UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2014] UKUT 0096 (LC)
UTLC Case Number: LRX/2/2013

	TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

LANDLORD AND TENANT -service charges – true construction of terms of lease -  validity of service charge demands – whether served in accordance with provisions of lease

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE FIRST-TIER TRIBUNAL (PROPERTY CHAMBER) (LEASEHOLD VALUATION TRIBUNAL)

BETWEEN

                                       G & O INVESTMENTS LIMITED                        Appellant

and
                                                     NAZNIN KHAN                                     Respondent

Re:	Flat 1, 
75 Parrock Street, 
Gravesend, 
Kent	

Judge Edward Cousins

Decision on written representations

© CROWN COPYRIGHT 2014

DECISION
The background to the appeal
1.	This is an appeal from the decision (“the Decision”) of the Leasehold Valuation Tribunal, Southern Rent Assessment Panel (“the LVT”) handed down on 16th November 2012.  The Decision followed a hearing before the LVT which took place over two days on 30th August 2012 and 19th October 2012. The subject matter of the dispute was over alleged unpaid service charges by the Respondent, and the efficacy of service charge demands made by the Appellants seeking the recovery of sums alleged to be due and owing by the Respondent. The LVT came to the conclusion that the service charge demands had not been served by the Appellants on the Respondent in accordance with the strict terms of the relevant provision contained in the lease.
2.	This appeal is concerned with the discrete point as to the true construction (“the Construction Point”) of clause 6(b) (“Clause 6(b)”) contained in a lease (“the Lease”) of the flat known as and situate at Flat 1, 75 Parrock Street, Gravesend, Kent. The Lease is dated 16th April 1987 and was made between (1) Mr Douglas George Bruce, and (2) Mr Peter George Abbott. The Appellants and the Respondent are, respectively, the assignees of the freehold reversion immediately expectant upon the term, and the leasehold interest. On 7th June 2013 the Deputy President gave permission to appeal the decision of the LVT, but on a limited basis, to which I shall refer again, below.
3.	Paragraphs 19 to 23 of the Decision deals with the Construction Point. As the LVT states, the starting point for analysis is whether the service charge demand has been served in the accordance with the Clause 6(b). This provides as follows:
“Any demand for payment notice or other documents required or authorised to be given to the Lessee shall be well and sufficiently given if sent by the Lessor or the Lessor’s Agent through the post by registered post or recorded delivery letter addressed to the Lessee at the flat or attached to the door or doors thereto Any demand notice or other document required or authorised to be given by the Lessee shall be well and sufficiently  given if left or sent through the post by registered or recorded delivery letter addressed to the Lessor at the last known address or registered office of the Lessor and any demand notice or other document sent by post shall be deemed to have been served forty-eight hours after such posting.”
4.	The LVT makes reference in the Decision to the fact that it had been “admitted”  by the Appellants during the course of the hearing that the service charge demands had been sent by ordinary second-class post. There was apparently evidence adduced to this effect. The LVT came to the conclusion on the Construction Point that a true interpretation of the Clause 6(b) “can only mean that the demands sent by post are sent by registered or recorded delivery post.”  In other words it is a mandatory requirement, and in effect no other method of service sufficed.  The LVT then went on to state that it was 

