Commonhold and Leasehold Reform Act 2002 – Administration charge – Appellant lessor making charge to respondent lessee for deed of variation to remedy perceived defects in certain covenants – Respondent obtaining determination of leasehold valuation tribunal (LVT) as to reasonableness of charges – Whether “administration charges” within section 158 of and and para 1(1) of Schedule 11 to 2002 Act – Whether LVT having jurisdiction to determine reasonableness – Appeal allowed
The respondent held a 999-year lease of a house on an estate of which the appellant acquired the freehold reversion in 1996. The lease contained a repairing covenant given by the company that managed the estate, but it did not contain any such covenant by the lessor. In 2007, the respondent wanted to sell her house. She raised concerns with the appellant regarding the adequacy of the lease repairing covenant, in particular as to: (i) the lack of any covenant by the lessor; (ii) the apparent lack of any right to require the lessor to enforce the lessee’s covenants against other lessees of the estate; and (iii) whether the covenant was wide enough to cover repair of the foundations. The appellant agreed to a deed of variation to remedy those matters in return for a payment of £500 and a further £350 plus VAT for legal fees incurred in the execution of the deed.
Following the execution of the deed, the respondent applied to the leasehold valuation tribunal (LVT) for a determination of the reasonableness of the charges made by the appellant for the deed as “administration charges” within section 158 of, and para 1(1) of Schedule 11 to, the Commonhold and Leasehold Reform Act 2002. Opposing the application, the appellant argued that the charges did not fall within the definition of an administration charge such that the tribunal had no jurisdiction to determine their reasonableness. The tribunal rejected that argument, holding that £350 plus VAT was a reasonable cost for the deed and ordering the appellant to refund £500 to the respondent. The appellant appealed.
Held: The appeal was allowed.
A charge for entering into a deed of variation did not constitute an administration charge within para 1(1) of Schedule 11 to the 2002 Act. The only potentially relevant part of para 1(1) was subpara (b), which dealt with a charge for or in connection with the provision of documents by the landlord. However, the words of subpara (b) could not be read so as to extend to the provision not only of documents relating to the lease but also to documents by way of formal deeds that amended the parties’ responsibilities under that lease. In the case of a deed of variation, the landlord was charging not only for the provision of the document but also for the substance of the variation, which might put the landlord in a less advantageous position with regard to the terms of the lease than it was before the variation. Accordingly, the LVT had had no jurisdiction to treat as an administrative charge the charges that the appellant made for the deed of variation and had not been entitled to consider the reasonableness of that charge or to reduce it.
Matthew Laing, of Rawlins Davy, of Bournemouth, appeared for the appellant; the respondent did not appear and was not represented.
Sally Dobson, barrister
