Sinclair Investments (Kensington) Ltd, R (on the application of) v The Lands Tribunal [2005] EWCA Civ 1305

[2005] EWCA Civ 1305Case No C3/2004/2080
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION (Administrative Court)
Mr Justice Sullivan
CO342004
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 08/11/2005
Before
LORD JUSTICE AULDLORD JUSTICE LAWSLORD JUSTICE NEUBERGER
Between
THE QUEEN ON THE APPLICATION OF SINCLAIR INVESTMENTS (KENSINGTON) LIMITEDAppellant
Mr Paul Letman (instructed by Messrs P Chevalier & Co) for AppellantMr Jonathan Karas (instructed by the Treasury Solicitor) as Advocate to the CourtHearing Hearing dates : 4 th October 2005
Approved Judgment
[1]This is an appeal, brought with leave of the Judge, by Sinclair Gardens (Kensington) Ltd (“Sinclair”) from a decision of Sullivan J, rejecting an application for judicial review of the Lands Tribunal’s refusal to grant permission to appeal against a determination of a Leasehold Valuation Tribunal (an “LVT”). The appeal raises two points. The first concerns the proper approach for the High Court to adopt to an application for judicial review of a refusal by the Lands Tribunal to grant permission to appeal from a determination of the LVT. The second point involves the application of that approach to the facts of this case. I shall first set out the facts; then I shall turn to the relevant statutory scheme; I shall then deal with the two points raised by this appeal.

The Facts

[2]Sinclair is the freehold owner of 75 Eardley Crescent, London SW5 (“the building”) , a four storey house, which has been converted into six flats, each of which is subject to a long lease containing service charge provisions in Clause 3(3). Those provisions require the tenant to pay “one-sixth of the expenses incurred by the lessor of performing its obligations contained or referred to in Clause 5(c) hereof ...”. Clause 5(c) is a covenant by the lessor, Sinclair: “to maintain amend renew replace and at all times during the...term to keep in good and substantial repair cleansed and decorated the whole of the building...including...the roof structure and foundations...and to do all such acts matters and things as may in the lessor’s reasonable discretion be necessary or advisable for the proper maintenance or administration...of the building”.[3]The service charges levied by Sinclair for the four years ending 24th June 1999, 2000, 2001 and 2002, and the service charge estimate for the year ending 24th June 2003, were challenged by two tenants, Ms Manuela da Graca and Mr Timothy O’Keefe (“the tenants”). Their challenge was made by way of application to the LVT pursuant to the provisions of section 19(2A) of the Landlord and Tenant Act 1985 (as amended by the Housing Act 1996) (“the 1985 Act”). The application was heard by the LVT over some four days during March and April 2003. On 3rd June 2003, the LVT published its determination, allowing certain items claimed by Sinclair, and disallowing others. The only relevant item for present purposes was the cost of carrying out damp proofing works (“the works”), some of which was disallowed.[4]The works consisted of the provision of a chemical damp proof course, and consequential replastering and water-proof rendering (or tanking) in two areas of the building. The works were carried out(i) to some of the walls of the basement flat, and(ii) to some of the walls of the basement flat access lobby. In the written and oral argument advanced by Counsel on behalf of Sinclair before the LVT, it was contended that, in the light of the expert evidence called by Sinclair, the practical justification for the works, Clauses 3(3) and 5(c) of the leases, and the guidance given in certain cases, the cost of all the works was the liability of the tenants. The tenants, who appeared in person before the LVT, disagreed.[5]In paragraph [32] of their determination, the LVT accepted that there must have been some damp proofing work to the basement flat when the building was converted into flats in the 1980’s, and that that damp proofing had failed. Accordingly, they concluded that the damp proofing and associated works to the walls of that flat constituted repairs falling within clause 5(c) of the leases, and that Sinclair could therefore recover the cost under clause 3(3).[6]In paragraph [33] of their determination, the LVT said they were unpersuaded that “the same standard would, automatically, have been applied to the access lobby”, and that they were “of the opinion that the damp proofing of the access lobby to the standard achieved constituted an improvement rather than a repair”. They therefore held that the damp proofing and associated works to the access lobby fell outside the scope of clause 5(c) of the leases, and that the cost could not be recovered by Sinclair under clause 3(3).