Roberts v Countryside Residential (South West) Limited [2017] UKUT 0386 (LC)

Westmark (Lettings) Ltd v Elizabeth Peddle and others [2017] UKUT 449 (LC)
4th January 2018
Roberts v Countryside Residential (South West) Limited [2017] UKUT 0386 (LC) Part II
7th February 2018
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Squirrelled away by the Upper Tribunal until almost the last chime of midnight on New Year’s Eve is this decision containing a plethora of technical points likely to sate even the most parched of service charge palates. I propose to review it over three posts. Too much of a good thing is – ahem – too much.

It is a Welsh case, so there is no FTT here: we are in the Leasehold Valuation Tribunal scrutinising service charges at a mixed-use development known as the Old Brewery Quarter in Cardiff.

The residential part of the Old Brewery Quarter comprises 42 flats split into 4 sections:

  • Hop House (6 flats),
  • Coopers Court (12 flats),
  • Malt House (12 flats) and
  • Dray Court (12 flats).

The lessee here, Mr Roberts, was the long lessee of 6 Dray Court. Dray, that is, as in the brewer’s cart, rather than the squirrel’s home.

Mr Roberts did not pay any service charges for the calendar years 2009 – 2015.

The landlord issued a county court claim, which, in time-honoured fashion, was transferred to the LVT, which, in turn, dealt with it over two days and a site inspection.

It determined that all of the service charges claimed by the landlord were payable by Mr Roberts.

Permission to appeal

Martin Rodger QC, Deputy President of the Upper Tribunal (Lands Chamber) granted Mr Roberts permission to appeal in relation to, frankly, a shopping list:

  • Ground rent;
  • The validity of the service charge demands;
  • Compliance with s.20B of the 1985 Act;
  • The effect of an earlier LVT decision;
  • Electricity charges;
  • Water charges, and
  • A ‘surplus’.

He ordered that the appeal be dealt with by way of review.

Skeleton arguments

Unfortunately, although skeleton arguments were to be exchanged seven days before the hearing, Mr Roberts did not send a skeleton argument to the Tribunal until 5am on the morning of the hearing. He cited ill health as the reason for its late submission.

HHJ Alice Robinson, hearing the appeal, declined to take it into account. She was of the opinion that it did not clarify Mr Roberts’s case, but raised new points. She did however permit him to rely on it as an aide-mémoire.

The lease

There was nothing unusual in the lease. Mr Roberts covenanted to pay a service charge. The landlord covenanted to keep the estate, buildings and machinery in repair and to provide various services.

To qualify as a service charge, the costs, including recurring expenditure and reasonable provision for future expenditure, must be “paid or incurred in that Service Charge Period”, which in this case was the calendar year.

Mr Roberts was liable to pay “one forty-second (1/42) or such other fair and reasonable proportion to be determined by the Landlord’s Surveyor whose decision (except in the case of manifest error) shall be conclusive.”

Mr Roberts was required to make on account payments towards the service charge costs in quarterly instalments on the usual quarter days.

At the end of every year, the landlord was required to provide him with a service charge statement, and any shortfall was to be paid within ten days of receipt of the service charge statement.

Any overpayment was to be credited against the next year’s service charge.

The landlord’s letter of 30 November 2015

On 30 November 2015, the landlord wrote to Mr Roberts, enclosing:

  • A letter before action from October 2013;
  • A schedule of arrears from 2008 to 2013, and
  • A summary of tenant’s rights and obligations that complied with the 2007 Regulations.

Mr Roberts was invited to sign the statement of arrears.


HHJ Robinson set out sections 27A, 18(1), 19(1), 20B, 20C and 21B of the 1985 Act, and sections 47 and 48 of the 1987 Act.

The LVT decision

In short, the LVT decided that:

  • The quality of service and the amount charged for those services were reasonable;
  • There had been compliance with section 20B for all of the disputed years;
  • The landlord’s practice of not crediting money to lessees due to cash-flow issues was acceptable;
  • Notices defective under sections 47 and 48 of the 1987 Act had been corrected, and could be so corrected retrospectively;
  • It was entitled to depart from figures calculated by an earlier LVT dealing the same development and the same proportions, and to substitute instead the sums that the landlord was claiming from Mr Roberts;
  • Ground rent was payable, even though it had no power to deal with the point.

The Upper Tribunal’s decision

(1) Ground rent

This was the simple one: it was agreed that the LVT had no power to decide the amount of ground rent payable.

HHJ Robinson therefore set aside that part of the LVT’s decision.

(2) Validity of the service charge demands

The arguments

Mr Roberts raised three points.

