Case Law

The leaseholder applied to an LVT in connection with the grant of a new lease under s.48 Leasehold Reform Housing and Urban Development Act 1993. The property was a purpose built development dating from 1931. The only issue in dispute was the price to be paid for the new lease.
The Lands Tribunal accepted that, following Cadogan v Sportelli, it was appropriate to set the deferment rate at 5% for flats and 4.75% for houses, even though the instant case might not involve property in the prime central London locations, although left open the possibility that “special factors” might justify a departure from these figures.
The Lands Tribunal also considered the correct rate of capitalisation for ground rent. In the instant case, the expert evidence was that the capitalisation rate should be the same as the deferment rate and that it would only be appropriate to adopt a different rate if the ground rent was substantial. The Lands Tribunal expressly rejected this approach, noting that the factors which determined the capitalisation rate were so manifestly different from those which are relevant to the deferment rate that there is no justification for simply adopting the same figure.
Analysis
The fall-out from the Arib / Sportelli decisions continues to be felt. It seems clear that the deferment rates suggested in Sportelli were to be treated as definitive and, whilst they have been accepted in this case, the reference to “special factors” which may justify a different result will, no doubt, cast despair into the hearts of surveyors across the country. The industry needs clear answers – the reference to “special factors” is an invitation to further litigation.

The applicant pursued service charges going back to 2000. The respondent contended that a proportion of the service charges had been withheld due to breaches of covenant on the part of the applicant and that a number of the charges were now statute barred. There was no evidence before the LVT to support the contention that the applicant was in breach of covenant and, accordingly, the LVT rejected that aspect of the respondent’s case. In respect of the limitation period, the LVT canvassed the possibility both of a 12 year limitation period (for claims made under a deed) and 6 years (for service charges reserved as rent) and concluded that there was, infact, no limitation period in respect of a s.27A application.
Analysis
The question of limitation periods for applications to the LVT continues to remain a contentious and unclear one. The Lands Tribunal must be called upon to examine the situation before too long.

The claimant landlord claimed five instalments on account of service charges from their defendant tenant. The tenant counterclaimed, contending that the landlord had failed to carry out roof repairs at the relevant time. The service charges arose from remedial works to the roof. The landlord had covenanted to use all reasonable endeavours to repair and replace the roof and, in addition, the lease provided a cap on the tenant’s liability for service charges up to December 2003. The landlord had notified the tenant of the intention to do the remedial works, but had postponed them until after the capping period expired.

The High Court held that the landlord had not used all reasonable endeavours to repair the roof and that the works should have been completed by the end of December 2003, such that the tenant would have had the benefit of the capping clause. If the work had been done when required, then the tenant would not have had to pay the sums claimed.

Analysis
This is an interesting case with potentially wide implications. If a landlord has a discretion about when to undertake works, is he required to do so at a time most convenient (and cost-effective) for the tenant? Would this logic be equally applicable to right-to-buy leases and s.125 notices? Or, is it the case that this argument was only available because of the specific covenant to use “all reasonable endeavours”? Sadly, the case was argued and reasoned very much from first principles, rather than on the basis of previous decisions and established case law. It remains to be seen what, if anything, inventive claimants can do with this decision.

The tenants had applied, under s48 Leasehold Reform Housing and Urban Development Act 1993 for a new lease of 43 Rednall Drive. The only issue between the parties was the price to be paid. The LVT adopted an approach and a final figure which neither party contended for. 
The Lands Tribunal disapproved of this. Whilst it was clear that the LVT was an expert tribunal, it was not entitled to simply substitute its own views without giving the parties a chance to comment upon the situation. The LVT had unilaterally attached an importance to certain improvement works which it had noted during the inspection. Neither of the experts had accompanied the LVT on its inspection nor commented upon these improvements

Analysis
The interplay between the LVTs role as an expert tribunal and a quasi-judicial body has never been an entirely satisfactory one and this case indicates the kinds of problems that can arise.

The applicant challenged her liability to pay service charges from 2001 to 2003, contending that she had not been given adequate notice of the service charges, as required by s.20B. The LVT agreed in respect of one of the three years in dispute. As it pointed out, s.20B imposes a strict requirement on landlords and even cases of genuine error will not save the landlord, as there is no discretion in determining such matters. The LVT was prepared to assume that the costs were “incurred” on the last day of the service charge year, but the respondent was unable to produce any written evidence showing that the charges had been notified to the applicant.
Analysis
As the LVT said, the requirement to notify leaseholders of their service charge liabilities is a strict one and this appears to be another case of a landlord who was unable to provide sufficient proof of compliance.