In November 2007, through no fault of its own, the Appellant management company found itself with a gas bill in the region of £100,000. This arose because the Appellant had mistakenly been paying EDF Energy for the supply of gas, when EDF were not responsible for the supply of gas to the block (this was unsurprising as the developer had told the Appellant EDF supplied the gas). Moreover, EDF had been under charging. Even when EDF paid Total Energy (i.e. the company who had been supplying the gas) there still remained a shortfall of £100,000, which the Appellant demanded from its leaseholders under the service charge five months later on 28 April 2008.

Mr Burr argued before the LVT that he was not liable to pay the service charge because the cost of the gas supply had been incurred at the time it was supplied and therefore, as the demand for payment had been made for than 18 months after the cost had been incurred, the service charge was not recoverable. The LVT agreed. The Appellant appealed.

The Upper Tribunal allowed the Appellant’s appeal. The authorities showed that costs become incurred when they are either expended or become payable (see Brent LBC  v Shulem B Association Ltd [2011] EWHC 1663 (Ch) / Capital & Counties Freehold Equity Trust Ltd v BL plc [1987] 2 EGLR 49 / Hyams v Wilfred East Housing Co-Operative [2007] 1 E.G.L.R. 89); they did not become incurred merely because a liability to pay at a future date had arisen. Under s.20B costs would therefore be incurred on the presentation of an invoice or on payment. In this case the invoice had been demanded in November 2007 and the demand for payment had been made in April 2008. It followed that the service charges were recoverable.

Perhaps foreseeing that this definition could lead to more confusion in other cases (e.g. the invoice is served on the landlord 20 months before the service charge demand, but the cost is expended 14 months before the service charge demand), the Upper Tribunal indicated that this point will be a question of fact for LVTs to decide in each case on their own facts. The Upper Tribunal made clear, however, that where there was a long delay in the payment of the invoice and it appeared the landlord was prevaricating  to postpone the start of the 18 month period, other than in circumstances where there was a genuine dispute or the landlord had entered into negotiations to reduce the payment, the relevant date would be from the date of the invoice .

Comment

As a lawyer whenever I see a phrase in a judgment which says something like “this question is best left to the [insert lower court] to decide on a case by case basis” I always rub my hands with glee as this breeds uncertainty and therefore a need for lawyers.

However, as a common law lawyer I must accept that certainty is no bad thing really and I’m not sure the Upper Tribunal needed to leave the question open for LVTs to decide in this one. In Capital Counties, all the High Court said is that incurred is synonymous with both “becomes payable” and “expended” and it did not mean the liability had arisen. It didn’t say it can mean one or the other depending on the circumstances; it means both. Thus, surely if it means both, when an invoice has been received the cost is incurred and that should be the relevant date for s.20B.

Mrs Singer was the long leaseholder of a flat within a block of 30 flats. She, and her husband, had (as described by the lawtel note) “a long running service charge dispute” with the management company responsible for managing the block, albeit it appears that Mr Singer often conducted the litigation on Mrs Singer’s behalf.

This dispute resulted in the Singers making more than 30 applications to the LVT, the county and magistrates’ courts arising from the service charge. The Divisional Court noted, while the Singers had had limited success in the LVT, they had none in the county or magistrates’ courts and the applications rarely had any basis in law, tended to repeat arguments that already been unsuccessful and were often branded as being without merit. The appeals they pursued were also unsuccessful. The LVT, on their most recent application, had decided that the application was an abuse of process and vexatious. Not only that, Mr Singer had been prosecuted for harassment.

It followed that the Divisional Court had no doubt that the Singers satisfied the second limb of the test. The real question for them to decide appears to have been whether applications in the LVT were civil applications and if the LVT was an inferior court. Both questions were answered in the affirmative. The purpose of the LVT was to resolve proprietary disputes which would otherwise have been dealt with by the civil courts. Importantly the court noted that the county court could transfer proceedings to the LVT. Its functions were therefore plainly judicial in nature and it was also noted that the Court of Appeal had previously decided that the LVT and Lands Tribunal were courts for the purposes of Article 6 of the Convention (R (Sinclair Gardens Investments (Kensington Ltd) v Lands Tribunal [2005] EWCA Civ 1305).