[7]Accordingly they allowed the cost of the works to the walls of the basement flat, but disallowed the cost of those to the walls of the access lobby. In paragraph [34], they said that they were not “greatly assisted by the legal arguments put forward on behalf of both parties”. This was, they explained, because “on the facts of this case” they believed that “a clear distinction between repairs and improvements could and should have been drawn”. In round figures, this meant that about £10,000, which Sinclair sought to recover by way of service charges as the cost of the work to the access lobby, was disallowed.[8]Sinclair requested permission from the LVT to appeal on this aspect of their determination (as well as on other aspects) to the Lands Tribunal. This request, which was made by way of a written reasoned application on 18th June 2003, was rejected by the LVT, essentially because they thought they were right, in a short written refusal dated 10th July 2003.[9]On 26th July 2003, Sinclair applied to the Lands Tribunal for permission to appeal. That application, which was also made in writing, set out the proposed grounds of appeal, and annexed the written evidence given to the LVT on the works, the legal submissions made to the LVT, the determination of the LVT, and the application to, and decision of, the LVT on permission to appeal. Essentially, there were two proposed grounds of appeal, so far as relevant. The first was that the LVT had failed to focus on, and to apply, the words of Clause 5(c), treating it simply as a covenant to repair, whereas it was more extensive than that. Secondly, even if the clause was simply a covenant to repair, that the nature of all the damp proofing and associated work was such that it constituted a repair.[10]On 2nd December 2003, Mr N J Rose FRICS, a surveyor member of the Lands Tribunal, refused permission to appeal in a short written determination expressed in these terms:
“The conclusions of the Leasehold Valuation Tribunal on the issues about which the applicant complains are ones which it reasonably could have reached. In the light of the submissions which have been made by the parties there are no reasonable grounds for concluding that the decision may have been wrong.”
[11]Sinclair was dissatisfied with this decision. The only conceivably available route to challenge the determination of the LVT was to seek judicial review of Mr Rose’s refusal to grant permission to appeal that determination. Accordingly, on 6th January 2004, Sinclair applied for permission to issue an application for judicial review. Permission to issue was granted by Collins J on 23rd February 2004. In reply to the application, the Lands Tribunal wrote querying the availability of a judicial review remedy in principle, and stating that, if such a remedy was available, an “active respon[se]” would be “inappropriate”.[12]The application for judicial review came on before Sullivan J. In a reserved judgment, he reached two conclusions of principle. First, he decided, contrary to the written suggestion of the Lands Tribunal, that the right of appeal to the Court of Appeal, generally available on a point of law to a disappointed party in the Lands Tribunal, did not extend to a party who had been refused permission by the Lands Tribunal to appeal from the LVT. However, his second conclusion was that, whatever the merits of Sinclair’s criticisms of Mr Rose’s refusal to grant permission to appeal to the Lands Tribunal, the application for judicial review could only succeed in exceptional circumstances.[13]In reaching this second conclusion, Sullivan J held that, in an application such as this, judicial review should only be granted on very narrow grounds. In so holding, he applied the approach of this court in R(Sivasubramaniam) –v- Wandsworth County Court [2003] 1 WLR 475. The effect of his decision is that a refusal by the Lands Tribunal to grant permission to appeal from the LVT can only be judicially reviewed in “exceptional circumstances”, namely “on the ground of jurisdictional error in the narrow pre-Anisminic sense, or procedural irregularity of such a kind as to constitute a denial of the applicant’s right to a fair hearing” – to quote from paragraph [56] of Sivasubramaniam. As it could make out no such ground in the present case, Sinclair’s application for judicial review failed.[14]Before the LVT, written representations on behalf of Sinclair were made by Mr Letman, instructed by P Chevalier & Co, solicitors, and the tenants appeared in person. The written applications, to the LVT and to the Lands Tribunal, for permission to appeal were settled by Sinclair’s legal advisers, and replied to by the tenants personally. In front of Sullivan J, Mr Letman was unopposed other than by the tenants in person. Mr Letman was initially unopposed before us, but, after hearing his submissions, we adjourned the hearing and invited the Treasury Solicitor to appoint counsel to assist us. We took this course, because we regarded the issue raised on this appeal as important and not easy. Mr Karas was duly briefed to appear as advocate to the court, and there was a resumed hearing when we heard from him and from Mr Letman in reply. We are grateful to both counsel for their clear and concise submissions.

