Section 27A(6) of the Landlord and Tenant Act 1985 (“the 1985 Act”) makes void any agreement (other than a post-dispute arbitration agreement) by the tenant of a dwelling in so far as it claims to oust the Leasehold Valuation Tribunal (LVT)’s jurisdiction to determine anything which may be the subject of an application under sub-sections (1) or (3) of section 27A of the 1985 Act. Such questions include the amount of the service charge payable by the tenant.
The fact that sub-section (4) specifically excludes from the scope of sub-section (1) an application in respect of a matter which has been the subject of a post-dispute arbitration agreement demonstrates that dispute resolution provisions in general are not afforded any exemption from these anti avoidance provisions.
In the Upper Tribunal (Lands Chamber) case of Windermere Marina Village Ltd v Wild & Anor [2014] the lease of a residence provided for the tenant to pay a fair apportionment of the cost of services. That apportionment was “to be determined by the surveyor for the time being of the Lessor whose determination shall be final and binding”.
The principal issue in the appeal was whether section 27A(6) made void that agreement in the lease that the landlord’s surveyor’s decision on the apportionment of the service charge was to be final and binding.
The tribunal said the question referred to the LVT in this case was what proportion of the expenses incurred by the appellant was to be paid by the respondents.
By paragraph (2) of the Schedule to their leases the respondents had already agreed that they were to pay such proportion as was determined by the appellant’s surveyor, whose decision was to be final and binding.
That agreement was void because it had the effect of providing for the manner in which an issue capable of determination, by the LVT, under section 27A(1) was to be determined, i.e. by a final and binding decision of the appellant’s surveyor.
The effect of sub-section (6) was to strike out so much of an agreement as made such alternative provision.
The LVT had been entitled to consider what was the fair proportion of the expenses payable by the respondents, because the contractual mechanism for identifying that fair proportion, being the words “(to be determined by the Surveyor for the time being of the Lessors whose determination shall be final and binding)”, had been struck out by section 27A(6) of the 1985 Act.
Section 27A had completely deprived the landlord’s surveyor of his role in determining the apportionment: even if the alternative method, which it barred out, may also have been fair.
There may be other forms of lease in which the provision of a certificate or the making of a determination is a pre-condition of the tenant’s liability to make a payment. It may well be that that contractual procedure continues to bind the landlord and tenant, so long as the eventual content of the certificate or determination is still open to challenge before the LVT under section 27A.
This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.
Original article: Landlords not final say on share of residential service charge.