Landlord and tenant – Service charge – Determination – Landlord and Tenant Act 1985 – First-tier tribunal asked to make determination under section 27A of 1985 Act as to service charge payable by long leaseholder of flat – FTT determining issues but failing to calculate actual amount payable – Whether failing to determine fundamental issue – Whether omission capable of correction under slip rule – Appeals allowed
Each of the two joined appeals concerned a decision of the first-tier tribunal (FTT), made under section 27A of the Landlord and Tenant Act 1985, in a dispute over the amount of the service charge payable by the long leaseholder of a flat.
In the first case, the FTT found that the leaseholder was liable under his lease to “pay a proportion” of the service costs but it did not state a figure for the amount of service charge. For example, in relation to the cost of new light fittings and door locks, the FTT determined that two invoices that it had examined were excessive and that only 50% of the appropriate proportion of the cost of those invoices should be applied to the leaseholder’s service charge account, but it did not quantify that amount.
In the second case, the FTT considered various heads of expenditure that were disputed by the leaseholder. The leaseholder’s liability to contribute to most of those items turned on the proper interpretation of the lease and on the extent to which leaseholders had access to certain areas with a corresponding obligation to contribute towards their maintenance. In its decision, the FTT explained that it had determined the disputed issues “in principle”, namely that it had determined each of the issues on which the liability to pay a service charge turned. However, not having been provided with the necessary figures, it did not determine the actual amount payable but instead required the landlord to determine the relevant sum.
The leaseholder appealed against the FTT’s determination in each case, complaining that the FTT had failed to determine the fundamental issue as to the actual amount of the service charge payable. In the first case, the respondent landlord submitted that, where both the service charge demands and the service charge accounts were before the FTT and both parties were aware of the annual service charge costs that had been incurred, the FTT’s omission to specify figures could be corrected under the slip rule contained in r 50 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 since it was sufficiently clear to the parties which sums were determined by the FTT to be reasonable. The landlord in the second case did not participate in the appeal.
Held: The appeals were allowed.
(1) Where an application was made to the FTT under section 27A of the 1985 Act for a determination of the amount of a service charge payable, it was incumbent on the FTT to determine that application in accordance with its statutory jurisdiction. Until it had quantified the service charge, the FTT had not fully determined the application. It could not properly delegate its duty by directing one of the parties to determine the financial consequences of its decision. It was possible that such a determination would itself become contentious, leaving the original dispute unresolved, or substituting a new dispute in its place.
While there might be practical difficulties in quantifying the sum payable in certain cases, for example where the necessary information had not been made available at the hearing, the FTT had adequate case management powers, under r 6 of the 2013 Rules, at any time to direct that a party should provide the information necessary to enable the tribunal to determine the amount of the service charge payable. Where the necessary information was not available at the hearing, or where it was not reasonable to expect the FTT to devote its own limited resources to the task of calculating what might be a large number of individual figures, the appropriate course was likely to be to direct the landlord or management company to recalculate the service charge in light of the tribunal’s decision and then to submit it to the leaseholder for agreement, giving both parties the right to apply to the tribunal if agreement could not be reached. In all cases, however, the final responsibility for determining the sum payable lay with the FTT.
Accordingly, the decision of the FTT in the first case should be remitted to it to complete the determination of the application by quantifying the service charges that were properly payable.
(2) For similar reasons, the FTT’s decision in the second case was not an adequate determination of the issue submitted to it. In circumstances where the invoices provided by the respondent landlord gave rise to potential for confusion and uncertainty, it was incumbent on the FTT to make clear the answer to the statutory question posed by section 27A(1)(c) by determining the amounts payable as service charges. It should have stated those amounts as absolute figures rather than as percentages or proportions of unspecified sums which it left to the parties to interpret. Its omission to do so was a breach of its duty to record its decision clearly and to provide proper reasons. If it was unable to do so on the basis of the information provided, then it should have followed the course suggested above.
The omission of the FTT to state the amount of the service charges payable was not a matter that could be corrected under the slip rule. That failure was not a clerical mistake or an accidental slip or omission but was fundamental to the statutory question which the FTT was required to determine.
In the second case, where the application had been determined on written representations and the material presented to the FTT had been incomplete and confusing, the appropriate course was not simply to remit the decision to the FTT for further consideration but to set it aside and require that the application be re-determined, with the parties being given the opportunity to appear and present their cases in full.
The appeals were determined on the written representations of the parties.
Sally Dobson, barrister