The Divisional Court decided to exercise their discretion and make the order. There was no sign of the Singers’ behaviour abating. Despite the fact that it was Mr Singer who had mainly conducted the litigation, it was also appropriate to make an order against Mrs Singer because it was she who had signed the applications.

Comment

This decision would appear to be fairly uncontroversial. However, one can see that the damage had already been done before the Attorney General got involved and (even with this new rather interventionist Attorney General) it is likely to be a rare case where he deems conduct to be serious enough to warrant him getting involved.

However, in the county court there should be no need for the Attorney General to get involved. Under CPR3.11, the county courts have the power to make a civil restraint order against vexatious litigants. Of course the CPR is of no application in the LVT and the LVT procedure regulations do not give LVTs the power to make similar orders. It would appear therefore that the LVT’s hands are tied.

Yet, such orders are not a species of the CPR, but rather stem from the 19th century authority Grepe v Loam (1888) L.R. 37 Ch. D. 168. In Bhamjee v Forsdick [2003] EWCA Civ 1113, the Court of Appeal affirmed the principle that there is a power vested in every court (not just the High Court) to protect its processes from an abuse of process. This begs the question: if the LVT is an inferior court does it not have the power to make an order barring vexatious applicants from making future applications?

(a) the tenant sought to sub-let their flat; and,

(b) the leases prohibited this without the consent of the landlord/management company.

In some of the leases, there was a further express provision requiring the tenant to pay the costs of the consent and/or a registration fee. In all cases, the landlord/management company sought to impose a charge for consent and/or registration of between £135 and £105, with a further £75 for registering the consent.

The LVT disallowed the charges in all cases, relying on s.19, Landlord and Tenant Act 1927. This provides as follows:

19 Provisions as to covenants not to assign, &c. without licence or consent.

(1)In all leases whether made before or after the commencement of this Act containing a covenant condition or agreement against assigning, underletting, charging or parting with the possession of demised premises or any part thereof without licence or consent, such covenant condition or agreement shall, notwithstanding any express provision to the contrary, be deemed to be subject—
(a)to a proviso to the effect that such licence or consent is not to be unreasonably withheld, but this proviso does not preclude the right of the landlord to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such licence or consent; and
(b)(if the lease is for more than forty years, and is made in consideration wholly or partially of the erection, or the substantial improvement, addition or alteration of buildings, and the lessor is not a Government department or local or public authority, or a statutory or public utility company) to a proviso to the effect that in the case of any assignment, under-letting, charging or parting with the possession (whether by the holders of the lease or any under-tenant whether immediate or not) effected more than seven years before the end of the term no consent or licence shall be required, if notice in writing of the transaction is given to the lessor within six months after the transaction is effected.

The Upper Tribunal allowed the appeals by the landlords/management companies:

(a) it was not a  case under s.19(1)(b), as the premium for the lease was not in consideration of the errection (etc) of the building, but in consideration of the grant of the lease;

(b) nor was it a case under s.19(1)(a) as this did not prohibit a landlord for charging for a consent; a charge could be levied regardless of whether there was an express term in the lease for such a charge.

In reality, the charges were administration charges under Sch.11, Commonhold and Leasehold Reform Act 2002 and, in particular, variable administration charges (being charges neither specified in the lease not calculated in accordance with a formula in the lease): see here. Such charges are required to be reasonable and, as no-one had yet considered that point, the parties were invited to make submissions on that point.

In addition, in Re: Bradmoss, the President noted that the LVT had referred to a decision (of his) refusing permission to appeal. He wanted to make “clear that decisions on applications for permission to appeal should not be treated as laying down guidance” and should not be relied upon.

