Council loses court battle over recovering repair costs from leaseholder

Sheffield City Council was wrong to seek recovery of repair costs from a leaseholder in a situation where it had received financial contribution for the works from a third party, the Court of Appeal has ruled.

The court refused Sheffield’s appeal against leaseholder Hazel St Clare Oliver because the council had benefited from support from the Community Energy Savings Programme for work associated with improvements to the estate in which she lives.

The judge said the issue was whether credit must be given by the lessor in respect of a third party contribution towards the cost of carrying out repairs and improvements to avoid any element of double recovery.

Ms Oliver had taken the dispute through the Leasehold Valuation Tribunal to the Upper Tribunal, which resolved the case in her favour. The council then appealed.

Sheffield owns the freehold of the Lansdowne and Hanover estates, which consist of some 1,000 flats and maisonettes constructed between 1968-72, which were in need of renovation.

This cost the council £11.4m of which it sought to recover £615,324 from some 80 long leaseholders.

Cladding work thickened the properties’ exterior walls so boiler flues had to be lengthened. The council instead chose to replace the boilers.

Under the Community Energy Savings Programme, commercial gas and electricity suppliers are required to fund energy saving measures for domestic consumers in low income areas.

Sheffield gained £2.9m from this scheme, of which £43,570 specifically concerned work to Ms Oliver’s block.

The council decided not to deduct the amounts received in respect of specific leaseholders’ homes since not all blocks on the estate qualified, so charging Ms Oliver the full amount for the cladding works.

In Sheffield City Council v Oliver [2017] EWCA Civ 225 (04 April 2017) Lord Justice Briggs ruled: “I have therefore not found it difficult to conclude that a way has to be found to interpret the lease so as to prevent all such forms of double recovery, upon the simple basis that the lease would otherwise lack common sense, as between long leaseholder and lessor.”

He added: “I do not consider that I should depart from the Upper Tribunal's 50% apportionment, since it was within the range of fair outcomes available to the decision maker.”

Mark Smulian