Levitt & Anor v London Borough of Camden, Court of Appeal - Lands Tribunal, September 21, 2011, [2011] UKUT 366 (LC)

Resolution Date:September 21, 2011
Issuing Organization:Lands Tribunal
Actores:Levitt & Anor v London Borough of Camden
 
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10© CROWN COPYRIGHT 20111UT Neutral citation number: [2011] UKUT 366 (LC) UTLC Case Number: LRX/136/2009 TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007 LANDLORD AND TENANT - service charges - communal heating system - renewal of equipment in tenants' flats - whether cost of replacement falls within landlord's responsibility - whether cost properly included in service charge - construction of leases - method of calculating service charge - reasonableness of service charge - Landlord and Tenant Act 1985 s19 - appeal dismissed IN THE MATTER OF AN APPEAL FROM A DECISION OF THELEASEHOLD VALUATION TRIBUNAL BETWEEN (1) DAVID LEVITT Appellants (2) JENNY LEVITT and LONDON BOROUGH OF CAMDEN Respondent Re: 170 O'Donnell Court, Brunswick Centre, London, WC1N 1NZBefore: Her Honour Judge Walden-SmithDecision on Written RepresentationThe following cases are referred to in this decision:Kenniston House [2010] UKUT 194(LC)R (Khatum) v Newham LBC [2005] QB 37Director General of Fair Trading v First National Bank plc [2001] UKHL 52Pole Properties v Feinberg [1981] 43 P & CR 121 Focelux v Sweetman [2001] 2 EGLR 173Veena SA v Cheong [2003] 1 EGLR 175Finchbourne v Rodriquez [1976] 3 All ER 581Morgan v Stainer [1993] 2 EGLR 73Scottish Mutual Insurance Co v Jardine (1999) ECGS 43Schilling and Ors v Canary Riverside Development PTD Limited LRX/26/2005DECISIONIntroductionThis is an appeal pursuant to the provisions of section 175(2) of the Commonhold and Leasehold Reform Act 2002 from the decision of the Leasehold Valuation Tribunal given on 15 September 2009. It relates to service charge obligations with respect to major works undertaken at the Brunswick Centre, London WC1N 1NA. The LVT determined that the service charge demand made on 23 April 2007 was invalid. That decision would not prevent the landlord from properly certificating the costs of the work incurred and seeking recovery of the appropriate proportion from the tenants in due course, once proper accounts and demands had been served. As a consequence, both parties were concerned that the LVT proceeded to determine the substantive issues with respect to the liability of the tenants to pay, as part of the service charge, a proportion of the cost of installing heating and hot water systems within individual flats.The LVT held, among other things, that the tenants are obliged to contribute in respect of the major works and, in particular, to contribute in respect of the cost of works to the interior of individual flats at the Brunswick Centre. The LVT refused permission to appeal on this issue and on 24 November 2009 His Honour Judge Reid QC granted permission to appeal with the following observation:``The construction placed on the lease at paragraphs 34-40 of the LVT decision is clearly correct. So far as the allocation of costs is concerned prima facie the appropriate apportionment is on a rateable value basis. Prima facie the landlord had no obligation to specify some other method under paragraph 4.3 of the Fourth Schedule because the tenants had chosen to have installations of their own which meant that they no longer took advantage of the services provided: the contrary however is capable of argument and since the decision will have long term effects the appeal should be allowed to proceed on this point.''The Appellants state that it is their understanding that permission to appeal has been granted both with respect to the liability to contribute by way of service charge to the proposed works and to the allocation and reasonableness of the service charge. The Respondent contends that this is not the case and relies upon the observation of His Honour Judge Reid QC that the construction of the Lease expressed by the LVT in paragraphs 34 - 40 of its decision was clearly correct.This is an appeal by way of review made on written representations. Nicola Allsop instructed by John May Law acts on behalf of the Appellants, Katharine Holland QC is instructed by Legal Services of the London Borough of Camden, the Respondent. While the observation of His Honour Judge Reid QC, that there is potential for argument, appears to relate solely to the issue of the allocation of costs, in light of the arguments raised on the papers (including comment by the parties upon the decision of the President in the Kennistoun House case, neutral citation number [2010] UKUT 194 (LC)) it seems to me appropriate at this stage to deal with both limbs of the appeal. It is therefore necessary to consider both the issue as to whether the cost of replacing the heating system in each individual flat falls within the responsibility of the landlord and the issue as to whether the landlord applied the correct method of calculating the service charge and whether that service charge is reasonable. The PartiesThe Appellants, Mr David Levitt and Mrs Jenny Levitt, are the long leasehold owners of the property at 170 O'Donnell Court, Brunswick Centre, Bloomsbury, London WC1N 1NZ (``170 O'Donnell Court) pursuant to a Right to Buy Lease granted for a term of 99 years, less 5 days, from 18 December 2000. Mr and Mrs Levitt purchased the Lease in or about April 2005. The Respondent, the London Borough of Camden holds a headlease of the Brunswick Centre.The Property170 O'Donnell Court is one of 394 residential flats at the Brunswick Centre. The Brunswick Centre was constructed in or about 1970s on behalf of the London Borough of Camden and comprises a large shopping complex around a central open area with shops, restaurants and a cinema, together with two large residential units to the east and west which rake back as they rise upwards. 81 of the 394 flats are held on long leases. The remainder (some 313 flats) provide secure accommodation for the tenants of the London Borough of Camden. The Brunswick Centre is now Grade II listed.The Heating SystemThe majority of the flats, including 170 O'Donnell Court, were heated by way of a mechanical warm air re-circulation system. A large boiler, originally located in an adjacent hotel and, from the late 1990s, in the basement of the Brunswick Centre, provided hot water to heat both residential blocks. The water was pumped around the residential units under pressure and a heat exchanger in each individual flat enabled the resident to convert some of the heat from the communal system into hot air which then heated each individual flat.By 2005, or thereabouts, the heating system was coming to the end of its useful life. The pipework was original, save for some basement locations, and being more than 30 years old, was beyond its normal life expectancy. As a result of corrosion and the consequences of a possible leak, the system temperature and pressure were both reduced to prevent the possibility of scalding being caused to occupants. This reduction in temperature and pressure in turn resulted in a significant reduction in available heating capacity and the ability of the system to transfer heat effectively. The London Borough of Camden determined that a new means of providing heat to the flats was due and that for safety and reliability reasons the system should be replaced.170 O'Donnell CourtMr and Mrs Levitt contend that when they purchased 170 O'Donnell Court in or about April 2005, it was uninhabitable. They contend that, in addition to blockages to drainage caused by the previous occupants, the heating system was unable to provide any service to 170 O'Donnell Court. This is not accepted by the London Borough of Camden. Mr and Mrs...

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