UT Neutral citation number: [2010] UKUT 324 (LC)

LRX/122/2009

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

Residential Lease - Service charges – terms of lease - whether demand for interim service charge lawful before charge incurred – whether demand had to be supported by estimates.

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF

THE LONDON LEASEHOLD VALUATION TRIBUNAL

BETWEEN Mr BENN MIEBAKA Appellant

and

PRIMEVIEW DEVELOPMENTS LIMITED Respondent

Re: Flat 2,

63 Thornton Avenue,

London, SW2 2ER.

Before: His Honour Judge Mole QC

Sitting at: Bedford Square, London

on Tuesday 7^th September 2010

© CROWN COPYRIGHT 2010

DECISION

Introduction

1.           This is an appeal against a decision of the Local Valuation Tribunal dated the 10th of August 2009.  That matter arose from an application by the respondents, Primeview Developments, the Landlord, which had been transferred from the Wandsworth County Court for a determination whether service charges levied in respect of 63 Thornton Ave, London, SW2 2ER and charged during the service charge years 2008/2009 were reasonable and payable by the applicant Mr Benn Miebeka.  The issue related simply to a service charge demand dated 21 November 2008 for the sum of £247.96, comprising electrical repairs of £221.29 and associated management fees of £26.67.  In addition there was a charge for £600 legal fees.

2.           The LVT conducted the hearing in the absence of Mr Miebeka, having formed the view that he had been adequately warned of its date.  The LVT upheld the reasonableness of the charge for electrical repairs but disallowed the management fee.  The LVT also upheld the legal fees of £600.  Mr Miebaka appealed from that decision to this tribunal.  On the 23rd of November 2009 the President, being concerned that Mr Miebeka had not been given sufficient notice of the date of the LVT hearing, ruled that in the circumstances Mr Miebeka ought to have the opportunity on appeal to contend that as at the date of the demand on 21^st November 2008 he was not liable to pay the sum demanded for the electrical repairs.  Permission to appeal is confined to this issue and to the consequential issue of costs.

3.           At the hearing before me Mr Miebaka appeared in person and, with my permission, Mr Tankaria, a director of Primeview Developments Ltd appeared for the respondent.

4.           Mr Miebaka first occupied 63 Thornton Ave, the flat in question, in 2006.  It appears that he took an assignment of a 999 year lease made the 23rd of December 2004 between other parties.  Mr Miebaka was a little unsure about some aspects of the history of the lease but does not argue that this lease does not govern his relationship with the current landlord.

Submissions

5.           Mr Miebaka started by explaining that the Lambeth Law Centre could not represent him due to their lack of resources.  He had sought the assistance of a pro-bono a lawyer who had advised that Mr Miebaka should rely on his statement of case.  In addition to that, he sought to make a point about the propriety of the claim for £600 costs and referred me to a decision that had not previously been put before this tribunal.  Mr Tankaria did not object to my looking at it and I have done so.  That decision of the LVT was dated 22^nd February 2010.  In it the LVT declined to allow the landlord to recover £600 costs because there had been no prior demand for such a charge, as the lease required. The LVT added a number of interesting comments about the propriety of the calculation of the legal fees and the way the Landlord had conducted litigation against Mr Miebaka. I have no doubt that the landlord should consider those comments very seriously and that they might be of relevance in any future proceedings.  However this is not a matter that can be dealt with by me on this appeal.  The decision dated 10th of August 2009 makes it plain that the LVT considered the reasonableness of the legal fees of £600 on that occasion, saw a breakdown of Mr Newman's fees and had the benefit of his submissions.  (See paragraphs 14 to 17.) The Tribunal did not find that the time spent or the hourly rate charged were excessive and the fixed fee of £600 charged was substantially lower than the amount that Mr Newman would have charged Primeview Developments Ltd on a time spent basis.  That was a finding of fact that was open to the LVT on the evidence before them at that hearing. It cannot now be challenged in this appeal.

