Putting it off

Before I come to the facts of Scriven and others v Calthorpe Estates [2013] UKUT 469 (LC), I need, I think, to give a fair bit of background. Even by the comprehensive standards of NL, this is pretty obscure.

Estate Management Schemes

Estate management schemes are, as Francis has previously explained, a (relatively rare) kind of scheme which permits land owners to exercise a degree of control over freehold property which they used to own. They can impose restrictions on the use of freehold property ('thou shalt not pebble-dash Cadogan Square') and/or require the freehold owner to contribute to certain shared "estate" costs.

These charges are subject to (limited) regulation in s.159, Commonhold and Leasehold Reform Act 2002, which gives the FTT(PC) / LVT two jurisdictions. The first is in s.159(2), and is over "variable" charges. The second is in s.159(3), which is a power to vary "non-variable" charges.

Charges under estate management schemes

(1)This section applies where a scheme under—

(a)section 19 of the 1967 Act (estate management schemes in connection with enfranchisement under that Act),

(b)Chapter 4 of Part 1 of the 1993 Act (estate management schemes in connection with enfranchisement under the 1967 Act or Chapter 1 of Part 1 of the 1993 Act), or

(c)section 94(6) of the 1993 Act (corresponding schemes in relation to areas occupied under leases from Crown),

includes provision imposing on persons occupying or interested in property an obligation to make payments (“estate charges”).

(2)A variable estate charge is payable only to the extent that the amount of the charge is reasonable; and “variable estate charge” means an estate charge which is neither—

(a)specified in the scheme, nor

(b)calculated in accordance with a formula specified in the scheme.

(3)Any person on whom an obligation to pay an estate charge is imposed by the scheme may apply to the appropriate tribunal for an order varying the scheme in such manner as is specified in the application on the grounds that—

(a)any estate charge specified in the scheme is unreasonable, or

(b)any formula specified in the scheme in accordance with which any estate charge is calculated is unreasonable.

(4)-(12)...

FTT rules

The old LVT rules (in England; they still apply in Wales) contained no provision enabling the LVT to review its decision. So, if, for example, it produced a decision and then realised that there was binding case-law which meant it was wrong, there was nothing you could do about that except appeal. The FTT(PC) does have such a power.

Back to the case

The facts of Scriven are quite simple. The applicants had applied to the LVT (as it was then) seeking to vary the terms of the estate management charge. The LVT decided it had no jurisdiction to do so and dismissed the application. It then realised that, in fact, it did have jurisdiction. But there was nothing it could do about that now, apart from grant permission to appeal. Before the UT, both parties agreed the LVT was wrong and the appeal should be allowed. The UT took the opportunity to remind everyone that now, with the new FTT rules, this wouldn't be necessary and the FTT could have remedied the problem itself.

The really interesting stuff

But that isn't the interesting bit. If you look at s.159(2) and 159(3), it looks like they're dealing with two differnet kinds of charge. If the charge is specified in the scheme (or calculated in accordance with a formula specified in the scheme) then it looks like it falls within s.159(3). Otherwise, it's in s.159(2). If it falls within 159(3), then you can vary it in the LVT. If it falls within s.159(2), then you can't vary it, but can only challenge the reasonableness. Certainly that is how Martin Rodger QC, the Deputy President of the UT, approached matters.

But it isn't that simple. There is an earlier case called Botteril v Hampstead Garden Suburb LRX/135/2007, which had taken a different approach. In that case it had been said that the reference to "any person" in s.159(3) meant that the subsection was of general application and applied to both varieties of estate charge, so the variation power applied to (in effect) all estate charges. The Deputy President clearly didn't think that this was right, but, as no-one was asking him to depart from Botteril, he wouldn't do so.

Now, it gets even more complex. The defintion of "variable" and "non-variable" estate charges in s.159 mirrors exactly the defition of "variable" and "non-variable" administration charges in Sch.11, CLRA 2002. Whilst estate charges are rare, administration charges are very, very common. It matters whether your remedy is a quantum dispute or variation (or both). As yet, no-one has picked up on this problem (other than Davey & Bates, in Leasehold Disputes - 3rd edn forthcoming), but, at some stage, it's going to have to get sorted out.

 

 

m4s0n501
Posted in FLW case note, Housing law - All, Leasehold and shared ownership.

About J

J is a barrister in London. He loves service charges and all things leasehold law related. He also likes beating rogue landlords and mortgage companies.

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