Chapter 1, Part 2, Commonhold and Leasehold Reform Act 2002 makes provision for “qualifying tenants” of a building to form a company that, in turn, will acquire the right to manage the property from the freeholder. It is largely modeled on the collective enfranchisement provisions of the Leasehold Reform, Housing and Urban Development Act 1993 (service of claim notice, reply, disputes resolved by the LVT, etc). For present purposes, readers need to note two points:
(a) s.79, 2002 Act requires the notice of claim to be given, inter alia, to the landlord and other tenants. The notice must give a date, being “not earlier than one month” by which a response may be given by way of counter-notice (s.80, 2002 Act);
(b) s.94, 2002 Act deals with what happens to “accrued service charges” once the right to manage has been exercised and, in broad terms, requires the “accrued uncommitted service charges” to be paid to the RTM company, with the LVT determining the amount to be paid in default of agreement.
In Moskovitz v 75 Worple Road RTM Co Ltd [2010] UKUT 393 (LC), the Upper Tribunal was faced with a very odd factual situation (and all dealt with in writing, so it’s hard to get to the bottom of what happened). The Upper Tribunal fought its way through this mess and got to the relevant points:
(a) the notice of claim specified June 16, 2009 for the reply;
(b) the notice was deemed served on June 17, 2009 as it had been sent by post and was deemed to arrive on that day;
(c) that was not a date that complied with s.80, 2002 Act, as it was not “not earlier than one month” after the notice was given.
Hence, the company was not entitled to acquire the right to manage. Now, frankly, the RTM isn’t where this is important. The real significance of this is in s.20, LTA 1985 consultation, where landlords are required to give various consultation periods of “at least 30 days beginning with the date of the notice” to leaseholders before carrying out major works or entering into long term contracts. I’ve always thought that you should allow a couple of days for posting and this case seems supportive of this view.
In OM Ltd v New River Head RTM Co Ltd [2010] UKUT 394 (LC), the appellant was the former manager of the property, being the management company under the lease. Between 2006 and 2008, there had been earlier proceedings between the parties that had resulted in the service charges being reduced by £121,742.39. In November 2008, the RTM company brought proceedings in the LVT for the payment of the uncommitted accrued service charges. It argued that the £121,742.39 was money that OM Ltd were due to pay over as uncommitted service charges. The LVT agreed with this argument and ordered the money to be paid over, together with interest at 4% p.a. OM Ltd had argued that these sums were not “uncommitted service charges” given that (a) they had been spent; (b) were not currently held by OM Ltd; and, (c) the LVT had no power to award interest.
The appeal was allowed. An RTM company stepped into the shoes of the previous landlord/manager such that it was entitled to whatever monies were on hand at the date of the transfer. It had no power in respect of any service charge matters that crystalised before that date, such that it could not sue for “old” service charges; nor could it exercise (effectively) restitutionary remedies that rightly belonged to leaseholders. The right was to the money that the manager actually had, not what he should have had or had at one stage but no longer had. The LVT also had no power to award interest.
Getting the money back after a successful LVT case is one of the hardest things for leaseholders to do and, frankly, is one of the major failings in the LVTs jurisdiction. Whilst this appeal was always doomed to fail, it does demonstrate just how hard it is (or can be) to get the fruits of your victory.