Section 27A of the Landlord and Tenant Act 1985 enables parties to residential leases to ask a tribunal to decide the amount, date and manner in which, and by whom and to whom, service charges are payable. What limitation periods, if any, apply generally to applications under section 27A? Parissis v Blair Court (St John’s Wood) Management Ltd [2014] UKUT 503 (LC); [2014] PLSCS 330 provides us with an insight, but the point has yet to be settled and the judge warned that different considerations may apply depending on whether an application is brought by a landlord or a tenant.
The Upper Tribunal had to decide whether the doctrine of laches applied because the tenant had taken too long to bring proceedings under section 27A in respect of service charges levied between 2001 and 2005. The doctrine of laches is an equitable doctrine, which can be used to bar claims that would be unconscionable because the delay in bringing the claim would prejudice the other party. The Upper Tribunal decided that the doctrine does not apply to section 27A applications, since they are an exercise of a statutory right rather than a claim for equitable relief.
The judge considered various other possibilities in passing. It was suggested that section 19 of the Limitation Act 1980 could apply because there is a six-year limitation period where service charges are reserved as rent. However, the judge rejected the suggestion on the ground that this was not an action to recover arrears, or damages in respect of arrears of rent. The tenant had applied for a determination of what was properly payable by way of service charge – and section 19 was not applicable.
The judge also considered that section 9 of the Limitation Act would be inapplicable; this was not an action to recoup a sum “recoverable by virtue of any enactment”. Section 5 of the Limitation Act, which applies a six-year limitation period to actions founded on simple contracts, was also inapplicable. Applications under section 27A are not founded on simple contract and could be a precursor to an application under section 24 of the Landlord and Tenant Act 1987 for the appointment of a manager.
Could this have been an action on a “specialty”, which includes a statute? The judge did not need to decide this point because the proceedings were brought inside the 12-year limitation period, which section 8 of the Limitation Act applies in such cases.
Finally, although the judge accepted that the landlord had held the service charge payments under the statutory trust imposed by section 42 of the Landlord and Tenant Act 1987, he doubted whether it could be argued that the landlord had converted the funds to its own use by paying the service charge bills. At the point of payment, the landlord would have had no way of knowing that the service charge might subsequently be adjudged to be unreasonable. As a result, the judge took the view that section 21 of the Limitation Act, which deals with trust property, did not apply.
However, the judge did suggest an alternative, which was that the application might be dismissed as frivolous, vexatious or an abuse of process under the rules that apply to proceedings before the tribunal.
Allyson Colby is a property law consultant