Williams v Aviva Investors Ground Rent GP Ltd [2021] EWCA Civ 27: Oil Not Grit

• Published date: 28 August 2021
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Landlord & Tenant - Leases
• Law Firm: Gatehouse Chambers
• Author: Faisel Sadiq

Introduction

1. When engaged in contractual or statutory interpretation, we lawyers would do well to remember that the courts (or at least the higher courts) view their role as being to "oil the wheels of commerce, rather than to throw grit into the engine"¹. The decision of the Court of Appeal in Williams v Aviva Investors Ground Rent GP Ltd [2021] EWCA Civ 27, is an excellent example of the higher courts performing this role as well as being an important case on the effect of s.27A(6) of the Landlord and Tenant Act 1985 ("1985 Act").
2. Section 27A(1) of the 1985 Act confers jurisdiction on the First-tier Tribunal ("FTT") to make various decisions as respects service charges payable by the lessees of dwellings. Section 27A(6) of the 1985 Act renders invalid any agreements that seek to exclude the jurisdiction of the FTT on questions that could be referred to it under s.27A(1)² Section 27A(6) reads as follows:

"An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination'

(a) in a particular manner, or

(b) on particular evidence,

of any question which may be the subject of an application under subsection (1)..."

3. In Williams, the Court of Appeal had to consider what the effect of s.27A(6) was on leases which provided that the service charge payable by the lessees was either a fixed percentage or such other sum as the landlord might reasonably determine. The landlord argued that the effect of s.27A(6) was to transfer the landlord's power to specify another amount to the FTT. The lessees argued that the effect of s.27A(6) was limited the landlord to the fixed percentage specified in the lease. The Court of Appeal agreed with the landlord.

Factual background

4. The case concerned leases of various flats in Southsea Hampshire. The flats formed part of a mixed development of residential and commercial units. The development was once in common ownership but that was no longer the case.
5. The leases of the flats each made provision for the lessees to pay a contribution towards the costs of insuring the building building services and estate services. The leases provided that the lessees would pay a fixed percentage of the overall cost or "...such part as the Landlord may otherwise reasonably determine". The fixed percentage varied from flat to flat as it was calculated by reference to the square footage of each of the flats.
6. Once the residential and commercial units ceased...