Tenant paying service charges – Tenant applying to leasehold valuation tribunal claiming charges were excessive – Whether tribunal having jurisdiction to determine whether service charges reasonably incurred irrespective of whether charges paid by tenant – Section 19(2A) of Landlord and Tenant Act 1985 – Judge finding tribunal having jurisdiction – Landlord’s appeal allowed
The appellant landlord was the owner of a block of flats known as Witley Court, Coram Street, London WC1. Many of the flats in the block were held under long leases. In June 1999, B, the lessee of flat 74 Witley Court, applied to the leasehold valuation tribunal under section 19(2A) of the Landlord and Tenant Act 1985, contending that the management fee in relation to major works projects carried out since 1989 had been excessive. The landlord had carried out major works in the years 1989, 1990, 1992 and 1999, and B had paid all services charges except those incurred in 1999. The issue arose whether the tribunal had jurisdiction to determine whether service charges had been reasonably incurred by the landlord, irrespective of whether those service charges had already been paid by B. The landlord contended that the tribunal’s jurisdiction was confined solely to service charges that had not yet been paid. It was submitted that the words in section 19(2A) “a service charge is alleged to be payable”, referred to a current dispute about service charges. The landlord also submitted that there were sound policy reasons for the tribunal’s jurisdiction being so limited. The tribunal ruled that it had jurisdiction, under section 19(2A) of the Act, to hear applications in relation to service charges that had been paid. The judge dismissed the landlord’s appeal. The landlord appealed.
Held: The appeal was allowed.
There were a number of compelling interlocking policy considerations for giving the words “is alleged to be payable” their natural meaning and for not giving the tribunal jurisdiction over service charges that had already been paid. The first was multiplicity of proceedings, as the contrary conclusion would involve an investigation by the tribunal into past charges and, if the lessee was successful, a restitutionary action in the county court. A second consideration was that the prospects of a successful restitution claim were often slender. To accord the tribunal jurisdiction to enquire into the reasonableness of service charges extending back, perhaps, over many years could well involve a great waste of time and money. A third consideration was that of limitation. The Limitation Act 1980 did not apply to applications to the tribunal, with the result that the disturbing possibility arose of the tribunal examining the reasonableness of service charges extending back for an unlimited period.
Nicholas Dowding QC and Stephen Jourdan (instructed by Memery Crystal) appeared for the appellant; John Litton (instructed by the Treasury Solicitor) appeared for the respondent.
Thomas Elliott, barrister