Cases - Dennis Phillips v Martin Francis

Record details

Name

Dennis Phillips v Martin Francis

Date

[2012]

Citation

EWHC 3650 (Ch)

Legislation

• Landlord and Tenant Act 1985
• Common and Leasehold Reform Act 2002
• Service Charges (Consultation Requirements) (England) Regulations 2003

Keywords

Double recovery of costs for services – Qualifying works – Landlord and Tenant Act 1985, section 18, section 20, section 20ZA, section 30, section 38, sch.3 para.6 – Common and Leasehold Reform Act 2002 – Service Charges (Consultation Requirements) (England) Regulations 2003 reg.1(3), reg.6, reg.7(4), Sch.3, Sch.4 para. 1

Summary

The Appellants (P) were long lessees of holiday chalets owned by the Respondent lessors (F). Due to a proposed development of the estate, increased service charge demands were served on the lessees. P sought declarations as to the true construction of service charge provisions in the leases.

Schedule 3 para. 6 of the lease entitled F to reimbursement through the service charge of both pay and expenses of 'staff employed' and 'fees paid' to 'architects agents surveyors and solicitors' employed in regard to the management of the estate. Paragraph 8 provided for payment of a 5% management charge.

On a preliminary issue the Court determined that the chalets were dwellings within the meaning of section 38 of the LTA 1985, therefore restriction on the recovery of service charges imposed by sections 18–30 of the LTA 1985 applied. The Judge held that F were entitled to recover the reasonable costs of agents for the management of the estate. Recovery of those costs were not limited to the 5% management charge. Further, no items for which service charges were claimed by F amounted to a single set of qualifying works for the purposes of section 20 and section 20ZA of the LTA 1985. P appealed arguing, inter alia, that the interpretation employed by the judge resulted in double recovery.

Some gloss had to be put on the words used in the lease in order to prevent double recovery for the same services. The context in which the word 'agent' was used was by reference to the provision of some professional service required in the management of the estate. That must be distinguished from the general management of the estate. The power to recover charges contained in Paragraph 6 did not extend to non-professional management services provided by F either personally or through their management company. Accordingly, 'fees paid' referred to in Paragraph 6 are limited to those charged to F by professional agents. As such they do not include wages paid to F.

In light of the amendments to the LTA 1985, the emphasis had shifted from prior costing of works to notifying an intention to carry out the works and limiting the amount of the individual contributions sought to pay for them after their completion. If works were qualifying works it was a matter for the landlord to assess whether they would be on such a scale as to necessitate complying with the consultation requirements. As the contributions were payable on an annual basis then the limit was applied to the proportion of the qualifying works carried out in that year. Under the legislation there was no 'triviality threshold' in relation to qualifying works; all the qualifying works had to be entered into the calculation unless the landlord was prepared to carry the excess cost. In the circumstances the judge below erred when seeking to apply the LTA 1985. Appeal allowed.