1-8 Cedar Court, 1-8 Maple Court, 1-8 Raven Court Westover Gardens, Bristol BS9 3LB, 3LD and 3LA CHI/00HB/LVT/2021/0005
REASONS
[1]The Applicant is the head lessee of a residential site at Westover Gardens, Bristol. This development consists of three blocks of flats known as Cedar Court, Maple Court and Raven Court constructed in about 1970. Each block contains eight flats. The twenty-four lessees of those flats are the First Respondents to this Application. The Applicant has been the head lessee since receiving an assignment of the 999-year head lease of the site in 1972. The leaseholders for the time being of the flats are the shareholders and directors of the Applicant company.[2]The Application is made under section 37 of the Landlord and Tenant Act 1987 (“the Act”) for variations in the underleases of the twenty-four flats on the grounds that the objects to be achieved by the variations that are proposed cannot be satisfactorily achieved unless all the leases are varied to the same effect. The proposed variations are set out below (paragraph 12). Twenty of the First Respondents consent to this Application; the other four have not objected. The Second Respondent is the freeholder of the site, Fairhold (Huddersfield) Ltd.[3]Part of the background to this Application is the First-tier Tribunal decision in Durbin v Falconside Management Ltd (2015) CHI/ooHB/LSC/2014/0118. It was determined in that case that the head lessee, the Applicant in this case, could not establish a reserve fund; and that the windows and patio doors of the flats were not included in the demise of the flats notwithstanding the fact that for 35 years the leaseholders had repaired their windows at their own expense. That Tribunal also pointed to other possible significant defects in the terms of the underleases.[4]The Application aims to achieve variations to the underleases that will remedy the deficiencies that have become apparent and thereby to provide for good management in the future.[5]The Tribunal made Directions on 26 October 2021 indicating that the application was likely to be suitable for determination on the papers alone without an oral hearing in accordance with rule 31 of the Tribunal Procedure Rules 2013 unless a party objected in writing to the Tribunal within 28 days of the date of receipt of the directions. No such objections have been received and the application is therefore determined on the papers.[6]On receipt of the hearing bundle the Tribunal considered whether it had sufficient information to make its decision without an oral hearing and decided that it did. There were no disputes as to the facts of the case that could be illuminated by the receipt of oral evidence. The Law[7]The relevant law relating to this application is contained in sections 37 and 38 of the Act. Section 37 of the Act states:(1) Subject to the following provisions of this section, an application may be made to the appropriate tribunal in respect of two or more leases for an order varying each of those leases in such manner as is specified in the application.(2) Those leases must be long leases of flats under which the landlord is the same person, but they need not be leases of flats, which are in the same building, nor leases, which are drafted, in identical terms.(3) The grounds on which an application may be made under this section are that the object to be achieved by the variation cannot be satisfactorily achieved unless all leases are varied to the same effect.(4) An application under this section in respect of any leases may be made by the landlord of any of the tenants under the leases.(5) Any such application may only be made if- (a) in a case where the application is in respect of less than nine leases, all or all but one, of the parties concerned consent to it; or (b) in a case where the application is in respect of more than eight leases, it is not opposed for any reason by more than 10 per cent of the total number of the parties concerned and at least 75 per cent of that number consent to it.(6) For the purposes of subsection (5)- (a) in the case of each lease in respect of which the application is made, the tenant under the lease shall constitute one of the parties concerned (so that in determining the total number of the parties concerned a person who is the tenant under a number of such leases shall be regarded as constituting a corresponding number of the parties concerned); and (b) the landlord shall also constitute one of the parties concerned. Section 38 provides that: (3) If on an application under section 37, the grounds set out in subsection (3) of that section are established to the satisfaction of the tribunal with respect to the leases specified in the application the tribunal may subject to subsection (6) and(7) make an order varying each of the leases in such manner as its specified in the order. (6) A tribunal shall not make an order under this section effecting any variation of a lease if it appears to the tribunal –a. that any variation would be likely to substantially to prejudice- (i) any respondent to the application, or (ii) any person who is not a party to the application and that an award under subsection (10) would not afford him adequate compensation, orb. that for any other reason it would not be reasonable in the circumstances for the variation to be effected. (10) Where a tribunal makes an order under this section varying a lease the tribunal may, if it thinks fit, make an order providing for any party to the lease to pay, to any other party to the lease, or to any other person, compensation in respect of any loss or disadvantage that the tribunal thinks he is likely to suffer as a result of the variation. The Issues The case raises the following issues:[1]Whether the Applicant satisfied the formal requirements of section 37 of the Act to enable the Application to be considered by the Tribunal.