So, what to make of these: The point on permission decisions is clearly right, although, perhaps, I might have tempered it a bit. In quite a few areas we simply don’t have many LT/UT decisions, and so permission decisions are all there are. Not ideal but, if the choice is between saying to a client/LVT “there is no law on this” or “there is a permission decision on this point”, I suspect most people would take the latter course. Perhaps the correct position is that such decisions should not generally be cited unless they’re the only thing on point (which, from memory, is what the Practice Direction on Citations says).

Then we turn to the wider points. So, these are variable administration charges are they? Well, lets take a step back. Apologies, but this is going to get messy.

The President says that a charge for a consent is clearly an “administration charge”, see Sch.11, para.1(1)(a), 2002 Act, as being a charge for or in connection with the grant of an approval. I think I’d agree with that. But then, to be an administration charge, it also has to be “payable”. Here, the President says that the charge is payable because either (a) there is an express term providing for it or (b) it follows from the fact that there is a right to withhold that a condition of grant can be the levying of a fee. I’m not so sure about (b). Surely the absence of an express contractual right is fatal?

Never mind, lets move on. He then decides it is a variable administration charge. This is defined as a charge which is neither specified in the lease, nor calculated in accordance with a formula specified in the lease. The formula bit is out, but surely in at least some of these leases, the charge was specified in the lease. There was an express right to charge. What is that if not “specified”? What the President means, I think, is that the amount of the charge wasn’t specified in the lease. But (a) that isn’t what Sch. 11 says and (b) how does this square with the earlier decision of Re Hampstead Garden Suburbs, under the similarly worded provisions about Estate Charges, which seemed to say that the merest mention in the lease meant that it was “specified” in the lease? Now, it could well be that Re Hampstead is wrong, but as it wasn’t even cited to the President, how can we know?

To put it bluntly, I’m more confused than an English batsman facing a Pakistani spin bowler. Like the English middle-order, any help would be gratefully received!

Whether a lease allows for recovery of legal costs is not usually a straight-forward proposition. in Sella House Ltd v Mears [1989] 1 EGLR 65, the Court of Appeal indicated that, in general terms, one would need to find a clause in “clear and unambiguous terms” before allowing for recovery. As against that, in Iperion Investments Corp. v Broadwalk House Residents Ltd [1995] 2 EGLR 47, the Court of Appeal did allow for the recovery of legal costs in a lease which did not necessarily contain such “clear and unambiguous” terms. In practice, it can be very difficult for landlords and tenants to know in advance whether the court/LVT will follow Sella House or Iperion.

In this case, the leaseholders had issued proceedings in the LVT disrupting the reasonableness of their service charges. Aside from some “modest amendments” the LVT found against the leaseholders. The LVT did, however, find that there was no contractual right to legal costs (i.e. it followed Sella House) and, in the event that it was wrong about that, indicated that it make an order under s.20C, Landlord and Tenant Act 1985.

The appellant successfully appealed to the Upper Tribunal. The lease did not refer to the recovery of legal costs, but it did refer to “professional advisers” and the costs of enforcing covenants. It was “extremely difficult” to consider legal proceedings without employing lawyers. The lease did not need to expressly refer to lawyers and legal costs if it was clear that, in context, that is what was intended. In this regard, it was relevant that the appellant was a lessee-owned company. There was a possibility that, if it did not recover its costs, there would be a “disaster”. It also followed that the reasoning for the order under s.20C was flawed and, as result, that question was remitted for reconsideration.

Two points seem to me to have emerged from this case. First, the lease need not expressly mention legal costs if, in context, it is clear that these were intended. That must be right. There is no magic to any particular form of words in this area, but it is useful to have it stated again and for the decision in Sella House to be put in context. Secondly, however, is the importance of lessee-owned companies recovering their costs. I’m slightly surprised that the Embassy Court case wasn’t cited on this point (Embassy Court v Lipman (1984) 271 EG 545), as it’s a very useful Court of Appeal authority on why it would be simply unrealistic to leave lessee-owned companies out of pocket in respect of reasonably incurred professional fees.

