Landlord and tenant – Major works – Service charge – Section 19 of Landlord and Tenant Act 1985 – Whether cost of proposed works reasonable within section 19 – Whether affordability to lessees relevant to that issue – Whether LVT erring in deciding issue of reasonableness without considering affordability – Appeal allowed
The appellant owned the freehold of a purpose-built, three-storey block containing 28 flats let to the respondent lessees. In May 2011, it served notice on the respondents, under section 20 of the Landlord and Tenant Act 1985, of its intention to carry out major works to the block. The notice listed various items of external repair and redecoration. The appellant subsequently decided that, in addition to the works listed in the notice, it also needed to replace the balconies of the flats at substantial extra cost.
The appellant applied to the leasehold valuation tribunal (LVT), under section 27A of the 1985 Act for a determination as to the reasonableness of the cost of the proposed works. The LVT held that it was presently unable to determine whether the balcony works were reasonableness in scope and cost since those works had not so far been included in the consultation process between the appellant and the respondents. As to the other proposed works, it recorded that none of the respondents was claiming that they were unnecessary or excessive in scope and that the respondents’ only concern was one of affordability. It found that the scope of the proposed works and their estimated cost were reasonable.
The LVT went on to mention the Upper Tribunal decision in Garside v RFYC Ltd [2011] UKUT 367 (LC); [2011] PLSCS 246 and noted that, in light of that decision, a tribunal might find the cost of works to be unreasonable where the landlord had failed to take into account the issue of affordability to the lessees in relation to the phasing and timing of the works.
The appellant sought permission to appeal on the issue of, inter alia, whether the LVT had or should have taken the question of affordability into account. Refusing permission, the LVT stated that it was not necessary or proper for it to decide the Garside point, which had not been properly raised or argued by the parties at the hearing. Permission to appeal was subsequently granted by the Upper Tribunal.
Held: The appeal was allowed.
The LVT had found that the cost and scope of the proposed major works, excluding the balcony works, would be reasonable. Although the reference to Garside in the LVT’s decision might have indicated that it had considered the issue of affordability when considering reasonableness, and decided that issue in favour of the appellant, its additional explanation when refusing permission to appeal indicated otherwise.
It was necessary for the LVT to decide the Garside point in deciding whether the cost of the proposed works was reasonable since the issue of affordability might go to whether the costs were reasonably incurred within the meaning of section 19 of the 1985 Act. Since affordability had been the only concern raised by the respondents, the parties were entitled to a determination of it as the only live issue between them on a particular point. The LVT had erred in failing to determine the affordability issue and the matter should be remitted to it for determination. However, it would be wise for the LVT to give the judgement in Garside careful consideration before applying it to the facts of the instant case.
Stan Gallagher (instructed by Comptons Solicitors LLP) appeared for the appellant; the respondents did not appear and were not represented.
Sally Dobson, barrister