6.           Central to Mr Miebaka's case is an expression of view by the LVT in yet another decision.  That decision is dated 29th of January 2009 and was also an application under section 27A to determine the reasonableness of service charges said to be payable by Mr Miebaka.  The service charges in that case concerned amongst other things fire and asbestos risk assessments. ( There was reference to lighting of the common parts and matters that were the subject of the current proceedings but, sensibly, that LVT did not deal with that particular topic.)  As for the fire and asbestos risk assessments, the LVT disallowed the service charges in respect of those matters.  The tribunal recorded that the applicants had not produced estimates for the surveys despite being requested to do so by Mr Miebaka and being invited by the Tribunal's directions to submit supporting documents.  The Tribunal said at paragraph 16:

“The Tribunal is unable to assess the reasonableness of the charges without being provided with estimates or any other documentation that would show the work to be undertaken in these inspections and the time taken and these sums are accordingly disallowed.”

7.           In the Statement of Case drafted for Mr Miebaka by the Lambeth Law Centre it is said that Mr Miebaka contends that the amount claimed was not reasonably demanded as the respondent did not provide any estimates or documentation that would show the work to be undertaken or the time it would take.  That Statement of Case is worded in a way that might give some encouragement to the view that what the tribunal had said was of wide application.

8.           Mr Tankaria for the respondent submitted that what the tribunal had said in the decision of 29 January 2009 was not of wide application.  It certainly does not apply to Mr Tankaria whose rights are governed by the lease.  Under clause 3 (3) of the lease the tenant covenants:

To pay an interim service charge meaning such a sum to be paid on account of the Service Charge in respect of each Accounting Period as the Landlord all their Managing Agents shall specify at their absolute discretion to be a fair and reasonable interim payment ..."

9.           On its true interpretation that clause contemplates that the interim service charge may be payable before works are done.  It was in reliance upon that provision that the demand dated 21 November 2008 for £247.96 was issued.  The lease puts no obligation upon the landlord to supply copies of any estimates prior to the making of interim demands.  Indeed, the lease does not oblige the Landlord to provide estimates at all, although as a matter of practice if estimates are asked for the Landlord would provide them.  Mr Miebaka did not ask for estimates until after the Landlord had begun proceedings.

10.        Mr Tankaria observes that the sum demanded was below the level that would require consultation by virtue of section 20 of the Landlord and Tenant Act 1985, that level now being set by regulation at a sum in excess of £250.

Conclusions

11.        In my judgment clause 3 (3) of the lease does oblige the tenant to pay an interim service charge on account of the service charge and in advance of incurring the expense that will later form the basis of the charge.  There is nothing in the lease that requires the Landlord to serve any estimates or other documentation before demanding such an interim service charge.  Nor are there any statutory consultation requirements imposed by section 20 of the Landlord and Tenant Act 1985, section 20, and the Service Charges (Consultation Requirements) Regulations 2003, as amended, because the "appropriate amount" (or "triviality threshold") set by the Secretary of State under section 20(5) is more than £250.  In this case, as noted above, the charge in question was £247.96.

12.        Nor does Mr Miebaka get the support from paragraph 16 of the decision dated 29th January 2009 that he believes.  It is clear to me that when that LVT said “the Tribunal is unable to assess the reasonableness of the charges without being provided with estimates” it was simply talking about its task in that decision.  The LVT was faced with an application to decide whether or not the particular charges were reasonable.  In the passage I have just quoted the LVT was simply pointing out that it could not decide that the charge was reasonable in the absence of evidence in the form of estimates or other documentation that would explain and justify those charges.  The LVT is not making a wide statement of principle.  In particular the LVT is not stating that the landlord is not entitled to make a demand under the lease without providing estimates.  The LVT was not, in that passage, talking about the provisions of the particular lease in question.

13.        It follows that at the date of the demand on the 21st of November 2008 Mr Miebaka was liable to pay the sum demanded for the electrical repairs under clause 3 (3) of his lease.  That sum was £221.29.  The management fee element was disallowed.  The charge for £600 in respect of legal fees has been held by the LVT to be reasonable and there can be no challenge to the reasonableness of that particular sum in the current proceedings.  That charge is, therefore, also payable, in consequence of my decision on the main point.

Dated 8 September  2010

His Honour Judge David Mole QC,

Judge of the Upper Tribunal