The landlord was dissatisfied with that decision and sought to appeal to the Upper Tribunal. After the appeal had been lodged (but shortly before permission was given), the LVT issued what it termed a “correction certificate”, in which it deleted a number of paragraphs from the original decision, inserted wholly new ones and, as a result, changed the deferment rate which it had used to calculate the purchase price and, this, increasing the price. The landlord also sought permission to challenge this development.

The Upper Tribunal allowed the appeal. The LVT was only empowered to correct “clerical mistakes” or “errors arising… from an accidental slip or omission.” (Reg.18, LVT (Procedure) (England) Regulations 2003). That power was akin to the slip rule in CPR 40.12 which, as is well know, exists to correct accidental errors and not to change the basis of the decision. The LVT “manifestly” had no power to alter its decision in the way it did. The power to correct under reg.18 was a limited and restricted rule.  In addition to having no power to make the changes that it did, it had done so without giving the parties the right to make submissions, this was a second failing and a serious procedural irregularity.

The Upper Tribunal then went on to consider what the purchase price should be. They noted that Hague on Leasehold Enfranchisement suggested that the purchase price under the 1967 Act should be calculated in three stages: first, the capitalised vlaue of the rent payable from the date of the Notice of Claim to the end of the term; secondly, the capitalised value of the s.15 rent (basically, modern ground rent) from the original term date until the expiry of the 50 year extension; and, thirdly, the reversionary value of the house. This had not always been the accepted practice, with some valuers (and, hence, decided cases) failing to make seperate provision for the reversionary value of the house, but, instead, factoring that in to the s.15 rent as if the landlord was to get that rent in perpetuity.

The Upper Tribunal rejected this older approach; in their view, valuations under the 1967 Act should take the three stage approach adopted by Hague. All elements of a valuation should be valued separately. That was not to say that the reversion would always have a significant (or any) value, but that value could not be assessed as part of the capitalised value of the rent, but had to be assessed separately.

As to the deferment rate, the decision in Sportelli (Cadogan v Sportelli [2008] 1 WLR 2142 CA; [2006] RVR 382) had determined that the starting point of 4.75% was appropriate for houses; on the evidence, capital grown prospects in the West Midlands were weaker than in London, so that should be increased to 5,5%.

So: (1) don’t make substantive changes under the slip rule (I can’t believe I have to write that; what was the LVT thinking?); (2) take a three-stage approach to valuation under the 1967 Act (and not the old 2 stage process) and, if you’re going to depart from Sportelli, have some evidence as to why.

In case you had forgotten, an agreement between a landlord and a contractor for works to be carried out over a period of 12 months or more is defined by the Landlord and Tenant Act 1985 as a qualifying long-term agreement. If a landlord enters into a QLTA without first consulting his leaseholders (in accordance with the Regulations) he is limited to recovering £250 from each leaseholder as a service charge. The consultation requirements in respect of QLTAs differ depending upon whether the award of the QLTA must comply with EU public procurement rules (of which this was such a case). The requirements are set out in Schedule 2 of the Regulations.

Paragraph 4(1) to Schedule 2 of the Regulations provides that a landlord must prepare a proposal and give each tenant and any relevant tenants’ association notice of the proposal. Any proposal must comply with the requirements set out in the remainder of paragraph 4. These are not particularly onerous as most of the requirements need only be complied with if it is reasonably practicable for the landlord to do so. Thus, in any proposal a landlord must set out an estimate of the tenant’s likely contribution (paragraph 4(4)). However, if it is not reasonably practicable for the landlord to provide such an estimate he is required to estimate the total amount of the landlord’s expenditure under the QLTA in respect of the building (paragraph 4(5)). If this isn’t reasonably practicable, then he must set out the unit cost or hourly or daily rates under the QLTA (paragraph 4(6)). If that isn’t reasonably practicable, the landlord must (in all cases) give reasons why he cannot comply with the preceding requirements and provide a date by which he expects to do so (paragraph 4(7)).

