Landlord and tenant – Service charge – Insurance premiums – Application by lessee for determination of LVT as to reasonableness of service charges – LVT deciding appellant landlord’s costs of insuring premises not recoverable as service charge under terms of lease – Whether LVT having jurisdiction to decide that issue – Whether insurance premiums recoverable – Appeal dismissed The leasehold valuation tribunal (LVT) determined an application by the long lessee of a flat, under section 27A of the Landlord and Tenant Act 1985, contesting the reasonableness of the service charges demanded by the appellant landlord for four accounting years between 2008 and 2012. In particular, the lessee disputed whether the apportionment of insurance premiums as between her flat and other premises insured under the same policy was reasonable and whether it was reasonable for the appellant to recover any other sums as insurance. The lease contained an obligation on the appellant to insure the demised premises and the building of which it formed part and, in a separate clause, a covenant by the lessee to indemnify the appellant against all “rates duties charges assessments impositions and outgoings” payable in respect of the demised premises. The LVT allowed some items of service charge but disallowed others. On the issue of insurance premiums, it found that the amount charged for insurance was reasonable, but none the less disallowed that amount on the ground that the service charge provisions in the lease did not entitle the appellant to recover from the lessee its costs of complying with its insuring obligations under the lease. The appellant applied for permission to appeal, contending that the LV had exceeded its jurisdiction by determining a question as to the recoverability of insurance premiums under the lease, which it had not been asked to decide. Permission to appeal was granted. The respondent, who had by then acquired the lease, did not participate in the appeal. Held: The appeal was dismissed. (1) On the application to the LVT, the lessee had not raised any issue as to whether insurance premiums were recoverable as a matter of contract under the lease. Her concerns had related to the reasonableness of the premium, having regard to apportionment between properties, and whether any other sums were included. No point was taken that the lease did not contain a provision for recovery of the insurance premium. There was no evidence that the LVT had raised that issue with the parties. It was unfair and impermissible for a court or tribunal to determine a dispute on the basis of a case not put forward by a party and not raised by the court or tribunal: Thinc Group v Armstrong [2012] EWCA Civ 1227 applied. Consequently, the LVT had not been entitled to hold that insurance premiums were not recoverable under the lease without at least referring the issue back to the parties for their comments. (2) However, in principle, the LVT’s jurisdiction did extend to determining whether sums were payable under a lease as service charges. By virtue of section 175(4) of the Commonhold and Leasehold Reform Act 2002, the Lands Chamber could exercise any power that was available to the LVT. Through its representations on the applications for permission to appeal, the appellant had had an opportunity to put forward its case as to why insurance premiums were recoverable under the lease. Accordingly, it was now appropriate for the Lands Chamber to determine that issue on the appeal. On the proper construction of the lease, the appellant was not entitled to recover insurance premiums from the lessee. The premiums were not covered by the lessee’s covenant to indemnify the appellant against all “rates duties charges assessments impositions and outgoings” payable in respect of the demised premises. An insurance premiums was not a rate, duty, charge, assessment or imposition on the flat. Nor should it be regarded as an “outgoing” payable in respect of the flat. The wording of the relevant clause did not naturally extend to the payment of a sum due under an insurance contract voluntarily entered into by the appellant. It was not possible to imply a term into the lease requiring the lessee to reimburse the lessor for insurance premiums. There was no provision in the lease that gave any indication that the parties had contemplated that the lessee would pay for the cost of insurance. Although it was unusual for such a term not to be included, it was not necessary to imply one as a necessary incident of an existing provision, in order to give business efficacy to the contract: Liverpool City Council v Irwin [1977] AC 239; [1976] 1 EGLR 53; (1976) 238 EG 879 applied. It did not automatically follow that if one party agreed to provide a service or pay for something, then the other party was obliged to reciprocate: Rapid Results College v Angell [1986] 1 EGLR 53; (1986) 277 EG 856 applied. To imply such a term would involve re-writing the lease. The fact that such a term would be reasonable, or had probably been omitted by mistake, was not enough to justify taking that course. The lease was not unworkable without such a term. The appeal was determined on the written representations of the parties. Sally Dobson, barrister
