Landlord and Tenant Act 1985 – Service charge – Appellant seeking to become recognised tenant’s association in respect of building for purpose of service charge provisions of 1985 Act – Application for certificate of recognition under section 29 – Membership of appellant representing less than 60% of qualifying tenants in building –Whether first-tier tribunal erring in treating 60% figure as requirement – Whether obliged to take into account that member tenants paying more than 60% of total service charge – Appeal allowed
The appellant body applied to the first-tier tribunal (FTT) to become a recognised tenants’ association in respect of a mansion block in London NW6, pursuant to section 29 of the Landlord and Tenant Act 1985, for the purposes of the provisions of that Act relating to service charges. The block contained 13 residential flats, eight of which were let on long leases at a low rent with provision for the payment of a variable service charge. The lessees of four of those flats were members of the appellant. The other four long lessees did not wish to become members of the appellant and did not support its application.
In its application, the appellant alleged that the management system for the building was archaic, that the respondent had refused to communicate or engage with lessees and that it had failed to consult with them on major contracts, in respect of which there had been an opaque tendering process which had led to the contracts being awarded to the respondent’s director or members of his family. It stated that concerns had been expressed regarding a lack of transparency, signs of neglect and financial and practical mismanagement.
The FTT refused to grant a certificate of recognition. In its decision, it noted that the membership of the appellant, as a percentage of tenants liable to pay a variable service charge, was less than the 60% recommended in government guidance issued in a document entitled “Residential Long Leaseholders – a guide to your rights and responsibilities”. It also noted that the constitution of the appellant did not permit voting rights to tenant members who were not long leaseholders. It further took the view that recognition of the appellant would not solve the issues in relation to the management of the building, which could in any event be pursued through the tribunal under the relevant legislation.
The appellant appealed. It argued that the FTT should have taken into account the fact that, while the qualifying tenants who supported it represented less than 60% of the potential qualifying tenants, between them they paid about 70% of the total amount of service charge.
Held: The appeal was allowed.
(1) The grant or refusal of a certificate of recognition by the FTT was a judicial act and not merely an administrative one, and could accordingly be the subject of an appeal to the Upper Tribunal. In order to obtain a certificate under section 29, it was necessary to make an application, which would be conducted according to the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 and would be dealt with by a decision of the FTT. Under section 11 of the Tribunals, Courts and Enforcement Act 2007, a party could appeal to the Upper Tribunal, with permission, on any point of law arising from a decision made by the FTT, other than certain excluded decisions which were not relevant for present purposes. Accordingly, section 12 of the 2007 Act was engaged and, if the Upper Tribunal found that the FTT’s decision involved the making of an error on a point of law, then it had the powers set out in that section: Minster Chalets Ltd v Irwin Park Residents Association LRX/28/2000 distinguished.
(2) The FTT had a wide discretion under section 29. While such discretion might in future be circumscribed by regulations made under section 29(5), no such regulations existed at present. There was no presumption that a certificate under section 29 should be granted unless there were good reasons to the contrary; instead, it was for the FTT to decide whether a certificate should be granted having regard to all the relevant facts of the case.
The question of whether the application for recognition was supported by a substantial proportion of the qualifying tenants was a relevant consideration. That matter was correctly recognised in the government guidance which the FTT had taken into account, and in subsequent guidance to the same effect published in July 2014 (in document T545 entitled “Guidance on Recognition of Tenant’s Association”). However, the size of the proportion of potential membership which the appellant represented was only one relevant consideration. Contrary to the approach taken by the FTT in the instant case, an application for a certificate under section 29 should not be considered on the presumption that, in the absence of special circumstances, the certificate should be refused if the proposed tenants’ association represented less than 60% of potential membership. Section 29 contained no requirement for a minimum percentage of the total qualifying tenants to support the association. The more substantial the percentage of support, the stronger the merits of the application night be, but the application had to be looked at in the light of all the relevant circumstances.
Contrary to the approach apparently taken by the FTT, it was relevant to consider not only the numerical proportion of potential members who supported the proposed tenants’ association but also the overall variable service charges payable by those supporters. The FTT had erred in the instant case by treating as irrelevant the proportion of total variable service charge paid by the flats supporting the application for a certificate.
The FTT had also erred in failing to consider whether the history of complaints and the apparent breakdown of confidence between the respondent and the tenants supporting the appellant, whether justified or not, was a factor which weighed in support of the giving of a certificate. The FTT did not appear to have considered the significance of that factor. Its decision would be quashed accordingly and the matter remitted to it for reconsideration.
Rebecca Cattermole (instructed by Jaffe Porter Crossick LLP) appeared for the appellant; John Hunt, director of the respondent, appeared for the respondent.
Sally Dobson, barrister
