England and Wales Lands Tribunal

 


Sinclair Gardens Investments (Kensington) Ltd v Wang & Ors [2006] EWLands LRX_89_2005 (07 July 2006)

LRX/89/2005

LANDS TRIBUNAL ACT 1949

LANDLORD AND TENANT – services charges - Section27A Landlord and Tenant Act 1985 as introduced by Section 155 Commonhold and Leasehold Reform Act 2002 which came into force on 30 September 2003 – the Commonhold and Leasehold Reform Act 2002 (Commencement No. 2 and Savings)(England) Order 2003 – whether on an application made to a Leasehold Valuation Tribunal after 30 September 2003 the provisions of Section 27A(2) and (5) apply so as to enable LVT to exercise jurisdiction under Section 27A notwithstanding that the service charges claimed by the landlord were paid by the tenant before commencement date – Article 1 of the First Protocol of the European Convention on Human Rights – abuse of process.

IN THE MATTER OF AN APPEAL FROM A DECISION OF THE LEASEHOLD

VALUATION TRIBUNAL FOR THE LONDON RENT ASSESSMENT PANEL

BETWEEN SINCLAIR GARDENS INVESTMENTS Appellant

(KENSINGTON) LIMITED

and

(1) JASON WANG Respondents

(2) MICHELLE ALEXANDER

(3) DAVID UFLAND

(4) MAJA CEPRNIE

(5) REHANA SYED

(6) KUZUOMI ARAI

________________________

Re: 15 Adamson Road, London NW3 3HU

Before: His Honour Judge Huskinson

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

on 23 May 2006

Mr. Paul Letman instructed by P Chevalier for the Appellant

No appearance or representation by the Respondents

(Mr. John Graham attending as an observer)

The following cases are referred to in this decision:

Daejan Properties Limited v London Leasehold Valuation Tribunal [2001] EWCA Civ 1095

Pocock v Steel [1985] 1 All ER 434

Hewitt v Lewis [1986] 1 All ER 927

Gardner and Co Ltd v Cone [1928] 1 Ch 955

L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] AC 486

DECISION

Introduction

1. The Appellant is the owner of 15 Adamson Road, London NW3 3HU and is the landlord from whom the Respondents each hold their respective leases as tenants. The Appellant appeals, with permission, to the Lands Tribunal from a decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel ("the LVT") dated 5 July 2005 whereby the LVT decided certain preliminary issues against the Appellant.
2. The substance of the LVT's decision was that it did have jurisdiction to entertain an application made by the Respondents under Section 27A of the Landlord and Tenant Act 1985 as amended including jurisdiction in relation to the examination of service charges which had been levied upon the Respondents prior to 30 September 2003 (the commencement date of Section 27A) and which had been paid by the Respondents before that date. The LVT rejected the Appellant's argument that the LVT should decline to proceed to consider the Respondents' application (so far as it related to these service charges paid before the commencement date) either by reason of want of jurisdiction or on the basis that it would be an abuse of process to do so. It is from this decision that the Appellant appeals.
3. The application to the LVT was made on 4 March 2005 and sought to challenge the service charges payable in respect of the building under the service charge provisions in the various leases in respect of the years ending on 31 December in each of the years 1999 to 2004 and also sought to challenge the service charges for the then current year namely the year ending 31 December 2005. I was informed by Mr Letman that in fact the service charge year ended on 1 January in each year rather than on 31 December, but nothing turns on that (none of the leases of any of the premises were before me). It was accepted by Mr Letman that the LVT in any event enjoys jurisdiction to entertain part of the Respondents' application, namely that part which seeks to challenge service charges for the later years, ie service charges which do not fall within the category next mentioned, which Mr Letman argued was a category of service charges which the LVT lacks jurisdiction to consider. The category is this, namely service charges which became payable and were paid by the Respondents before 30 September 2003.
4. In summary the Appellant's argument was that, on the basis of the Court of Appeal decision in Daejan Properties Limited v London Leasehold Valuation Tribunal [2001] EWCA Civ 1095 the position immediately before the introduction of section 27A into the 1985 Act on 30 September 2003 was that the LVT had no jurisdiction to consider the reasonableness of the aforesaid category of service charges and that on the proper construction of the amending legislation and of the commencement and transitional provisions and having regard to the presumption against legislation having a retrospective effect, the new statutory provision in section 27A should be construed as not giving the LVT jurisdiction now to examine this category of service charge. Mr Letman argues that the LVT lacks jurisdiction to consider this category of service charge quite apart from any considerations under Article 1 of the First Protocol of the ECHR, but that Article 1 lends further weight to his argument that the statutory provisions should indeed be construed as not giving the LVT jurisdiction to consider the reasonableness of service charges when the service charge has been paid before the commencement date. In the alternative he argued that it is an abuse of process for the Respondents to seek to raise the reasonableness of the service charges demanded and paid in respect of these past years and that the LVT was wrong in declining to dismiss the application as being an abuse of process of the LVT under Regulation 11 of the Leasehold Valuation Tribunals (Procedure) England Regulations 2003.
5. The LVT's reasoning on the question of jurisdiction is contained in the following passage:

