Some brief notes on recent Upper Tribunal and Court of Appeal decisions on leasehold and service charge issues.
Yambasu v London Borough of Southwark (LANDLORD AND TENANT – SERVICE CHARGES – Consultation requirements for qualifying long-term agreements) (2023) UKUT 152 (LC)
The FTT was right to find that consultation requirements had been met where there was a long term qualifying agreement. The appellant’s argument that there was no LTQA was not raised before the FTT, or in the appeal grounds and was not allowed. Further challenges to the reasonableness of works costs, and to the apportionment of costs, failed as the appellant leaseholder presented no evidence to the contrary.
Orbit Housing Association Ltd v Vernon (2023) UKUT 156 (LC)
The FTT had found that a “Scheme based support charge” in an assured shorthold tenancy for sheltered accommodation was not a variable service charge, so it had no jurisdiction, but also that no services were provided to Mr Vernon in respect of the charge. On appeal, the UT held that the terms of the tenancy agreement provided for the charge to vary year by according to the previous year’s actual costs. This was a variable service charge under section 18 Landlord and Tenant Act 1985, and the FTT had jurisdiction. .As there was no written evidence before either the FTT or the UT as to what services were provided to Mr Vernon in respect of the charge, it was not a reasonable charge.
And finally, from the Court of Appeal (on appeal from the UT)
Eastpoint Block A RTM Company Ltd v Otubaga (2023) EWCA Civ 879
Eastpoint – a right to manage company as the name suggests – had brought an application to the FTT for a determination of breach of lease by Mr Otubaga under s.168 Commonhold and Leasehold Reform Act 2002. The FTT said there was no jurisdiction as the RTM company could not serve a s.146 notice or pursue forfeiture. The Upper Tribunal agreed with the FTT.
The Court of Appeal held that while an RTM company could not serve a section 146 notice or pursue forfeiture, the company could bring a section 168 application. Section 100 of the 2002 Act gave the RTM the power to enforce ‘untransferred covenants’ (those not in section 96 of the Act) ‘in the same manner as the landlord’.
what is critical, on this argument, is that both the RTM company and the landlord are entitled to enforce the covenants “in the same manner”. If, therefore, the landlord could enforce the covenant by applying to the FTT for a determination that the lessee is in breach, so, too, may the RTM company.
While a section 168 application may be a route towards forfeiture, that as not its only purpose
The mere fact that the FTT has found the existence of a breach of covenant may itself persuade the tenant to cease the activities complained of
or remedy the breach without the need for further action. Alternatively, it may, for example, be the prelude to obtaining a judgment from the county court for an injunction or damages; or a charging order; or enabling the landlord to serve notice under section 146 of the Law of Property Act 1925 and forfeit the lease.
Appeal allowed. An RTM company can bring a s.168 application for determination of breach of lease.