The relevant statutory provisions

[15]The relevant statutory provisions at the time these proceedings were before the LVT and the Lands Tribunal were as follows.[16]Section 19(2A) of the 1985 Act entitled a tenant of residential premises, alleged by his landlord to be liable for service charges for works, to apply to the LVT for a determination as to whether the costs of the works were reasonably incurred and whether the works were carried out to a reasonable standard. The procedures of the LVT were governed by the provisions of the Rent Assessment Committee (England and Wales) (Leasehold Valuation Tribunal) Regulations 1993, SI 1993/2408, as amended.[17]Section 31A(5) of the 1985 Act applied the provisions of, inter alia, paragraph 2 of Schedule 22 to the Housing Act 1980 to the decision of an LVT in such a case. That paragraph provided that no appeal from the decision of the LVT lies to the High Court under section 11 of the Tribunals and Inquiries Act, but that a dissatisfied party may appeal to the Lands Tribunal.[18]Section 31A(6) of the 1985 Act, however, provided that no such appeal shall lie in relation to a determination of the LVT under that section “without the leave of the leasehold valuation tribunal concerned or the Lands Tribunal”. Section 3(4) of the Lands Tribunal Act 1949 (“the 1949 Act”) provided that “any party aggrieved by the decision [of the Lands Tribunal] as being erroneous in point of law may ... appeal ...”, and section 3(11) stated that, in England and Wales, such an appeal is to the Court of Appeal.[19]Section 3(6) of the 1949 Act authorised the making of rules “for regulating proceedings before the Lands Tribunal”. The rules governing that procedure were the Lands Tribunal Rules 1996 as amended from time to time (“the 1996 Rules”). The Lands Tribunal (Amendment) Rules 1997 (“the 1997 Rules”) inserted into the 1996 Rules a new Part IIA, which, according to Rule 5A, dealt with applications for permission to appeal to the Lands Tribunal from LVT decisions under section 31A of the 1985 Act. Rule 5C of the 1996 Rules stated that a person can only apply to the Lands Tribunal for permission to appeal, if an application has first been made to, and refused by, the LVT. Rule 5D(1) of the 1996 Rules provided that the Lands Tribunal “shall determine an application for permission without a hearing unless it considers that there are special circumstances which make a hearing necessary or desirable”.[20]Practice Directions have been issued from time to time by the President of the Lands Tribunal. The relevant edition of those Directions was dated 5th April 2001 (“the Directions”), and it had 20 paragraphs. Paragraph 2.1 stated that the CPR “have no application in the Lands Tribunal”, although it went on to state that “the same overriding objective” to deal with cases justly applied. It then set out what that involved, including the obligation to “deal... with cases in ways which are proportionate”. As with the CPR, proportionality was expressed to be judged by reference to the amount involved, the importance of the case, the complexity of the issues, and the parties’ respective financial positions.[21]Paragraph 5 of the Directions was concerned with appeals from LVTs, and confirmed the need for permission to appeal in the case of applications under section 19(2A) of the 1985 Act. Paragraph 5.6 set out in paragraphs (a) to (e) the five possible reasons for which permission to appeal may be sought. They included paragraph (a), that the LVT “wrongly interpreted or wrongly applied the law”, and paragraph (d), that the point in issue is “of potentially wide implication”. The paragraph then stated that, in general, permission to appeal will only be granted if there are “reasonable grounds for concluding that” one or more of the five reasons may apply. It also provided that permission to appeal will only be granted if the Lands Tribunal “is satisfied that it would accord with the principle of proportionality for it to hear and decide the appeal”.[22]There have been changes in the law since this dispute was before the LVT. Section 19(2A) of the 1985 Act has now been repealed with savings, and re-enacted with changes, by section 180 of, and Schedule 14 to, the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). The 2002 Act also introduced a new section 27A into the 1985 Act extending the powers of the LVT in relation to service charge disputes. The jurisdiction and procedure of LVTs are now covered by sections 173 and 174 of the 2002 Act. Appeals from LVTs are now governed by section 175 of the 2002 Act. The procedure in the LVT is now the subject of new rules, the Leasehold Valuation Tribunals (Procedure) (England) Regulations 2003, SI 2003/2099. As for the procedure in the Lands Tribunal, the 1996 Rules were amended in 2003. Although we were understandably not addressed on the point, it does not appear to me that these changes would have made any difference to the essential arguments or outcome of this appeal.

Does section 3(4) of the 1949 Act preclude the application for judicial review?

[23]I agree with Sullivan J that section 3(4) of the 1949 Act does not present an impediment to Sinclair’s application for judicial review. In other words, I do not consider that the Lands Tribunal’s refusal of permission to appeal is itself a “decision” susceptible to an appeal (or application for permission to appeal) to the Court of Appeal under that section. The Judge considered this point in a little detail, but it is sufficient for present purposes simply to identify the relevant authorities which establish this proposition, concerned as they are with similar provisions in other statutes.[24]The passages in previous decisions which support the Judge’s conclusion on this point were helpfully quoted in the judgment below, and they are as follows. Lane –v- Esdaile [1891] AC 210 at 211-212 per Lord Halsbury LC, In the matter of the Working Classes Act 1890 ex p Stevenson [1892] 1 QB 609 at 611 per Lord Esher MR and at 612-613 per Lopes LJ, and Bland –v- Chief Supplementary Benefit Officer [1983] 1 WLR 262 at 266-267 per Sir John Donaldson MR and at 268 per Sir Sebag Shaw.[25]It is true that the point was left open in this court’s decision in Orchard Court Residents’ Association –v- St Anthony’s Homes Ltd [2003] 2 EGLR 28. That was an application which involved section 3(4) of the 1949 Act, and was concerned with a decision of the Lands Tribunal on appeal from a decision of the LVT on a dispute under Part II of the Landlord and Tenant Act 1987. However, it does not appear that the authorities set out above were cited, or, indeed, that the point was argued.[26]Sullivan J observed that the conclusion that section 3(4) of the 1949 Act does not apply to the refusal by the Lands Tribunal of permission to appeal is also supported by the fact that the determination of an application for permission to appeal will almost always be effected without a hearing – see Rule 5D(1) of the 1996 Rules. It seemed to him unlikely, in those circumstances, that a right to appeal against the determination of such an application to the Court of Appeal, with an automatic right to a hearing, can have been intended. That point (which was not a major reason) is of questionable force as the 1996 Rules post-date, and cannot anyway govern the construction of, section 3(4) of the 1949 Act.[27]The Lands Tribunal is a tribunal created by statute, namely the 1949 Act. That Act contains no provision other than section 3(4), which can, so far as I can see, be said to exclude the power of the High Court to review the question of whether it has acted within its jurisdiction. Accordingly, in the light of the limit on the ambit of section 3(4) I have just been discussing, it must follow that it is, at least in principle, open to a person, who is refused permission by the Lands Tribunal to appeal a decision of an LVT to the Lands Tribunal, to seek judicial review of that refusal.