"It is the Tribunal's view that the clear effect of section 27A is to give the Tribunal jurisdiction to determine all aspects of the payability of service charges, where an application is made on or after 30 September 2003. The section therefore is not retrospective in effect, in that it does not purport to give the LVT the power to deal with any application made before that date. However, the scope of any dispute between the parties that may be dealt with by the LVT is not limited by reference to the date of payment or otherwise. The situation is wholly different to that pertaining for example, in Pocock v Steel [1985] 1 All ER 434, which changed the substantive rights of landlords to recover possession of dwelling houses. Had it been intended that there should be any limitation on the LVT's jurisdiction in this respect, there would have been clear words to that effect either in legislation itself or in the transitional provisions contained in the Commencement Order."

As regards to the abuse of process argument the LVT stated as follows:

"The tribunal did not accept that there had been unreasonable delay in bringing this action and that the landlord would be put to disproportionately costly and time consuming investigations. With good management the relevant documentation should still be readily available and accessible for the service charge years in question. Fortunately the landlord and managing agent remain the same throughout. It is apparent that the applicants have been unhappy with the service charges and management for sometime. They are entitled to query the reasonableness of the costs incurred and in fairness should be allowed to do so."

6. At the hearing before the Lands Tribunal there was no appearance by or on behalf of any the Respondents and none of the Respondents had indicated that they wished to participate as Respondents in the appeal. Mr Graham attended merely as an observer. I heard argument from Mr Letman who had prepared a helpful skeleton argument and bundle. I agreed that Mr Letman could supplement his argument on one aspect of the case (see paragraph 30 below) by making additional written submissions promptly after the hearing. He did so.
7. There was not before me any detailed material touching upon the merits of the Respondents' allegations that past service charges did not satisfy section 19 of the 1985 Act and were to some extent irrecoverable. It appears from the Appellant's statement of case at paragraph 7.3 and following that, apart from an issue relating to the redecoration and scaffolding in 2003, no issues were raised by the Respondents prior to 2005 regarding the reasonableness of the services charges levied under their leases in respect of the year's ending 31 December 1999, 2000, 2001, 2002 and 2003 and that the Respondents had paid the service charges demanded by the Appellant. There was no evidence laid before me as to the strength or weakness of any eventual argument (supposing that a ruling were ultimately made that there had been overcharge of service charges for these years) that the Respondents or any of them could succeed in a claim for restitution of monies overpaid. The Appellant's statement of case asserts that

"Retrospective legislation entitling a Tenant to challenge Service Charge paid in the past 6 years would seriously prejudice Landlords if their records have been destroyed or they have conducted themselves on the basis of the previous law."