[2]Whether the proposed variations to the leases fall within the grounds on which an application may be made under section 37, namely, that the object to be achieved by the variation cannot be satisfactorily achieved unless all the leases are varied to the same effect.[3]If the Tribunal does make an order varying the leases, whether any compensation is payable under section 38(10) of the Act. Each of these issues will be considered in turn.[9]The evidence on which the Tribunal bases its decision is the bundle of documents supplied by the Applicant.[10]On the first issue, the Applicant has satisfied the formal requirements of section 37 above. By virtue of that section, there are 25 ‘parties concerned’, namely the 24 leaseholders and the Applicant as immediate landlord. There are some leaseholders who own more than one flat; by virtue of section 37(6) such leaseholders are ‘persons concerned’ for each of the flats for which they are leaseholders. This Application falls within section 37(5)(b) so the Application must not be opposed by more that 10 per cent of the total number of parties concerned. In this case, no party concerned has opposed the Application. At least 75 per cent of the parties concerned must consent to the Application. In this case, the Applicant and 20 of the leaseholders have consented, meaning that 84 per cent of the persons concerned consent to the Application. The bundle of papers includes the relevant signed consent forms by those parties who consent and evidence by way of Certificates of Service of this Application dated 10 September 2021 on all the persons concerned, namely the first Respondents, and on all persons likely to be affected by the claim, including the Second Respondent as freeholder and mortgagees of some of the flats. The Tribunal is therefore satisfied that the formal requirements of s 37 have been satisfied.[11]No objections or expressions of concern have been received from the persons served by the Applicant as a person likely to be affected by the claim. In relation to the Second Respondent, as freeholder, it appears from the papers that the matter was delayed while the solicitors for the Second Respondent considered whether to apply for an oral hearing, but they did not do so. They also did not return to the Tribunal Office the Respondent form and did not at any time indicate either whether they agreed with the Application or objected to it. The Tribunal is satisfied that the Second Respondent has had full opportunity to take part in these proceedings had it wished to do so. In any event, the Second Respondent is not a ‘person concerned’ within section 37 and the terms of its head lease with the Applicant are not changed by the variations proposed in the underleases.[12]The second issue is to ensure that the grounds on which an application is made under section 37 is satisfied and that the objects to be achieved by the variation cannot be satisfactorily achieved unless all the leases are varied to the same effect. The Application proposes a series of major variations to the leases. These may be summarised as follows:[1]Incorporation of the concept of good estate management by requiring adherence to the Royal Institution of Chartered Surveyor’s Code of Practice for Residential Leasehold Properties.[2]The introduction of more modernised service charge provisions in a new Eighth Schedule to all the underleases which will permit the Applicant to request payments in advance on account of the cost of anticipated work and to replace the current position that service charges can only be demanded once accounts have been audited.[3]The requirement of a five-year planned maintenance programme.[4]Allowance for the establishment of a reserve fund to cover the cost of identified future maintenance and repairs.[5]The setting out in more detail the services that the Applicant may provide.[6]Clarification and amendment of the division between the Applicant and the leaseholders of the repairing responsibilities for the windows and the doors of the flats.[7]Supplementation of the rights included in each demise by a right to attach fixtures and fittings to the internal faces of the structural walls.[13]The Tribunal is satisfied that these proposed variations, and the additional detailed amendments consequent upon them, cannot be satisfactorily achieved unless all the leases are varied to the same effect. None of the reasons for not granting an order set out in section 38 apply in this case.[14]As far as the third issue is concerned, the Tribunal is satisfied that the proposed order varying the leases does not give rise to any compensation becoming payable under section 38(10) of the Act.[15]For these reasons, the Tribunal therefore makes the order set out in the Determination above as requested by the Applicant and supported by the requisite percentage of the 24 leaseholders constituting the First Respondents. Right of Appeal[16]A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application to the First-tier Tribunal at the Regional office which has been dealing with the case (RPSouthern@justice.gov.uk). The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.[17]If the person wishing to appeal does not comply with the 28-day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.[18]The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result that the party who is making the application for permission to appeal is seeking. 17 March 2022