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Issue No. 109 Summer 2014

Re SCMLLA (Freehold)’s Appeal (2014 UKUT 58) was also a case concerning Section 20C and also where the freehold of the building was owned by the leaseholders. There was a successful appeal against the LVT order that costs should not be charged to any of the leaseholders through the service charge. It was considered by the UT that only one leaseholder had applied and had not sought an order in such wide terms as to benefit all the other leaseholders. The UT did however give leave to the leaseholder to return to the LVT for full consideration of the point and to allow other leaseholders also to make an application should they wish to do so.

Prior to the decision of the Supreme Court in Daejan v Benson (see Newsletter 105), the LVT had, in deciding Re OM Properties(2014 UKUT 9) refused the landlord dispensation from the consultation provisions contained in Section 20, thus allowing recovery of only £250 from each leaseholder which was only a small proportion of the total cost of the works: there had been a failure (i) to release copies of all four estimates for the cost of the work, but only the two lowest and (ii) to summarise and distribute the leaseholders’ observations who had responded to the original consultation. However, in reliance on Daejan, the landlord appealed and the UT took the view that the focus should be on whether the leaseholders were prejudiced by the landlord’s breach, the burden of proof being on the leaseholders. Furthermore, even if dispensation were granted, it could be conditional and not absolute. It was concluded that (i) there was no evidence that lack of the two highest estimates had caused the leaseholders paying for inappropriate work or paying more than necessary; (ii) it was not a relevant consideration that leaseholders should not be made aware of others’ response to the consultation on the basis that it would have allegedly promoted confidence and (iii) dispensation was granted so that £200,590 plus VAT would be recoverable (as opposed to £42,500 ie £250 per leaseholder) conditional on paying the leaseholders’ costs in the LVT (they were not represented before the UT) and not adding its own legal costs to the service charge.

Right to Manage (RTM) The property in 90 Bloomfield Road RTM v Triplerose ( 2013 UKUT 606) was the subject of an application by its leaseholders for the right to manage and consisted of two separate buildings in the same ownership and under the same management regime. The UT held (i) that Section 72(1) of the Commonhold & Leasehold Reform Act 2002 did not preclude an RTM Company applying in respect of more than one self-contained building: the Section merely defined the type of building which would qualify; (ii) it was not necessary to serve separate notices for each building as long as it was sufficiently clear that the conditions of the Section had been complied with and (iii) the number of qualifying leaseholders needed to be calculated for each building separately.

On the other hand in Albion Residential v Albion Riverside RTM (2014 UKUT 6) the UT held, in allowing an appeal from the LVT, that the application by the leaseholders for the RTM should be refused. The development consisted of nine floors over a basement car park which extended under other buildings and under a piazza which was integral with both the flats and the other buildings. Under Section 72(1) of the 2002 Act, the right could be exercised by residents of “a self-contained building or part of a

Federation of Private Residents’ Associations Newsletter


building with or without appurtenant property” and not structurally detached; in this case it was, on the physical facts, structurally part of the wider development and thus did not come within the Section.

The leaseholders in Assethold v 7 Sunny Gardens Road RTM (2013 UKUT 509) were also unsuccessful in their application for a RTM through sheer bad luck. The building contained only three flats and all the leaseholders formed a RTM company and were registered as directors and members but, before the formation was completed, one leaseholder died and therefore ceased to be a leaseholder. The remaining two were not entitled to acquire the RTM.

Leasehold Reform Housing & Urban Development Act 1993

Although the property in Houser v Howard de Walden Estates (2013 UKUT 597) looked like a house, it did not qualify for enfranchisement under the Leasehold Reform Act 1967, one part of it being overhung by another building to which it was structurally attached. The leaseholder therefore sought to purchase an extended lease under the 1993 Act. The landlord’s valuation was 99 per cent of the freehold value of such a house but the leaseholder was unsuccessful in arguing that, because only a 138 year lease extension was being granted, the correct figure should be no more than 95 per cent. The UT ruled in favour of 99 per cent, bearing in mind that such properties were scarce in such a prestigious area, thus inflating its leasehold value over and above what might be obtainable elsewhere.

Lease Interpretation The service charge dispute in Pas Property Services v Hayes (2014 UKUT 26) arose in respect of a building which consisted of four flats, two of which were converted from an existing building and two were in a purpose-built new building. There was a communal heating system only for the two new flats and the common parts. The landlord sought a contribution towards the cost of heating gas from all four leaseholders. The lease was silent on who should pay although there was a “sweeper” clause designed to cover all possible items not expressly mentioned elsewhere in the service charge provisions. The UT held the sweeper clause was, without express words, insufficient to cover charges for heating of individual flats but would cover the common parts. However, the clause in the leases of all the flats required the leaseholders to “pay and discharge the cost of all water electricity gas and telephone . . . used or consumed” in the flat, did enable the landlord to recover from each individual leaseholder the cost of gas, even though not included in the service charge accounts; it followed that only those in the new flats would pay because only those were connected to the system. The reasonable apportionment would need to be assessed by the landlord’s surveyor.

Each of the twelve 999-year flat leases in H. Waites v Hambledon Court & others (2014 EWHC 651 (Ch) included garages in a separate block. The freeholder purported to grant a lease of the airspace over the garages to a developer who planned to erect flats over the garages and to support the structure on steel columns on their own foundations. It was held in the High Court that the demise of the garages to the leaseholders included the roof. Such a demise was akin to the grant of a freehold and accordingly was deemed to include the airspace above and the soil below.

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