Fitzroy Place Residential Limited & Ors v Angus Lovitt & Ors
[2024] UKUT 63 (LC)
Graham Bradley & Anor v Abacus Land 4 Limited
15 May 2024
[2024] UKUT 120 (LC)
Upper Tribunal
Two tenants challenged their landlord's charges for a shared gym. The court ruled the landlord must be fair when deciding who pays for shared facilities like the gym. While the tenants agreed to past charges by not complaining, the landlord was unfairly making them pay all the gym costs after it gave away a great gym deal to a private gym operator. The landlord needs to fairly share the costs now.
Key Facts
- •Appeal against First-tier Tribunal (FTT) decision on service charges for a gym in Romney House.
- •Appellants are two leaseholders; 61 others joined the section 20C application.
- •Gym leased to a third party in 2013 without a service charge clause.
- •Landlord allocated 100% of gym costs to residential leaseholders after 2020, previously sharing the gym rent.
- •Dispute centers on whether landlord acted reasonably in allocating gym costs, considering the lease's 'acting reasonably' and 'fair proportion' clauses.
Legal Principles
Wednesbury unreasonableness: A decision is reviewable if it's so unreasonable that no reasonable authority could have reached it.
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Contractual discretion review: A decision-maker's discretion is limited by honesty, good faith, genuineness, and the absence of arbitrariness, capriciousness, perversity, and irrationality.
Socimer International Bank Ltd v Standard Bank London Ltd [2008] EWCA Civ 116
Distinction between 'reasonable' (objective reasonableness considering both parties' interests) and 'rational' (Wednesbury rationality focusing on process and a limited aspect of outcome).
Braganza v BP Shipping Ltd [2015] UKSC 17
Leasehold service charge apportionment: A lease conferring unqualified discretion on the landlord is not void; the FTT's review is limited to rationality. An express obligation to act reasonably requires objective reasonableness.
Williams and others v Aviva Investors Ground Rent GP Ltd [2023] UKSC 6
Section 27A Landlord and Tenant Act 1985: Jurisdiction to determine whether service charges are payable, considering factors like reasonable cost and standard of work, and whether the landlord is entitled to charge under the lease.
Landlord and Tenant Act 1985, section 27A
Section 19 Landlord and Tenant Act 1985: Deals with whether service charges were reasonably incurred.
Landlord and Tenant Act 1985, section 19
Section 27A(4) Landlord and Tenant Act 1985: No application can be made if the matter has been agreed or admitted by the tenant. Payment alone does not constitute agreement.
Landlord and Tenant Act 1985, section 27A(4)
Outcomes
Appeal partially successful.
The FTT incorrectly applied the rationality test instead of objective reasonableness to the landlord's allocation of gym costs. It was objectively unreasonable to charge residential leaseholders 100% of gym costs after 2020 due to shared use.
FTT's decision regarding charges from 2013-2020 upheld.
Appellants agreed to pay the service charges during this period, despite earlier discussions regarding the gym lease, and didn't challenge the charges until this case.
Landlord's decision to allocate litigation costs to service charges overturned.
Respondent conceded this point and will refund payments.
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