Landlord and tenant – Service charges – Paragraph 14 of schedule 6 to Housing Act 1985 – Appellant acquiring leases of flats as secure tenant under statutory right to buy – Respondent issuing proceedings for unpaid service charges – First-tier Tribunal determining appellant liable to pay sums claimed – Appellant appealing – Whether FTT right to find appellant liable to contribute towards costs of roof repairs – Appeal allowed
The appellant held long leases of two flats in Rothesay Gardens, Plymouth, No 96 (an upper-floor flat) and 146 (a ground-floor flat). They were granted pursuant to section 122 of the Housing Act 1985 (the 1985 Act), which gave secure tenants of local authority housing the right to buy their homes on the terms provided by the Act.
The flats were in separate buildings, each of which was a two-storey “Cornish Unit” with two flats on the ground floor and two on the upper floor, each with its own separate entrance. They were constructed with pre-cast reinforced concrete walls and a traditional timber pitched roof.
In 2018, the roofs of the buildings were inspected by the respondent, which held the freehold reversions, and found to be in urgent need of repair. After consultation, the roofs were stripped of their tiles, the roof structures renewed and new tiles fitted.
The respondent issued county court proceedings claiming unpaid service charges including £7,965.60 towards the cost of replacing the roofs. The proceedings were transferred to the First-tier Tribunal (FTT) to determine the amount of the service charge payable under section 27A of the Landlord and Tenant Act 1985. The appellant disputed its liability to contribute towards the cost of roof repairs.
The appellant appealed against the FTT’s decision that the appellant was liable for the sums demanded. The issue was whether the FTT was right to find that the appellant was liable to contribute towards the costs of repairing the roofs.
Held: The appeal was allowed.
(1) Because the leases were granted pursuant to the right to buy, the legislative background was an aid to interpretation of the covenants, but it was not necessarily determinative. There was no presumption that the cost of all works that the landlord was obliged to carry out could be passed on to the lessees: City of London v Leaseholders of Great Arthur House [2021] EWCA Civ 431 followed.
Section 139(1) of the 1985 Act specified that a grant of a lease executed in pursuance of the right to buy was to “conform” with parts 1 and 3 of schedule 6 to the 1985 Act. Part 3 of schedule 6 was concerned with the terms of leases granted pursuant to the right to buy. Paragraph 14 dealt with covenants by the landlord where the dwelling-house was a flat.
(2) The general pattern of the statutory scheme, as far as repairing obligations were concerned, was that the landlord was to be responsible for repairs to the structure and exterior of the flat and the building (paragraph 14(2)), and the tenant was to be responsible for keeping the interior of the flat in repair (paragraph 16(b)). By paragraph 16A, a lease might require the tenant to bear “a reasonable part” of the costs incurred by the landlord in discharging or insuring against the obligations imposed by the covenants implied by virtue of paragraph 14(2).
That requirement was modified during the first five years after the grant of the lease by paragraph 16B, which limited the tenant’s contribution to an amount not greater than the amount estimated in respect of works itemised in a notice given by the landlord before the lease was granted. Where specific works were not itemised in such a notice the tenant’s contribution was limited by reference to an estimated annual average amount notified by the landlord before the grant of the lease. Paragraph 18 rendered void any provision in so far as it purported to authorise the recovery of a service charge restricted by paragraph 16B.
(3) In the present case, the FTT held that the implied covenant introduced into the leases by paragraph 14(2) not only required the lessor to carry out repairs to the roof but inserted the implied covenant into the fourth schedule thereby creating a contractual obligation on the lessee to contribute half the cost.
The FTT was correct that the effect of paragraph 14(2) was to subject the lessor to the implied covenant to keep the whole of the structure and exterior of the flat and the building in which it was situated in repair. At No 146, the implied covenant duplicated the lessor’s obligation to keep the reserved premises (including the roof) in repair. At No 96, the implied covenant was the only obligation on the lessor to repair the roof.
But the covenant implied into the lease by the statute said nothing about any corresponding obligation on the lessee to contribute towards the costs incurred by the lessor in complying with it. Moreover, paragraph 16A(1) left the parties free to agree whatever terms they chose about contributions by the tenant towards costs incurred by the landlord in discharging the implied obligations (provided those contributions did not exceed a reasonable part of those costs). In neither of the leases in this case did they expressly agree anything about those costs. Nor could any obligation to contribute be implied.
(4) The FTT relied on paragraph 14(4) as nullifying the parties’ agreement that the landlord’s obligation to repair the exterior of the building was not to include an obligation to repair the roof. However, paragraph 14(4) restricted the extent to which the parties might exclude or modify the obligations of the landlord under the covenants implied by paragraph 14. It had no effect on their express covenants, whether or not they were inconsistent with paragraph 14; the implied covenant to repair the structure and exterior of the dwelling and of the building was an additional obligation, the meaning of which was clear and which applied unamended.
It followed that when the respondent replaced the roof of No 96 it was complying with the implied covenant. When it replaced the roof of No 146 it was complying with the implied covenant and additionally with its obligation to keep the reserved premises in repair, but that obligation was excluded from the lessee’s contribution obligation under the lease.
The tribunal would set aside the FTT’s decision and substitute a decision that no service charge was payable by the appellant in respect of the work to replace the roofs.
Rawdon Crozier (instructed by Curtis Whiteford Crocker) appeared for the appellant; Jonathan Ward (instructed by Tozers) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Crisplane Ltd v Plymouth Community Homes Ltd
