Those few days between Christmas and New Year were always quite a lot of fun in our household. You’d finally have the time to catch up on the excellent Christmas TV (i.e. you could watch the hours and hours of stuff you’d recorded on your video player). There was still quite a lot of treat-food to get through. Not to mention getting to grips with all the presents. And, so, in that spirit of unrestrained joy, I bring you a leasehold update, in the style of Christmas TV.
The satisfying sequel
Johnson and others v County Bidefort Ltd [2012] UKUT 457 (LC) involved a dispute between holiday chalet owners and their landlord (interestingly, no-one seems to have picked up on the issue of whether a holiday chalet is a “dwelling” for the purposes of the Landlord and Tenant Act 1985: see our post here on the two conflicting cases). The landlord had acquired the freehold reversion in 2008. In the usual way, it sent out service charge demands in 2008, 2009 and 2010. Those demands failed to comply with s.47, Landlord and Tenant Act 1987 in that they did not give the name and address of the landlord, with the result that the service charges were not to be treated as due. The correct information was, however, sent in 2011 (and retrospectively for the earlier – defective – years).
The LVT held that the failure to comply with s.47 meant that the service charges were not payable, but that this could be remedied at a later date (which the landlord duly did). It appears that the leaseholders sought permission to appeal and, in doing so, sought to take a new point. They argued that the s.47 failure could not be remedied, because more than 18 months had passed since the original demands and, hence, s.20B, Landlord and Tenant Act 1985 prevented recovery.
I interpose – this is quite an important argument. We’ve known since the Brent v Shulem B case in 2011 that s.20B requires a contractually valid demand (see here), but the Brent case didn’t touch on the issue of statutory compliance.
George Bartlett QC, the President of the Upper Tribunal (in what must be one of his last cases before he retires on 1.1.13) granted permission to appeal on this point. He held that, notwithstanding the failure to comply with s.47, 1987 Act, the demands were still a “demand for payment” within the meaning of s.20B, 1985 Act. They demanded payment. The fact that the tenant had a defence didn’t matter. The Brent case was about errors which were incapable of retrospective correction. It was clear that s.47 could, however, be retrospectively complied with.
This is a pretty important decision. First, as I said above, this was one of the issues left open by the Brent case and it’s good to have an answer. Secondly, it seems that the logic applies with equal force to failures to comply with s.21B, Landlord and Tenant Act 1985 (summary of rights and obligations). Thirdly, however, whilst I agree with the result, I’m not sure of the reasoning stands up. Saying that Brent was about errors which were incapable of retrospective correction is, I think, to miss the point. The errors were only incapable of correction because of s.20B. Still, an important issue clarified.
The amusing tit-bit
Macdonald v (1) PWC LLP (2) LB Havering [2012] EWHC 3556 (Admin) (Lawtel only, from what I can see) isn’t really a service charge case at all. It’s a follow on from LB Havering v Macdonald in the UT earlier this year (see here). The LVT had held that certain costs associated with communal tv signals were not recoverable as a service charge. The UT allowed an appeal on the basis of procedural irregularity. Thanks to this new judgment, we now know that, at the re-trial, the LVT found for Havering. The case itself is a challenge to the decision of Price Waterhouse Coopers not to declare that items in the accounts of the London Borough of Havering (the same TV costs) were unlawful. The claim was dismissed with a hefty costs order.
The endless repeat
The UT has recently been on a drive to try and force the LVT to adopt something of a more uniform (and, some would say, fair and proper) approach to cases. The most obvious examples are probably these two here. In LB Hackney v Akhondi [2012] UKUT 439 (LC), the UT had to do it again. The case itself was about a major works project that had left the leaseholder with a demand for around £30,000. The UT reiterated (at [35]) that it as not for the LVT to create a case that a party had not advanced. clarification or teasing out an argument are one thing (subject to giving proper notice to the other side), but the LVT must go no further.
I’m not convinced by the s47 LTA1987 and s20B LTA1985 decision.
The argument by the UT president that the intention of s47(2) was to allow retrospective correction doesn’t resonate with me. I would have thought the statement in the legislation that the amount demanded in the invalid demand is for all purposes not due until correction would provide the only clue as to the purpose of the legislation. Interest and any legal costs incurred before correction would not I presume be due once corrected. Would it not also follow that costs incurred by the LL would not be due unless corrected in time?
Likewise with s21B LTA1985. Interest and legal costs not being recoverable by virtue of the lease until the tenants’ rights and obligations are provided.
I also wonder about the unscrupulous LL who withholds his name and the summary of tenants’ rights until much later when the tenant can’t do anything about those newly discovered rights or the name and address for notice of proceedings.
I’m not quite sure I follow you (‘tho that could easily be my hangover). The idea that s.47 can be complied with retrospectively isn’t controvercial: Lindsey Trading Properties Inc v Dallhold Estates (UK) Lty Ltd (1995) 70 P&CR 332; Rogan v Woodfield Building Services Ltd (1995) 27 HLR 78; Staunton v Taylor [2010] UKUT 270 (LC). As to whether costs would be recoverable in respect of the earlier (incorrect) demands – like you, my instinct is that a court would be loathe to allow complete recovery (although it might allow some, I suspect it’ll be fact-sensitive)
Sure, s47 applies retrospectively. The argument was that if it doesn’t save the LL from losing interest and legal costs incurred before validating the demand then it shouldn’t save the LL from the 18 month rule imposed by s20B LTA1985.
Judge Bartlett argues that it does. Yet, in my view, the only indicators that there are, suggest there is a punitive effect to s47.
I think this is clearer with s21B as subsection 4 states that any provisions of the lease relating to non-payment or late payment do not have effect whilst withholding payment.
I know s20B isn’t a provision of the lease but Judge Bartlett has decided without any pointers (as is his right) that there is no punitive effect from s20B for an invalid demand of a certain type.
As mentioned earlier, this decision gives LL’s the green light to withhold their name and not provide the s21B summary. Then they can validate their demands much later when proof of unreasonable charges becomes much harder and the right to a s21 statement of account for anything but the last accounting period disappears.
Sorry – I understand now. And I agree that those are potential results.