The grounds upon which judicial review will be granted in cases such as this

[28]The Judge concluded that the present application should be rejected effectively as a matter of course, even though judicial review was in principle available. This was because he took the view that, as a matter of judicial policy, judicial review should only be afforded in a case such as the present in exceptional circumstances, such as procedural irregularity or lack of jurisdiction in the narrow sense, which could not be asserted here. This view was, as I have mentioned, based on the Judge’s opinion as to the effect of the reasoning of this court in Sivasubramaniam. In order to test the correctness of his conclusion, it is therefore necessary to consider that case.[29]In Sivasubramaniam, the appellant had made a number of applications for permission to apply for judicial review, all of which had been rejected by Hooper J. One of those applications sought a review of the refusal by a Circuit Judge, His Honour Judge Morgan, to grant the appellant permission to appeal against a decision of District Judge Coni. In paragraphs [7] to [32] of the judgment of the court, delivered by Lord Phillips of Worth Maltravers MR, the facts, the legislative background, and a brief summary of the respective arguments were set out. The judgment then turned to the first main issue, which was whether the High Court had power to review the decision of the Circuit Judge to refuse permission to appeal from the District Judge.[30]In that connection, the Court of Appeal concluded that, notwithstanding the observations of Lord Diplock in Re Racal Communications Ltd [1981] AC 374 at 383-4, the High Court’s jurisdiction to review decisions of so-called inferior tribunals had not been removed in relation to a Circuit Judge’s refusal of permission to appeal from a District Judge. In paragraph [44], the Court of Appeal said this: “Nearly 50 years ago Denning LJ stated in R v- Medical Appeal Tribunal ex p Gilmore [1957] 1 QB 574 at 583 that ‘the remedy by certiorari is never to be taken away by any statute except by the most clear and explicit words’. All the authorities to which we have been referred indicate that this remains true today”.[31]At paragraphs [46] to [48] of the judgment in Sivasubramaniam, the court concluded that, save perhaps in exceptional circumstances (and the court said in paragraph [48] that it found “it hard to envisage what these could be”), judicial review should not be available until all possibilities of an appeal had been exhausted. Thus, if the District Judge had refused permission to appeal his decision, the appellant could not have applied for judicial review without first applying for (and failing to obtain) permission from the Circuit Judge. The Court of Appeal then turned to the second main issue, namely whether judicial review of a Circuit Judge’s refusal of permission to appeal from a District Judge should only be granted in what were described in paragraph [49] as “exceptional circumstances”.[32]In paragraphs [50] to [52], the Court of Appeal discussed the fact that judicial review has always been treated as being available in relation to the refusal of the Immigration Appeal Tribunal (“IAT”) to grant permission to appeal from a decision of special adjudicators. In paragraph [51], the court said this:
“If the [IAT] errs in its evaluation of the prospects of success of an appeal as a result of an error of law which is apparent from its reasons, permission to claim judicial review may be granted. In reality, the application to claim judicial review comes close to being a renewed application for permission to appeal to the [IAT].”
[33]The Court of Appeal then went on, in paragraph [52], to explain why the right to seek judicial review was appropriate in relation to refusals of permission to appeal by the IAT (by reference to the immigration appeals system then in force). The reasoning was based on both principle and practicalities. As to principle, the court pointed out at paragraph [52], that most applications to the IAT were asylum cases, where “fundamental human rights are in play, often including the right to life and the right not to be subjected to torture”. So far as practical aspects were concerned, the “number of asylum cases is enormous, the pressure on the [IAT’s] immense and the consequences of error considerable”. Accordingly, the court concluded, the “most anxious scrutiny of individual cases is called for and review by a High Court Judge is a reasonable, if not an essential, ingredient in that scrutiny”.[34]In paragraphs [53] and [54], the Court of Appeal explained why the position of a claimant for judicial review such as Mr Sivasubramaniam was different. In paragraph [53], it was pointed out that he had not merely a right to apply to a Circuit Judge for permission to appeal, but also a right “to renew the application at an oral hearing if it is refused on paper”. In paragraph [54], the court pointed out that “the substantive issue will have been considered by a Judge of a court at two levels”. Indeed, it could be said that each such Judge would, at least in theory, have considered the issue twice: the District Judge, when determining the issue and when deciding whether to grant permission to appeal, and the Circuit Judge, when deciding whether to grant permission to appeal, first on paper, and then after oral argument.[35]The Court of Appeal referred briefly to the unmeritorious grounds which were raised by Mr Sivasubramaniam for contending that he should have been granted permission to appeal against the substantive decision of District

Judge Coni, and then said this at paragraph 54:

“We do not consider that Judges of the Administrative Court should be required to devote time to considering applications for permission to claim judicial review on grounds such as these. They should dismiss them summarily in the exercise of their discretion. The ground for so doing is that Parliament has put in place an adequate system for reviewing the merits of decisions made by District Judges and it is not appropriate that there should be a further review of these by the High Court. This, we believe, reflects the intention of Parliament when enacting section 54(4) of the [Access to Justice Act]1999.”
[36]Sivasubramaniam was followed and applied in Gregory –v- Turner [2003] 1 WLR 1149, where this court further discussed the circumstances in which Judicial review might be granted of a Circuit Judge’s refusal to grant permission to appeal from a District Judge. It was also applied by this court in R(G) –v- Immigration Tribunal [2005] 1 WLR 1445, which was concerned with an application for judicial review of a decision of the IAT, against whose decision the High Court (from which permission to appeal had been sought pursuant to the statutory scheme contained in section 101 of the Nationality, Immigration and Asylum Act 2002) had refused permission.[37]In Gregory, at paragraphs [40] to [43], the Court of Appeal expanded somewhat on the issue of what might constitute excess of jurisdiction in “the narrow pre-Anisminic sense”, and emphasised that what was required was “at least, some fundamental departure from the correct procedures”.

