Landlord and tenant – Service charge – Landlord and Tenant Act 1985 – Jurisdiction of first-tier tribunal – Claim by respondent landlords for unpaid service charge – Issue between parties as to whether respondents’ method of apportioning charge complying with terms of lease – Proceedings transferred from county court to FTT to determine reasonableness of service charge – Parties reaching agreement for payment of 50% of sum claimed – Whether FTT retaining jurisdiction to determine apportionment issue – Appeal allowed
The respondent landlord brought proceedings against the appellant in the county court to recover an unpaid service charge of £1,060.54 said to be due under a long lease of a flat. The charge represented an apportioned part of the cost of installing a new door entry system in the building. The proceedings were transferred to the first-tier tribunal (FTT), pursuant to para 3 of Schedule 12 to the Commonhold and Leasehold Reform Act 2002, to determine the reasonableness of the charge demanded. One of the issues in dispute concerned the method of apportioning the charge and whether it complied with the terms of the lease.
During the hearing before the FTT, the parties reached an agreement for the appellant to pay 50% of the amount originally claimed. The FTT nonetheless proceeded to consider the issue of apportionment and held that the method used by the respondent was permissible under the terms of the lease and was also reasonable and fair.
The appellant appealed. On the appeal, the respondents raised an issue as to whether the FTT had jurisdiction to determine the issue of apportionment once the parties had reached agreement on the quantum of the service charge payable by the appellant.
Held: The appeal was allowed.
(1) The jurisdiction exercised by the FTT exercised was statutory in nature and it had no inherent power to determine any question. Where the FTT’s power was conferred as a result of the transfer of proceedings from the county court under para 3 of Schedule 12 to the 2002 Act, its jurisdiction was confined to the question transferred and all issues comprehended within that question. That principle was to be applied in a practical manner, with proper recognition of the expertise of the FTT in relation to residential service charges. When trying to identify which subsidiary issues ought properly to be treated as included within the scope of the questions transferred, it was not appropriate to be too pedantic, especially where an order transferring proceedings was couched in general terms and there was no suggestion that the court intended to reserve for itself any particular question.
Although the order transferring the instant proceedings to the FTT had referred only to a determination of the reasonableness of the service charge demanded, it was necessary, before determining the statutory question of reasonableness under section 19 of the Landlord and Tenant Act 1985, for the FTT first to consider the prior contractual question of how much the appellant was obliged to pay under the terms of his lease. Until that sum was quantified, it would not be possible to determine, save in abstract terms, whether it was reasonable. Construing the order for transfer with appropriate generosity, the jurisdiction conferred on the FTT included the power to rule on any question of interpretation of the lease on which the quantification of the service charge depended. At the commencement of the proceedings before the FTT, it therefore had jurisdiction to determine whether the respondents were entitled to apportion service charges in the manner that they had; that was necessary in order to determine the sum payable by the appellant, which itself was a precondition of determining the reasonableness of that sum.
However, that position had changed when the sum payable by the appellant was agreed. At the point of the agreement, the issue of apportionment fell away as a matter properly open for consideration by the FTT. The question of apportionment was subsidiary to the quantification of the appellant’s service charge and consideration of whether it was reasonable; once those matters had been agreed, the subsidiary issue necessarily fell away too, even though the parties had reached no specific agreement on apportionment. At the point when the parties agreed the sum which the appellant would pay, the task which the county court had invited the FTT to undertake was complete and, thereafter, the FTT lacked jurisdiction to consider any other issue.
The same result would flow if the effect of the compromise were considered by reference to section 27A(1) of the 1985 Act, which dealt with jurisdiction to determine liability for service charges and was the source of the jurisdiction invoked by the county court when it made its order transferring the dispute to the FTT. An application under section 27A(1) to determine the amount of a service charge which was payable could not be made in respect of a matter which had been agreed or admitted by the tenant: see section 27A(4)(a). The parties’ agreement on the amount which was payable meant that it would not thereafter have been possible for them to apply to the FTT for a determination of the manner in which the charge ought to have been apportioned. After that agreement was reached, the FTT did not retain any jurisdiction in the transferred proceedings to reach a conclusion on the question of apportionment. It followed that the FTT’s decision should be set aside as being made without jurisdiction.
(2) The appeal having succeeded, it was just and equitable to make an order under section 20C of the 1985 Act, as requested by the appellant, that no part of the costs incurred by the respondents in connection with the proceedings before the Upper Tribunal should be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the appellant.
The appellant appeared in person; Ranjit Bhose QC (instructed by the legal department of Islington London Borough Council) appeared for the respondents.
Sally Dobson, barrister
Click here to read transcript: Cain v Islington London Borough Council
