By J
01/05/2010

Holiday chalets and service charges

Hopefully, you’re either reading this (a) whilst enjoying the long bank-holiday weekend or (b) back in the office after having enjoyed the long weekend. Either way, a case about holiday chalets seemed appropriate at this time.

By s.27A, Landlord and Tenant Act 1985, an application may be made to an LVT to determine, inter alia whether a service charge is payable and in what sum. A service charge is (s.18, 1985 Act) an amount payable by a tenant of a dwelling for services, repairs, maintenance, improvements, insurance or the landlord’s costs of management, the whole or part of which costs vary according to the costs incurred by the landlord in providing the same.

In Phillps v Francis, QBD, March 24, 2010 (Westlaw note, Lawtel transcript), the court was dealing with a dispute between chalet owners and their freeholder. P had a 999 year lease of a holiday chalet on a site owned and managed by F. F sought to recover service charges under the terms of the lease and issued proceedings in the High Court. Two preliminary issues were identified:

(a) could the court deal with a service charge dispute, or were such matters the exclusive preserve of the LVT (a daft preliminary issue; anyone who has even a passing understanding of service charge litigation could tell you that the jurisdiction is concurrent);

(b) whether the chalets were “dwellings”; this is, I accept, a slightly more difficult issue, particularly after the Lands Tribunal held in Udlaw v King [2008] 2 EGLR 99, that they were not.

HHJ Griggs, sitting as a deputy High Court Judge held:

(a) that the jurisdiction was concurrent; not only did s.27A(1), 1985 Act provide that an application “may” (not “must”) be made to the LVT, but s.27A(7) 1985 Act made quite clear that the jurisdiction of the LVT was “in addition to any jurisdiction of the court.” Whilst it would be convenient for the majority of cases to be dealt with by the LVT, there was no reason why all such cases had to be.

(b) that the chalets were dwellings. It was true that the terms of the leases prevented the claimants from living at the chalets on a permanent basis and that the President of the Lands Tribunal had, in King v Udlaw, felt this to be a reason why holiday chalets were not dwellings. However, King was not binding on the court; it was no requirement of the 1985 Act that the dwelling be a permanent home; indeed, there was no reason why a person could not have two homes. The policy of the 1985 Act was to protect people against excessive and unreasonable service charge demands. That policy should apply with equal force to a flat in a block and to a holiday home.

Permission to appeal has apparently been granted.

J is a barrister. He considers housing law to be the single greatest kind of law known to humankind and finds it very odd that so few people share this view.

20 Comments

  1. Charles Knapper

    Although permission to appeal was granted F withdrew the appeal shortly after lodging the grounds with the Court of Appeal so the appeal is now dismissed.

    In your third paragraph you have indicated that F issued proceedings this is incorrect as P issued the proceedings not F.

    The correct title is Phillips (not Phillps) there was a typo in the reserved judgment when it was handed down.

    In case you are wondering I am both a claimant and the solicitor that started the proceedings. I brought all the case law together for the trial of the preliminary issue which has clarified the position with regards to holiday chalets.

    Reply
    • NL

      Charles, thanks for the correction and the update. Good work in the face of Udlaw, too. Who raised the jurisdiction issue? If you started proceedings in the High Court, I’m presuming it was F that argued for non-concurrent jurisdiction.

      Reply
  2. Charles Knapper

    Yes it was F who argued against concurrent jurisdiction.

    Reply
  3. Charles Knapper

    The effect of this case is really far reaching. Holiday Chalets had not been regarded as having the protection of the Landlord and Tenant Act 1985. Certainly many application to the Leasehold Valuation Tribunal by chalet owners had in the past been rejected by the LVT making a finding that they did not have the jurisdiction to hear the application. In fact many of these decision pre date King -v- Udlaw.

    Now of course the position is clear and the LVT will have the ability to hear applications although perhaps of greater importance is the fact that s20 applies thus restricting the service charge contribution to £250.00 per leaseholder per year in the absence of proper consultation.

    Of equal importance is the fact that the landlord cannot forfeit if the leaseholder challenges and refuses to pay the service charge as a result of the protection afforded by the Housing Act 1996. This was particulary relevant in our case as leases had been forfeit and the most recent service charge demand for 2010 was over £9500.00 per chalet owner.

    As someone who specialises in this area of law to see the back of King -v- Udlaw was particularly satisfying. To see the relief on the faces of many chalet owners is however far more satisfying especially those who simply could not afford the service charge demands being imposed by F.