(G) –v- IAT, the Court of Appeal said this at paragraph [23]:

“It seems to us that the key finding made by Collins J was that, in the light of the two-tier tribunal system, statutory review was a satisfactory judicial process for the question that it was designed to address. This is the critical issue. Does the procedure as a whole carry a satisfactory assurance that the rights of those entitled to asylum will be upheld?”
[38]Mr Letman contends that at least some of the reasons given by the court in Sivasubramaniam for arriving at its conclusion, do not apply here. The issue the subject of the proposed appeal has not been considered by one, let alone two, “Judge[s] of a court”, as opposed to a Tribunal member, at any level. Indeed, the member of the Lands Tribunal whose refusal of permission to appeal is sought to be reviewed, Mr Rose, does not appear to be a qualified lawyer (although he is very experienced both as a Chartered Surveyor, and as a member of the Lands Tribunal). The only lawyer who will probably have considered the issue is a legally qualified member of the LVT (which an LVT normally, but not always, includes). Further, there has been no opportunity to “renew the application [for permission to appeal] at an oral hearing [before the Lands Tribunal]”. In addition, section 54(4) of the Access to Justice Act 1999, which was intended to limit the right of appeal as described in the Bowman Report (discussed in paragraph [30] of Sivasubramaniam), does not apply to appeals to the Lands Tribunal.[39]In the case of immigration decisions, a disappointed party can get his case before the court by way of an application for judicial review, as explained in paragraph [51] of Sivasubramaniam, if the IAT refuses permission to appeal. If the IAT entertains an appeal, then, as was explained in paragraphs [2] and [3] of R(G) –v- IAT, there is still a right to get the matter before the High Court, albeit only by way of written submissions, and, if unsuccessful, without any right of further appeal.[40]In the end, the question which needs to be determined in this case is whether the statutory scheme contained in the 1949 and 1985 Acts, and the regulations made thereunder, for appealing decisions of the LVT on service charge issues can be said to amount to what this court variously described in paragraph [54] of Sivasubramaniam (echoed in the passage I have quoted from paragraph [23] in R(G) –v- IAT) as “an adequate system for reviewing the merits” of the first instance decision, and “fair, adequate and proportionate protection against the risk that [the first instance tribunal] acted without jurisdiction or fell into error”. If the statutory scheme satisfies that test, as in the case of the scheme for appealing District Judges’ decisions, judicial review of a refusal of permission to appeal will only be granted in the “exceptional circumstances” as identified in paragraph [56] of Sivasubramaniam and explained in Gregory. If the statutory scheme does not satisfy the test, as in relation to the scheme for appealing special immigration adjudicators’ decisions where the IAT refuses permission to appeal, then the “exceptional circumstances” hurdle will not apply, although it seems to me that one might still have to consider whether it is appropriate to have any, and, if so, what, fetter on the court’s ability to grant judicial review.[41]The reasoning in Sivasubramaniam and R(G) –v- IAT indicates, to my mind, that the resolution of the question at issue must be resolved by reference to(a) the generic nature of the issues involved (in this case, residential service charge disputes),(b) the effect of the statutory procedures concerned, particularly those relating to appeals (in this case, section 31A of the 1985 Act, section 3 of the 1949 Act, Rules 5C and 5D of the 1996 Rules, and Paragraphs 2.1 and 5.6 of the Directions),(c) the nature and constitution of the tribunals involved in those procedures, and (d), in so far as it can be ascertained, the legislative intention (which in this case is also to be gleaned from the aforementioned statutes and regulations). These factors must be assessed (a) against fundamental policy considerations, namely the desirability of finality, with the minimising of delay and cost, and the desirability of achieving the legally correct answer, and (b) against the practicalities, such as the burdens on the Administrative Court and, in this case, the pressures on the Lands Tribunal.[42]In a powerful passage in paragraphs [42] and [43] of his judgment, Sullivan J explained why he was of the view that the statutory scheme in the present case was “fair, adequate and proportionate”. At paragraph [42], he said this:
“[T]here is a ‘coherent statutory scheme’ for dealing with disputes relating to service charges. It does not ensure that an LVT’s decision will be ‘reviewed’ by a legally qualified judge, but that is not inconsistent with the underlying purpose of the scheme: to remove such disputes from the Courts, and dispose of them simply, expeditiously and inexpensively by a hearing before a specialist tribunal, the LVT, with a limited right of appeal to the Lands Tribunal.”
[43]He then pointed out that the facts of the present case demonstrated one reason for this. Sinclair, as a landlord with many properties, was particularly interested in the issue, and was represented by solicitor and counsel, whereas the tenants, with a much more limited interest, were without any representation. In paragraph [43] of his judgment, the Judge observed that it appeared to him to follow from his conclusion that section 3(4) of the 1949 Act did not give a right to appeal to the Court of Appeal against the Lands Tribunal’s refusal of permission to appeal under section 31A(6) of the 1985 Act, that an application to this case of “the approach in Sivasubramaniam would reflect [the legislature’s] intention”.