Crosspite Ltd v Sachdev & Ors

Factual and Procedural Background

This appeal arises from a decision of the Leasehold Valuation Tribunal (LVT) concerning the entitlement of the Appellant landlord (Company A) to charge costs for consenting to an underletting of demised premises by the Respondents (tenants). The Respondents had underlet the whole of the premises in breach of a lease dated 8th September 1995, and the Appellant sought retrospective consent along with a standard administration charge of £165. The Respondents challenged the reasonableness of this charge under paragraph 1 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (the 2002 Act), though they accepted the principle of an administration charge. The LVT held that the Appellant was not entitled to charge for the costs of consenting to underletting and found that £135, not £165, would be a reasonable charge if such a charge were permitted.

The Appellant applied for permission to appeal the LVT decision on two grounds: first, that the LVT lacked jurisdiction to determine entitlement to payment of costs as this issue was not raised in the application and had been agreed by the Respondents; second, that the Appellant was entitled to charge such costs, relying on statutory provisions including section 19(1)(a) of the Landlord and Tenant Act 1927. Permission to appeal was granted by the Upper Tribunal (Lands Chamber), which led to this determination on written representations by His Honour Judge Gerald.

Legal Issues Presented

1. Whether the Leasehold Valuation Tribunal had jurisdiction to determine the Appellant’s entitlement to require payment of costs incurred in consenting to the underletting, given that this issue was not raised by the Respondents and was implicitly agreed.
2. Whether the Appellant landlord is entitled at law to require payment of reasonable costs incurred in consenting to underletting under the lease and relevant statutory provisions.
3. Whether the charge of £165 sought by the Appellant was a reasonable administration charge under paragraph 1 of Schedule 11 to the 2002 Act.

Arguments of the Parties

Appellant's Arguments

• The LVT had no jurisdiction to determine the entitlement to payment of costs as this issue was not raised in the Respondents’ application and had been agreed by them.
• The Appellant is entitled to require payment of reasonable costs incurred in consenting to underletting, supported implicitly by section 19(1)(a) of the Landlord and Tenant Act 1927 and section 144 of the Law of Property Act 1925.
• The LVT erred in concluding that the £165 charge was unreasonable; the Appellant submitted that the charge was justified by the extent and complexity of the administrative and legal work involved.
• It was the Appellant’s burden to prove the reasonableness of the charge and it had discharged this burden through evidence of time spent by administrators and legal staff.
• The LVT improperly imposed a standard charging bracket without adequate explanation or consideration of the specific circumstances of this case, which involved a retrospective application and was more complex than usual.

Respondents' Arguments

• The Respondents accepted the principle that an administration charge could be payable but challenged the reasonableness of the amount sought (£165).
• They suggested a one-off administration charge in the range of £50 to £100 would be reasonable to cover both initial grant and renewal of consent.
• The Respondents did not dispute the Appellant’s entitlement to require payment of costs but focused solely on the reasonableness of the sum claimed.
• They argued that ongoing fees (such as the £130 renewal charge) were excessive, noting that no further work was undertaken if the same tenant remained in the property.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first addressed the jurisdictional issue, concluding that the LVT had no jurisdiction to determine the Appellant’s entitlement to require payment of costs for consenting to underletting because this issue was not raised in the Respondents’ application. The Respondents had implicitly agreed to the principle of such a charge in correspondence prior to the application, which under paragraph 5(4) of Schedule 11 to the 2002 Act precluded the LVT from considering entitlement anew. This reasoning was supported by analogous case law concerning the limits of tribunal jurisdiction.

Substantively, the court held that the Appellant was entitled to require payment of reasonable costs incurred in consenting to underletting as a term or condition of consent under clause 2(8)(b) of the Lease. This right is consistent with long-established conveyancing practice and statutory provisions including section 19(1)(a) of the Landlord and Tenant Act 1927 and section 144 of the Law of Property Act 1925, which preserve the right to charge reasonable legal or other expenses in connection with consent.

The court distinguished these provisions from the Landlord and Tenant Act 1988, which governs the timing and reasonableness of consent but does not circumscribe the landlord’s right to impose reasonable terms or conditions, including charges.

The court accepted that the charge for consent to underletting qualifies as a "variable administration charge" under the 2002 Act, subject to reasonableness scrutiny by the LVT. The Appellant bore the burden of proving reasonableness and adduced evidence describing the administrative and legal tasks involved and the time taken, while the Respondents offered only a bare assertion of what they considered reasonable.

The court found that the LVT erred in imposing an unexplained charging bracket and in concluding that £165 was unreasonable. The LVT’s approach conflated estimated time spent with a standard charge range without proper evidential or contextual basis. Given the complexity of the retrospective application, the court concluded that £165 was reasonable and that the Appellant had discharged its burden of proof.

Holding and Implications

The appeal is allowed.

The court reversed the LVT’s decision, holding that the Appellant landlord is entitled to require payment of reasonable costs incurred in consenting to underletting even if the lease does not expressly provide for such a charge, consistent with statutory provisions and established legal principles. The LVT lacked jurisdiction to determine entitlement as this issue was not raised and had been implicitly agreed by the Respondents. The court further held that the £165 administration charge was reasonable in the circumstances.

The direct effect is that the Appellant may recover the £165 charge from the Respondents. No new precedent was established beyond clarifying the application of existing statutory provisions and confirming procedural limits on tribunal jurisdiction regarding issues not raised by parties.