Practice and procedure – First-tier Tribunal (FTT) – Paper determination – FTT determining service charge on papers – Decision by FTT about contested facts made without hearing – FTT deciding on the balance of probabilities service charge demands contained prescribed information and accompanied by statement of tenant’s rights – Appellant leaseholder appealing – Whether FTT erred in determining contested issues of fact without hearing – Whether FTT’s reasons for concluding demands sent were flawed – Appeal allowed
The appellant was the leaseholder of flats 6and 47, East Waterloo Dock, Liverpool; the leases were in materially identical terms and required payments of variable service and administration charges. Those charges had been demanded quarterly. The respondent was an RTM company, which had been managing East Waterloo Docks in exercise of the leaseholders’ right to manage since May 2004.
In August 2018, the respondent commenced proceedings in the county court against the appellant for recovery of arrears of service and administration charges in respect of both properties for the years 2015 to 2018.
The matter was transferred to the First-tier Tribunal (FTT) (pursuant to section 176A of the Commonhold and Leasehold Reform Act 2002) for it to determine the reasonableness and payability of service charges. The FTT made its decision without a hearing.
It also refused to make an order in the appellant’s favour under section 20C of the Landlord and Tenant Act 1985 (which would prevent the respondent from recovering its legal costs of the proceedings from him as part of the service charge) because the respondent had been largely successful in the application.
The appellant subsequently appealed against the decision made by the FTT contending that it should not have determined contested issues of fact (namely whether service charge demands had been served, and also whether an agreement was reached about the allocation of payments) without a hearing; and that the FTT’s reasons for concluding that demands had been sent were flawed. The appeal was determined on written representations.
Held: The appeal was allowed.
(1) Section 47 of the Landlord and Tenant Act 1987 required that demands for service and administration charges had to include prescribed information, namely the landlord’s name and address for service. Where a demand did not include that information the amount demanded was to be treated as not due from the tenant until the information was provided.
Furthermore, section 21B of the Landlord and Tenant Act 1985 required that demands for service charges be “accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges” and provided that the charges might be withheld if that requirement was not complied with.
(2) It was not the case that issues of disputed fact could never be decided without a hearing. There would be cases where corroborating documentary evidence, for example, made a decision possible. But it was difficult to imagine that where disputed facts turned on credibility they could ever be decided fairly, or reliably, without a hearing.
The FTT in this case was confident that it could do so. But the reasons it gave for preferring the respondent’s evidence to that of the appellant were wholly inadequate; and no reason was given for the FTT’s preference for the respondent’s evidence about the allocation of payments. The reasons given for the preference for the respondent’s evidence about the content of demands did not stand up to scrutiny; it might or might not be true that most management companies produced demands in the correct form, but in this case there was positive evidence that it had not done so. Moreover, the FTT had no information as to whether other leaseholders had challenged the demands. The copy documents produced by the respondent were in the correct form but those produced by the appellant were not. It would have been perfectly simple for the respondent to correct its demands by adding an additional photocopied page to each one in the bundle of copy demands provided for the FTT.
(3) It was regrettable that the FTT did not have in mind other decisions of the Upper Tribunal where an appeal had succeeded because a disputed issue of fact was decided without a hearing. The FTT had sought, in this case as on other occasions, to justify its decision not to conduct a hearing by the fact that neither party requested one; but an unrepresented party such as the appellant might not be aware that it would be difficult, if not impossible, to determine contested issues of fact on written representations without the parties and the tribunal being able to question witnesses and test the evidence. It was both unfair and unreliable to make a decision without a hearing in a case such as this one where it was inevitable that either one party or the other was lying and where there was nothing in the written material that could enable the FTT reliably to determine who was telling the truth. The point turned on the credibility of witnesses: Enterprise Home Developments LLP v Adam [2020] UKUT 151 (LC); [2020] PLSCS 92 and Webb v Sunley (Findlay Close) Residents Ltd [2022] UKUT 171 (LC) considered.
(4) In all the circumstances, the appeal succeeded and the findings of the FTT would be set aside, together with its decision on the application under section 20C of the 1985 Act. The matter would be remitted to the FTT for a fresh determination, by a different panel.
Eileen O’Grady, barrister
Click here to read a transcript of Smith v Waterloo Warehouse RTM Co Ltd
