United Kingdom Supreme Court

Lease, apportionment of maintenance costs, service charge

Aviva Investors Ground Rent GP Ltd and anor v Williams and ors [2023] UKSC 6 (8 February 2023)

Unsuccessful appeal from CA – Concerned validity of lease provision which allowed landlord to revise proportion of overall costs of maintaining wider estate leaseholder should pay through service charge –

Dispute related to long leases of residential flats – Leaseholders required to pay service charges towards overall costs landlord incurred maintaining building and wider estate – Each lease provided leaseholder to pay specific percentage of overall costs “or such part as the Landlord may otherwise reasonably determine” –

Landlords (Aviva Investors Ground Rent GP Limited and Aviva Investors Ground Rent Holdco Limited) sought to re-apportion service charges by varying from percentages specified in leases – Some leaseholders (Leaseholders) objected and brought claim in First-tier Tribunal – Said re-apportionment unreasonable and in any event void under s 27A(6) Landlord and Tenant Act 1985 –

Section 27A allowed for disputes relating to service charges in residential leases to be resolved by First-tier Tribunal (Tribunal) – Section 27A(6) said in essence that clause in lease which gave landlord right to determine issues relating to service charges that Tribunal ought to determine would not be effective – Provision’s exact scope disputed here –

Tribunal rejected leaseholders’ complaints – Said lease provision valid – Also said re-apportionments reasonable –

On leaseholders’ appeal Upper Tribunal said re-apportionment provision void under s 27A(6) – Therefore no ability to vary apportionment so leaseholders only had to pay percentage of costs originally fixed in their leases unless they agreed otherwise –

CA said re-apportionment provision not wholly void – Instead s 27A(6) effect to transfer discretion to vary service charge proportions from Landlord to Tribunal – Allowed appeal and restored Tribunal decision –

Leaseholders appealed to SC – SC unanimously dismissed leaseholders’ appeal and, for reasons different to those CA gave, approves Tribunal decision that revised apportionment valid – Said, among other things, s 27A(6) plainly anti-avoidance provision, designed to preserve Tribunal jurisdiction – Not s 27A(6) purpose to enlarge Tribunal jurisdiction or deprive landlord’s managerial decisions of their ordinary contractual effect – Rather purpose to prevent lease parties agreeing different mechanism to determine question that Tribunal could otherwise decide – Contractual provision void only to extent it purported to oust Tribunal jurisdiction of Tribunal, for example by making landlord’s (or some other person’s) decision final and binding, or requiring Tribunal to presume or ignore certain facts –

Here agreement that landlords entitled to adjust proportions of leaseholders’ service charges did not remove Tribunal jurisdiction of First-tier Tribunal – Tribunal still able to review whether adjustments were reasonable, as was required by leases – Tribunal determined they were reasonable – Section 27A(6) not engaged, and re-apportionments valid – Appeal dismissed.

Northern Ireland, lawfulness of Northern Ireland Protocol

In the matter of an application by Allister and ors for Judicial Review [2023] UKSC 5 (8 February 2023)

Unsuccessful appeals from Northern Ireland CA – Proceedings challenged lawfulness of Northern Ireland Protocol (Protocol), which formed part of agreement between United Kingdom (UK) and European Union (EU) regarding UK’s exit from EU – Section 7A European (Withdrawal) Act 2018 (2018 Act) gave Protocol legal effect –

Three grounds of appeal: Ground One was Protocol incompatible with Article VI Acts of Union 1800 (Article VI), Acts which provided for Union of Great Britain and Ireland – Article VI Trade Lim said “[His] Majesty's subjects of Great Britain and Ireland shall … be on the same footing … in respect of trade” – Argued that Protocol meant people of Ireland not ‘on the same footing’ in respect of trade because, for example, Protocol required payment of charge on goods which may be moved into EU –

Ground Two related to s 1(1) Northern Ireland Act 1998 (NIA 1998) – Section 1(1) NIA 1998 said Northern Ireland remained part of UK unless majority of people of Northern Ireland consent via poll – Argued could be no substantial change to Northern Ireland status without consent – Protocol changed Northern Ireland – Unlawful as poll procedure not followed –

Ground Three challenged lawfulness of Protocol on Ireland/Northern Ireland (Democratic Consent Process) (EU Exit) Regulations 2020 (2020 Regulations) – Section 8C 2018 Act provided power to make 2020 Regulations – 2020 Regulations permitted Northern Ireland Assembly to vote on continued application of Articles 5 to 10 Protocol without need for cross-community support as s 42 NIA 1998 required – Argued that s 8C did not enable making regulations incompatible with NIA 1998 –

SC unanimously dismissed appeals on all three grounds: Ground One dismissed as Article VI subject to Protocol such that any parts which conflict with Protocol suspended; Ground Two: Dismissed as s 1(1) of NIA 1998 related only to right to determine whether Northern Ireland remained part of UK or joined united Ireland; Ground Three dismissed as s 7A amended existing law such that system created by 2020 Regulations lawful without requirement of cross-community support – 2020 Regulations were lawfully made – Appeals dismissed.