None the less as we all know there remains the option of the landlord making an application to the LVT (before or after the QLTA has been entered into) to dispense with any or all of the consultation requirements and the LVT must do so if it considers it reasonable.

In this case Southwark opted to apply to the LVT for dispensation from paragraph 4(4), (5), (6) & (7) to Schedule 2 of the Regulations in advance of serving their notice of proposal on the basis that they could not provide the information that was required by those paragraphs of the Regulations. In doing so they relied upon Paddington Basin Developments Ltd. v West End Quay Management Ltd. [2010] EWHC 833 (Ch) (our note here), in which Lewison J suggested that an LVT should dispense with the consultation requirements under the Regulations if, owing to the nature of the QLTA, it was impossible for a landlord to comply with them. This application was opposed by the Respondents (a company which had been formed to represent the interests of leaseholders in Southwark).

Before the LVT Southwark contended that it was not reasonably practicable for it to comply with paragraphs 4(4) or (5) because surveys had not been undertaken (and would not be undertaken until after contracts had been awarded) and so it was unclear as to what the cost would be. In respect of paragraph 4(6), Southwark argued that while it had been able to provide a schedule of rates, under the QLTA these rates were subject to change and as a result of such if they were included in a proposal they would not comply with the Regulations. As to paragraph 4(7), Southwark argued that they could not provide a date for when the relevant information would be provided because any date given would be liable to change as it would be contingent on the availability of funding (in the end a date for when the contract was to expire was provided).

The LVT agreed that Southwark did not have the information available at that stage to comply with paragraphs 4(4),(5) & (6), but considered any finding to that effect to be premature as the notice had not yet been served. Further, Southwark could not comply with paragraph 4(7) because it had not provided a sensible or reasonable date.

However, the LVT refused to grant dispensation. The Regulations required that tenants be given information in advance so that they could set aside the relevant funds to pay for the works or sell their properties. While acknowledging the problems posed by QLTAs and the difficulties landlords had in complying with the Regulations, dispensation should not be granted unless all reasonable efforts have failed. In this case Southwark had adopted an approach which was always going to fail to comply and yet had the potential to affect leasehold properties across Southwark for ten years.

Southwark appealed to the Upper Tribunal. By the time the appeal was heard Southwark had served the notice of proposal and subsequently entered into the QLTAs (albeit with a contractual provision that the agreement was to end if the Upper Tribunal’s decision was that dispensation should not be granted). The Upper Tribunal therefore heard the matter by way of a re-hearing and considered whether dispensation should be granted retrospectively. This made Southwark’s position slightly awkward. If their application for dispensation failed they would either be limited to recovering £250 from each leaseholder or end the QLTAs and start again.

This meant that Southwark’s main argument was that there had been compliance with the Regulations and the application for dispensation was only argued in the alternative. They first argued that paragraph 4(6) had not been complied with because it was not reasonanly practicable to do so. However, during argument this position shifted towards arguing that the paragraph had been complied with (one would have thought owing to the approach adopted by the Respondents – see below). In respect of paragraph 4(7), Southwark contended that the end of the contract was a valid date and did not invalidate the notice. In the alternative, paragraph 4(7) should be dispensed with because the leaseholders would in any event be provided with an estimate, cost or rate within 21 days of Southwark having the information to provide one (as required by paragraph 8 to Schedule 2) and leaseholders would also be provided with information in advance of any actual works being carried out in accordance with Schedule 3 of the Regulations.

For their part, the Respondents agreed with Southwark’s contention that, first, it was not possible for Southwark to comply with paragraphs 4(4) & (5) as the information was not available at the date of the notice and, second, that paragraphs 4(6) & (7) had been complied with. The Respondents made clear that the application before the LVT for dispensation had only ever been opposed as it was premature and the Respondents were keen for Southwark to provide sufficient information so as to comply with the consultation requirements rather than to be granted a blanket dispensation. As Southwark had subsequently provided this information the Respondents’ position had been vindicated and there was now no need for dispensation.