Landlord and tenant – Service charge – Insurance premiums – Application by lessee for determination of LVT as to reasonableness of service charges – LVT deciding appellant landlord’s costs of insuring premises not recoverable as service charge under terms of lease – Whether LVT having jurisdiction to decide that issue – Whether insurance premiums recoverable – Appeal dismissed The leasehold valuation tribunal (LVT) determined an application by the long lessee of a flat, under section 27A of the Landlord and Tenant Act 1985, contesting the reasonableness of the service charges demanded by the appellant landlord for four accounting years between 2008 and 2012. In particular, the lessee disputed whether the apportionment of insurance premiums as between her flat and other premises insured under the same policy was reasonable and whether it was reasonable for the appellant to recover any other sums as insurance. The lease contained an obligation on the appellant to insure the demised premises and the building of which it formed part and, in a separate clause, a covenant by the lessee to indemnify the appellant against all “rates duties charges assessments impositions and outgoings” payable in respect of the demised premises. The LVT allowed some items of service charge but disallowed others. On the issue of insurance premiums, it found that the amount charged for insurance was reasonable, but none the less disallowed that amount on the ground that the service charge provisions in the lease did not entitle the appellant to recover from the lessee its costs of complying with its insuring obligations under the lease. The appellant applied for permission to appeal, contending that the LV had exceeded its jurisdiction by determining a question as to the recoverability of insurance premiums under the lease, which it had not been asked to decide. Permission to appeal was granted. The respondent, who had by then acquired the lease, did not participate in the appeal. Held: The appeal was dismissed. (1) On the application to the LVT, the lessee had not raised any issue as to whether insurance premiums were recoverable as a matter of contract under the lease. Her concerns had related to the reasonableness of the premium, having regard to apportionment between properties, and whether any other sums were included. No point was taken that the lease did not contain a provision for recovery of the insurance premium. There was no evidence that the LVT had raised that issue with the parties. It was unfair and impermissible for a court or tribunal to determine a dispute on the basis of a case not put forward by a party and not raised by the court or tribunal: Thinc Group v Armstrong [2012] EWCA Civ 1227 applied. Consequently, the LVT had not been entitled to hold that insurance premiums were not recoverable under the lease without at least referring the issue back to the parties for their comments. (2) However, in principle, the LVT’s jurisdiction did extend to determining whether sums were payable under a lease as service charges. By virtue of section 175(4) of the Commonhold and Leasehold Reform Act 2002, the Lands Chamber could exercise any power that was available to the LVT. Through its representations on the applications for permission to appeal, the appellant had had an opportunity to put forward its case as to why insurance premiums were recoverable under the lease. Accordingly, it was now appropriate for the Lands Chamber to determine that issue on the appeal. On the proper construction of the lease, the appellant was not entitled to recover insurance premiums from the lessee. The premiums were not covered by the lessee’s covenant to indemnify the appellant against all “rates duties charges assessments impositions and outgoings” payable in respect of the demised premises. An insurance premiums was not a rate, duty, charge, assessment or imposition on the flat. Nor should it be regarded as an “outgoing” payable in respect of the flat. The wording of the relevant clause did not naturally extend to the payment of a sum due under an insurance contract voluntarily entered into by the appellant. It was not possible to imply a term into the lease requiring the lessee to reimburse the lessor for insurance premiums. There was no provision in the lease that gave any indication that the parties had contemplated that the lessee would pay for the cost of insurance. Although it was unusual for such a term not to be included, it was not necessary to imply one as a necessary incident of an existing provision, in order to give business efficacy to the contract: Liverpool City Council v Irwin [1977] AC 239; [1976] 1 EGLR 53; (1976) 238 EG 879 applied. It did not automatically follow that if one party agreed to provide a service or pay for something, then the other party was obliged to reciprocate: Rapid Results College v Angell [1986] 1 EGLR 53; (1986) 277 EG 856 applied. To imply such a term would involve re-writing the lease. The fact that such a term would be reasonable, or had probably been omitted by mistake, was not enough to justify taking that course. The lease was not unworkable without such a term. The appeal was determined on the written representations of the parties. Sally Dobson, barrister