SIMON v St MILDRED’S COURT RESIDENTS ASSOCIATION LTD [2015] UKUT 0508 (LC): Lease Variation Requires Majority When Application Is Issued

Summary: The requisite consent of a majority of parties to vary a lease in accordance with s.37 of the 1987 Act must have been achieved at the date the application is issued.

Facts: The service charge provisions in the leases provided that the service charge shall be apportioned amongst lessees according to rateable values. The problem was that 3 of the 29 flats did not have a rateable value. On 10 June 2014 the landlord issued an application to vary the terms of the leases proposing that the service charge be paid equally between all lessees. By a letter of the same date (10 June 2014) the landlord invited the lessees to agree or disagree with the application which that day had been issued. Enclosed with the covering explanatory letter was a copy of the application and the proposed new terms of the lease as well as a piece of paper entitled “Agreement” which was to provide the lessees with an opportunity to accept or reject the proposal. A total of 23 lessees consented which, when added to the applicant freeholder, totalled 24 thereby garnering the requisite majority. The FTT was “satisfied on the balance of probability that informed consent to the variation had been given by 26 of the lessees and that none of the points raised affected the validity of the number of consents required to comply with the provisions of the 1987 Act.”  One of the lessees appealed.

On Appeal: The respondent landlord submitted that whilst it was accepted that the consent of the requisite majority had not been obtained at the time when the application was issued on 10 June 2014, it had been obtained at the time when an application in relation to the hearing and at the time of the hearing itself which, as a matter of construction, was sufficient.

Held: The UT (HHJ Gerald) held that the consent of at least 75% of the total number of the parties concerned must have been obtained before the application was made because that is what the section says, specifically: “any such application shall only be made if” the requisite majority has approved.  Marshall Dixon v Wellington Close Management Ltd [2012] UKUT 95 (LC) applied.

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