In the end, rather unsurprisingly given the submissions of both parties, the Upper Tribunal found that there had been compliance with paragraph 4(6); all that a landlord was required to do was provide the costs and rates applicable to those works which would be covered by the QLTA. It could not have been Parliament’s intention that a landlord should provide details of every cost or rate non-standard items that may arise in the course of an agreement because then no landlord would ever be able to comply with the paragraph. Southwark had done this. While paragraph 4(7) did not therefore fall to be considered , the Upper Tribunal accepted that where a date could not be given, it was open to a landlord to provide the end of the contract as being the relevant date. It followed therefore that as there had been compliance the application for dispensation was dismissed.

Comment

This is an odd case. At first blush, when one looks at both parties submissions to the Upper Tribunal, it appears that this case was a spectacular waste of public money; if both sides were arguing the same thing why was the case being brought? However, that would be unduly harsh on Southwark. It is perfectly clear why Southwark adopted this belt and braces approach; millions of pounds were at stake if the consultation exercise was held to be unlawful and dispensation was not granted (Southwark were clearly mindful of what had happened to Waltham Forest LBC last year when their application for retrospective dispensation was not granted). The costs of an LVT case pale into insignificance when one conisders the costs to the council if they had not complied or been granted dispensation.

Yet one can’t help but think that Southwark would have made life a lot easier if they had served the notice of proposals before appearing before the LVT and sought a declaration that they had complied with the requirements with an application for dispensation pleaded in the alternative.

The first is the Right to Manage (Prescribed Particulars and Forms) (Wales) Regulations 2011, replacing the 2004 regulations of the same name. As you’ll all know, the Right to Manage is where qualifying leaseholders of buildings form a company which can take over the landlord’s management functions; it involves the service of a series of prescribed notices, all of which are dealt with in these new regulations. On a similar note, the RTM Companies (Model Articles) (Wales) Regulations 2011 have also been published, prescribing new forms of model articles for RTM companies in Wales. This, in broad terms, brings Wales into line with England (see our note about these reforms in England, here).

We then come to Stenau Properties Ltd v Leek and others [2011] UKUT 478 (LC), concerning dispensation from the consultation requirements in s.20, Landlord and Tenant Act 1985. The respondent tenants had applied to the LVT under s.27A, 1985 Act, for a determination as to their liability to pay service charges in respect of certain items of work. The LVT found that the service charges were justified and reasonable, but noted that it was common ground that the landlord had not consulted in accordance with s.20 and, as such, felt obliged to cap the service charges at £250 per leaseholder unless and until the landlord obtained dispensation under s.20ZA. The landlord promptly applied for dispensation, which was rejected. The evidence showed that there had been no real attempt to consult the leaseholders and that no good reason had been advanced for this failure.

The landlord appealed to the Upper Tribunal (Lands Chamber), arguing that the LVT had failed to consider the degree of prejudice suffered by the tenants, but had erred in focusing upon the inability of the landlord properly to explain why no statutory consultation took place.

The Upper Tribunal dismissed the appeal. The LVT had concluded that there was a substantial breach of the consultation process. A properly conducted consultation process should give tenants confidence in the decision that are reached and the opportunity to participate in a meaningful way is itself of real value. The LVT had been entitled to find that the breach was so substantial that prejudice must have flowed from it.

Excuse the (slightly flippant) title which is a backhanded reference to a recent post by NL. This is actually a slightly sad case.

It is also slightly convoluted set of facts so you will have to bear with me.

