| LANDLORD AND TENANT — Service charge — Statutory protection — Sub-tenant contesting maintenance charge — Whether “service charge” within meaning of statute — Whether service charge payable by tenant of dwelling notwithstanding dwelling part of larger demise —Whether sub-tenant having locus standi before tribunal — Landlord and Tenant Act 1985, s18(1)
Ruddy v Oakfern Properties Ltd [2006] EWCA Civ 1389
CA: Pill, Jonathan Parker and Moses LJJ: 25 October 2006
The purpose of ss 18 to 30 of the Landlord and Tenant Act 1985 was to protect a residential tenant against overcharging for service charges. Where a tenant was a “tenant of a dwelling” within the meaning of “service charge” in s 18 of the Act, there was no reason to construe the definition of “dwelling” in s 38 to include the plural and thereby exclude a tenant from the definition merely because, whilst he was the tenant of a dwelling which extended only to part of a building, he was also the tenant of other parts of the building.
The Court of Appeal so held dismissing the appeal of the defendant, Oakfern Properties Ltd, from a decision of the Lands Tribunal (His Honour Michael Rich QC) on 9 February 2006 to dismiss the defendant’s appeal from the decision of a Leasehold Valuation Tribunal on 15 July 2005 on preliminary issues, inter alia, whether a maintenance charge which the claimant, Desmond Ruddy, sought to challenge on the ground that it was unreasonable was a “service charge” within the meaning of the Landlord and Tenant Act 1985.
The defendant was the freeholder of a building consisting of commercial premises on the lower floors and separate residential flats on the upper floors. The upper floors were let by the defendant on a long lease and the flats were separately sub-let on long leases. The claimant, a sub-tenant, sought to challenge the amount of the maintenance charge levied by the defendant on the ground that the amount was unreasonable.
JONATHAN PARKER LJ said that s 18(1) of the Landlord and Tenant Act 1985 set out the meaning of “service charge” as “ an amount payable by a tenant of a flat...” That had been amended by s 41(1) of the Landlord and Tenant Act 1987 which had substituted “dwelling” for “flat”. S 38 of the 1985 Act provided that in the Act “dwelling” meant “ a building or part of a building occupied …as a separate dwelling”. Two authorities on the service charge issue had been referred to the tribunal: Horford Investments Ltd v Lambert [1976] 1 Ch 39 and Heron Maple House Ltd v Central Estates Ltd [2002] 1 EGLR 35. In the Horford case the Court of Appeal had held that, in the context of the Rent Act 1968, and bearing in mind the policy of the Rent Acts, the singular “dwelling” did not include the plural “dwellings”. In the Heron case Judge Cooke had observed that the provisions of the 1985 Act did not necessarily exclude a tenant of mixed premises which included a dwelling or dwellings. The Lands Tribunal had concluded that the true ratio of the decision in the Heron case was that a tenant was a “ tenant of a dwelling” within the meaning of the definition of “service charge” in s 18 notwithstanding that he was also the tenant of other property in addition to a dwelling (whether or not such other property included a dwelling or dwellings). It was necessary to read into the expression “tenant of a dwelling” in s 18(1) the definition of “dwelling” in s 38 which read “a building or part of a building occupied or intended to be occupied as a separate dwelling…”. The definition in s 38 did not require that the tenant should himself be in occupation of the dwelling, and hence it was apt to include a tenant who had sublet, ie a mesne landlord. There was no reason why the policy considerations which had led the Court of Appeal in the Horford case to decide that a tenancy of a block of flats was not within the protection of the Rent Acts should lead to the conclusion that a tenant of a flat in a block who happened also to be a tenant of another flat , or flats, in the same block, and/or of the common parts in the building, was not, for that reason, within the protection of the service charge provisions.
MOSES and PILL LJJ agreed.
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