Practice and procedure – Appeal from decision of leasehold valuation tribunal – Cross-appeal – Appellant landlord obtaining permission to appeal to Upper Tribunal from decision of LVT as to service charge recoverable from respondent lessee – Lessee not applying for permission to cross-appeal – Lessee then seeking to challenge LVT’s decision on a point for which permission not given – Whether appropriate for Upper Tribunal to hear cross-appeal in exercise of discretion – Appeal dismissed – Cross-appeal not heard.
The appellant was the leaseholder of one of three flats in a building let on long leases from the respondent freeholder. The respondent applied to the leasehold valuation tribunal (LVT), under section 27A of the Landlord and Tenant Act 1985, for a determination of the leaseholders’ liability for service charges. One of the items in dispute was the sum charged for the respondent’s costs of insuring the property. The respondent used its own insurance agency, a sister company to the managing agent operating at arm’s length, to deal with claims management; a 12% fee was charged for claims handling. The LVT took into account that a lessor had a very wide discretion with respect to insurance and found that, while cheaper insurance might have been obtained, the respondent’s approach to insuring the property was not unreasonable. It concluded that the insurance costs were reasonable and recoverable save for the 12% claims handling fee, which it disallowed. The LVT gave permission for the appellant to appeal on the issue of whether the insurance costs, except the 12% claims handling fee, were reasonable. The respondent did not seek permission to cross-appeal. However, when the appeal was heard, it sought to challenge the removal of the 12% claims handling fee; relying on Arrowdell Ltd v Coniston Court (Hove) Ltd LRA/72/2005; [2007] RVR 39, it contended that the Upper Tribunal had a discretion to review the LVT’s decision to disallow that item. The appellant contended that the respondent could not cross-appeal in that way without first obtaining permission to do so.
Held: The appeal was dismissed; the cross-appeal was not heard.
(1) There were no grounds for interfering with the LVT’s findings of fact as to the reasonableness of the insurance costs where it had made no error in leaving material factors out of account or taking into account immaterial factors. A landlord was not obliged to shop around to find the cheapest insurance. So long as the insurance was obtained in the market and at arm’s length, the premium was reasonably incurred.
(2) The respondent was not entitled to use the appeal in order to “piggyback” its own argument that the LVT had erred in its conclusion with regard to the 12% claims handling fee. Arrowdell had been decided at a time when, by reason of a lacuna in the Lands Tribunal Rules 1996, a cross-appeal could not be made unless the other party had made an application and received leave from the LVT to appeal well within the prescribed 21-day period; the decision concerned the discretion of the then Lands Tribunal to act to relieve the injustice that would result from there being no provision for cross-appeal in the relevant rules. An application for permission to appeal out of time could now be made by virtue of regulation 21(6) of the Tribunal Procedure) (Upper Tribunal) (Lands Chamber) Rules 2010, so removing the fundamental difficulty of a potential cross-appellant being prevented from making an application for permission to appeal. Although Arrowdell remained good law, there was now provision for the making of a cross-appeal out of time. The overriding objective of dealing with cases fairly and justly, which included avoiding unnecessary formality and seeking flexibility in the proceedings, did not cover the situation where the respondent was seeking to cross-appeal on a point on which it did not have permission to do so. Permission to appeal was necessary in order to prevent the Upper Tribunal from being over-burdened with unmeritorious appeals. Only those matters that had a realistic prospect of success were allowed to proceed to appeal. The permission stage was an important part of the management of the tribunal’s work and it would be wrong to allow parties to circumvent that requirement. If a party could bring any matter before the tribunal without first obtaining permission to cross-appeal, that would drive a cart and horses through the procedure and result in the need for permission to cross-appeal being removed in practice. It followed that the respondents were not entitled to argue that the 12% claims management fee was wrongly found to be unreasonably incurred.
Justin Bates (instructed by Conway & Co, of Henley on Thames) appeared for the appellant; Oliver Radley-Gardner (instructed by P Chevalier & Co, of Surbiton) appeared for the respondent.
Sally Dobson, barrister
