Service charge – Block of flats – Appellant landlord making service charge demand – Respondent tenants applying to LVT for determination of liability for service charges –Section 20 and 20B of Landlord and Tenant Act 1985 – LVT raising points regarding appellant’s compliance with 1985 Act – Brief adjournment granted but appellant unable to provide evidence of compliance – Whether LVT entitled to raise section 20 points of own motion – Whether appellant deprived of fair hearing – Appeal allowed
The respondents were tenants in a block of flats of which the respondent was the landlord. In April 2007, the appellant issued tenants with a demand for service charges for the period 2004 to 2007. The respondents applied to the leasehold valuation tribunal (LVT) for a determination of their liability to pay and the reasonableness of the amount claimed.
At the hearing, the LVT, of its own motion, raised an issue with regard to the appellant’s compliance with the procedural requirements of section 20 of the Landlord and Tenant Act 1985, in particular whether: (i) a number of items claimed had been the subject of a demand within 18 months of the relevant charge being incurred, as required by section 20B; and (ii) section 20 notices had been served upon tenants in respect of all items. The appellant produced an undated and unaddressed photocopy of a document that purported to demonstrate its compliance with section 20B. However, the LVT was not satisfied with that and adjourned the hearing for 30 minutes to permit the appellant to obtain further evidence. The appellant failed to do so. Although it later provided a copy of a further letter to a tenant, the LVT did not consider that it assisted matters. It concluded that all items that predated the April demand by more than 18 months should be disallowed, and expressed the view that evidence to comply with section 20B should have been included in the appellant’s bundle and referred to in its statement of case. It disallowed further items on the ground that it was not satisfied that proper section 20 notices had been served in respect of them. The effect of the decision was to reduce the costs recoverable by the appellant by more than £70,000.
The appellant appealed. It contended that the LVT had not been entitled to raise the section 20 points of its own motion and that, having done so, it had acted unfairly in failing to allow sufficient time for the appellant to deal with them.
Decision: The appeal was allowed.
(1) The LVT had been entitled to raise the section 20 points of its own motion. The LVT might properly be concerned to clarify issues of law in cases where parties were not legally represented and those issues went to the central question of liability. A tenant might not be aware of the provisions of section 20B, which parliament had enacted expressly for their benefit. The LVT was not obliged to sit in silence and find the respondents liable for service charges when it had reason to query whether they were in fact liable; it was entitled to explore the matter on its own initiative if it considered that justice so required. Any problems that this might create could usually be resolved by giving the party against whom a point was raised every opportunity to deal with it. A party could have no justifiable complaint about a good point being raised by the tribunal and decided against it provided it had been given a fair and proper chance to deal with the matter.
(2) It would have been prudent for the appellant to plead in respect of each item that section 20 notices had been served, where relevant. Given the broad terms of the tenants’ application and the lack of any indication that they had received legal advice, it was rash to rely too strictly on the application and assume that no point would be taken on section 20 notices. However, the manner in which the LVT had dealt with the section 20 points, once raised, had deprived the appellant of a fair hearing. For the LVT to proceed to a decision on the section 20B point after an adjournment of only 30 minutes was not merely robust but unfair. One matter to be considered in exercising the discretion to grant more time to produce evidence was the potential inconvenience of doing so. If the LVT had granted an adjournment until the next day, or the next convenient day, it would have been beyond criticism. Regarding the section 20 notice, the appellant had not been offered an adjournment to enable it to produce evidence to prove that such notices had been served, and, therefore, had not been given a fair chance to deal with that point.
Per curiam: A landlord was not under any initial burden to prove to the LVT that section 20 had been complied with; however, if it did not deal with that issue in its initial case, all a tenant had to do to raise the issue was to give credible evidence that no notices had been received, whereupon the landlord would either have to lead credible evidence that notices had been served or lose on that issue. A landlord who was confident that the service of appropriate section 20 notices could be proven would be well-advised to raise the issue at an early stage to see whether it was in contention, rather than relying upon silence in an application drafted by a tenant without conspicuous legal skills.
Edward Denehan (instructed by Glinert Davis) appeared for the appellant; certain of the respondents appeared in person.
Sally Dobson, barrister
