UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2014] UKUT 0260 (LC)

UTLC Case Number: LRX/167/2012

 

 

                                                                             

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

LANDLORD AND TENANT – service charge – whether notification given of interim service charge before County Court proceedings commenced – appeal dismissed

 

 

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

LEASEHOLD VALUATION TRIBUNAL FOR THE

LONDON RENT ASSESSMENT PANEL

 

 

BETWEEN:

                                             TESSA CHOWDHURY                                        Appellant

                                                                  and

                       BRAMERTON MANAGEMENT COMPANY LIMITED             Respondent

 

                                                                             

 

 

Re: Flat 6 Bramerton

       213-215 Willesden Lane

       NW6 7YT

 

Before Martin Rodger QC, Deputy President

 

Sitting at: 45 Bedford Square, London WC1

23 May 2014

 

The Appellant in person

Miss Amanda Gourlay instructed by Brady solicitors, for the Respondent

© CROWN COPYRIGHT 2014

The following cases are referred to in this decision:

 

London Borough of Havering v MacDonald [2012] UKUT 154 (LC)

Oxfordshire County Court v G B [2001] EWCA Civ 1358

English v Emery Reimbold & Strick Limited [2002] 1WLR 377

South Tottenham Land Securities Ltd v R & A Millet (Shops) Ltd [1984] 1WLR 710

 

                                                                    DECISION

Introduction

1.             This appeal is against a decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“the LVT”) dated 26 September 2012 by which it decided that service charges totalling £2,232.01 were payable by the appellant tenant to the respondent landlord in respect of leasehold premises at Flat 6, Bramerton, 213-215 Willesden Lane, London NW6 (“the Premises”), and dismissed an application by the appellant for an order under section 20C, Landlord and Tenant Act 1985. 

2.             Permission to appeal was granted by the Tribunal (Her Honour Judge Alice Robinson) on 17 April 2013 on the following two grounds:

(a)           That it was arguable that the LVT failed to have regard to or give reasons for rejecting the appellant’s case that service charge demands had not been served on her when dealing with the substantive application, when considering with her complaint that she had had inadequate time to consider the papers for the hearing (giving rise to unfairness) and when dismissing the section 20C application;

(b)          That it was arguable that the LVT had been biased in that it predetermined both the applicant’s request for more time and the substantive application.  Permission was granted on this ground because the in its representations in opposition to the application for permission the respondent had not disputed the appellant’s assertion that the chairman of the LVT had stated “that whatever happened that day he was going to finish the hearing and would not grant an adjournment even if I had requested it.”

3.             The appeal was directed to be dealt with by way of a review but permission was given to both parties to adduce evidence concerning what had occurred before the LVT.  For reasons which I will explain it was not necessary for that evidence (which gave diametrically opposed accounts of what had occurred) to be called.

4.             Although the Premises are let to the appellant and Mr Nazim Chowdhury, and although both were parties to the proceedings before the LVT (and the county court proceedings which gave rise to them) Mr Chowdhury was not party to the application for permission to appeal and has played no part in the appeal. 

 

 

The background to the appeal

5.             The Premises were let to a predecessor in title of the appellant and Mr Chowdhury by a lease granted on 9 June 1972.  By clause 4(4) the lessee covenanted to pay by way of service charge such:

          “yearly sum as shall represent a rateable proportion of the Annual Service Cost… estimated by the Lessor to be incurred for the following 12 months together with the Reserve Fund and of which the Lessor shall give notice in writing to the Lessee prior to any quarter day such yearly sum to be paid by equal quarterly instalments in advance on the usual quarter days in each year without any deduction.”

The lease also provides for a balancing charge to be paid or credited at the end of the year after final accounts have been drawn up.  As this appeal is concerned only with the quarterly instalments referred to in clause 4(4) it is necessary to note only that the liability to make those quarterly payments is dependent on notice having been given by the Lessor prior to any quarter day of the yearly sum payable.  

6.             The appellant purchased the lease in November 2007.  In a letter written on 10 August 2012, shortly before the proceedings before the LVT, she asserted that service charge demands had not been sent to her for the first nine months after she had acquired the lease.  The appellant suggested in her letter (and repeated to me) that all correspondence concerning service charges may initially have been addressed to her predecessor (although whether this was sent to the premises or to a different address is not mentioned). 

