Landlord and tenant – Service charge – Evidence – First-tier tribunal determining service charge payable by respondent leaseholders – Tribunal disallowing architect’s, surveyor’s and legal fees incurred by appellant landlord on grounds of lack of evidence of entitlement – Tribunal allowing appellant to provide further evidence to substantiate entitlement to insurance premiums – Whether tribunal acting irrationally in failing to give similar opportunity in relation to fees – Appeal allowed
The first-tier tribunal (FTT) was asked to determine the service charge properly payable by the respondent leaseholders to the appellant landlord in respect of certain flats for the service charge year ending March 2014. The appellant had undertaken major works and sought to recover architect’s fees of £7,066.40, surveyor’s fees of £3,870 and legal fees of £6,167.73 in that connection. The FTT determined that those costs were not recoverable.
The FTT did not dispute that the appellant had expended the sums claimed but held that it had failed to discharge the burden of proof, because insufficient evidence had been adduced to determine whether those costs fell within the service charge provisions of the lease and, if so, whether they were reasonable in amount and had been reasonably incurred. Although a differently-constituted FTT had previously approved estimated costs of £6,000 for both architect’s and surveyor’s fees, in separate proceedings involving other leaseholders in the same premises, the FTT in the present proceedings stated that it did not regard itself as bound by that earlier decision.
The FTT similarly found that there was insufficient information on which to determine whether the appellant was entitled to recover certain insurance premiums which it had paid; however, in respect of that item, and after the hearing had finished, it invited the appellant to furnish further information to substantiate its entitlement.
The appellant appealed against the FTT’s decision in respect of the architect’s, surveyor’s and legal fees. It contended that the FTT should have exercised its discretion to allow further information and explanation in relation to the fees, given that there was a requirement for consistency in decision-making and bearing in mind its decision on the insurance costs and also the earlier FTT decision approving architect’s and surveyor’s fees for the same period.
By the time of the appeal, it was common ground that all sums were in principle recoverable under the service charge provisions in the lease.
Held: The appeal was allowed.
After completion of evidence and close of submissions, and once the tribunal had withdrawn to deliberate, it nonetheless retained a discretion, as did any court, to invite further evidence or submissions on any point in issue. That discretion would generally be exercised sparingly, because it was for the parties to, in compliance with previous directions, and because there needed to be finality. However, once the discretion was exercised, that had to be done in a way that was consistent and promoted consistency of judgment.
An appellate tribunal or court would generally be reluctant to intervene unless it could be shown that the inferior tribunal had acted perversely, in the sense that it had acted in a way that no reasonable tribunal vested with the knowledge and information of the instant tribunal would do. However, this was just such a case. It was irrational for the FTT not to allow the appellant to advance further information in relation to architect’s and surveyor’s fees. While the approval of the estimated fees by the previous tribunal was not binding on the FTT, the fact of that approval, coupled with the fact of the ongoing major works being carried out to the premises, gave a strong steer in the direction that at least some, if not all, of the actual fees being sought were or were likely to be recoverable. The major works were inherently likely to require the on-going services of the architect and surveyor to continue the work which they had been doing the previous year. The FTT accepted that the amounts in issue had been expended.
Further, while the FTT said that the appellant had failed to discharge the burden of proof, it overlooked that it had declined the opportunity to inspect the premises, which might have afforded it an opportunity to evaluate the nature and extent of the work and the likely involvement of the architect and surveyor in the year in question. The FTT’s complaint of insufficient evidence was, or might have been, in part because it had chosen not to inspect.
That did not overlook the need for documentary evidence to reconcile or further explain precisely what the architect’s and surveyor’s fees had been expended on. However, it was more likely than not that at least some of the fees had been spent, and spent reasonably, on works of repair and that the matter could have been clarified had the appellant been given the same opportunity to furnish further information as it was given in respect of the insurance premium. There was no rational reason why the insurance premium should be treated differently. While all relevant evidence should have been before the FTT at the time of the hearing, if the FTT was going to allow more time for some evidence, then there was no rational reason why it should not have permitted the same in relation to the architect’s and surveyor’s fees also. That was also true of the legal fees, albeit that slightly different considerations applied to them. This was not a case where no more evidence was available.
The matter was therefore remitted to the FTT for reconsideration of the reasonableness of the architect’s, surveyor’s and legal fees.
Sally Dobson, barrister
Click here to read transcript: Powell & Co Property (Brighton) Ltd v Patel and another
