San Marino Estates Ltd & Ors v Peveral OM Ltd

Factual and Procedural Background

This appeal arises from a decision of the Leasehold Valuation Tribunal (LVT) dated 19 February 2007 concerning service charges for gas central heating at a residential building comprising 129 apartments ("the Building"). The original application was made under Section 27A of the Landlord and Tenant Act 1985 regarding service charges for the years 1997-2004. Initially, three respondents were named, but a preliminary order limited the respondent to the managing agent ("the Respondent"). The LVT conducted an original hearing in February 2006 and issued a decision in March 2006, but was unable to resolve an issue concerning the allocation of gas charges due to discrepancies in meter readings. A supplementary hearing followed, which is the subject of this appeal.

The leases required each tenant to pay a "Tenant's Proportion" of maintenance expenses, including 100% of gas costs related to heating hot water for their individual apartments. The issue arose because of different types of meters installed: some meters measured heat consumption in kilowatt hours (kWh), while others measured in units of 10 kWh, but the Respondent treated all meter readings as if they were in kWh. This resulted in overcharging tenants with kWh meters and undercharging tenants with 10 kWh meters. The LVT acknowledged the error but declined to determine the correct amounts payable by individual tenants due to lack of data on undercharged tenants, stating it lacked jurisdiction to address reimbursements.

The Appellants, represented by an individual who was husband to one of the original applicants, sought to challenge the LVT's refusal to determine the correct overcharges for certain tenants without requiring proof of undercharges for others. The Respondent did not attend the appeal hearing but submitted written responses.

Legal Issues Presented

1. Whether the LVT erred in refusing to determine the correct amount payable by tenants who were overcharged for gas service charges without requiring evidence of the amounts payable by undercharged tenants.
2. Whether tenants have an individual right under Section 27A of the Landlord and Tenant Act 1985 to seek a determination of service charges payable to them, independently of the overall reconciliation of charges for all tenants in the building.

Arguments of the Parties

Appellants' Arguments

• Each tenant has an individual statutory right to have the amount properly payable for service charges determined under Section 27A without being required to prove the correct allocation for all other tenants.
• The LVT should have determined the overcharges for tenants with kWh meters despite the lack of data on undercharged tenants with 10 kWh meters.
• The expert report provided by the Appellants established the maximum amount properly chargeable per tenant, assuming no deductions for other unquantifiable overcharges, thus presenting a conservative calculation favorable to the Respondent.
• The Appellants did not seek to address other alleged overcharges such as heat used in common areas or faulty meters, accepting these as assumptions against themselves to simplify the calculation.

Respondent's Arguments

• It was impermissible for the Appellants to limit the claim to only some tenants; the LVT's role was to determine service charges for all tenants collectively.
• The total gas charges were not disputed, and any overcharges to some tenants were offset by undercharges to others, so a partial determination would distort the overall picture.
• The LVT and the Lands Tribunal lack jurisdiction to order refunds; their role is limited to determining what is properly payable.
• The Appellants' approach skewed the overall charging scheme and disregarded directions binding all tenants to the LVT's decision.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analysed the statutory framework under Section 27A of the Landlord and Tenant Act 1985, emphasizing that each tenant has an individual right to seek a determination of the service charges payable. The court rejected the Respondent's contention that the claim must encompass all tenants collectively. It held that the LVT erred by refusing to determine the amounts payable by overcharged tenants on the basis that undercharges for others had not been established.

The court accepted the expert evidence provided by the Appellants, which calculated the maximum proper charge per apartment for each relevant year, noting that this calculation assumed no deductions for other unquantifiable overcharges and thus favored the Respondent. The court found no reason to doubt the expert's methodology or conclusions.

The court further held that it was unnecessary for the Appellants to solve the entire problem of gas charge allocation for all apartments; the focus was properly on those tenants who claimed to have been overcharged. The question of fault or negligence by the Respondent was irrelevant to the determination of the amount properly payable.

Holding and Implications

The court ALLOWED THE APPEAL and determined that for each relevant service charge year, the amounts properly chargeable for gas heating are those set out in the Appellants' expert report as the "Maximum charge" per apartment. The court clarified that it does not have jurisdiction to order refunds but only to determine the correct amounts payable.

The direct effect of this decision is to establish the proper gas charge liability for the overcharged tenants without requiring a full reconciliation of charges for all tenants in the building. No new legal precedent beyond the interpretation of Section 27A rights was established.