7.             In 2010 the respondent commenced proceedings in the county court to recover unpaid service charges.  As the appellant was sometimes abroad, and in any event did not reside at the premises, in her acknowledgement of service she gave the address of her then employer as her address for service of communications in connection with the proceedings. 

8.             The 2010 proceedings concluded in a judgment against the appellant.  On 26 January 2011 the respondent wrote to her at the Premises complaining that she had not yet discharged the judgment.  On 1 February 2011 the appellant responded, from her employer’s address, making various counter-complaints against the respondent.

9.             The appellant told me that service charge demands had been addressed to her at the premises and were safely received by her between 2008 and the beginning of 2011.  Nonetheless there came a time in 2011 when the respondent began to address service charges statements of account and demands to the appellant at her employer’s address (which had been given as her address for service and from which she had sent her letter of 2 February 2011).  In paragraph 17c of her statement of case in this appeal the appellant asserted that she became aware in March 2011 that a service charge demand dated 2 March 2011 had been received at her employer’s address (although the earliest document I have seen addressed in that way is a statement of account dated 14 July 2011).  The appellant confirmed that this was the case and told me that she had asked a member of staff to contact the respondent to inform them that her correct address was at the Premises.  Whether that suggestion was communicated to the respondent is not in evidence, but further statements of account were sent to the appellant at her employer’s address in July, August and September 2011.

10.         In about April 2011 the appellant’s employer ceased trading.  Subsequently the service charge statement dated 19 September 2011 was returned to the respondent’s agent marked “addressee gone away”.  On 12 October 2011 the same September statement was forwarded to the appellant at the Premises.  The following month, on 11 November 2011 a further statement of account was addressed to the appellant at the Premises.  The appellant confirmed to me that she had received that statement of account, albeit not until early in January 2012 as she had been abroad.  The statement of account showed that the quarterly service charges had been £491.38 plus a reserve fund contribution of £90.61 for each quarter since 25 December 2010.  The same amount had been included in a demand dated 12 November 2010 addressed to the appellant at the Premises, and in the further demand of 2 March 2011 of which she became aware from her employer in the same month.

11.         On 6 January 2012 proceedings were issued in the Barnet County Court by the respondent against the appellant and Mr Chowdhury seeking the recovery of £2,232.01 arrears of service charge (which included an additional management charge of £240 and gave credit for payments received, most of which had been appropriated to meeting the 2010 judgment).

The proceedings and the LVT’s decision

12.         The proceedings were transferred by Barnet County Court to the LVT so that it could determine under section 27A Landlord and Tenant Act 1985 whether any service charges were payable by the appellant.  The matter came before the LVT on 30 August 2012 and it is common ground that the appellant’s case included the assertion that she had not received service charge demands and so had not known what sums were claimed from her by the respondent.  The appellant also complained that she had not received supporting information including service charge accounts and other material which she had requested from time to time, and that the hearing bundle which was due to be delivered to her two weeks before the hearing date had arrived late.  The appellant told me that she had not attended the hearing before the LVT with the intention of disputing her liability to pay the service charges once they were properly explained and demanded.

13.         The LVT dealt with various issues concerning specific service charge items which had been challenged by the appellant and determined that the charges demanded from the appellant were reasonably incurred and recoverable in full.  

14.         It is common ground that in its decision the LVT did not deal with the applicant’s case that she had not received notice of the service charges.  It did record in paragraph 12 that the appellant had told them “that she and her husband have not received all the papers”, and at paragraph 13 that the respondent’s managing agent had referred in her submissions “to the bundles of documents which demonstrate that service charge demands have been made properly, and that they maintain full and proper records”.  

15.         In her application to the LVT for permission to appeal the appellant asserted:

          “Our defence was simply that we never received the demands”.

In response to that application, which the LVT refused, the LVT said this:

          “At the hearing …. Mrs Chowdhury claimed that she had not received demands and related documents.  Complaints were also made of the management of the premises and the performance of the caretaker. 

          Having heard submissions and evidence from both parties and having considered also the bundle of documents which contained copies of relevant notices, demands and receipt, we were satisfied that the leaseholders had been served with all relevant documents and that all the charges made were properly incurred and recoverable from the leaseholders in full.”

The first ground of appeal: the appellant’s case that she had not received service charge demands

16.         The contention that the LVT had omitted to deal with a significant aspect of the appellant’s case, namely that she had not received demands to trigger her liability to pay the service charges, was the basis of the first ground of appeal for which the Tribunal granted permission.

