Apportionment

Varying the percentages

Provision in the lease void?

Williams v Lessees of 38 Flats in Vista

(2020) UKUT 111 (LC)

Summary

A provision in a lease was void insofar as it purported to allows the landlord to vary the apportionment of service charges from a fixed percentage.

Facts

The leases of the subject flats provided for contribution towards the service charge of a percentage or “such part as the Landlord may otherwise reasonably determine”. For some years, the freeholder had been demanding service charges apportioned by its own determination. 

Issues

  • Was the provision permitting the freeholder to determine apportionment void by virtue of s27A(6) of the Landlord and Tenant Act 1985 as providing for apportionment other than as agreed or determined by, inter alia, the FTT, as contended by the leaseholders; or
  • Was the provision being subject to a requirement of reasonableness, which could be determined, inter alia, by the FTT prevent s.27A (6) being engaged?

First instance

The FTT held that the provision was not void by virtue of s27A (6) as the purpose of s27A (6) was to avoid contracting out of, inter alia, the FTT’s jurisdiction. The FTT accepted the freeholder’s argument that the lease permitted, inter alia, the FTT to determine the reasonableness of the landlord’s apportionment and that as a result the provision was not void. 

Decision on appeal

Appeal allowed.

The FTT had misapplied the decision in Windermere Marina Village Limited v Wild [2014] UKUT 163 (LC) (‘Windermere’).

Windermere and Gater v Wellington Real Estate Limited [2019] UKUT 561 (LC) (‘Gater’) required that any provision that purported to provide for a means of determination for any matter that could the subject of an application under s27A(1), including apportionment was void and the lease had to be read as if that provision was not present.

Accordingly, as apportionment could be the subject of an application provision for determination by the freeholder was void even if subject to a requirement of reasonableness. 

As the lease in question provided for fixed percentages in the alternative to determination by the freeholder it could be read without the provision for such determination, there was accordingly no need for the Tribunal to make its own determination as to apportionment.

 

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