However there was no evidence before me to indicate whether or not the Appellant would on the facts of the present case be seriously prejudiced if the Respondents were entitled to pursue their application before the LVT regarding these past years (supposing of course that the LVT has jurisdiction to do so). It should be noted that the LVT recorded in paragraph 13 of its decision:

"Mrs Wang explained that the applicants have been dissatisfied for some time but find it difficult to express, as three of them cannot speak good English and one lives abroad. She added that the landlord is not readily forthcoming with information or easily contactable."

The Legislation

8. Prior to the introduction of section 19(2A) to (2C) of the Landlord and Tenant Act 1985 by section 83 of the Housing Act 1996 (which took effect on September 1 1997) disputes under section 19 of the 1985 Act went to the County Court. Section 19(1) provides:

"Relevant costs shall be taken into account in determining the amount of a service charge payable for a period –

(a) only to the extent that they are reasonably incurred, and

(b) where they are incurred on the provision of services or the carrying out of works, only if the services are of a reasonable standard;

and the amount payable shall be limited accordingly."

9. Section 19(2A) and (2C) provide as follows:

"(2A) A tenant by whom, or a landlord to whom, a service charge is alleged to be payable may apply to a Leasehold Valuation Tribunal for a determination –

(a) whether costs incurred for services, repairs, maintenance, insurance or management were reasonably incurred,

(b) whether services or works for which costs were incurred are of a reasonable standard, or

(c) whether an amount payable before costs are incurred is reasonable.

(2B) ......

(2C) No application under subsection (2A) or (2B) may be made in respect of a matter which:

(a) has been agreed or admitted by the tenant,

(b) under an arbitration agreement to which the tenant is party is to be referred to arbitration, or

(c) has been the subject of determination by a Court or Arbitral Tribunal".

In the Daejan case the Court of Appeal held that while the County Court had jurisdiction to determine the reasonableness of service charges and to investigate this question in relation to service charges already paid, the wording of section 19(2A) limited an LVT's jurisdiction to examining services charges still unpaid. Thus a tenant who wished to challenge the reasonableness of service charges already paid would be limited to pursuing such a challenge in the county court and could not apply to the LVT because the LVT lacked jurisdiction.

10. The Commonhold and Leasehold Reform Act 2002 introduced a new section 27A into the 1985 Act in the following terms:

"27A Liability to pay service charges: Jurisdiction

(1) An application may be made to a leasehold valuation tribunal for a determination whether a service charge is payable and, if it is, as to –

(a) the person by whom it is payable,

(b) the person to whom it is payable,

(c) the amount which is payable,

(d) the date at or by which it is payable, and

(e) the manner in which it is payable.

(2) Subsection (1) applies whether or not any payment has been made.

(3) An application may also be made to a leasehold valuation tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to –

(a) the person by whom it would be payable,

(b) the person to whom it would be payable,

(c) the amount which would be payable,

(d) the date at or by which it would be payable, and

(e) the manner in which it would be payable.

(4) No application under subsection (1) or (3) may be made in respect of a matter which –

(a) has been agreed or admitted by the tenant,

(b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,

(c) has been the subject of determination by a court, or

(d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

(5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.

(6) An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination –

(a) in a particular manner, or

(b) on particular evidence,

of any question which may be the subject of an application under subsection (1) or (3).

(7) The jurisdiction conferred on a leasehold valuation tribunal in respect of any matter by virtue of this section is in addition to any jurisdiction of a court in respect of the matter."

The 2002 Act also, by section 180 and Schedule 14, repealed section 19(2A) to (3) of the 1985 Act.