17.         Miss Gourlay acknowledged that the LVT had indeed failed to give reasons for rejecting the appellant’s case that she had never received service charge demands.    She nonetheless contended that the omission was made good by the further reasons given by the LVT when dismissing the appellant’s application for permission to appeal, and in particular by the statement that: “we were satisfied that the leaseholders had been served with all relevant documents”.  She relied on the decision of the Tribunal (Her Honour Judge Walden-Smith) in London Borough of Havering v MacDonald [2012] UKUT 154 (LC) in which, at paragraph 34, it was said that:

          “There is a clear rationale for the LVT to be able to amplify its reasons where reasons are said to be inadequate so long as those reasons were properly within the mind of the LVT at the time the decision was made and formed the basis (or at least part of the basis) for the decision being reached.

18.         On the other hand, as the Tribunal also noted in Havering at paragraph 37, the Court of Appeal has expressed reservations on the practice of additional reasons being provided in response to an application for permission to appeal.  For example in Oxfordshire County Court v G B [2001] EWCA Civ 1358 Sedley LJ said: “We do not consider it generally appropriate that a statutory tribunal which is required to give reasoned decisions should respond to an appeal by purporting to amplify its reasons”.  An equivocal, but ultimately more tolerant approach was advocated by the Court of Appeal in English v Emery Reimbold & Strick Limited [2002] 1WLR 377, at [24]-[25], where Lord Phillips MR said this:

“24.           We are not greatly attracted by the suggestion that a Judge who has given inadequate reasons should be invited to have a second bite at the cherry. But we are much less attracted at the prospect of expensive appellate proceedings on the ground of lack of reasons. Where the Judge who has heard the evidence has based a rational decision on it, the successful party will suffer an injustice if that decision is appealed, let alone set aside, simply because the Judge has not included in his judgment adequate reasons for his decision. The appellate court will not be in as good a position to substitute its decision, should it decide that this course is viable, while an appeal followed by a re-hearing will involve a hideous waste of costs.

25. Accordingly, we recommend the following course. If an application for permission to appeal on the ground of lack of reasons is made to the trial Judge, the Judge should consider whether his judgment is defective for lack of reasons, adjourning for that purpose should he find this necessary. If he concludes that it is, he should set out to remedy the defect by the provision of additional reasons refusing permission to appeal on the basis that he has adopted that course. If he concludes that he has given adequate reasons, he will no doubt refuse permission to appeal. If an application for permission to appeal on the ground of lack of reasons is made to the appellate court and it appears to the appellate court that the application is well founded, it should consider adjourning the application and remitting the case to the trial Judge with an invitation to provide additional reasons for his decision or, where appropriate, his reasons for a specific finding or findings.”

19.         The power to give further reasons must now also be considered in light of the jurisdiction conferred on first-tier tribunals by section 9, Tribunals, Courts and Enforcement Act 2007 to review a decision and to take consequential steps including to “amend reasons given for the decision”.  Effect is given to that jurisdiction by rule 53 of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013, which did not apply at the time of the LVT’s refusal of permission to appeal in this case.

20.         It is not necessary for me to consider in this decision the ambit of a first-tier tribunal’s ability legitimately to respond to an application for permission to appeal by providing further reasons for its decision.  I have reached that conclusion because I am satisfied that, even if the LVT was not entitled to supplement its reasons as it did, and although its original decision was defective and might otherwise require to be remitted to a differently constituted tribunal for redetermination, the inevitable outcome of such redetermination would be a conclusion, once again, that the service charges claimed in the county court proceedings were due and payable by the appellant at the date on which the proceedings were commenced.

21.         The first point of note is that the county court proceedings which gave rise to the application to the LVT were commenced by the issuing of a claim form on 6 January 2012 asserting the appellant’s liability to pay service charges which had fallen due before that date.  Secondly, the LVT’s conclusion that the sums claimed were reasonably incurred and recoverable in full is challenged only on the grounds that the necessary prior notice of the amount payable had not been given.  

22.         The appellant acknowledges that the service charge statement of account dated 11 November 2011 was addressed to her at the Premises and had been delivered there, although that she did not become aware of it until early in January 2012 because she was abroad.  In those circumstances only two questions would fall to be considered if the proceedings were remitted for reconsideration: first, whether the service charge statement of account was sufficient to trigger the appellant’s liability under clause 4(4) of the Lease to pay the charges recorded in it; and secondly, if so, whether that liability had been triggered by the date the proceedings were commenced.

