Daejan Properties Limited v London Leasehold Valuation Tribunal

The jurisdiction conferred on a leasehold valuation tribunal by section 19(2A) of the Landlord and Tenant Act 1985 extends only to service charges which remain unpaid. It does not ordinarily extend to charges already paid, even where payment was made under protest. The distinction avoids potentially duplicative proceedings: a tribunal determination would otherwise be followed by a restitutionary claim in the county court. The jurisdiction does include payments made under an interim contractual arrangement requiring repayment if the charge is found excessive. Section 31C does not enlarge the tribunal’s jurisdiction; it permits transfer only of questions already falling within it.

The landlord owned a block of flats whose lessees had paid service charges, including management fees on major works, over several years. A lessee applied to the London Leasehold Valuation Tribunal under section 19(2A) of the Landlord and Tenant Act 1985, challenging the reasonableness of charges that had already been paid.

The tribunal held that it had jurisdiction and that a 12-year limitation period applied. On judicial review, Sullivan J upheld the tribunal’s jurisdiction but held that the Limitation Act 1980 did not apply. The landlord appealed, arguing that the words “is alleged to be payable” confined the tribunal’s jurisdiction to unpaid charges. The central issue was whether payment deprived the tribunal of jurisdiction.

1. Appeal allowed. Sullivan J’s order was set aside and the tribunal’s determination was quashed. The tribunal was prohibited from continuing the tenants’ application insofar as doing so would exceed its jurisdiction.
2. Lord Justice Simon Brown held that section 19(2A) of the Landlord and Tenant Act 1985, construed in context, applied to a service charge alleged to be payable, which involved a temporal element. The county court’s jurisdiction under section 19(1) was wider and could address charges already paid, but the tribunal’s jurisdiction was not equivalent.
3. The conclusion was supported by the cumulative policy consequences. If paid charges could be examined by the tribunal, a successful tenant might need separate restitution proceedings in the county court. There could also be overlapping evidence, substantial expenditure on historic disputes, irrecoverable tribunal costs, and uncertainty about any limitation period.
4. The fact that restitution might be difficult did not make those consequences irrelevant. Nor did the tribunal’s power to dismiss frivolous or vexatious applications under regulation 4B of the relevant 1999 Regulations, or the bar concerning matters agreed or admitted by the tenant, resolve the jurisdictional problem.
5. Section 31C(1) did not assist the tribunal. It permits transfer of a question falling within the tribunal’s existing jurisdiction; it does not determine what that jurisdiction is. It remains capable of operating where unpaid charges are claimed in county-court proceedings and the reasonableness issue is transferred.
6. The rule is subject to payments made under an interim contractual arrangement for repayment if the charge is found excessive. Lord Justices May and Dyson agreed with Lord Justice Simon Brown. The respondent was ordered to pay the landlord’s costs.

• Court of Appeal (Civil Division): Appeal allowed. The order of Sullivan J dated 3 October 2000 was set aside, the tribunal’s determination was quashed, and the tribunal was restrained from exceeding its jurisdiction.
• Queen’s Bench Division: Sullivan J dismissed the landlord’s judicial review challenge to the tribunal’s interlocutory jurisdiction ruling.
• London Leasehold Valuation Tribunal: The tribunal ruled that it had jurisdiction under section 19(2A) of the Landlord and Tenant Act 1985 to determine the reasonableness of service charges already paid.