Landlord and tenant – Service charges – Jurisdiction –Appellant landlord bringing claim against respondent tenant for sums allegedly due – County court sending case to First-tier Tribunal (FTT) to determine reasonableness and payability of service charges – Appellant appealing against decision of FTT – Whether FTT having limited jurisdiction to make decisions only under section 27A of Landlord and Tenant Act 1985 – Whether FTT having jurisdiction to determine matters within sole jurisdiction of county court – Appeal allowed
The respondent held a 125-year lease of a flat at 9 Cousins Court, 3 Alwyn Gardens, London, granted in 1993. The demise of the flat included the glass in the windows but not the window frames. It contained standard provisions for the appellant landlord to be responsible for the repair and maintenance of the structure and exterior of the building and recover its costs through a service charge.
The appellant brought proceedings in the county court against the respondent claiming a sum of £2,440.47, which included service charges and administration fees in the sum of £1,123.03. The respondent objected that the service charge element of the claim was a charge for window replacement. He argued that he should not have to pay it because he had himself replaced the windows of his flat, having paid a fee for the appellant’s licence to do so. He also made a counterclaim of £480 for damage to his health and the work and costs he had undertaken.
A district judge ordered the claim to be sent to the First-tier Tribunal (FTT) under section 176A of the Commonhold and Leasehold Reform Act 2002. The FTT gave directions under section 27A of the Landlord and Tenant Act 1985 which set out the FTT’s jurisdiction to determine whether a service charge was payable and the amount payable. The FTT dismissed the counterclaim but decided that the district judge had intended to pass the whole of the claim to it for determination. It accepted the respondent’s argument that the use of the reserve fund had been unfair and made deductions to the service charge accordingly. It also held that the administration charges, legal costs and interest were not recoverable.
The appellant appealed challenging the FTT’s jurisdiction to determine its claim. The appeal was determined on written representations.
Held: The appeal was allowed.
(1) Section 176A of the 2002 Act provided that where the court had to decide a question arising under any of a list of statutes, which included the 1985 Act, “which the First-tier Tribunal … would have jurisdiction to determine”, it “may by order transfer to the First-tier Tribunal so much of the proceedings as relate to the determination of that question”.
When service charge disputes were commenced in the county court it was usual for issues of payability and reasonableness to be transferred to the FTT since section 27A of the 1985 Act gave the FTT jurisdiction to determine the reasonableness and payability of service charges. The order making that transfer was sometimes less than specific, and the deputy president in Cain v Islington London Borough Council [2015] UKUT 117 (LC); [2015] PLSCS 294 encouraged the FTT to interpret such orders in a practical manner, with proper recognition of the expertise of the FTT in relation to residential service charges.
(2) When trying to identify which subsidiary issues ought properly to be treated as being 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 where there was no suggestion that the court intended to reserve for itself any particular question. But if a practical approach led to the crossing of jurisdictional barriers, it had gone too far. Section 176A of the 2002 Act only enabled the county court to transfer to the FTT a question that the FTT had jurisdiction to answer. The FTT had no inherent jurisdiction and could not decide matters that remained within the sole jurisdiction of the county court.
All judges of the FTT were by statute judges of the county court and could be deployed to sit as county court judges at the hearing in which they determined the questions transferred to the FTT. No such deployment arrangement had been made in this case and the FTT judge was not free to decide to sit as a county court judge unless he or she had been specifically deployed to do so. Therefore, the decision that the claim for £1,056 described in the county court claim form as “legal costs incurred to date in connection with the default” was refused on the grounds that it was irrecoverable and the decision on the claim for interest on unpaid arrears were made without jurisdiction and would be set aside.
(3) The respondent had not objected to the reasonableness and payability of the service charge. He had made a deduction because of his own view about the fairness of the use of the reserve fund. He did not claim to have obtained any assurance that his usual proportionate liability for the repair and maintenance would change as a result of his having replaced his own windows. The FTT, instead of making a decision about the reasonableness and payability of the service charge, regarded the critical issue as being the charge to the reserve fund for the windows. It accepted the respondent’s view of the fairness of a different matter (the use of the reserve fund), made a determination about the fairness of the use of the reserve fund (which was not relevant to the reasonableness and payability of the service charge), and approved a deduction from the service charge.
(4) Therefore, the FTT had failed to decide what it was asked to decide about the service charges and made a different decision on an issue that was not before it. The decision about the service charge was made in error and would be set aside. Furthermore, the decision about the administration charges was irrational and would be set aside. The FTT made reference to the administration fees of £60 mentioned in the appellant’s statement of case, and dismissed them as unreasonable since no evidence was produced to sustain them. Yet the respondent had made no challenge to administration charges save for his unexplained assertion that they were exorbitant; it appeared that the FTT had confused the legal expenses fee of £1,056 with the small sums relating to administration, but had not said in what respect the administration charge was unreasonable.
Eileen O’Grady, barrister
Click here to read a transcript of Holding and Management (Solitaire) Ltd v Miller