[44]The intention of the legislature does indeed appear clear. As Mr Karas points out, appeals to the High Court from the LVT are specifically precluded by paragraph 2 of Schedule 22 to the 1980 Act (now section 175(9) of the 2002 Act). This is a clear indication that the legislature intended the High Court to be kept out of the procedure. Further, as pointed out by Laws LJ during argument, the very fact that there is no right of appeal to the Court under section 3(4) of the 1949 Act against a decision of the Lands Tribunal to refuse permission to appeal, suggests that there should not, save in exceptional circumstances, be a right to seek a judicial review of a refusal of permission to appeal. After all, there is not much difference between appealing a refusal on a point of law, and seeking to have it judicially reviewed on the basis that it was wrong in law.[45]The nature of the dispute in question, relating as it does to service charges claimed under the terms of residential tenancies, is significant in two respects. First, while disputes relating to residential service charges are of importance to the parties involved, they normally involve questions of detail and often will raise points which turn very much on the particular factual details of the case. Secondly, the disputes will only very rarely involve significant sums of money from the point of view of each tenant. Even from the perspective of the landlord, or of the tenants as a whole, the amount which ultimately turns on a point of law will often be small, especially when compared with the costs of the hearing before the LVT. All the more so if one takes into account the costs of any appeal.[46]It is true that, if the decision of Sullivan J is correct, no Judge, in the narrow sense of the term, will consider the point of law sought to be raised by Sinclair, because the Lands Tribunal refused permission to appeal. However, not only can the LVT and the Lands Tribunal be said to satisfy the requirements of a “court” for the purposes of Article 6 of the European Convention on Human Rights, but they are clearly both independent judicial bodies. They have the additional advantage of specialising (albeit not, of course, exclusively) in service charge disputes.[47]Further, any point of law will have been considered by three members of an LVT and by a member of the Lands Tribunal. One of the three members of an LVT will normally be a qualified lawyer, as was the case here. By virtue of section 2(2) of the 1949 Act, members of the Lands Tribunal must either have certain legal qualifications or must be “persons who have had experience in valuation of land appointed after consultation with the President of the Royal Institution of Chartered Surveyors”. Thus, such a member must be professionally qualified as a Chartered Surveyor, and must have experience at valuing property. As anyone with experience of property valuation disputes will know, such disputes will, more often than not, involve issues of law, of many types, which require to be resolved before the valuation dispute can be determined. Further, by virtue of section 3(2) of the 1949 Act, the President of the Lands Tribunal decides which member is to hear which type of case. As the President must be legally qualified (and is and has always been a QC), there can be said to be some, albeit exiguous and indirect, lawyer involvement at the permission to appeal stage in the Lands Tribunal.[48]The “fundamental human rights” involved in most asylum cases, which clearly carried a lot of weight with the Court of Appeal in Sivasubramaniam as a reason for justifying a right to judicial review of an IAT’s refusal of permission to appeal, do not arise here. As Sullivan J said in paragraph [36] of his judgment, while “property rights are important”, they cannot be “equated with the fundamental human rights that are in issue in asylum cases”. Nor does the Lands Tribunal suffer from the “immense pressure” which is placed on the IAT, although, as the Judge said, it does have a substantial workload.[49]As he pointed out, the Judge’s conclusion is also supported by the fact that the 1985 Act was enacted at least partly to provide protection for residential tenants in relation to service charges. The protection of relatively less well off and unrepresented tenants in relation to the cost and uncertainty of drawn out litigation is a legitimate factor to bear in mind, although it must be balanced against the fact that the same principles apply to appeals by tenants and landlords. However, landlords are more likely to want to appeal as their financial interest in any issue will always be far greater than that of an individual tenant.[50]It is also right to have in mind that the general policy of the 1985 Act in the present connection is to leave residential service charge issues “to the good sense of the [LVT], under the expert supervision of the Lands Tribunal”, as Carnwath LJ said in paragraph [18] in Orchard Court.[51]In all these circumstances, while acknowledging that it could fairly be said to involve extending the scope of the principle in Sivasubramaniam to a case where no Judge, in the narrow sense of that term, will have considered the point of law involved, I am of the view that Sullivan J reached the right conclusion for the right reasons as to the proper approach to take to the instant application for judicial review.[52]For completeness, I should mention two final points on this aspect. First, Mr Letman contended that, if Sullivan J’s decision stands, Sinclair’s rights under article 6 of the Convention would be infringed. In my judgment, the reasons for rejecting Sinclair’s case on the basis of domestic law apply equally in relation to its case under article 6. Secondly, although Mr Karas briefly alluded to the possible argument, Mr Letman did not contend that the question he wished to take to the Lands Tribunal was not one which was in fact directed to the LVT by section 19(2A) of the 1985 Act (a contention which would not, I think, be open under the current legislation). It is scarcely surprising that the point was not raised as all parties had proceeded on the basis that the point was within the jurisdiction of the LVT, and I should not be taken as suggesting that they were wrong in that.

