ON APPEAL FROM Hastings County Court
His Honour Judge Hollis
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HOOPER
LADY JUSTICE RAFFERTY
| Freeholders of 69 Marina, St Leonards-on-Sea - Robinson, Simpson & Palmer
||Claimants / Respondents
|- and -
|John Oram & Mohammed Ghoorun
||Defendants / Appellants
Grace Cullen (instructed by Heringtons LLP) for the Respondents
Hearing date : 25 October 2011
Crown Copyright ©
The Chancellor :
(1) "There shall also be paid by way of further or additional rent such sum or sums to be assessed in manner referred to in this clause as shall be a just and fair proportion of the amount which the Landlord may from time to time expend and as may reasonably be required on account of anticipated expenditure
(i) in performing the Landlord's obligations as to repair maintenance and insurance hereinafter contained
(ii) in payment of the proper fees of the surveyor or agent appointed by the Landlord in connection with the carrying out or prospective carrying out of any repairs and maintenance herein referred to and the apportionment of the cost of such repairs maintenance and collection between the several parties liable to reimburse the Landlord for the same and such fees for collection of the rents hereby reserved and the other payments to be paid by the Tenant under this clause." (clause 1(b))
(2) "PROVIDED FURTHER such just and fair proportion shall be such sum as the rateable value of the flat bears to the total rateable value of all the flats in the Building…" (second proviso to clause 1.)
(3) "The Tenant HEREBY CONVENANTS with the Landlord as follows:
(1) To pay the rents and other moneys hereby reserved and made payable at the times and in the manner in which the same are hereby made payable without any deduction whatsoever." (clause 3(1))
(4) "(12) To pay all expenses including solicitors' costs and surveyors' fees incurred by the Landlord incidental to the preparation and service of a notice under Section 146 of the Law of Property Act 1925 or incurred in or in contemplation of proceedings under Section 146 or 147 of the Act notwithstanding in any such case forfeiture is avoided otherwise than by relief granted by the Court and to pay all expenses including solicitors' costs and surveyors' fees incurred by the Landlord of and incidental to the service of all notices and schedules relating to wants of repair of the premises whether the same be served during or after the expiration or sooner determination of the term hereby granted (but relating in all cases to such wants of repair that accrued not later than the expiration or sooner determination of the said term as aforesaid)."
(5) "Subject to contribution by the Tenant as hereinbefore provided the Landlord hereby covenants with the Tenant as follows:
(1) at all times during the said term to keep in good and substantial repair and in clean and proper order and condition those parts and appurtenances of the Building which are not included in this demise or in a demise of any part of the Building" (clause 4(1))
"5. I am quite clear that this clause [clause 3(12)] in the lease is quite separate to clause 1(b) and this clause is an individual covenant between each tenant and the lessor.
6. I am also satisfied, having carefully considered this clause, that it does not pertain only in circumstances where a notice has been served under Section 146 of the Law of Property Act, which it has not in this case. There have been schedules relating to wants of repair that were served and the matter was referred to the LVT, who made determinations in relation to the value of the repairs to be done.
7. So in my view this clause falls to be determined quite exclusively from clause 1(b) and it binds the tenants in this case to paying all that they have specifically cost the lessors in terms of dealing with these proceedings, both before the LVT and before this court, in relation to solicitors' costs."
"10. She [the District Judge] concluded that the costs before the tribunal should fall under 3.12 of the lease. Although she does not go into the details, it must be the case that in deciding that she was taking the view that the costs fell incidental to the, or in contemplation of the preparation and service of proceedings under section 146 or 147 of the Law of Property Act 1925.
11. It seems to me that that was a perfectly reasonable view to have come to, and although I have given permission for this appeal, because it did seem to be a complicated issue that should be revisited. I am satisfied, having had the assistance of Mr Speller for the lessees and Ms Naylor for the lessors, that the District Judge was not wrong in coming to the decision she did. Especially bearing in mind that it is not now challenged that these were costs that the lessees could incur, indeed it seems they were sensible to do so as the lessees themselves were represented before the valuation tribunal and there was a question of equality of arms before that tribunal, although I know they do their best to discourage these sort of additional expenses."
He went on to consider and reject the other grounds of appeal.
"an amount payable by a tenant of a dwelling as part of or in addition to the rent—
(a)which is payable, directly or indirectly, for services, repairs, maintenance or insurance or the landlord's costs of management, and
(b)the whole or part of which varies or may vary according to the relevant costs."
It follows that the liability of the Lessees under clause 1(b) though recoverable as rent was a service charge for the purpose of the legislation relating to that subject matter. That legislation is now contained in the Housing Act 1996.
"A landlord may not, in relation to premises let as a dwelling, exercise a right of re-entry or forfeiture for failure by a tenant to pay a service charge…unless
(a) it is finally determined by (or on appeal from) a leasehold valuation tribunal…that the amount of the service charge…is payable by him, or
(b) the tenant has admitted that it is so payable."
Subsections (2) and (4A) plainly recognise that the s.146 procedure is applicable in the case of re-entry or forfeiture in the case of non-payment of a service charge. Given that the definition of service charge includes "an amount…payable as a part of…the rent", the evident intention is that the s.146 procedure, as modified, is to be applicable in cases of non-payment of a service charge even when such charge is recoverable as part of the rent.
"(1) A leasehold valuation tribunal may determine that a party to proceedings shall pay the costs incurred by another party in connection with the proceedings in any circumstances falling within sub-paragraph (2).
(2) The circumstances are where–
(a) … ,or
(b) he has, in the opinion of the leasehold valuation tribunal, acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings.
(4) A person shall not be required to pay costs incurred by another person in connection with proceedings before a leasehold valuation tribunal except by a determination under this paragraph or in accordance with provision made by any enactment other than this paragraph."
No order for costs in favour of the Freeholders was made by the Tribunal but counsel for the Lessees does not contend that this paragraph precludes recovery of such costs if a liability exists under the leases.
(a) "expenses…incurred by the landlord…in or in contemplation of proceedings under s.146…"; and
(b) "…all solicitors costs…incurred by the landlord of and incidental to the service of all notices and schedules relating to wants of repair…".
Given that the determination of the Tribunal and a s.146 notice are cumulative conditions precedent to enforcement of the Lessees' liability for the Freeholders' costs of repair as a service charge it is, in my view, clear that the Freeholders' costs before the Tribunal fall within the terms of clause 3(12). If and insofar as any of them may not have been strictly costs of the proceedings they appear to have been incidental to the preparation of the requisite notices and schedules.
Lord Justice Hooper
Lady Justice Rafferty