“…satisfied that the above clause seeks to ensure actual delivery or if it does not happen then the Post Office and the Lessor would be notified of the same.  At the present circumstances the Tribunal is satisfied that the demands were not served in accordance with the Lease.  Furthermore it is satisfied that the Lease is not a “pick and mix” document when it suits but a binding contract in its entirety.”
5.	Having regard to this interpretation the LVT was therefore satisfied that the demands had not been served by the Appellants in accordance with the Clause 6(b), and were therefore invalid.  It was therefore determined that no service charges were payable for the service charge years ending 29th September 2007, 2008, 2009 and 2010.  LVT then found that that it did not need to go on to consider the reasonableness or otherwise of the service charges demanded.  
Application for permission to appeal to the LVT
6.	Following the Decision the Appellants then made an application for permission to appeal to the LVT dated 5th December 2012, to which reasons for the application for seeking permission to appeal were attached.  The reasons set out three grounds the basis of which was that the appeal had real prospects of success. The third ground was directed to the Construction Point. In the decision dated 17th December 2012 the LVT rejected all three grounds of appeal. In respect of the third ground  permission was refused on the basis that the LVT was satisfied (being judge both of law and fact) that the construction of the Clause 6(b) was in law the correct one.  Permission to appeal to the Upper Tribunal was then refused for the reasons set out in that decision.  The LVT stated that the arguments advanced by the Appellants disclosed no errors of law or other irregularity that would warrant permission being granted.  
Application for permission to appeal to the Upper Tribunal
7.	Subsequently on 3rd January 2013 the Appellants sought permission to appeal from the Upper Tribunal (Lands Chamber).  The grounds of appeal were drafted by Counsel.  The submission made in respect of the third ground (paragraphs 7 to 10 of the grounds of appeal) is that the LVT erred in law and/or in fact in concluding in paragraph 20 of the Decision that clause 6)(b) of the Lease requires demands for service charges to be served only by registered post or recorded delivery.  It is contended by the Appellants that on its true construction the clause constitutes a deemed service provision in that documents sent by registered post shall be deemed to have been served whether or not they have in fact been received.  However, this does not displace actual service of demands for payments. 
8.	In particular Counsel for the Appellants stresses that the words “shall be well and sufficiently given if sent” (my italics) would be otiose if the Lease required all demands of notices to be sent by registered post or recorded delivery.  It is submitted that those words and the focus in the clause of the manner of sending indicate a deemed service provision.  He says that this interpretation is confirmed by the final words of the clause which read “on any demand notice or other documents sent by post should be deemed to have been served 48 hours after such posting.” Further, the reference to “if sent” clearly denotes that the leaseholder has a choice as to whether to send the stated documents by registered post or not.  It is submitted that the use of the word “if” would directly contradict a meaning of the clause which made of the use of registered post mandatory for the service of demands and notices.

Decision of Upper Tribunal 
9.	In the decision dated 7th June 2013 the Deputy President gave permission to appeal against the decision of the LVT, but this was limited to the issue raised in paragraphs 7 to 10 of the Appellants’ grounds of appeal i.e. the third ground.  The following observations are made in this decision, as follows:- 
“The proposed appeal has a realistic prospect of success on the question whether the LVT was correct to treat clause 6(b) of the Lease as a mandatory provision requiring service of documents to be by registered post rather than a permissive provision.”
The Decision
10.	In my judgment on the Construction Issue the LVT was incorrect in its interpretation of Clause 6(b). It is not an easy clause to construe, but on a strict construction of the relevant clause I find that its provisions are not mandatory requiring that the service of documents by post is to be effected exclusively by registered post or recorded delivery. In other words it is clear that the wording is not exhaustive of the methods of service and is not intended to prescribe the only methods of service to be utilised. On the contrary, I find that the provision is permissive in that it does not prevent other means of service of the demands. In other words, it does not displace other methods of actual service of demands for payment. 
11.	In this context I consider that the words “if sent” are directly referable to the word “post”, as thereafter defined i.e. by registered post or recorded delivery.  So the clause should be interpreted as reading “if sent by registered post or recorded delivery”, and in such a case it “shall be well and sufficiently given”. The alternative method prescribed in the case of the Lessor which will also be construed as being “well and sufficiently given” is when the demand for payment notice or other document is “attached to the door or doors” to the flat. 
12.	As to the deeming provision in the final sentence of the clause, although it is somewhat infelicitously worded in the context of the earlier parts of the clause, in my judgment it is an attempt to incorporate by analogy some of the wording of the deeming provision contained in section 7 of the Interpretation Act 1978 – “References to service by post”. This provides as follows:
“Where an Act authorises or requires any document to be served by post (whether the expression “serve” or the expression “give” or “send” or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”
13.	I find that the word “post” in the penultimate line of Clause 6(b) means “ordinary post”, and is to be contrasted with the words “registered post or recorded delivery” in the earlier parts of the clause. If ordinary post in utilised as the method of service then the demand for payment notice or other document is “…deemed to have been served forty-eight hours after such posting”.  In this context it is to be noted that in the case when the methods of registered post or recorded delivery (now known as Special Delivery) are utilised the receipt of such documents served in this way are subject to tracking and are signed for by the recipient, or returned.  There is no need for the delivery in such circumstances to be “deemed” to have been served within forty-eight hours of such posting. In my judgment the deeming provisions are directly referable to the service of documents by ordinary post and bear no relevance to service by Special Delivery.
14.	Thus although I have reached my conclusions in a different way from the submissions presented by Counsel for the Appellants I do agree with him that the use of the words “shall be well and sufficiently given if sent” would be otiose if the Lease required all demands of notices to be sent by registered post or recorded delivery.
15.	The Appeal therefore is allowed. 

		Dated 26th day of February 2014

	Judge Edward Cousins