11. By the Commonhold and Leasehold Reform Act 2002 (Commencement No.2 and Savings) England Order 2003 (hereinafter "the Commencement Order") it was provided that section 155, which introduced the new section 27A, was to come into force on 30 September 2003 and that the repeal of section 19(2A) to (3) of the 1985 Act should also take effect on that date. Article 2(c) and Schedule 2 of the Commencement Order made certain saving provisions including the following provision in paragraph 6:

"Liability to pay services charges

6. The amendment made by section 155 and the repeals of sections 19(2A) to (3) of the 1985 Act and of section 83(1) of the 1996 Act shall not have effect in relation to –

(a) any application made to a LVT under section 19(2A) or (2B) of the 1985 Act; or

(b) any proceedings relating to a service charge transferred to a LVT by a County Court,

before the commencement date."

12. The 2002 Act introduced substantial further measures extending the jurisdiction of Leasehold Valuation Tribunals. Schedule 12 of the 2002 Act set out a code of procedure for leasehold valuation tribunals including in paragraph 10 a limited power to determine that a party to proceedings should pay the costs incurred by another party. The power exists where the application to the LVT has been dismissed as being frivolous or vexatious or otherwise an abuse of process or where the applicant has in the opinion of the LVT acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings. Costs can only be awarded in the foregoing circumstances and the amount which a party can, in these circumstances, be ordered to pay is limited to £500 (or such other amount as may be specified in procedure regulations). The award of costs in the County Court is, of course, not so limited.

Appellant's submissions

13. Mr Letman drew attention to the position of a landlord, prior to 30 September 2003, in relation to services charges which had actually been paid by the tenant. While not immune from these paid service charges being challenged, such a challenge could only be mounted in the county court and the landlord therefore had the benefit that (a) a tenant would be discouraged by the prospect of an adverse costs order from mounting a challenge to paid service charges in the first place (b) even if, despite the foregoing, the tenant did mount such a challenge the landlord, if successful, could get a substantial order for costs against that tenant. Mr Letman drew attention to the problems as analysed in Daejan for landlords if tenants were able to challenge paid service charges before the LVT. In the light of this he submitted that the position of a landlord was substantially weakened by extending jurisdiction to entertain a challenge to paid service charges to the LVT. He argued that where services charges had been paid before the commencement of section 27A the landlord had a security of position which would be so significantly weakened by this extension of jurisdiction to the LVT that it could properly be said that existing rights enjoyed by the landlord would be removed if after 30 September 2003 a tenant could challenge in the LVT the reasonableness of service charges which had actually been paid before that date and which, until 30 September 2003, the tenant could only have challenged if he had been prepared to launch county court proceedings.
14. Mr Letman referred to Halsbury's Laws under the title Statutes in Volume 44 at paragraph 1283 to 1285 and paragraphs 1433 and 1434. He referred to the presumption against statutes acting retrospectively. He referred to Hewitt v Lewis [1986] 1 All ER 927 as an example of the language needed to make clear that a statute was to act retrospectively and to affect previously existing rights and he referred to the following passage:

"The general rule is that statutes are construed as operating only in cases or on facts which came into existence after the statute was enacted, unless a retrospective effect is clearly intended."

He also argued that this case showed that where a statute was intended to be retrospective and affect existing rights then it was made applicable to pending proceedings – and he drew attention to the provisions of the Commencement Order which make clear that the new provisions of section 27A are not to apply to pending proceedings. He argued this was a further indication against retrospectivity.

