A few quick notes on various leasehold related cases.

Howe Properties (NE) Ltd v Accent Housing Ltd (2024) EWCA Civ 297

Accent Housing levied a management fee on leaseholders which was at flat rate and a) differed by tenure (freehold and assured tenancies were at different rates) and b) was charged as against Accent’s management costs across its whole estate, some 3058 leasehold properties, not just this specific development.

The leases provided for a charge

in connection with the management and maintenance of the Buildings

The Court of Appeal agreed with the Upper Tribunal that “there is simply no basis for including in the Annual Service Charge any amounts expended or provided for by Accent in connection with the management or maintenance of any other properties that are not on the Estate.”

However, leases which provided for payment of ‘a fair proportion’ of a service charge, rather than a set percentage or fraction, would allow for different leaseholders to be charged different amounts, albeit with objective justifciation.

it might well be that the costs of compliance by the landlord with its repairing and maintenance covenants under clause 4 – which would fall within clause 5(2)(a) – might relate to defects or works in some only of the flats or blocks of flats. Indeed, depending on the facts, it could be that the costs of remedying a major defect in one of the blocks of flats might form a substantial proportion of the costs making up the Annual Service Charge (as defined) in any particular year.

Whilst there might be an instinctive tendency towards collective burden sharing by all tenants in such a situation, I do not see why such a result is mandated by the wording of clause 5(1). It seems to me that the broader wording of clause 5(1) in the Leases permits a result under which the tenants of the flats affected by the defect are required to bear a higher proportion, and the unaffected tenants a lesser proportion, of the total costs for that year, to reflect the way in which those total costs are made up.

[…]

Nor does clause 5(1) permit Accent to decide the proportion of the Annual Service Charge that it should recover from a particular tenant by reference to factors that are irrelevant to the provision of services to that tenant. So, for example, I do not consider that it would be permissible for Accent to decide to charge long leaseholders a greater proportion of the Annual Service Charge than would otherwise be justified by the services provided to them, so as to make up for any limits on the amounts which Accent can lawfully charge to assured tenants by reason of statutory limitations under the Landlord and Tenant Act 1985. If and to the extent that this is what UT Judge Cooke was alluding to in the last sentence of [20], I would agree with her.

However, if UT Judge Cooke was indicating that there could never be any basis under clause 5(1) upon which Accent could charge a different proportion of the Annual Service Charge to tenants with different tenures, then I would not agree. If it were the case that the nature of the tenure of a lease required a greater level of work to be done by Accent in managing the tenancy, then Accent would be able, if it could justify the differential, in charging a different rate to the different tenants. But that would all depend on the facts.

Thirty One Crescent Grove Ltd v Atherden (LANDLORD AND TENANT – SERVICE CHARGES – procedure – admission or agreement, sec.27A(4) Landlord and Tenant Act 1985 – consultation requirements – decision-making by tenant-owned landlord) (2024) UKUT 80 (LC)

The FTT’s decision that a leaseholder (and shareholder in the freehold company) who had participated in discussions as to the extent of works to a communal area, and had made suggestions as to materials that had in fact increased the cost, should only pay £250 because of the lack of formal section 20 consultation was set aside. The FTT had introduced this issue itself, not the leaseholder applicant.

Bradley & Anor v Abacus Land 4 Ltd (LANDLORD AND TENANT – SERVICE CHARGES – apportionment – landlord’s contractual obligation to act reasonably) (2024) UKUT 120 (LC)

A requirement in a lease that a landlord act ‘reasonably’ in a exercising a discretion was a requirement for objective reasonableness. If the discretion was not qualified by ‘reasonably’ then the requirement was only that the landlord exercise the discretion rationally.

In this case, costs of renovating a gym, to which the leaseholders only had time limited access and which otherwise functioned as a commercial gym under a commercial lease, were levied on the residential leaseholders only.

If the FTT did indeed intend to apply a test of objective reasonableness then in my judgment it reached the wrong outcome. It is manifestly unfair, and therefore not objectively reasonable, for the residential leaseholders to pay the whole of the gym costs after 2020 when they no longer have exclusive use of the gym. The landlord in 2013 decided to grant the gym lease in extraordinarily generous terms, and the respondent is now seeking to charge that generosity to the residential tenants. I cannot understand how that is not unfair.

Triplark Ltd v Whale & Ors [2024] EWHC 1440 (Ch)

A landlord of a block with an old communal heating system was not entitled under the lease to replace it with a new system that would require the installation of heat interface units within the flats, where that would result in increased repairing obligations on the leaseholders (as the freeholder maintained that the HIUs  would be heating apparatus solely applicable to each flat.

As was conceded, the hot water would only be available by way of an HIU. Each flat would require its own HIU. At this point account must be taken of the effect of clause 3.3(a) of the Lease. It was common ground that an HIU supplying hot water to a flat, albeit being situate outside that flat, would fall to be treated as part of the flat-owner’s repairing obligation pursuant to clause 3(3) of the Lease. This is because the repairing obligation contained in the clause extends to central heating apparatus solely applicable to each flat.

(…)

The Ds submit that the effect of the introduction of the HIUs to the new system means that there is a change in the way that the Lease operates; it is not as the C says that there is no change to the repairing covenant itself, it is that the introduction of the new system would entail two heating devices whereas upon the grant of the Lease there was only one. Whilst previously the hot water arrived at the taps and radiators, now a HIU is required: the Ds would have to repair that HIU. This is an additional burden not contemplated by the parties upon entering into the Lease. On this proposition I find myself in complete agreement with the Ds.

