Addressing the issue

12 Oct 2012

This article was first published in Butterworths Property Law Newsletter (October 2012, Vol 4 Issue 10)

The appeal in Beitov Properties Ltd v Elliston Bentley Martin [2012] UKUT 133 (LC) highlights three issues for landlords: compliance with s 47 of the Landlord & Tenant Act 1987, remedying non-compliance, and the Leasehold Valuation Tribunal’s procedure and jurisdiction.

Beitov issued county court proceedings against Mr Martin for arrears of ground rent and service charge, administration charges and interest totalling £2193.31.

Mr Martin admitted £500 and defended the balance.  The LVT described the gist of his defence as being failure to provide services and problems with the managing agent.

Judgment having been entered for £500, the balance of the claim was transferred to the LVT.

In contravention of the LVT’s directions, Mr Martin failed to file or serve a statement of case, to attend the hearing and, it appears, to file witness evidence.

At the hearing, Beitov withdrew its claim for administration charges and the LVT had no jurisdiction to determine rent in arrear or interest, leaving £937.72 service charge arrears to be determined.

The service charge was determined to be reasonable, but not payable, as Beitov had not complied with the notice requirements of s 47.

On appeal to the Upper Tribunal (Lands Chamber), George Bartlett QC, President, could not fault the reasoning of the LVT and dismissed the appeal.  However, he found it "inappropriate for a tribunal to take on behalf of one side in what is a party and party dispute a purely technical point, by which I mean a point that does not go to the merits or justice of the case… No purpose will in the circumstances have been served in imposing on the landlord the need to deal with the issue raised, to serve a fresh demand and, quite possibly, to take further proceedings for recovery."

Compliance with s 47

S 47 provides that a demand served on a residential tenant must contain the landlord’s name and address and, if not in England and Wales, an address in England and Wales at which notices may be served on the landlord.  Beitov gave the managing agent’s address so no service charge was due. Confusion was caused by the conflation with s. 48 which requires the landlord to give the tenant an address for service of notices, including proceedings, in England and Wales, as opposed to the landlord’s address.

S 48 requires only one notice, unless there is some change in the landlord’s status; s 47 must be complied with in the case of every demand.

Remedying non-compliance

Failure to comply with ss 47 or 48 is remedied by the later service of notice; the service or administration charge demanded is deemed due from the tenant (and interest accrues) when the information is furnished.

In respect of s 48, Sir Ralph Gibson (Rogan v Woodfield Building Services [1995] 27 H.L.R. 484) was of the opinion that: "If the point of a purely formal failure to comply with section 48 should be taken, the county court would often be able to deal with it effectively by allowing a notice to be served followed by amendment."

This does not sit well with the traditional approach that because an amendment to a pleading dates back to the date of issue, a pleading cannot be amended so as to rely on a cause of action arising after the date of issue.  However, in more recent times, the courts have not felt so constrained (Hendry v Chartsearch Ltd [1998] CLC 1382, per Evans L.J. @ § 23 (pre-CPR)).

Following Hendry, Chadwick LJ (Maridive & Oil Service SAE v CAN Insurance Co. (Europe) Ltd [2002] E.W.C.A. Civ. 369 (post-CPR)) was of the opinion that: "There is no absolute rule of law or practice which precludes an amendment to rely on a cause of action which has arisen after the commencement of the proceedings in circumstances where (but for the amendment) the claim would fail. The court has a discretion whether or not to allow the amendment in such a case…"

The President, in Staunton v Taylor, felt even less constrained, finding that provision of the landlord’s address after the issue of proceedings, but before the County Court or LVT hearing, was sufficient to comply with s 47(2), without any requirement to amend.

Landlords in a similar position to Beitov may wish to serve the appropriate notice, seeking to amend and, if necessary, applying for a short stay pending service of the notice.

The LVT's procedure and jurisdiction

Mr Martin failed to comply with the LVT’s directions, serve a statement of case, file witness evidence or attend the hearing. The only case he advanced was that services had not been provided and there were problems with the managing agent.

Bietov met this case with ease: The reasonableness of the service charge was dealt with in three short paragraphs.

Parties should know the case they have to meet. It cannot be fair that a tenant can play no part in proceedings and rely on the tribunal to carry out an open-ended audit of the landlord’s procedures and accounts on the off-chance that some error will be unearthed.

What is more, the LVT’s jurisdiction is limited. Where court proceedings raise a question falling within the LVT’s jurisdiction, the court may transfer as much of those proceedings as relate to that question. If an issue has not been raised before the court, there is no question for the LVT to determine and it has no power to allow amendments to pleadings so as to allow determination of that issue.

In Beitov’s case, although the transfer was in general terms, there was no question in respect of s 47 which fell to be determined by the court and, therefore, the LVT had no jurisdiction to determine it.

Since the broadening of its jurisdiction, the LVT more readily delves into matters which are either not in issue or raised for the first time at the hearing.  The LVT should not be laden with excessive procedural rules and subjected to technical pleading points, particularly with the number of litigants in person who appear before it. However, enforcing its own directions and determining the issues raised by the parties will facilitate a fair hearing for all parties, dispel any perception of bias, engender confidence and help to avoid such criticism as that levied by the President.

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