15. Mr Letman referred to Gardner and Co Ltd v Cone [1928] 1 Ch 955 especially at 965 and following. He argued that in just the same as it was held in that case that the legislation being there considered did not affect the consequences of a breach of covenant which had taken place before the Act came into force, the new provisions of section 27A(2) and (5) should also be construed as not having any effect on the consequences of a payment of service charges made before section 27A came into force, such that a tenant should remain limited to challenging a service charge which had been paid in the County Court.
16. Mr Letman referred to the Commencement Order and argued that it would be completely futile to say that section 27A does not operate in relation to a pending application, ie. an application made to an LVT before the commencement date, if a person could immediately after that date make a fresh application in respect of the earlier years under the new legislation. He argued that if it was intended to be retrospective, then the provisions of section 27A should be made applicable to pending applications, but this has not been done.
17. As regard Article 1 of the first protocol of the ECHR Mr Letman accepted that this was merely a parallel argument being in effect further material weighing in favour of the conclusion on construction and jurisdiction which he urged upon the Tribunal. He referred to certain passages from Human Rights Law and Practice (General Editors Lord Lester of Herne Hill QC and David Pannick QC) at paragraphs 4.19 and following. He argued that the Appellant had a legitimate expectation that a certain state of affairs applied and would continue to apply when the landlord received payment, before 30 September 2003, of service charges for the years 1999 to 2002. The Appellant received the money under the old law without the risk of having subsequently to face a challenge as to the reasonableness of the service charge in the LVT (with the potential disadvantages identified in the Daejan case including the inability to claim costs from an unsuccessful tenant). He argued that this legitimate expectation that the state of affairs would apply was a matter the interference with which could constitute the interference with the peaceful enjoyment of the Appellant's possessions or the deprivation of its possessions. He argued that this interference with the Appellant's property rights was not proportionate and could not be justified.
18. As regards the separate abuse of process argument (which only arises if the Appellant is unsuccessful on the argument regarding jurisdiction) Mr Letman did not seek to argue that the Respondents' application to the LVT should be dismissed as being frivolous or vexatious. He argued however that it was "otherwise an abuse of process of the Tribunal". He referred to a decision of another LVT in which the Tribunal (chaired by Lady Wilson) concluded that there was no statutory limitation period on claims by tenants under section 27A, but concluded that the provisions of section 27A(4) would dispose of the majority of stale claims and:

"Furthermore, by Regulation 11 of the Leasehold Valuation Tribunals (Procedure) England Regulation 2003, the Tribunal has the power to dismiss applications which are frivolous or vexatious or otherwise an abuse of the process of the Tribunal; and it is considered that it will be likely to exercise it if the investigation is disproportionate or the applicant has been unreasonably slow to exercise his rights to apply to the Tribunal."

19. Mr Letman accepted that, bearing in mind there is no material before the Lands Tribunal regarding the extent of the prospective dispute regarding the reasonableness of the earlier service charges and that this indeed has not yet emerged before the LVT (but will do so if the matter proceeds and the directions given by the LVT are followed) he was unable to argue at present that an investigation of these earlier years would be disproportionate – this is because the extent of the dispute is not known. However, Mr Letman argued that there has been unreasonable delay by the Respondents with no explanation given by them as to why in 2005 they sought to challenge service charges for the years ended 31 December 1999 and following being years in respect of which they had not previously complained and had already paid the amounts demanded. Mr Letman pointed out that service charges can become stale (as he put it) very quickly so far as concerns the landlord, see section 20B of the 1985 Act. He argued that similarly the present stale application by the Respondents amounted to an abuse of process.

Conclusions

20. I am unable to accept Mr Letman's arguments for the following reasons.
21. It has been clear since the introduction by section 83(1) of the Housing Act 1996 of sections 19(2A) to (2C) into the Landlord and Tenant Act 1985 that it has been the intention of Parliament that certain disputes regarding service charges, which previously (ie prior to 1 September 1997) could only be decided by the County Court, could thenceforth be examined by a leasehold valuation tribunal.
22. Section 180 of the 2002 Act gives force to the repeals in Schedule 14 of that Act and this schedule operates to repeal sections 19(2A) to (3) of the 1985 Act. The Commencement Order brought this repeal into force on 30 September 2003. Accordingly from this date subsections 19(2A) to (3) are no longer in force and the jurisdiction of the LVT conferred by those provisions no longer exists so as to enable a tenant to make an application to an LVT to decide certain matters regarding service charges, unless the jurisdiction conferred by section 19(2A) to (3) is saved by the transitional provisions.
23. The relevant saving is in paragraph 6 of the Commencement Order which is set out above. Thus after 30 September 2003 the provisions of section 19(2A) and (2B) continue in force in relation to an application made to the LVT under these provisions before 30 September 2003. As regards such an application it is these old provisions (and not the new provisions of section 27A) which continue to give the LVT jurisdiction. The purpose of this saving is to make clear that an application which was validly made before 30 September 2003 continues to be a valid application despite the repeal of the provisions under which the application was made.
24. However where an application in relation to service charges is made to the LVT after 30 September 2003 such application cannot be made under section 19(2A) or (2B) because these sections have been repealed and are not continued in force by any transitional provisions so as to enable applications to the LVT to be made after 30 September 2003. This is so even if the service charges which are the subject of the application fell to be paid before that date.
25. It is helpful to test the position on and after 30 September 2003 in relation to service charges payable before that date (and leaving aside the question of whether or not such service charges have been paid – we are merely concerned for the moment to consider what if any statutory tools are available for the landlord or tenant to use in relation to pre-commencement date facts regarding service charges). A landlord or a tenant who wishes to have decided questions relating to such service charges cannot apply to the LVT under the now repealed section 19(2A) or (2B) and consequently the position is either:

(1) that the landlord or tenant can apply to the LVT under the new provisions of section 27A in respect of these service charges; or

(2) that the landlord and the tenant cannot make any application at all to the LVT in respect of these service charges payable before 30 September 2003, for the simple reason that neither section 19(2A) and (2B) or the new section 27A is available to them. Accordingly the landlord and the tenant are limited to applying to the county court in respect of such matters.

It appears to me clear that the position is not as in subparagraph (2) above. This would be a remarkable situation to be reached on the proper construction of a statute whose intention is to extend rather than limit the jurisdiction of the LVT. Also the clear words of section 27A and of paragraph 6 of the Commencement Order show that in relation to an application made after 30 September 2003 the landlord and the tenant can rely upon section 27A.

26. The provisions of section 27A which the Appellant take objection to in the present case are those contained in subsections (2) and (5) which, in effect, reverse the decision in Daejan and provide that the LVT is not deprived of jurisdiction to consider a service charge merely because the tenant has paid it. These provisions are only part of the new section 27A. I can see no sustainable argument to justify the conclusion that in relation to applications made to an LVT on and after 30 September 2003 (being an application dealing with costs incurred and service charges payable before 30 September 2003) only part of the section 27A applies, namely all of section 27A except for subsection (2) and (5). In respect of an application made after 30 September 2003 either the whole of section 27A applies or none of it does. However, the latter clearly cannot be the case for the reasons already given, because it would leave the landlord and the tenant without any ability to go to the LVT in relation to service charges payable before that date. On the basis that section 27A does apply to such applications made after 30 September 2003 the landlord and the tenant are bound by all of the provisions of section 27A including subsection (2) and (5). It would in my judgment need some express provision to reach a conclusion that section 27A only applied partially where a post commencement date application to an LVT is made in relation to pre-commencement date facts.
27. It may be observed that in paragraph 2 of the savings provisions in the Commencement Order it is provided that the amendment introduced by the 2002 Act Schedule 9 paragraph 7 (which extends the definition of service charge in section 18 of the 1985 Act so as to include sums payable for improvements)

".... shall not apply to costs incurred before [30 September 2003] in connection with matters for which a service charge is payable."

It would have been easy for the commencement order to make provision, if this had been intended, that subjection (2) and (5) of section 27A were not to have effect in relation to service charges paid before the commencement date. This has not been done.