The freeholder could replace the heating system, but could not, under the lease unilaterally add to the leaseholder’s repairing obligations in doing so.

Comment

I am slightly surprised that it was apparently conceded that an HIU would be an apparatus ‘solely applicable to each flat’. HIUs are an integral part of the communal system, and play a key role in its functioning. It would also be somewhat ridiculous to suggest that the leaseholder is responsible only for the half of the HIU inside the heat transfer panel (though I suppose no more ridiculous than lease clauses that make the freeholder responsible for the outside of window frames, but the lessee responsible for the inside of the frames….)

Rutland Lodge (Petersham) Management Company Ltd v Benjamin & Anor (2024) EWHC 1429 (Ch)

A cautionary tale on the wording of settlement terms on a breach of lease claim, in which the High Court had to decide with a row of planters amounted to a ‘barrier’.

It is clear to me, both from the background to the dispute and the intention behind the compromise, and from the use of the word ‘barrier’ which is to mark the relevant lines, that the planters must extend for the entirety of each line. It would be in the nature of a barrier that it extends along the full length of each relevant line, in order to prevent the line being crossed. The gaps between the planters/pots mean that this requirement is not currently satisfied.

I consider that what I have said above is sufficient to dispose of the question before the court, which is solely whether the present arrangement of planters/pots complies with paragraph 2(e) on its true construction. It is not the function of the court to dictate precisely how the barrier should be formed, but I do find that there should be an uninterrupted line across the length of the barrier. I can see that a question may arise whether a de minimis gap between planters, say measured in a small number of millimetres, is permissible. I consider that it arguably would be, as the Schedule envisages that there will be a series of planters, the placing of which may lead to small gaps, and which would nonetheless satisfy the object of barring the advance of persons across the line of the barrier. That is, however, not a question which requires to be determined on the present application.

Also, watering trees in pots did not amount to ‘maintenance’.

Ambercrown Ltd v Alexandra Perrett & Anor (LANDLORD AND TENANT – SERVICE CHARGES – consultation – whether consultation took place) (2024) UKUT 158 (LC)

An FTT decision that there had not been section 20 consultation on works, and so a charge limited to £250, was set aside. The FTT had failed to give reasons why it considered that the consultation that had taken place did not amount to consultation for the works done. Further, the applicant leaseholders had agreed the works were necessary and did not dispute the charges in issue, so the Tribunal had no jurisdiction. (All the parties were in person…).

29 Buckland Crescent Management Company Ltd v White (2024) EWHC 1480 (Ch)

An appeal on whether the freehold management company were able to bring forfeiture proceedings, following the leaseholder’s breach of the terms of settlement of previous proceedings, which included an admission of breach of lease by failure to stop a leak from the leaseholder’s flat.

The settlement said

6 Release
This agreement is in full and final settlement of, and each party hereby releases and forever discharges, all and/or any actions, claims, rights, demands and set-offs, whether in this jurisdiction or any other, whether or not presently known to the parties or to the law, and whether in law or equity, that it, its Related Parties or any of them ever had, may have or hereafter can, shall or may have against the other party or any of its Related Parties arising out of or connected with the Proceedings.

7 Agreement not to sue

7.1 Each party agrees on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Parties any action, suit or other proceeding concerning the Proceedings, in this jurisdiction or any other.

7.2 Clause 6 and Clause 7.1 shall not apply to any claims in respect of any breach of this agreement.

The agreed works were not completed within the time specified in the settlement, and the landlord served a s.146 notice, followed by a claim for possession (forfeiture).

The High Court found interpretation difficult and finely balanced, but decided the landlord’s interpretation was more likely, The s.146 and forfeiture claim was not  ‘concerning the proceedings’ but for ongoing breach of lease.

It had already been decided at first instance that the leaseholder would have relief from forfeiture, should that be required, conditional on payment of the landlord’s costs, so the only real issue on this appeal was costs.

FSV Freeholders Ltd v SGL 1 Ltd (2023) EWCA Civ 1318

A section 5 notice was not invalid because it failed to set out the terms of a whole transaction for the sale of 5 blocks, where Block A was a separate building from Blocks B, C & E (and Block 4 was outside the section 5 requirement, being unoccupied). The full terms of the sale were not required to be in the ‘severed’ section 5 notices, and the sale value had been apportioned.

Keith v Benka & Anor (2023) EWCA Civ 821

A county court forfeiture claim had been referred to the FTT for determination of breach of lease. Then, nothing happened for four years. The leaseholder applied to strike out the claim for the claimant’s failure to refer the claim to the FTT and for inordinate delay in prosecuting his claim.

A DDJ struck out the claim for failure to bring the FTT application. This was overturned by a CJ on appeal, as there had been no breach of the original order, and it was not for the freeholder to initiate FTT proceedings where the court had ordered the referral.

On second appeal, the Court of Appeal held that it was right that there had been no breach of the order and the claim should not have been struck out on that ground. The referral was the court’s to progress.

The delay was very long, and the freeholder had done nothing to try to progress it by contacting either the court of the FTT. However, this was not enough, in itself, to amount to an abuse of process.

Mr Gatty has persuaded me that we would be extending the law by holding that on the particular facts of this case there has been an abuse of process sufficient to justify the striking out of Mr Benka’s claim. I reach this conclusion with reluctance, because the claim is thoroughly stale, and it may well be that DJ Bell ought to have struck it out back in 2015 on the ground that at that time Mr Benka was not entitled to serve a section 146 notice. But that decision was not appealed, and it is now too late to do so.

Appeal dismissed.