Dr Lellis Francis Braganza v The Riverside Group Limited
[2023] UKUT 243 (LC)
Aviva Investors Ground Rent GP Ltd and another v Williams and others
8 February 2023
[2023] UKSC 6
Supreme Court
Landlords can decide how much tenants pay in service charges, but they must be fair. Tenants can challenge unfair decisions in court, but the court won't make the decision for the landlord; it will just check if the landlord was fair.
Key Facts
- •Landlords levied service charges on residential tenants based on a different apportionment than initially stated in the leases.
- •Tenants challenged the landlords' re-apportionment under Section 27A of the Landlord and Tenant Act 1985, arguing it was void.
- •The case concerned the interpretation of Section 27A(6) and its effect on contractual provisions allowing landlords to determine service charge apportionment.
- •Lower courts offered differing interpretations of Section 27A(6) and its application to the case, leading to the appeal.
Legal Principles
Section 27A of the Landlord and Tenant Act 1985 aims to alleviate unfair restrictions on residential tenants' access to justice regarding service charges.
Landlord and Tenant Act 1985, Section 27A
Section 27A(6) renders void agreements that attempt to determine service charge questions in a particular manner, other than post-dispute arbitration agreements.
Landlord and Tenant Act 1985, Section 27A(6)
Section 19 of the 1985 Act limits service charge costs to those reasonably incurred for services or works of a reasonable standard.
Landlord and Tenant Act 1985, Section 19
The First-tier Tribunal (Property Chamber) (FtT) has jurisdiction to determine service charge disputes, subject to the limitations in Section 27A(4).
Landlord and Tenant Act 1985, Section 27A(1), (3), (4)
Statutory interpretation requires considering the words in their context, purpose, and the mischief the provision seeks to address.
Common Law Principles of Statutory Interpretation
An anti-avoidance provision should not be construed to extend the jurisdiction it aims to protect, but rather to preserve its existing scope.
Common Law Principles of Statutory Interpretation
Outcomes
The tenants' appeal was dismissed.
Section 27A(6) does not transfer the landlord's discretionary management powers to the FtT. The FtT's jurisdiction is limited to reviewing the contractual and statutory legitimacy of service charge demands, not making the initial discretionary decisions. The landlord's re-apportionment was deemed reasonable.
The FtT's original decision was restored.
The FtT correctly determined that the landlord acted reasonably in re-apportioning the service charges. Section 27A(6) did not invalidate the landlord's power to re-apportion because the FtT's ability to review the reasonableness of that decision remained.
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