23.         As to the first question, the appellant pointed out that the statement of account was not a demand.  That is not an attractive argument since although the word “demand” was not used, the statement identified the sums which were “due”, aggregated them to produce a “balance to pay” and provided details of how payments could be made.  In any event, clause 4(4) of the lease does not render the quarterly service charge instalments payable on demand and provides only that the lessor should give notice in writing to the lessee prior to any quarter day of the yearly sum to be paid by those instalments.  The statement of account of 11 November 2011 clearly, although belatedly, performs those functions.

24.         If it is assumed in the appellant’s favour (although this is disputed by the respondent) that she received no statement of account or other notice of the quarterly charges due from her during 2011 until 11 November 2011, what was the effect of the belated service of the statement of account of that date?  In my judgment the effect of late service of the statement of account was to provide the appellant with notice in writing of the yearly sum required to be paid by her. 

25.         The lease does not deal expressly with the consequences of late service of notice of the quarterly service charge instalments, but those consequences are nonetheless a matter of interpretation of the lease itself.  The general rule is that time is not of the essence of procedural steps under a contract relating to land.  It would nonetheless be arguable that late service of notice of the service charge contributions would not create a liability immediately to discharge the instalments which would have been payable on the three previous quarters had notice been given at the appropriate time.  What is unarguable and was not suggested by the appellant, was that a failure to give notice would relieve the appellant of her liability to pay the quarterly service charge instalments at all. 

26.         The possible consequences of late service of notice of the sum claimed on account seem to me to be either that the arrears might not become due and payable until the next quarter day (by analogy with the reasoning in South Tottenham Land Securities Ltd v R & A Millet (Shops) Ltd [1984] 1WLR 710 (a rent review case), or that the accumulated arrears might not become due until a reasonable time after notification of the sum claimed.  Of these alternatives the language of the lease seems to me to point more strongly to the first, because notice was required to be given “prior to any quarter day” in order to trigger a liability to pay the sum notified on that quarter day.  Assuming that approach to be correct, the three accumulated quarterly payments would have become payable on 25 December 2011 at the same time as the instalment falling due for the first time on that date.  If, alternatively, the instalments were only to become payable after the lapse of a reasonable period, it nonetheless seems to me that the period of approximately seven weeks between the service of the statement of account and the commencement of the proceedings meant that the sums recorded in the statement of account had undoubtedly become due by the time the claim form was issued.

27.         As I have already said, the appellant does not challenge her liability in principle to pay the service charges demanded of her, provided they have been properly demanded.  The LVT considered the charges and subjected the respondent to a close enquiry as a result of which it concluded that all of the charges were reasonably incurred and provided for services of a reasonable quality.  No purpose would therefore be served by remitting the matter for further consideration at first-tier level.

The second ground of appeal and disposal

28.         The conclusions I have reached on the appellant’s principal ground of appeal make it unnecessary for me to consider the allegations she made in her application for permission to appeal that the LVT had refused to allow her adequate time to consider the bundle of documents served on her in advance of the hearing, and refused to contemplate the possibility of an adjournment.  It is common ground that the documents were provided to the appellant at least a week before the hearing.  While they may not have included all of the documents which the appellant wished to see (which, ultimately, she was shown on the day of the hearing) they seem to have included sufficient material to establish the respondent’s entitlement to the service charges payable on account for 2011.  The appellant has filed a witness statement of Mr Cliff Ryan, a colleague who accompanied her to the hearing, which corroborates the allegations made in her statement of case.  The evidence served on behalf of the respondent is to the opposite effect and suggests that the appellant was offered the opportunity of an adjournment and declined it.  Nor do contemporaneous notes taken by the respondent’s solicitor support the allegations made by the appellant (not all of which are repeated in her statement of case for the appeal notwithstanding that they featured in her application for permission to appeal).

29.         In the circumstances it has not been necessary for me to investigate the manner in which the LVT conducted the proceedings.  I would have been reluctant in any event to embark on such an investigation as the LVT’s own contemporaneous record of the hearing was not available.  The proceedings of first-tier tribunals (in the Property Chamber at least) are not routinely recorded but the members of the tribunal take a note.  Where disputed allegations are made concerning the conduct of a hearing these contemporaneous notes should provide an important point of reference for the Tribunal and it is important that in such a case the parties take steps to obtain them.  

30.         For these reasons the appeal is dismissed.

9 June 2014                                                                                                     Martin Rodger QC

                                                                                                                         Deputy President