Lands Tribunal Decision - Service Charge Dispute Appeal

In the case  Akorita v 36 Gensing Road Ltd,   the Lands Tribunal considered whether or not the leasehold owner  had been properly served with a notice under s. 20 Landlord and Tenant Act 1985. This was essentially an appeal case given that the case had earlier been heard by the Leasehold Valuation Tribunal.

Background to the service charge dispute.

In 2005 the Landlord wished carry out substantial repair works to the Building. These service charge works constituted qualifying works within the meaning of sections 20 and 20ZA of the Landlord and Tenant Act 1985 and within the Service Charges (Consultation Requirements) (England) Regulations 2003.

In recognition of his legal responsibilities the Landlord asked a firm of Chartered Building Surveyors to prepare a section 20 notice. The building surveyors, on behalf of the landlord, sent this section 20 notice addressed to the Laeaseholder at the flat in the building, even though he never lived at the flat. The principal point considered by the LVT was whether this section 20 notice had been properly served upon the leasehold owner given (1) the lease terms concerning service and (2) the facts as to what occurred to the section 20 notice.

Clause 9(1)(a) and (b) of the lease is in the following terms:

“(a) ANY notice in writing certificate or other document required or authorised to be given or served hereunder shall be sufficient although only addressed to the Lessees without his name or generally to the person interested without any name and notwithstanding that any person to be affected thereby is absent under disability or not ascertained and shall be sufficiently given or served if it is left at the last known place of abode or business of the Lessees or other person to or upon whom it is to be given or served or is affixed or left on the Demised Premises

(b) Any such notice in writing certificate or other document as aforesaid shall also be sufficiently given or served if it is sent by ordinary post in a prepaid letter addressed to the person to or upon whom it is to be given or served by name at the aforesaid place of abode or business and if the same is not returned through the Post Office within seven days of posting it shall be deemed to have been received or served at the time at which it would in the ordinary course have been delivered. ”

The Leasehold Valuation Tribunal decided that the section 20 notice had been served on the Leaseholder because (a) it had been served in accordance with the terms of the lease and also (b) because there was ‘a reasonable chance’ that the leaseholder had received the letter enclosing the section 20 notice. In the light of this finding that the section 20 had been served the LVT did not give any consideration as to whether the consultation requirements should be dispensed with under section 20ZA, because this question did not arise (the Landlord had made an application for such dispensation insofar as it was needed). The LVT also decided that the relevant costs which were subject to the service charge dispute were reasonable.

Lands Tribunal Decision

The Land Tribunal accepted the leaseholder’s appeal and made a number of decisions including :

(1)  No section 20 notice relevant to the qualifying works which the LVT was considering (for the purpose of including the costs thereof within the service charge) was served upon the leaseholder.

(2) As a result of the above section 20(1) of the Landlord and Tenant Act 1985 as amended applies in respect of the qualifying works such that the relevant contributions are limited as provided within section 20 and the 2003 Regulations unless the consultation requirements are dispensed with in relation to the works by the LVT.

(3) The LVT’s decision that the amount of the costs of the qualifying works was reasonable was overruled . It was ordered that this matter must be reconsidered by the LVT.

(4) The LVT’ were wrong in finding that all the amounts of service charge set out in the “Not Agreed” column in paragraph 14 of the LVT’s decision are payable − this finding was made as a consequence of the LVT’s finding that the section 20 notice had been served and that the amount of the relevant costs was reasonable.  

(5) The principal reason given by the LVT for refusing an order under section 20C of the 1985 Act was that the leaseholder had failed in her contention that she had not been served with the section 20 notice. The Land Tribunal  concluded that the LVT’s refusal to make a section 20C order cannot stand and must be quashed. However the discretion of whether to make an order under section 20C in relation to proceedings before the LVT is a discretion vested in the LVT. It is one thing for the Lands Tribunal to conclude that such discretion has been exercised on a flawed basis, but it is another thing for the Lands Tribunal actually to reverse such a decision especially in a case where the matter remains live before the LVT. The Land Tribunal therefore ordered that the refusal of the section 20C order was quashed and that the question of what (if any) order under section 20C should be made in respect of all (or any) part of the proceedings before the LVT should be  remitted for further consideration by the LVT.