Regent Management Ltd v Jones, Court of Appeal - Lands Tribunal, October 15, 2010, [2010] UKUT 369 (LC)

Resolution Date:October 15, 2010
Issuing Organization:Lands Tribunal
Actores:Regent Management Ltd v Jones





UT Neutral citation number: [2010] UKUT 369 (LC)

LT Case Number: LRX/14/2009


Residential Lease - Service charges - terms of lease - whether charges reasonable- correct test of reasonableness.






Re: 240, Waterloo Quay,

Waterloo Road,

Liverpool, L3 0BU


Sitting at: Leeds Employment Tribunal, 4th Floor, City Exchange, Albion St., Leeds

on Wednesday 1st September 2010

Mr Jonathan Manning of counsel appeared for the appellant.

The respondent did not appear and was not represented

The following case is referred to in this decision:

Yorkbrook Investments Ltd v Batten [1985] 2 EGLR 100



  1. This matter arises by way of an appeal from a decision of the Leasehold Valuation Tribunal for the Northern Rent Assessment Panel. The decision is undated but follows a hearing that took place on the 14th of August and the 6th of October 2008. The hearing was into an application by Regent Management Ltd, the appellant, under section 27A of the Landlord and Tenant act 1985 for a determination as to the liability of Mr Thomas Jones, the respondent, to pay service charges for the years 2004, 2005, 2006, and 2007 in respect of flat 240, Waterloo Quay, Waterloo Road, Liverpool, L3 0BU. The application under section 27A arose following proceedings to recover the service charges by the appellant in the Liverpool County Court which were, apparently, transferred to the Leasehold Valuation Tribunal (hereafter the LVT) for the determination of the issue whether the service charges were reasonably incurred and of a reasonable standard. To avoid any doubt about the meaning of the County Court's order, the appellant itself applied to the LVT.

  2. The LVT gave a brief account of the background to this matter.

    ``The (appellant) is a management company responsible for the management of a large portfolio of residential developments, many of which contain blocks of apartments in respect of which services are provided, a service charge levied and the service provision controlled by the (appellant). One such development is Waterloo Quay, situated on the now-defunct Waterloo Dock, itself situated approximately a one-half mile north of Liverpool Pier Head. The development as a whole encompasses a conversion of the large Waterloo Dock warehouse into residential flats and a number of recently instructed apartment blocks on the sides of East Waterloo Dock. Originally the (appellant) was responsible for the management of the whole development but management of the warehouse conversion is now carried on by a ``Right to Manage'' company, leaving the (appellant) responsible for management of these services to the new build blocks. Some services are shared with the warehouse block, others are provided and accounted for solely to the new build blocks known as Waterloo Quay 1(being the original new build) and Waterloo Quay 2 (being a further block of apartments added later).''

  3. The LVT inspected the development and described it, so far as is relevant, in paragraph 3.

    ``Access to the complex, including the separate Warehouse scheme, is gained through what was the main dock gate for Waterloo Dock where there is a gatekeeper's lodge manned 24/7 by gatekeeping staff who also monitor CCTV camera images from various cameras situated throughout the site. Vehicular access is controlled by a barrier operated by the gate staff or fobs in the possession of tenants. Pedestrian access is gained more easily via the same gate or via other gates with security coded locks located in the dock wall and giving pedestrian access only. There is a large, marked parking area for residents' use and a separate visitors' area near the gate. A security fence adjacent to the car park represents the northerly boundary of the development. Separating the car park from the apartment blocks is the main access roadway which then follows the westerly boundary of the development. This was formerly the edge of Waterloo West Dock, now partly filled in but a part of which, immediately adjacent to the boundary, will be the new canalised waterway from Nelson Dock to the Pier Head. The apartments themselves are in four-storey towers, containing either 16 or 32 apartments, around the East Dock, with front entrances facing the roadway and the Dock itself at the rear if the entrances are regarded as the ``front''. There are maintained areas of shrubbery at the front and further areas of paving and composite surfacing to the rear and sides of the blocks. Each tower has an entry system that can be operated from inside the appropriate flat, block paved entrance halls, common hallways, stairs and landings and utility shafts/cupboards.