Facts
Mr & Mrs Haselden were the owners of a farm in Lancashire along with their daughter, Mrs Ollerton. Mr & Mrs Hardy met with the Haseldens on several occasions during the latter part of 1997 to discuss terms on which the Hardys might move into the farm. In August 1997 Mr Haselden is said to have made an oral statement in front of his wife on the following lines:

(i) that the Claimants move to the [Farm] and occupy a mobile home situate at the property for the purpose of securing it from trespassers;
(ii) that the Claimants could live at the [Farm] for so long as they wished to in the expectation that the Claimants would move into the farm within a very short time;
(iii) that the Claimants could keep livestock, including horses, sheep and pigs at the Farm;
(iv) that the claimants pay rent to the Defendants in the sum of £200 per month and discharge all bills;
(v) that the Claimants renovate and refurbish the farmhouse located at the [Farm];
(vi) that the Defendants would reimburse the Claimants for the cost of the aforesaid renovation and refurbishment.

Crucially, no part of this agreement was ever reduced to writing. Presumably in reliance on this statement the Hardys moved into the farmhouse in October of that year and began renovation works which ultimately cost them around £31,000.
In late late 2002 the Hardys sought to run a child are business, a use to which the Haseldens consented and in spring 2004 part of the farm was sold to a third party who is not relevant to this matter.
Relations turned more problematic in the summer of 2006 when the Hardys discovered that a mortgagee of the farm was seeking an order for possession of the whole property as against any occupiers due to a default in mortgage payments. That possession order was granted in January 2007 but was rescinded in June following discharge of the mortgage. The Hardys meanwhile had been pressing for a formal grant of a lease and repayment of the monies spent as they had become concerned about their position. This correspondence went totally unanswered.
In September 2007 a claim was issued on behalf of the Hardys. It sought a number of things. Probably least controversially it sought repayment of monies spent on the restoration of the farmhouse. Rather more importantly it sought:

a declaration that they had a tenancy of the Farm for their lives taking effect as a term of 90 years pursuant to s.149(6) Law of Property Act 1925 at a rent of £200 a month. In addition they sought an order for specific performance of an oral agreement to that effect they alleged to have been made in or about August 1997 and damages for breach of an implied covenant for quiet enjoyment.

None of the Defendants responded to the claim or appeared at any of the initial hearings. The matter came before DJ Anson in September 2008, again without any response or attendance by the Defendants. The Hardys admitted that expenditure on works had been incurred more than 6 years in the past and this limitation was an issue but made the, perfectly valid, argument that limitation was only an issue if it was raised by the defence. Oddly, DJ Anson, took the view that the Defendants’ failure to correspond amounted to an effective ‘abandonment’ of the farm. In reliance on witness statements produced by the Hardy’s accordingly gave judgement allowing the declaration, ordering the defendants to execute a lease, and giving judgement for just over £40,000 plus costs.
At the start of October 2008 Mr Haselden suffered a heart attack and then died at the end of the month leaving no will. Also in that month DJ Anson made an interim charging order over the farm for the money judgement of £40,000-odd he had already given.
In January 2009 the charging order was made final and in February 2009 a Deputy District Judge executed a lease on behalf of the Haselden’s and Mrs Ollerton in pursuance of DJ Anson’s order. In August 2009 an eviction order in respect of the farm was made pursuant to the final charging order which was to take effect in September 2009.
In October 2009 the farm then fell under the control of Mrs Haselden and Mrs Ollerton as his personal executors when letters of administration were issued to them.

Set Aside
In September 2009 Mrs Ollerton made an application in respect of herself and her mother to have the orders of DJ Anson set aside. This application was made under CPR39.3 which deals with failure to attend trial. It seems that Mr Haselden was severely ill for some time prior to his heart attack and had taken to intercepting all mail sent to the Defendants and placing it in his room and then not opening it. There was in fact some doubt cast as to whether any of the Defendants had actually been aware of the proceedings at all. Mrs Ollerton herself had also been unwell and unable to deal with the matter even if she had been aware.
This application was refused by DJ Bland and the appeal to that decision was then refused by HHJ Appleton. There was no right of appeal to the order of HHJ Appleton.