First, for the years 2008 to 2013, the summaries of tenants’ rights and obligations, required under section 21B of the 1985 Act, did not accompany the service charge demands in the manner required by Tingdene Holiday Properties Ltd v Cox [2011] UKUT 310 (LC):

  • The letter of November 2015 was not a demand for payment: it was an invitation to agree and pay the service charge arrears;
  • The summary accompanying it was therefore of no effect because it must be served with a demand for payment;
  • In any event, a summary must accompany each service charge demand, and not be sent with a “compendious list” of all service charge arrears, and
  • The November 2015 letter only covered the period to 2013. The service charge demands for 2014 and 2015 therefore remained invalid.

Second, the summaries that accompanied the 2014 and 2015 service charge demands did not comply with the Service Charges (Summary of Rights and Obligations, and Transitional Provisions) (Wales) Regulations 2007/3160:

  • The English language summary contained paragraph numbering errors;
  • The Welsh language summary was placed after the English language summary, and
  • They were in less than 10 point font;

Third, the demands did not contain the information required by ss.47 and 48 of the 1987 Act.

Section 21B

Given that a section 21B notice must accompany a service charge demand, the first question on this point was whether the November 2015 letter was a demand.

In her HHJ Alice Robinson’s view, that letter could “only sensibly be construed as a demand for payment of the service charges”. The invitation to sign the statement of arrears reinforced that status.

“Accordingly”, said HHJ Robinson, “… this case is not analogous to Tingdene”.

Compliance with the relevant regulations

The 2014 and 2015 service charge years were not covered by the November 2015 letter. Mr Roberts took issue with the summaries that had been served with the demands relating to those years.

The key parts of Regulation 3 of the 2007 Regulations provide:

“Where these Regulations apply the summary of rights and obligations which must accompany a demand for the payment of a service charge must be legible in a typewritten or printed form of at least 10 point, and must contain—

“… (b) the following statement—“

The statement that follows is the mandatory summary of a tenant’s rights and obligations, and appears first in Welsh, and then in English.

In Tingdene, the President (George Bartlett QC) held that it was not sufficient for the service charge demand to be accompanied by a copy of the relevant statutory instrument:

“What was required to be sent was a document with a specific title – “Service Charges – Summary of tenants’ rights and obligations” – and a specific text. The purpose is obvious: to ensure that the tenant, when he receives his demand, has clearly before him a statement of the rights and obligations that the Regulations set out; and the heading of the document is important in directing the tenant’s attention to what it contains. The statutory instrument itself has its own title and contains the text of regulations 1 and 2 before the requirement for the heading and the statement is set out in regulation 3. It clearly does not itself constitute the document that it prescribes and it does not fulfil the purpose that underlies the requirement.”

The difference between Tingdene and Mr Roberts’s case was that the summary was sent with the demand, albeit with errors.

The question for HHJ Robinson was whether the summary fulfilled the statutory purpose.

“The Court of Appeal have recently considered this issue in the context of a notice seeking to acquire the right to manage under the Commonhold and Leasehold Reform Act 2002 in Elim Court RTM Company Limited v Avon Freeholds Limited [2017] 2 P&CR 8”, she said.

“Applying Natt v Osman [2015] 1 WLR 1536, Lewison LJ drew a distinction between two types of cases, those where a decision of a public body is challenged and those where a statute confers a property or similar right on a private person. Although a demand for service charges does not involve the acquisition of a property right, it affects the landlord’s right to recover sums that would otherwise be due and the second type of case extends to “similar” rights. In my judgment the present case falls into the second category.

“Lewison LJ went on to describe the stricter approach that applies in such cases as follows:

“52. The outcome in such cases does not depend on the particular circumstances of the actual parties, such as the state of mind or knowledge of the recipient or the actual prejudice caused by non-compliance on the particular facts of the case: see [32] [in Natt v Osman]. The intention of the legislature as to the consequences of non-compliance with the statutory procedures (where not expressly stated in the statute) is to be ascertained in the light of the statutory scheme as a whole: see [33]. Where the notice or the information which is missing from it is of critical importance in the context of the scheme the non-compliance with the statute will generally result in the invalidity of the notice. Where, on the other hand the information missing from the statutory notice is of secondary importance or merely ancillary, the notice may be held to have been valid: see [34]. One useful pointer is whether the information required is particularised in the statute as opposed to being required by general provisions of the statute. In the latter case the information is also likely to be viewed as of secondary importance. Another is whether the information is required by the statute itself or by subordinate legislation. In the latter case the information is likely to be viewed as of secondary importance. In this connection it must not be forgotten that while the substantive provisions of a bill may be debated clause by clause, a draft statutory instrument is not subject to any detailed Parliamentary scrutiny. It is either accepted or rejected as a whole. A third is whether the server of the notice may immediately serve another one if the impugned notice is invalid. If he can, that is a pointer towards invalidity.”

The statutory purpose of section 21B of the 1985 Act is to inform a tenant as to his rights and obligations and what action he may take. That action included:

  • The right to apply to the LVT for a determination as to liability to pay the service charge and the amount, the potential costs of doing so,
  • The right to be consulted where service charge costs exceed a certain sum and
  • Rights to obtain information.