Should judicial review be granted in this case?

[53]The question to be decided, then, is whether the Lands Tribunal’s refusal, on 2nd December 2003, of Sinclair’s application to appeal the determination of the LVT that the cost of most of the damp proofing and associated works was irrecoverable under the service charge provisions in the leases was susceptible to judicial review in the light of the stringent test laid down in Sivasubramaniam as expanded in Gregory. Mr Letman takes two points in this connection. His primary contention is that the decision to refuse permission to appeal was obviously wrong in law. Secondly, he says that it was not a properly reasoned decision.[54]I am not impressed with the latter point. It is true that the reasons given by the Lands Tribunal for refusing permission to appeal were exiguous, but that is not unusual or unreasonable in itself. In effect, Mr Rose was saying that, insofar as the LVT made findings of fact, they were permissible findings, and, insofar as they reached conclusions of law, he thought they were right. In my view, that was a coherent and understandable conclusion, and it was sufficient to enable Sinclair to know why they had been refused permission to appeal. At least in the absence of special circumstances, that was all that was required of the Lands Tribunal on an application for permission to appeal from the LVT.[55]In connection with the question of whether the reasons given by Mr Rose for refusing permission to appeal were adequate, we were referred to the decision of this court in North Range Shipping Ltd –v- Seatrans Shipping Corpn [2002] 1 WLR 2397. That was a case concerned with the adequacy of reasons given by the High Court for refusing permission to appeal against an arbitrator’s award under section 69(3) of the Arbitration Act 1996. I note that, in paragraph [27] of the judgment of the Court, Tuckey LJ said that “It would be enough to say ‘For the reasons given by the arbitrators’ if that was the judge’s reason”. That seems to me to be quite apt in the present case.[56]I turn to Mr Letman’s main point. I do not accept that the mere fact that a decision of the Lands Tribunal refusing permission to appeal was obviously wrong in law would be sufficient to justify its being judicially reviewed. Such a basis for judicial review would fly in the face of the conclusion and reasoning in Sivasubramaniam and in Gregory, which appear to me to be applicable in this case for the reasons given above. Before permission to seek judicial review could be granted, it would not be enough to show that the refusal of permission to appeal was plainly wrong in law. It would also have to be established that the error was sufficiently grave to justify the case being treated as exceptional.[57]I think it is appropriate to say, that there could, in my view, be cases, which would be wholly exceptional, where it would be right to consider an application for judicial review of such a decision on the basis of what could be said to be an error of law. A possible example would be if the Lands Tribunal, despite being aware of the position, refused, without any good reason, permission to appeal on a difficult point of law of general application, which had been before a number of different LVTs which had taken different views on it, and which cried out for a definitive answer in the public interest. In that connection, it seems to me that one could say that it was not so much the point of law itself which justified judicial review, but more the failure of a public tribunal to perform its duty to the public, as well as what one might call its duty to the parties in that particular case.[58]The point of law raised by Sinclair in this case appears to me to involve what could accurately be characterised as a standard, or “bread and butter”, issue for an LVT. It also raises a point which is fact-sensitive and nuanced. There are of course numerous decisions of the courts on the meaning and effect of repairing covenants in leases. Indeed, there are four reported decisions of this court on the question whether installation of a damp-proof course, where there was no damp proof course when the lease was granted, constitutes repair.[59]In Pembery –v- Lamdin [1940] 2 All ER 434, such work was held not to be repair. In Elmcroft Developments Ltd –v- Tankersley-Sawyer [1984] 1 EGLR 47, it was. In the latter case (which involved a landlord’s covenant), Ackner LJ justified the difference on the ground that the former case (which also involved a landlord’s covenant) related to business premises which were over 100 years old, whereas the latter case related to a recent letting “of what was built as a separate self-contained flat … in a high-class fashionable area …”.[60]However, in Wainwright –v- Leeds City Council [1984] 1 EGLR 67, a case also concerned with a landlord’s covenant to repair residential property, installation of damp proofing in “a house without a damp-proof course” was held not to be repair, as “a house with a damp-proof course … is a different thing to the house which was the subject of the demise”. That was also the conclusion in Eyre –v- McCracken (2000) 80 P&CR 220, a case which involved a tenant’s covenant to repair a house, and where the three previous authorities were cited and discussed.[61]In Eyre, Pill LJ said this at paragraph [46]:
“I have regard to the age, (over 150 years) and the design of the building. It has no damp-proof course. … I bear in mind the limited interest of the tenant and the poor condition of the premises … when the term started. It is common ground that it would be sensible to put in a damp-proof course. … In my judgment, to require the tenant to insert a damp-proof course … would be to require him to give back to the landlord a different thing from that [originally] demised to him… The circumstances are very different from those involved in the consideration of the landlord’s covenant in Elmcroft Developments.”
