case of Windermere Marina Village Ltd v Wild & Anor [2014] the lease of a residence provided for the tenant to pay a fair apportionment of the cost of services. That apportionment was “to be determined by the surveyor for the time being of the Lessor whose determination shall be final and binding”.

The principal issue in the appeal was whether section 27A(6) made void that agreement in the lease that the landlord’s surveyor’s decision on the apportionment of the service charge was to be final and binding.

The tribunal said the question referred to the LVT in this case was what proportion of the expenses incurred by the appellant was to be paid by the respondents.

By paragraph (2) of the Schedule to their leases the respondents had already agreed that they were to pay such proportion as was determined by the appellant’s surveyor, whose decision was to be final and binding.

That agreement was void because it had the effect of providing for the manner in which an issue capable of determination, by the LVT, under section 27A(1) was to be determined, i.e. by a final and binding decision of the appellant’s surveyor.

The effect of sub-section (6) was to strike out so much of an agreement as made such alternative provision.

The LVT had been entitled to consider what was the fair proportion of the expenses payable by the respondents, because the contractual mechanism for identifying that fair proportion, being the words “(to be determined by the Surveyor for the time being of the Lessors whose determination shall be final and binding)”, had been struck out by section 27A(6) of the 1985 Act.

Section 27A had completely deprived the landlord’s surveyor of his role in determining the apportionment: even if the alternative method, which it barred out, may also have been fair.

There may be other forms of lease in which the provision of a certificate or the making of a determination is a pre-condition of the tenant’s liability to make a payment. It may well be that that contractual procedure continues to bind the landlord and tenant, so long as the eventual content of the certificate or determination is still open to challenge before the LVT under section 27A.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.