Appeal
The matter therefore came before the Court of Appeal by way of an appeal against the original decision of DJ Anson along with permission to appeal out of time, permission to adduce fresh evidence, and an order setting aside the decision of DJ Anson and ordering a new trial.
The Court considered the case of Bank of Scotland v Pereira in some detail. We have previously written about this case here and so I will not go into it again. Suffice it to say it deals with the interaction between an application to set aside and an appeal. The Court should be reluctant to allow an appeal when an application to be set aside has already been refused but the failure of an application under CPR39.3 is not an absolute bar to an appeal.

Decision
Ultimately this appeal turned completely on the Court’s interpretation of CPR1 and the overriding objective. Was it more just to allow the decision of the DJ Anson to stand after such an extended period or was it more appropriate to roll back the clock and allow Mrs Haselden and Mrs Ollerton what effectively amounted to a second bite of the cherry.
Undoubtedly, it was a very persuasive factor that the decision of DJ Anson was simply wrong. The statements that the Hardys’ contended had been made by Mr Haselden were not enough to constitute the grant of a tenancy. There was no certainty of term and, unlike in the recent case of Berrisford v Mexfield (our report here) there was no written disposition of land or contract. Therefore there was not grant of a tenancy, never mind one that could be converted to a 90 year term by s149(6) LPA 1925.
In the circumstances the Court were not of the view that it was their role to penalise the Haselden’s for their failure to deal with their business affairs properly.
The Court therefore granted the appeal.

Tidying Up
It only remained for the Court to consider the money claim and the mechanism for moving things forward. They were asked not to disturb the monetary judgement. The part that related to quiet enjoyment was never going to survive a conclusion that there was no tenancy. Given that the agreement was void to create a lease the Court was reluctant to allow it to avoid further consideration.
Therefore, the extension for appeal was granted and the appeal allowed. The decision to DJ Anson was set aside in its entirety and a retrial ordered. The parties had agreed with the suggestion of the Court that if the appeal were allowed it should be remitted to a specialist Chancery judge in Manchester and this was done. The Hardy’s were directed to make application to the Chancery division in Manchester to seek directions for the further disposal of the matter.

There is a bit of a cottage industry in these applications to the LVT. Landlord says that tenant is in breach by, e.g. having a cat. A s.168 application is issued and then the LVT goes to look for the cat (or the satelite TV, wooden floors, etc, whatever the breach is). The overwhelming majority are dealt with on the papers.

We’ve already had quite a problem with LVTs getting this wrong. They went through a phase of deciding that, because forfeiture was unlikely, (i.e. that relief would be granted), there was no breach. This is wrong, as the LT/UT(LC) made clear, their task is to determine whether a breach has occured, not whether the landlord is entitled to any particular remedy (see, e.g., this decision)

In Beaufort Park Residents Management Ltd v Sabahipour [2011] UKUT 436 (LC), the leaseholder had covenanted to allow the landlord, including its agents, to enter the flat on reasonable notice for the purpose of inspecting the condition of the flat. The landlord had chosen Mr O’Brien, (who was also the Secretary and Director of the landlord company and, in practice, seems to have been the de facto manager). The tenant, Mr Sabahipour, refused to let Mr O’Brien enter, as there was a personal conflict between them. The landlord applied for a determination of breach under s.168. The LVT found there was no breach and, as the UT(LC) says, reading between the lines, seems to have thought that the landlord was being rather heavy handed.

The landlord appealed to the UT(LC). It was clear that Mr O’Brien was a properly authorised agent and so, prima facie, there was a breach of covenant. However, the UT(LC) did not determine that such a breach had occured, but, rather, hoped that Mr Sabahipour would now give access and, if not, the landlord could apply for a fresh determination of breach.

Now, no-where does the UT(LC) explain where this power to make, in effect a suspended order, comes from. Where in s.168 does that power exist? Quite simply, there is no such power in s.168. Parliament didn’t give the LVT (or UT(LC)) any sort of discretion here. There is a breach or their isn’t. I agree that forfeiture is unlikely in such a case, but that is a matter for the county court on any subsequent application and not a reason to decline to make a determination.