Brunswick Mansions Management Company Limited v Triplerose Limited
[2023] UKUT 31 (LC)
Joseph Darryl Douglas v RMB 102 Limited & Anor
22 August 2023
[2023] UKUT 207 (LC)
Upper Tribunal
Residents of apartment buildings fought a huge insurance bill increase. A lower court dismissed their case, but a higher court said it should be re-examined to see if the increase was fair.
Key Facts
- •Leaseholders of Boswell Court and Hitherwood Court challenged a significant increase (over 180%) in their buildings insurance service charges.
- •A tripartite lease agreement required the leaseholder-controlled management company to procure insurance from the landlord's nominated insurer.
- •The First-Tier Tribunal (FTT) struck out the leaseholders' application under section 27A, Landlord and Tenant Act 1985, deeming it without reasonable prospect of success.
- •The FTT's decision was based on the Court of Appeal's decision in *Berrycroft Management Co Ltd v Sinclair Gardens Investments (Kensington) Ltd*, which the FTT interpreted as barring leaseholders from challenging insurance charges under such a tripartite arrangement.
- •The leaseholders appealed to the Upper Tribunal (Lands Chamber).
Legal Principles
Definition of service charge and relevant costs.
Landlord and Tenant Act 1985, sections 18 and 18(2)
Reasonableness of service charges.
Landlord and Tenant Act 1985, section 19(1)(a)
Application for determination of service charges.
Landlord and Tenant Act 1985, section 27A
Definition of 'landlord' in service charge context.
Landlord and Tenant Act 1985, section 30
Tripartite lease agreements and the applicability of the Landlord and Tenant Act 1985.
*Berrycroft Management Co Ltd v Sinclair Gardens Investments (Kensington) Ltd*, *Cinnamon Ltd v Morgan*, and *Gateway Holdings (NWB) Ltd v McKenzie*
Outcomes
The Upper Tribunal allowed the appeal.
The Upper Tribunal found the FTT wrongly struck out the application. The *Berrycroft* decision was misinterpreted; the management company, also a 'landlord' under section 30, incurred the costs, making them 'relevant costs' under section 18. The landlord's involvement is necessary to determine the reasonableness of charges, even if not directly payable to them.
The matter was remitted to the FTT for determination.
The FTT should determine whether the costs incurred by the management company were reasonably incurred under section 18(1)(a).
Permission to appeal was refused regarding the exclusion of E&J Estates and the addition of A J Gallagher as respondents.
The Tribunal deemed the inclusion of other parties besides the landlord and management company unnecessary at this stage.
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