Block of flats – Major works – Service charge – Determination of service charge payable – Section 20 of Landlord and Tenant Act 1987 – Leasehold valuation tribunal limiting recovery by appellant landlord to £250 per leaseholder on ground of failure to comply with statutory consultation procedure – Point not raised by respondent leaseholders or put to parties by tribunal – Whether breach of natural justice – Appeal allowed
The respondents were leaseholders of flats in a block of which the appellant was the landlord. In 2004, following the construction of further flats above the existing block, the appellant proposed to carry out a major programme of maintenance and repair to the original building. It sought estimates from several contractors and served various notices on the leaseholders regarding the works. Contracts were signed with the contractor that had submitted the cheapest tender, and the works commenced in 2005. Problems arose, resulting in a substantial variation in the nature of the works carried out. In May 2006, when the works were still far from being completed, those that had been finished at that point were certified and the payments received by the contractor were confirmed. The leaseholders and the appellant subsequently applied to the leasehold valuation tribunal (LVT) for a determination regarding the service charge payable by the leaseholders. The appellant included a small part of the major works cost in the 2004 accounts but sought to recover £133,734 for 2005.
The LVT determined that the appellant had failed in certain respects to comply with the statutory consultation procedure required under section 20 of the Landlord and Tenant Act 1987 and Part 2 of Schedule 4 to the Service Charge (Consultation Requirements)(England) Regulations 2003. It accordingly determined that the appellant was limited to recovering £250 per leaseholder in 2005 in respect of the major works costs, and that it could not charge any further sum in 2006. In the light of that, the LVT did not determine the reasonableness of the costs incurred. The appellant appealed, contending that the LVT’s decision on the section 20 point was wrong and that natural justice had been breached in circumstances where that point had not formed part of the respondents’ case and had not been put to the appellant by the LVT.
Held: The appeal was allowed.
An LVT should not reach a conclusion on a point or argument that the parties had not raised or that the tribunal had put to them. The respondents had not suggested that the appellant had failed to comply with the statutory consultation procedure in respect of the work as originally specified, or that any section 20 point arose in respect of subsequent events. Their statement of case had raised no point as to the service or adequacy of any notice, nor had they raised it at the substantive hearing. Consequently, the appellant’s evidence had not dealt with the point in detail. In those circumstances, the appellant had not been given a fair hearing since it had neither been presented with the suggestion that a section 20 point arose or given an opportunity to rebut it: Arrowdell Ltd v Coniston Court (North) Hove Ltd [2007] RVR 39 considered.
Although it would be pointless to overturn the LVT’s decision if the appellant was unable to show the Lands Tribunal that it had an answer to the section 20 point, the appellant had so shown. It could not be said that should the matter be remitted to another LVT, the result would inevitably be the same after a hearing at which the appellant was given a proper chance to answer the points upon which the LVT had relied. The determination of the first LVT would be set aside so far as it concerned the £250 limit on recoverability and the case would be remitted to a differently constituted tribunal to determine what amount the appellant was entitled to recover by way of service charge for the major works in the years 2005 and 2006.
Alastair Redpath-Stevens (instructed by Lee & Kan) appeared for the appellant; the respondents did not appear and were not represented.
Sally Dobson, barrister
