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LVT Jurisdiction To Order A Lease Variation: Appeal Allowed

Summary: The LVT has jurisdiction to order a variation of leases to take effect from a date prior to the LVT’s decision and prior to the application to vary.

Facts: The freeholder of 56 flats contained in seven blocks had granted long leases with a covenant to repair and maintain the buildings and a concomitant covenant by the lessees to contribute towards the service charge. Qualifying tenants in one of the blocks exercised their right to collective enfranchisement of their block. As a consequence, the total expenditure incurred by the freeholder in maintaining the remaining six blocks of flats was less than it would have been if the freeholder had been obliged to continue to maintain seven blocks rather than six. Thus, the total expenditure by the freeholder which was capable of being recovered through the service charge provisions decreased. A further consequence concerned the relevant proportions paid by each of the lessees in the remaining six blocks. If the proportions for each of these flats were added together they now added up to less than 100%.

The freeholder subsequently granted a headlessee to the appellant. In consequence, the rights and obligations of the freeholder under the various long leases of the flats became vested in the appellant. After attempts to agree variations with the lessees failed, the appellant applied to the LVT seeking variations of the relevant leases with effect from the date of the transfer pursuant to the collective enfranchisement (“the Transfer Date”) so as to re-establish the 100% total for the proportionate contributions to the service charge expense.

Issues: (1) Did LVT have jurisdiction to order a variation of leases to take effect from a date prior to the LVT’s decision and prior to the application to vary; and (2) If so, whether such jurisdiction should be exercised in the instant case.

First Instance: The LVT ordered a variation of the leases but ordered such variations were to have effect from the date of the decision, not the Transfer Date as sought in the application. It did not expressly consider whether it had jurisdiction to order that the variation was to be effective from the Transfer Date, but appears to have concluded that it did have jurisdiction to do so. The LVT decided it should not exercise its discretion because of the delay in making the application and having regard to the contra proferentum rule.

Decision on Appeal: HHJ Huskinson accepted that the LVT did have jurisdiction to order a variation of leases to take effect from a date prior to the LVT’s decision and prior to the application to vary. There was no justification for refusing to order the variation to take effect from the Transfer Date. The appeal was allowed.

 

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