    There were some minor signs of ageing and use apparent during the inspection, for example to stairway carpets and the entry bell with system. Efflorescence was also present on a number of walls, otherwise the exterior of the buildings and the common parts inside were, in the Tribunal's opinion, in good condition and appeared to be maintained to an acceptable standard of repair and decoration, subject to the matters mentioned above and also the observations below.

    The car park is patrolled by parking enforcement contractors and there are notices posted referring to the consequences of inappropriate or unauthorised parking. Clamping is in operation. The Tribunal's attention was drawn to an abandoned vehicle and a number of rusting and unroadworthy bicycles.''

  4. Mr Jones' lease is dated the 17th of September 1999. By it the Mersey Docks and Harbour Company leased the flat to Mr Jones for a period of 125 years from the 1st of January 1989, in consideration of a premium of £64,200. The Appellant, as the management company, was also a party to the lease. By virtue of part 2 of the 8th Schedule of the lease the lessee covenanted.

    ``2. To pay to the Management Company

  5. The Lessee's Proportion of the Maintenance Expenses at the times and in the manner provided ..''

  6. The Maintenance Expenses are defined as meaning the money expended by the Management Company in carrying out the obligations in the 6th Schedule. The 6th Schedule includes, amongst other things, ``generally managing and administering'' the property and if necessary employing managing agents (Clause 7); ``administering the Management Company itself...'' (Clause 11) and confers a right to charge a management fee, being a reasonable sum for carrying out the management obligations (Clause 13).

  7. A short account of the proceedings up to the LVT hearing is relevant. The appellant's application was made in March 2008. On 2nd April the LVT directed the respondent to serve a statement of case identifying those items of service charge that were disputed. On 23rd April the respondent listed the items of service charge in issue as

    ``Security, lighting (external/internal), external upkeep, internal upkeep (carpets, painting), gardening.''

  8. The questions the LVT was invited to decide were stated as

    ``To remove management agents (Regent) residents to undertake right to manage scheme. Failure to comply with leasehold agreement to carry out repairs and property maintenance, in breach of terms of leasehold agreement.''

  9. The appellant's solicitors wrote to the LVT in July protesting that it was impossible to respond in the absence of particulars. The appellant served a first bundle of documents, containing amongst other things, the respondent's lease.

  10. The matter came to a hearing on 14th August 2008. The LVT said (in its undated refusal of permission to appeal) that it made the point that the basic premise in s27A proceedings is that service charges are only recoverable to the extent that they are fair and reasonable and there is an onus on the Applicant to establish that in the first instance. The appellant/applicant was therefore directed to serve further and better details to support the case that the service charges demanded were fair and reasonable. The directions expressly included -

    ``a) The entries in the service charge accounts relating to ``Management Fees'' and ``Administration'' identifying the nature and extent of the management and administration carried out by the Applicant......

    c) The entries in the accounts relating to ``security'' identifying the nature and extent of the work carried out thereunder....

    f) Any other matter or matters that may assist the applicant's case in explaining or clarifying any other entries in the said accounts.''

  11. The directions then ordered the respondent to submit any reply to the details supplied by the applicant within 14 days of receipt.

  12. The progress of these proceedings is set out in section 4 of the decision of the LVT.

    a. The Tribunal had the benefit of the first bundle which contained copies of the application, the Respondent's lease and the order of the County Court dated the 2 April 2008. Also included were the service charge accounts for the year ending December 2003 to December 2007 (the last year of being in draft form) together with the accountants' certificates for 2003 -- six and a summary of the service charge obligations. Also included with the response from the Respondent, in the form of a completed application form containing details of the respondent's concerns relating to external and internal upkeep, security lighting, gardening and failure to maintain or manage the development appropriately, a copy of the earlier directions and a number of photographs. Essentially no further or better details were provided than that and the final response of the Applicant was to the effect that the Respondent had not set out any cause of action or support for any complaint. Save for those matters referred to the other items...

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