    Of course F is now faced with having to repay substantial sums in relation to the service charge years 2008, 2009 and 2010 as well as substantial damages claims for unlawful re-entry in relation to a number of the chalets. The trial judge used an interesting phrase in his reserved judgment when he referred to “unscrupulous landlords”. To quote from the reserved judgment:-

    “But in my judgment that does not undermine another principle about which Parliament has been concerned namely that unscrupulous landlords should not be able to exploit tenants who are required to contribute to the management costs of an estate”

    This particular finding says it all.

    Reply
  4. J

    Charles,
    Echoing NL, as the original author of this post, I’m grateful for the corrections. The transcript that Lawtel has claims to be the draft judgment. Do you have a final version that you could share with us?

    Reply
    • C Sumpner

      I am a holiday chalet owner having awful problems from a landlord. We have to renew and sign a new contract every year with the site owner, even though we own our chalets. He says if we do not sign the contract we will have to leave our chalet. There are many things in this year’s contract of which we do not agree but feel forced to sign it.
      1)First of all the landlord wants to charge us 10% plus on top of the electricy meter reading, he also charges uf 20% vat when we believe it should be 5%. We have the latest elelectity bill and the price per unit of elec seems way too high. We have asked him for a copy of the site invoice but he is not forthcoming. Is it true that he should comply with the maximum resale charge, i.e. not profit from providing electricity?
      2) Secondly he has decided that we have to pay water charges on top, although it was originally included in the annual site fee.
      3) He increases the annual fee every year but does not repairs, the site is very scruffy with fences falling down. He does pay for removal of rubbish and has the grass cut.
      4)The original contract said we had a right to arbitration and that he should give us 3 months’ notice of any increase in the site fee. Even when this was in the contract he always told us about the rise less than 1 month before.
      There are 28 chalets on site and a lot of the residents are elderly, to our way of thinking although they are described as holiday chalets they are still a dwelling with lounge, kitchen, bathroom and 2 bedrooms. They were built in the 1960’s by the local council I have been told.
      We would very much appreciate some advice on the way forward as the law is very grey on some of these matters, and we want some clarity so that we may challenge this individual.
      Thanks for any help you can give us.

      Reply
      • J

        I’m afraid that – as we say throughout the blog – we don’t give legal advice on specific cases; our respective insurance companies would not be happy with us if that were not so.

        Reply
        • NL

          Yup – can’t do it. Can only suggest that you contact a specialist solicitor for advice.

      • Evie Gibson

        To C.Sumpner,
        Did you ever resolve your problem
        Who was your specialist solicitor.?
        Thanks
        Evie

        Reply
  5. C Sumpner

    Thank you very much anyway, that’s what I’ll do.

    Reply
  6. Evie Gibson

    I am in a similar position to C.Sumpner. 11/2/2011
    How do I find a Specialist Solicitor for this issue.
    Plus we also have a Ground Rent/VAT issue on our holiday property.
    I am elderly widow and
    Badly need legal advice against the bully boy freehold owners.
    Please help thanks

    Reply
    • Mo

      Did you have any luck with a specialist solicitor. We have a problem my elderly parents have had a chalet for over forty years. The ownner died leaving it in a charitable trust The solicitor in charge ignored it for years now wants us to sign a lease with a 300% increase in ground rent. We have never had a lease it was an unwritten agreement that the rent would always be paid on time and was. There are 26 chalets. L am looking for a specialist solicitor.

      Reply
  7. Tony McLachlan

    Having read this satisfying judgment – Phillips and Francis I can only direct those seeking help to the government funded advisory body – LEASE. Jurisdiction for dwellings on holiday parks and for home owners on similar ‘mobile home parks’ has now been extended and disputes can now be heard by the Leasehold Valuation Tribunal. LEASE will advise on contact details or you can search for RPTS online. Good luck.

    Reply
  8. David Beasley

    I have just received a letter from our landlord demanding a payment in relation to a Further Service Charge they have decided to ask us for back dated payment as they cannot run the site on the charges they agreed last year they are asking for £1,900 on top of our agreed amount and have given us 21days in which to pay which some of us cannot pay can they demand a 40% increase 8months into an agreed contract that is still in force

    Reply
    • Giles Peaker

      David, we really can’t offer advice on individual’s issues through the blog, I’m afraid. We aren’t insured for it.

      Reply
  9. Saint Jean

    You’re no use at all then , what are you doing here ?

    Reply
    • Giles Peaker

      Providing considerably more of interest than you.

      Reply
  10. Carole

    Did you entirely defeat Udlaw? I presume that being a QBD decision your precedent will bind the 1st Tier Property Tribunal, not the Udlaw precedent?

    Reply
    • Giles Peaker

      They are of equal status. Upper Tribunal is equivalent to High Court.

      Reply

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