28. Further and in any event I do not accept that the principles regarding the presumption against the retrospective effect of statutes helps the Appellant in the present case for the following reasons.
29. The situation before section 27A came into force is that the county court already had powers to examine the reasonableness of service charges even though those services charges had already been paid, see Daejan paragraph 9. Accordingly the Appellant's position before 30 September 2003 was that it could face a challenge regarding paid service charges. The only difference is that a tenant seeking to mount such a challenge did not have a choice of forum but instead had to go to the county court with the attendant cost risks. Accordingly the new provisions of section 27A do not change the substantive rights of the Appellant nor do they revive or recreate some expired right, but instead the new provisions merely extend jurisdiction to a previously unavailable forum for the purpose of examining the Appellant's existing rights.
30. So far as concerns the presumption against retrospectivity relied on by Mr Letman I raised with him the question of whether there was not a distinction between enactments which affect substantive rights and enactments which affect the procedure for examining or enforcing those substantive rights. Halsbury's Laws at paragraph 1287 states:

"The general presumption against retrospection does not apply to legislation concerned merely with matters of procedure; on the contrary, provisions of that nature are to be construed as retrospective unless there is a clear indication that such was not the intention of Parliament. For this purpose 'procedure' includes matters relating to remedies......"

Mr Letman argued that the alteration in the landlord's position brought about by section 27A was so great that it should be regarded as affecting his substantive rights rather than merely being a procedural amendment. Also it was on this point regarding substantive/procedural amendment that Mr Letman made his additional written submission. This referred to L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd [1994] AC 486 and in particular to Lord Mustill's speech at pp 527G to 528C where he observed that the distinction between substantive and procedural may be misleading as it leaves out of account the fact that some procedural rights are more valuable than some substantive rights and also because it may be difficult to assign rights unequivocally to one category rather than the other. Therefore Lord Mustill preferred to look at the practical value and nature of the rights presently involved as a step towards an assessment of the unfairness of taking them away after the event.

31. In applying this analysis it is necessary (see per Lord Mustill at p.528D) to look not at the merits of the particular case but at the generality of rights as regards which a landlord would suffer if the provision took effect retrospectively. Thus while a landlord could be much inconvenienced by questioning in the LVT of very stale and long since paid service charges it would be wrong to concentrate exclusively on such a case. On Mr Letman's submissions it is necessary to find that it would be unfair to those concerned to alter the law in the manner achieved by section 27A in respect of past events and to find that Parliament is presumed not to have intended to have altered the law in such a way (unless a contrary intention appears) – see per Lord Mustill at p525.
32. Rather than such a very stale case consider instead a more likely type of case where a tenant has promptly paid service charges which fell due on all of the quarter days within the service charge year ending on 25 March 2004, but suppose that later in 2004 the tenant wishes to challenge these in the LVT. It would in my judgment not be unfair to the landlord for the tenant to be able to raise in the LVT not merely the instalments paid on 25 December 2003 and 25 March 2004 but also those paid on 24 June and 29 September 2003.
33. In summary therefore I conclude as follows:

(1) The wording of the new section 27A and of the commencement provisions makes it clear that the new section 27A is intended to apply where there is an application made to the LVT on or after 30 September 2003 in respect of service charges payable before that date (and including service charges which have actually been paid before that date).

(2) The amendment introduced by section 27A regarding paid service charges is procedural rather than substantive and accordingly there is no presumption against it operating in respect of service charges paid before commencement.

(3) If one examines the matter as suggested by Lord Mustill in L'Office Cherifien there is no such unfairness in allowing the new provisions to apply to service charges paid before commencement as to give rise to a presumption (in the absence of an indication to the contrary) that the new provisions were not intended by Parliament so to apply. Also and in any event there is such an indication to the contrary, see subparagraph (1) above.

