Over the past 12 months the Leasehold valuation Tribunal (“LVT”) has fallen under the responsibility of the Ministry of Justice. It is due to reform to become part of the Lower Tribunal (“Lands Chamber”) to reflect the various changes in jurisdiction of tribunals and organisation undertaken over the past few years. This will result in a new set of rules and procedures governing all cases before the LVT. It will however continue to be a specialist tribunal with members of the panel having appropriate specialist knowledge.
The LVT has over the past decade interacted increasingly with the Courts. In particular since the Commonhold and Leasehold Reform Act 2002 (“CLRA”) came into force the Courts have had a power to refer matters relating to service charge disputes to the LVT to determine. This jurisdiction has seen many claims which have been started in the County Court as a traditional debt claim being referred to the LVT to determine particular questions. Case law has provided that in such cases the LVT is however only allowed to deal with the particular question posed of it by the County Court. For this reason County Courts should ask specific questions of the LVT so that all parties are clear regarding the questions that the LVT are being asked to determine.
This procedure means that usually if a claim for a service charge debt is defended the Court as part of the allocation process will wish to consider if a referral is to be made to the LVT. The LVT has powers to consider points under which it already has jurisdiction such as the reasonableness of the service charge; and what often flows from this point is whether the lease itself allows recovery of all or part of the service charges being claimed. In practice it is evident that an LVT may determine all substantive matters; which when referred back to the Court the Court by the LVT allows the Court to simply giving final effect to such findings. The Court will of course continue to have costs jurisdiction in the usual way and it will be for the Court to determine any costs which may or may not be awarded for or against either party using the usual principles of court procedure.
The CLRA also provided jurisdiction to the LVT for the first time to determine if there was a breach of the terms of a residential lease. In essence this procedure was made the first step which a freeholder had to undertake if they wished to try to forfeit a lease. Once such a determination was made by the LVT then the matter could proceed for forfeiture in the usual way. Ultimately this could lead to an application to the Court for forfeiture. In considering a forfeiture claim the Court would no longer usually have to consider whether or not there was a breach of the lease as this aspect would have been predetermined. Obviously this can lead to many such claims taking up less time before the Court and being resolved prior to actual forfeiture proceedings. The determination of a breach procedure is viewed by many practitioners as being a fast and efficient way of dealing with allegations of breach, particularly given that in practice most can and will be remedied.
These changes have reflected the fact that it is generally accepted that the LVT is a specialist tribunal which can bring specialist knowledge and expertise to residential leasehold disputes. This was recently reiterated by the Court of Appeal in the case of Winstone v. Great Gate Management Company Limited 2012 unreported which was a case involving a leasehold dispute, injunctions and service charge matters where in an obiter statement the Court of Appeal suggested that the parties might seek to have the remaining items in dispute following the appeal referred to the LVT given its specialist jurisdiction.
What is clear is that everyone practising in this field must give careful consideration as to the correct forum to begin a claim as often a claim could be issued either in the Court or the LVT. There may be tactical advantages in using one avenue over the other, but ultimately the party making the decision could find themselves before the LVT come what may. The influence of the LVT and no doubt its successor are growing as may the jurisdiction over disputes which they cover.
If any help or assistance is required in this complex field PainSmith Solicitors are happy to advise.