Russell Stewart Lacy v Homeselect Finance (No.3) Limited
[2023] UKUT 231 (LC)
Assethold Limited v Nelio Patricio Teixeira Franco
7 November 2022
[2022] UKUT 285 (LC)
Upper Tribunal
A landlord appealed a decision about charges owed by a tenant. The judge ruled the lower court made mistakes about what charges were allowed under the tenant's lease, and corrected the amount the tenant owed.
Key Facts
- •Assethold Limited (appellant) appealed a First-tier Tribunal (FTT) decision regarding service and administration charges from Nelio Patricio Teixeira Franco (respondent), leaseholder of Flat A, 9 Oval Road, Dagenham.
- •The lease included a clause allowing recovery of costs incurred "for the purpose of or incidental to the preparation and service of a notice under Section 146 of the Law of Property Act 1925."
- •Disputes arose over estimated service charges for meter cupboard works, administration charges for the current and previous FTT/county court proceedings, and claimed costs (£6,290).
- •The respondent did not actively participate in the appeal.
Legal Principles
A leaseholder must challenge the reasonableness of a service charge; it is not for the landlord to substantiate it.
Schilling v Canary Riverside Pte Limited [2005] EWLands LRX 65 2005
There is no need for a section 20 process under the Landlord and Tenant Act 1985 for estimated charges.
23 Dollis Avenue (1998) Ltd v Vejdani [2016] UKUT 365 (LC)
A "section 146 clause" allows recovery of costs incurred for the purpose of preparing and serving a section 146 notice (forfeiture). The landlord must show the costs were incurred for that purpose.
Barrett v Robinson [2014] UKUT 322 (LC)
The FTT has limited jurisdiction regarding costs; generally, it's a no-costs jurisdiction.
Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013
A landlord must obtain a determination of service charge payability under section 81 of the Housing Act 1996 before serving a section 146 notice.
Section 81, Housing Act 1996
Outcomes
Appeal succeeded regarding estimated service charges for meter cupboard works.
The FTT's reasons for rejecting the charges were incorrect. The respondent did not challenge the reasonableness of the charge, and section 20 consultation wasn't required for estimated charges.
Appeal succeeded regarding the administration charge (£2,040) for the current proceedings.
The lease's section 146 clause covered these costs, and no challenge was made to their reasonableness.
Appeal partially succeeded regarding the administration charge (£3,600) for the previous proceedings.
The FTT erred in its approach. However, insufficient evidence existed to show the 2017 proceedings aimed at forfeiture; therefore, the charge was deemed unpayable.
Appeal succeeded regarding the claimed costs (£6,290).
The FTT lacked jurisdiction to award costs in the county court proceedings. The proportionality test applied by the FTT was inappropriate.