34. So far as concerns Article 1 of the First Protocol of the ECHR, I do not consider that the Appellant enjoyed any legitimate expectation that the costs disincentive facing a tenant who was thinking of challenging paid service charges would not be lessened in some or other way. The Appellant's possessions (namely the money represented by the service charges paid before 30 September 2003) have not been removed from the Appellant's peaceful enjoyment nor has the Appellant been deprived of these possession. The strength of the Appellant's hold on these possessions has not been weakened – all that has happened is that a different (and for the Respondents a less potentially expensive) procedural route has been opened up to enable to be tested how strong the Appellant's hold on these possessions actually is.
35. In summary the 2002 Act clearly intends to extend to leasehold valuation tribunals certain jurisdiction previously solely enjoyed by the County Court. The Act also lays down a limitation regarding the recovery of costs in the LVT. The extending to the LVT of jurisdiction to examine the reasonableness of past service charges, notwithstanding they have been paid, is one aspect of this legislation. I can see no justification for reading section 27A as only enabling the LVT to consider the reasonableness of paid service charges where the payment was made after 30 September 2003, such that where the payment was made before that date the tenant must still go to the county court.
36. So far as concerns the separate argument that the Lands Tribunal should conclude that the LVT was wrong in omitting to dismiss the Respondents' application as an abuse of process of the LVT and that the Lands Tribunal should itself therefore dismiss the Respondents, application as such an abuse, I am unable to accept this argument for the following reasons:

(1) If the LVT does not consider that an application is an abuse of the process of the LVT, then the Lands Tribunal would be slow to conclude that such a decision should be reversed, unless it was clearly shown that the LVT had erred in principle or misdirected itself when considering the point or had reached a perverse conclusion. Having regard to the matters set out below I am not satisfied as to any such point.

(2) There is nothing before me to indicate the merits (or lack of them) of the Respondents' challenge to the service charges. The present preliminary ruling, which is under appeal, by the LVT was made prior to details becoming available as to what if any merits the challenge might have (the LVT has given directions for the service of further documents which will reveal such matters).

(3) At present, bearing in mind the substance of the dispute and the ambit of potential argument is not yet known, it is not possible to conclude that the investigation into the matters challenged by the Respondents' would be disproportionate. Mr Letman correctly accepted that on present information he could not argue that the investigation would be disproportionate.

(4) There is asserted by way of general principle the fact that stale claims may prejudice a landlord. However there is nothing before me to indicate that on the facts of this particular case these landlords, namely the Appellant, will in fact be prejudiced in any material way (beyond their reluctance to face a challenge in the LVT rather than in the County Court) by virtue of these paid service charges being challenged. The LVT commented:

"with good management the relevant documentation should still be readily available and accessible for the service charge years in question. Fortunately the landlord and managing agent remain the same throughout."

There is nothing before me to indicate that the LVT was in error in reaching this conclusion.

(5) Mr Letman referred to the provisions of section 20B of the 1985 Act and the requirement for landlords to pursue promptly the recovery of service charges. He argued that this indicated that stale claims should not be allowed by the tenant. However the presence of an express time provision which bears upon landlords and the absence of any such provision in relation to tenants in my judgment weighs against rather than for the argument that a similar promptness is to be required of tenants as of landlords, if the tenants are to avoid an argument of abuse of process.

(6) If once the extent of the dispute regarding the past service charges is revealed it becomes clear that the Respondents' application is wholly without merit, or would indeed involve a disproportionate expenditure to a examine, or that by reason of the Respondents' previous inaction the Appellant no longer has relevant documents such that it has been substantially prejudice by the tenants in action it would be open to the Appellant to renew its application to the LVT that the Respondents' application (so far as concerns the earlier years) should be stayed as an abuse of process. By saying this I am not to be taken as indicating that any such application should be viewed in some favourable light by the LVT. I am merely observing that on present information I do not see how either I or the LVT can conclude at present that the application is an abuse of process.

37. In the result therefore I dismiss the Appellant's appeal.
38. No application was made to me for costs and in any event the Lands Tribunal's jurisdiction to award costs is limited by section 175 of the 2002 Act. I make no order for costs. No application has yet been made to the Lands Tribunal under section 20C of the 1985 Act by the Respondent for an order that any costs incurred by the Appellant in connection with the proceedings before the Lands Tribunal are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable. It may be that the terms of the tenants' leases would not in any event entitle the Appellant to seek to include these costs as part of some future service charge (I do not know because I have not seen the leases). It will be for the Respondents to consider whether to make such an application to the Lands Tribunal.

Dated 7 July 2006

His Honour Judge Huskinson