Aviva Investors Ground Rent GP Ltd & Anor v Williams & Anor

Factual and Procedural Background

The dispute concerns long leases of residential flats in a building in The City, under which each tenant is obliged to pay a fixed percentage of the landlord’s service-charge expenditure “or such part as the landlord may otherwise reasonably determine.” The Respondent landlords issued demands calculated on revised (and higher) percentages. The Appellants, a group of lessees led by the tenant of Flat 64, contended that:

• Section 27A(6) of the Landlord and Tenant Act 1985 rendered the landlord’s contractual power to vary the percentages void; and
• In any event, the revised apportionment was unreasonable.

Procedurally, the matter travelled through four instances:

1. First-tier Tribunal (Property Chamber) – held the power to re-apportion valid and the landlord’s decision reasonable.
2. Upper Tribunal (Lands Chamber) – held the entire re-apportionment clause void, fixing the original percentages forever.
3. Court of Appeal – held the clause void only so far as it vested the power exclusively in the landlord; either party could instead apply to the Tribunal for apportionment.
4. Supreme Court – current appeal by the tenants challenging the validity of the clause; landlords cross-appealed on the legal approach.

Legal Issues Presented

1. Does section 27A(6) invalidate a lease term that lets a landlord vary each tenant’s percentage contribution to service charges?
2. More broadly, does section 27A(6) transfer to the First-tier Tribunal the original power to make discretionary management decisions (such as apportionment) conferred on landlords by contract?
3. Should prior Court of Appeal authority (Oliver v Sheffield City Council and related cases) on the scope of section 27A(6) be departed from?

Arguments of the Parties

Appellants' Arguments

• The variation clause is void under section 27A(6) because it “provides for a determination in a particular manner” of a question the Tribunal can decide, namely the amount each tenant must pay.
• In the alternative, even if the power survives, the landlord’s particular re-apportionment was unreasonable.

Respondents' Arguments

• If every contractual power to determine service-charge quantum is void, the Tribunal would have to make routine management decisions, an outcome Parliament cannot have intended.
• Section 27A(6) is anti-avoidance: it prevents clauses that oust the Tribunal’s review jurisdiction but does not enlarge that jurisdiction or strip landlords of managerial powers.
• Oliver and its progeny were wrongly decided and should be overruled.

Table of Precedents Cited

Court's Reasoning and Analysis

The Supreme Court, per Judge Briggs, undertook a purposive interpretation of section 27A within the wider statutory scheme regulating residential service charges:

• Contextual reading. Sections 19–21 of the 1985 Act already impose substantive limits (reasonableness, consultation, time bars) on service-charge recovery. Section 27A gives the Tribunal a review jurisdiction to apply those limits.
• Nature of the “questions.” A “question” under s. 27A(1) or (3) concerns whether a demanded or future charge is contractually/statutorily payable, not the making of the underlying management decision itself.
• Anti-avoidance, not jurisdiction-creating. Sub-section (6) voids clauses that would make another body’s decision final and binding so as to oust the Tribunal’s review, but it does not substitute the Tribunal as the original decision-maker.
• Practical consequences. Reading s. 27A(6) as transferring every discretionary decision to the Tribunal would:
• Force landlords to seek advance rulings before incurring costs, overwhelming the Tribunal.
• Destabilise long-term management bargains and create “Pandora’s box” litigation (as shown by the divergent solutions below).
• Overruling earlier authority. The Court held that Oliver and the two Upper Tribunal decisions were wrongly decided for failing to distinguish between preserving review jurisdiction and enlarging it.
• Application to this lease. The landlord’s powers—to trigger and set a revised apportionment, exercised reasonably—did not impede the Tribunal’s ability to review reasonableness. Therefore, they are not void.

Holding and Implications

APPEAL DISMISSED. The Supreme Court restores the First-tier Tribunal’s decision upholding the landlord’s revised apportionment.

Implications:

• The landlord’s contractual power to vary service-charge percentages survives unless it purports to make the landlord’s decision immune from Tribunal review.
• Oliver v Sheffield City Council, Windermere Marina, and Gater are overruled on this point, clarifying that section 27A(6) is a shield against ouster clauses, not a sword that reallocates managerial powers.
• The decision reduces the risk of routine management issues being diverted to the First-tier Tribunal, preserving its role as a dispute-resolution forum rather than a primary decision-maker.