Landlord and Tenant Act 1985 – Service charges – Jurisdiction of leasehold valuation tribunal (LVT) – Appellant leaseholders seeking determination of service charges – Appeal against determination of LVT – Whether jurisdiction to determine application against freeholder or contractor engaged by management company to provide services – Whether appropriate to continue appeal against management company only – Appeal dismissed
The appellants were leaseholders of flats on long leases that provided for the payment of a service charge to a management company. The directors of the company were the first appellant and another leaseholder, and the leaseholder of each flat held one share in the company. The leases contained a covenant by the management company to carry out or provide specified services and a covenant by the freeholder, as landlord, to enforce that covenant against the management company if so requested in writing by any of the leaseholders or their mortgagees.
The appellants applied to the leasehold valuation tribunal (LVT), under section 27A of the Landlord and Tenant Act 1985, for a determination of the service charges payable for the period 2004 to 2007. The respondents to the application were: (i) the freeholder; (ii) the management company; and (iii) the first respondent, which provided management services under a contract with the management company. The LVT’s determination was appealed by the appellants. On the appeal, an issue was raised for the first time as to whether there was jurisdiction to determine the application against either the freeholder or the first respondent. The respondents contended that there was not, since the first respondent was not a party to the lease and neither it nor the freeholder was a party by or to whom the service charge was payable. The appellants submitted that even if the freeholder and the first respondent were excluded, the proceedings should continue with the management company as sole respondent.
Held: The appeal was dismissed.
The LVT did not have the power to include the first respondent as a respondent since it was not a party to any of the occupational leases of the flats, which had been made between the freeholder, the management company and the individual tenant. There was no privity of contract between the appellants and the first respondent, and the latter was not a party by or to whom the service charge was payable.
The freeholder should not have been included as a respondent. The obligation to provide services was imposed upon the management company under the terms of the leases. The freeholder, as landlord, was under no obligation to become involved in the provision of services other than in the case of default by the management company, and only then on the basis of specific conditions. It had not been asked to become involved in that way. Further, it had not taken any part in the payment or receipt of service charges.
Consequently, the LVT’s decision was not binding upon either the freeholder or the first respondent. It was not appropriate to permit the appeal to proceed between the leaseholders and the management company. That would amount to an abuse of process because the position of those parties was identical such that there would be no dispute for the tribunal to determine.
The first appellant appeared on behalf of himself and the other appellants; Colin Green (instructed by Accent Group Ltd) appeared for the first respondent; Mr AB Butterfield, the managing director of the freeholder, appeared on its behalf.
Sally Dobson, barrister