The same view was taken by Hale LJ, who, in paragraph [48], said that the question of whether “admittedly sensible works fall within [a] particular repairing covenant” was “in every case a matter of fact and degree”, depending also on the wording of the covenant in question.[62]The question of whether certain work is within the ambit of a particular repairing covenant involves the application of legal principles to the facts, the terms of the particular lease or leases, and expert evidence. However, although, in a Platonic sense, there may be only one right answer in any particular case, in practice it is frequently difficult to discern that answer with confidence, and there is often room for disagreement between lawyers, including Judges, as to what it is. In connection with the installation of a damp-proof course where there was none before, the four cases just discussed above illustrate the difficulty. The differences in the results do not appear to arise so much from differences in the wording of the particular covenants, but from the different factual circumstances.[63]In those circumstances, it seems to me that this case is very far away indeed from being one of those exceptional cases where judicial review should be available.[64]At the risk of going into the merits further than is appropriate, I consider that the facts of the present case have features which, when viewed in the light of those four authorities, can be said to point to opposite conclusions. There was no damp-proof course in the relevant location and the building was more than 100 years old, but the leases were long leases, and, for what it is worth, the covenant was imposed on the landlord, not on the tenant, albeit that the tenants, rather than the landlord, ultimately had to pay for the cost of the repairs, through the service charge provisions.[65]As the four cases discussed above show, the issue is one which turns to a significant extent on the fact-finding tribunal’s assessment of the evidence, and the primary fact-finding tribunal in this case was, of course, the LVT. More specifically, the LVT’s decision was in terms influenced by their assessment of the nature of the particular damp proofing works (demonstrated by the words “to the standard achieved” and “the facts of this case” in paragraphs [33] and [34] of their decision) as well as by the other factors referred to in the four cases. That would render an appeal rather more difficult to mount, especially in the light of Hale LJ’s observation that the “matter is one of fact and degree” in each case.[66]For these reasons, it seems to me that, even if it would have been sufficient for Sinclair to have established that the Lands Tribunal’s refusal of permission was obviously wrong on the ground that the disputed work constituted repair, I do not consider that Sinclair would have satisfied that requirement. Further, despite Mr Letman’s argument to the contrary, Mr Rose was not, in my view, obviously wrong in his implied rejection of the contention that the covenant in the present case, clause 5(c), went wider than an ordinary repairing covenant. The string of verbs at the start of the covenant may well add nothing to the overall concept of repair, and the closing part of the covenant could fairly be read as directed to matters of administration, as opposed to being aimed at items such as works of improvement, which are not also repair. It must be emphasised that I am not saying that these views are correct, merely that they are not obviously wrong as a matter of law.[67]In these circumstances, I consider that it is not even by any means clear that Mr Rose was obviously wrong to conclude that there was no prospect of establishing that the LVT “wrongly interpreted or wrongly applied the law”.[68]I also find it very hard to see how it could be said that Mr Rose was wrong to conclude that any point of law which would be raised by Sinclair on an appeal to the Lands Tribunal would not be of “potentially wide implication”. The point at issue turns very much on the precise nature of the works and of the other relevant facts of the particular case. Especially so in view of the fact that such guidance as can be given, on the question of whether the installation of a damp proof course where none existed before constitutes a repair, has been provided by this court in the four cases on the topic discussed above. Indeed, in the light of the LVT’s reasoning in paragraphs [33] and [34], and in particular the reference to “the standard achieved”, I do not believe that their determination is likely to be of any assistance even in relation to a possible future dispute about the recoverability of the cost of the installation of another new damp proof course elsewhere in the building.[69]The question of proportionality is significant. The amount which turns on the issue which is sought to be appealed is, in total, about £10,000. The parties have already had the benefit (and the consequent effort and expense) of a full hearing, with oral and written evidence and argument, and a reasoned determination. The costs of an appeal to the Lands Tribunal, even assuming (as seems likely) that it would have been a review, and not a rehearing, and that the tenants would not have been represented, would not be much less than the amount at stake. I have in mind that it would be a one-day hearing with solicitor and counsel, involving quite a large bundle of evidence (leases, expert reports, notes of cross-examination, and the determination of the LVT), and another large bundle of authorities on repairing covenants (not by any means limited to the four to which I have referred).[70]Accordingly, even if the Lands Tribunal’s decision to refuse permission to appeal would otherwise have been wrong (which it may well have been), if one confines oneself to asking whether the LVT misinterpreted or misapplied the law, in my judgment once one takes proportionality into account, it renders the argument that the decision was “obviously wrong” untenable. For the avoidance of doubt, I am not saying that, once one takes proportionality into account, it was necessarily right to have refused permission to appeal; merely, that it renders it impossible, in my view, to contend that the refusal was obviously wrong in law. Thus, even on the test propounded by Mr Letman, which appears to me to be too generous to an applicant for judicial review in the position of Sinclair, I consider that the application should have been refused.

Conclusion

[71]In these circumstances, I would uphold Sullivan J’s decision to dismiss this application for judicial review of the refusal of the Lands Tribunal to grant Sinclair permission to appeal against the decision of the LVT.[72]I agree.[73]I also agree, for the reasons given by Lord Justice Neuberger, that the appeal should be dismissed.

Cited in 18 later judgments

and 9 more of the most senior