On 8 February 2023, the Supreme Court handed down judgment in the case of Aviva Investors Ground Rent Ltd and another (Respondents) v Williams and others (Appellants). The judgment overturns previous judgments in the Court of Appeal and clarifies the role and enforceability of lease clauses dealing with the apportionment of service charge. 

The case considered whether the provision of section 27A(6) of the Landlord and Tenant Act 1985 rendered the lease provisions void.  

Section 27A of the Landlord and Tenant Act 1985 (the “Act”) permits an application to be made to the First Tier Tribunal (“FTT”) to determine whether a service charge is payable.

Section 27A(6) of the Act further provides that an agreement by a residential tenant “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 [to the First Tier Tribunal]”.

The Facts 

The dispute concerned the interpretation of service charge provisions within leases of residential units at Vista, a mixed use development block in Southsea, Hampshire. The leases provided that the tenants were to pay a fixed percentage of the service charge, as specified in their lease, or “such part as the landlord may otherwise reasonably determine”.

For years, Aviva Investors Ground Rent GP Ltd and Aviva Investors Ground Rent Holdco Limited (the “Landlords”) demanded service charges on the basis of an apportionment different, and higher than, the percentages specified in the leases. The tenants argued that section 27A(6) of the Act rendered the re-apportionment provision void and that the re-apportionment was unreasonable. It was therefore claimed that the provision should be removed from the leases so that only the fixed percentages remained.

At first instance, the FTT found that the Landlords’ power to re-apportion the lease was not voided by section 27A(6). The reasonableness argument also failed. Therefore, the re-apportionment was lawful and enforceable.

However, on appeal from the tenants, the Upper Tribunal found that the re-apportionment provision was indeed void on account of section 27A(6). The leaseholders were therefore only required to pay the percentage of the costs originally fixed in the leases.

On appeal from the Landlords, the Court of Appeal considered various authorities to conclude that section 27A(6) was designed to remove a landlord’s role from the apportionment decision-making process. The statute’s objective was satisfied if a landlord’s ability to vary the service charge provision was transferred to the FTT so that it carried out the apportionment exercise, and associated management decisions, itself. The re-apportionment provision was therefore not void as a decision had been taken by the FTT.

The Supreme Court’s Decision

On 8 February 2023, the Supreme Court held that section 27A(6) was merely an anti-avoidance provision designed to prevent contractual provisions that intended to limit the jurisdiction of the FTT. As such, a provision would only be void if it ousted the FTT’s jurisdiction to review whether a service charge was legitimate. The relevant lease provisions did not do this and the Tribunal was still able to review whether the apportionments were reasonable. Section 27A(6) was therefore not engaged and the re-apportionments were valid.

In reaching this conclusion, the Supreme Court rejected the Court of Appeal’s decision, and the case law this was based on, that section 27A(6) was designed to allow the FTT to step into the shoes of a landlord and carry out discretionary management decisions. It was found that such an interpretation would extend the jurisdiction of the FTT beyond the scope intended by Parliament and would, in doing so, result in an increase of disputes that would overwhelm the tribunal system.


The provisions contained in these leases are common, and this judgment has significant ramifications for landlords and leaseholders across the country.

Ultimately, however, it is landlords that should be most reassured by this decision. The rejection of the Court of Appeal’s decision, and the associated case law, means that they can be confident that any re-apportionment exercises undertaken will only be subject to a reasonableness review by the FTT. The FTT will not be able to actually determine the apportionment where the lease contains provisions for the landlord to determine it.

This article was written by Sarah Taylor and Charles Gray.