Ambercrown Limited v Alexandra Perrett & Anor
[2024] UKUT 158 (LC)
Firstport Property Services Limited v Various Leaseholders of Switch House
7 September 2023
[2023] UKUT 219 (LC)
Upper Tribunal
Leaseholders challenged service charges. They won a small part of their case. The judge ruled that the landlord should still get to recover their legal costs through service charges because the leaseholders’ win was too small, and the landlord’s unrelated breach of the lease about the reserve fund didn't justify preventing cost recovery.
Key Facts
- •Appeal against First-tier Tribunal (FTT) decision regarding service charges for roof repairs at Switch House.
- •FTT found service charges reasonable but ordered under section 20C of the Landlord and Tenant Act 1985 that costs of proceedings not recoverable via service charge.
- •Leaseholders' limited success: £3,161.85 reduction in total charge of £69,136.85.
- •Management company breached lease by not maintaining a separate reserve fund in a trust account.
- •Appeal focuses on the section 20C order, not the reasonableness of the charges themselves.
Legal Principles
For service charge disputes, only disadvantage suffered from lack of consultation is relevant (not historic neglect).
Daejan Investments Limited v Benson [2013] UKSC 54
Historic neglect or failure to act earlier is irrelevant to reasonableness of repair charges.
Daejan Properties Limited v Griffin [2014] UKUT 206 (LC)
Section 20C order (costs not recoverable as service charge) is discretionary and requires consideration of justice and equity; not automatic for leaseholder success.
Landlord and Tenant Act 1985, section 20C
Section 20C order can only benefit leaseholders specified in the application.
Plantation Wharf Management Ltd v Fairman [2020] L. & T.R. 7
Unusual circumstances needed to justify a section 20C order in favour of an unsuccessful tenant.
Schilling v Canary Riverside Development PTE Limited LRX/26/2005
Outcomes
Appeal succeeds; section 20C order set aside.
The FTT’s reliance on the irrelevant breach of covenant (failure to maintain separate reserve fund) in making the section 20C order was an error of law. The minor cost reduction related to the RopeTech work alone was insufficient to justify the order.