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12 Federation of Private Residents’ Associations Newsletter

Legal jottings Compiled by Philippa Turner LVT

Leasehold Valuation Tribunal


First Tier Tribunal (successor to the LVT) Upper Tribunal

PLCSC Property Law Case Summaries EWHC England & Wales High Court EWCA England & Wales Court of Appeal RTM Right-to-manage

Landlord & Tenant Act 1985 Cases in which the consultation requirements contained in Section 20 are in dispute continue to come before the LVT (now the FTT) in significant numbers. Four such follow below. Three points emerged in Jastrzembski v Westminster CC (2013 UKUT 284 LC): (i) it is not necessary to specify a particular address to which a tenant should send observations in response to a Section 20 Notice; (ii) there is no specific period before which the works proposed in the Notice need be carried out but it should be months rather than years. It followed that a Notice dated 2007 would not cover works executed in 2009 and it was therefore invalid and (iii) however, in this case, the Section 20ZA dispensation sought by the landlord would be granted since the tenants had not suffered any detriment as a result of the delay.

However, in BWD Trading v S. Anglian Housing (2013 PLSCS 167) it was held that there was no question of Section 20 being invoked for the simple reason that, in as yet uncompleted development of flats there were no landlord nor tenants in existence and therefore the developer entering into a long-term service agreement for the supply of hot water and electricity before disposal of the flats could not be challenged after they had been sold.

The case of R (Regisport) v UT (2013 EWHC 2638 (Admin) also concerned the supply of utilities – water rather than electricity – the bill, having been incorrectly addressed to the developer and not the current freeholder, had remained unpaid for a considerable period. The tenants claimed the benefit of Section 20B successfully before the LVT however, on judicial review of the UT’s refusal of leave to appeal, the High Court quashed the refusal, holding that the UT had wrongly assumed that the water bill had been sent to the developer prior to its transfer to the freeholder; the UT’s refusal had been reached on wrong evidence as to the facts.

The knock-on effect of Daejan v Benson (see Newsletter 105) was expressly acknowledged in Voyvoda v Grosvenor West End Properties (2013 UKUT 334LC) which was, in fact, an enfranchisement case concerning valuation. The claim by the freeholder for an added 0.25 per cent to the deferment rate to reflect the additional burden imposed on management by introduction of the 2003 Consultation Requirement Regulations would not be allowed; it was reasoned that failure to comply was not, since Daejan v Benson, as likely to result in the landlord’s inability to recover expenditure.

Issue No. 107 Winter 2013

Leasehold Reform Housing & Urban Development Act 1993 The issue of valuation on enfranchisement under the Act was also the subject of R (Wellcome Trust) v UT (2013 EWHC 2803) in which it was confirmed that the LVT was right to exclude expert witnesses called by parties in attempting to challenge the general principles of calculating the deferment rate as decided in Sportelli (see Newsletters 83, 86 and 88).

Yet another decision on valuation was that of the Court of Appeal in Cravecrest v the Duke of Westminster (2013 EWCA Civ 731). It was held that account should be taken of the “hope value” arising from the possibility that a future purchaser of each of the several flats might develop the whole building into one house, estimated to increase the total value by £3m.

One lessee of a flat in a building with four other flats applied for an extended lease under the Act. When the case (Burchell v Raj Properties 2013 PLSCS 241) was heard, the lessee sought to invoke Section 57(6)) by seeking variation of a term of the existing lease by removing the requirement for the flat to be used exclusively as a residence “for the lessee and his family” and substituting a covenant that it should be used “as a private dwelling and for no other purpose” which would have enabled subletting for residential use. It was held by the UT, dismissing the appeal from the LVT, that the natural and ordinary meaning of the covenant was its literal meaning; even though there was no express prohibition on subletting it did not follow that other covenants could be given a restricted or strained meaning: as drafted, it required occupation by the lessee personally. Section 57(6) did not allow alteration of a lease where there was no defect in the existing wording. This covenant was not a mistake: it had been included for a specific purpose in this lease and in the other leases of flats in the building and was for the mutual benefit of all the other lessees. Furthermore, there was no change of circumstances since the original grant of the lease which might have brought it within the Section.

! Legal Point Section 57 of LRHUD Act specifies that extended leases should, save in certain limited circumstances, be in the same terms as the existing lease; two of these are contained in Subsection 6 which provides that the new lease may be modified if (a) it remedies a defect or (b) it would be reasonable in view of changes occurring since the original grant.

Commonhold & Leasehold Reform Act 2002 The landlord in Fairhold Mercury v HQ Action Management Co. (2013 UKUT 487 LC) opposed the application by the tenants’ RTM Company to take over the management of the block (under Section 84 of the Act) on the ground that the name of the Company did not contain the words “RTM Co. Ltd.” after its name as prescribed by the 2009 Statutory Regulations. The UT upheld the LVT decision that the application should be granted. As long as the requirements of Section 73(2) as to the description of the Company were met, non-adherence to the Regulations could not invalidate the application. It was only if the constitution of the Company was, in some way, inconsistent with the Regulations

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