Noting that the alleged non-compliance related to the 2007 Regulations, rather than to the statute, the 1985 Act itself, HHJ Robinson turned to the errors identified by Mr Roberts.

Paragraph numbering

The omission of the number (4) against the text of that paragraph in the English language version of the statement required by the 2007 Regulations and the sequential renumbering of subsequent paragraphs. That omission was, in HHJ Robinson’s view, trivial and of no significance to the statutory scheme.

Ordering of the languages

The placing of the English language version of the statement before the Welsh language version, whereas the 2007 Regulations place them the other way around, may have been of cultural importance, but in the context of the statutory purpose was of no relevance. The key point was that the information was given clearly and in both Welsh and English.

Font size

By regulation 3 of the 2007 Regulations the summary must be “legible in a typewritten or printed form of at least 10 point”.

In Elim Court, Lewison LJ held that one pointer towards invalidity was the power to re-serve a notice immediately. That is the case with s.21B notices.

The purpose of the regulation was to ensure that a person with normal eyesight, “corrected with spectacles where appropriate”, could read the summary clearly.

Mr Roberts did not contend that the text was too small to read – indeed, it was larger than the text on the service charge demand.

There was no evidence before HHJ Robinson as to the actual font size used by the landlord.

She concluded that, as a matter of statutory construction, the service charge demands were “wholly valid” not “wholly invalid”. Mr Roberts’s arguments therefore failed and he was unable to rely on section 21B as a reason for withholding payment.

Sections 47 & 48

Here, Mr Roberts argued that:

  • Some of the service charge demands did not contain the landlord’s name. Instead, they simply said: “Landlord: Accounts Countryside House Brentwood CM13 3AT”;
  • One invoice bore the landlord’s name, but omitted the word “landlord” above;
  • One invoice was ambiguous because where it stated that the landlord’s name and address were “above”, there were three names and addresses, none of which were identified as being the landlord, and
  • The demands did not comply with section 48 because they did not clear identify which address was that of the landlord and which the address for service of notices.

HHJ Robinson accepted that the demand for 2014 service charges stated that “the Landlord’s name and address details are shown above” and that three names and addresses were set out above that in the demand.

One address was Mr Roberts’s, and could not therefore be confused with the landlord’s name and address.

Another, on the printed letterhead, was the block management company’s address.

The third was the landlord’s name and address, but the word ‘Landlord’ did not appear above it.

Could two names and addresses be confused to the extent that, as a matter of law, the demand did not contain the name and address of the landlord?

“There is certainly some support for that argument in Tedla v Cameret Court Residents Association Limited [2015] UKUT 0221 (LC)”, said HHJ Robinson.

In Tedla, Martin Rodger QC, the Deputy President, said this:

“A demand which provides the name and address of two or more different companies without identifying which one of them is the landlord does not, in my judgment, provide the required information. The tenant is not to be left to guess which of two or more parties is the landlord, but is to be informed of the landlord’s identity.”

By section 47(2), a service charge demand is to be treated as not being due “at any time before that information is furnished”.

However, as Martin Rodger QC also held in Tedla:

“The effect of section 47(2) is suspensory only, in that any service charge or administration charge is treated as not being due from the tenant to the landlord “at any time before the information is furnished by the landlord by notice to the tenant”. …all that is now required to satisfy the statutory requirement is for a notice to be given to the [tenant] informing her that the respondent is her landlord and of its address… It is not necessary for all the previous service charge demands to be re-issued. From the time at which such a notice has been given the service charges will be treated for all purposes as being due…”

The insuperable obstacle facing Mr Roberts was that the demand for the 2015 service charges did furnish the information required by section 47(1).

When that demand was served, “…the suspensory effect of section 47(2) was lifted and the 2014 service charges became due”, held HHJ Robinson, observing that such reasoning was consistent not only with Tedla, but also with Johnson v County Bideford Limited [2012] UKUT 457 (LC), a case that turned primarily on section 20B, but also considered the relationship between section 20B and section 47.

In Johnson, the (then) President, George Bartlett QC, held that there was no reason why the information required by section 47(2) could not be included in a later service charge demand, thereby retrospectively correcting the previous demand that had omitted the section 47(1) information.

“This aspect of the Johnson case was cited with approval by the Court of Appeal in Skelton v DBS Homes (Kings Hill) Limited [2017] EWCA Civ 1139”, said HHJ Robinson.

Despite having found completely against Mr Roberts on the section 47 and 48 points, HHJ Robinson nonetheless expressed sympathy for him and the confusing earlier demands that were not the subject of the appeal, some of which gave the landlord’s name and address in one place on the demand, and the managing agent’s name and address “for service of notices” elsewhere.

Spoiler alert:

Part II will follow, with Court of Appeal action in which I feature. My excitement is unbounded.

Part III will devoted to my observations. I will probably have calmed down by then.

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