Landlord and tenant – Service charges – Section 27A of Landlord and Tenant Act 1985 – Lease of flat being transferred to respondent on death of father – Respondent applying to First-tier Tribunal for determination in respect of service charges paid by father before she acquired her lease – Whether leaseholder entitled to seek determination of service charges paid by deceased predecessor in title – Whether application for years pre-dating respondent’s interest permitted to proceed to hearing – Appeal allowed in part
The respondent was the owner of a long leasehold interest in flat 2, Charles Willow Court, Colehill Road, Atherton (the building). She acquired her interest in the flat in June 2016 when she was registered as proprietor of a lease granted to her father (R) in June 2006. R died in December 2015 and his lease was transferred to the respondent by his personal representatives. The appellant was the freehold owner of the building and the respondents’ landlord.
In 2016, the appellant began consultation over the necessary external works to the building under section 20 of the 1985 Act. The leaseholders considered that sums which they had paid into a reserve fund ought to be sufficient to cover the cost of the works The respondent complained that the appellant was using the section 20 process to get leaseholders to pay £32,412.34 for work which was required because of its own failure to carry out its obligations. She applied to the First-tier Tribunal (FTT) under section 27A of the Landlord and Tenant Act 1985 for a determination in respect of service charges, including charges paid by her father before she acquired her lease.
The net result of the FTT’s determinations was a reduction in the routine service charges for the years from 2011 to 2016 by an amount which, in aggregate, exceeded the sum demanded in 2016 as a contribution towards the anticipated cost of the section 20 works.
The appellant appealed. The main issue was whether a residential leaseholder might apply to the FTT under section 27A for a determination in respect of service charges paid by her predecessor in title before she acquired her lease.
Held: The appeal was allowed in part.
(1) Section 27A(4)(a) only operated as a bar to jurisdiction where an agreement or admission had been made by a tenant. An agreement or admission by a guarantor or mortgagee would not prevent a tenant from seeking a determination as to the payability of a service charge. In this case, the respondent had not been the tenant during the years in which the disputed service charges had been levied and paid, she had not herself made the payments and nothing was due from her for the disputed years.
(2) Section 27A(1) did not state who might make an application to the appropriate tribunal in relation to a service charge. It was in unrestricted terms and had to be taken to have been drafted in a deliberate attempt to minimise opportunities for jurisdictional disputes. There seemed no doubt that a former tenant with a continuing liability would be able to make an application under section 27A, but the question was whether any other limitation ought to be read in to what was otherwise an unqualified entitlement: Sarum Properties Ltd’s application [1999] 2 EGLR 131 considered.
(3) There was no justification for implying any restriction into the entirely general words of section 27A. In some cases, the applicant for a determination under that section as to the proper amount of service charge payable would be the party who was liable to pay the service charge, the subject of the challenge, and the respondent to the application would be the party who was seeking to levy it on the applicant; but there was no reason why that would inevitably be the case. As to possible abuses of process the tribunal had ample powers to regulate its own procedures, including power to strike out vexatious or abusive applications: Oakfern Properties Ltd v Ruddy [2006] EWCA Civ 1389; [2006] 3 EGLR 30 applied.
(4) The opportunity to apply to the FTT under section 27A for a determination concerning a service charge was not restricted by the statute to those entitled to receive or obliged to pay the service charge in question. The words of the statute were unrestricted. A residential leaseholder might apply to the FTT under section 27A for a determination in respect of service charges paid by her predecessor before she acquired her lease. However, the outcome of the FTT’s determination in relation to the years before she acquired her father’s lease could be of no practical benefit to the first respondent. The service charges she challenged were paid by her father, and neither she nor her father’s estate had any continuing liability concerning them. The lease required that “the landlord shall give credit for such overpayment” which presumably meant the sum overpaid had to be credited to the account of the tenant who paid it. In respect of the sum found by the FTT to have been overpaid, that tenant was not the respondent and she could not now claim to be entitled to receive the overpayment. Her father’s executors might have a claim to recover it, but the respondent herself was not an executor and she would have to await the recovery and distribution of the funds by them.
(5) The FTT had been incorrect to suggest that the first respondent might have her contribution towards the cost of the section 20 works reduced by sums which ought to have been credited to her father’s service charge account. She had no legitimate interest in relation to the years which pre-dated her ownership. The FTT was entitled to investigate those years on the basis of the second respondent’s application, but not that of the first respondent.
Simon Allison (instructed by J B Leitch Solicitors, of Liverpool) appeared for the appellant; The respondents appeared in person by their representative.
Eileen O’Grady, barrister
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