Assethold Limited v Nelio Patricio Teixeira Franco
[2022] UKUT 285 (LC)
Khalid Qayyum Rana & Anor v Maitland Court Limited
14 May 2024
[2024] UKUT 122 (LC)
Upper Tribunal
A landlord tried to charge leaseholders for legal costs. A lower court partially allowed the charge. The higher court decided the landlord had made big concessions before the hearing which weren't considered fairly. Therefore, the higher court cancelled the landlord's charges, ruling the leaseholders had largely won the case.
Key Facts
- •Appeal against a First-tier Tribunal (FTT) order under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002.
- •Dispute concerned service charges of £5,560.24 (reduced to £1,909 after FTT jurisdiction limitations and concessions).
- •FTT initially found £1,063.97 payable, later amended to £259.74 after accepting appellant's argument.
- •FTT made a paragraph 5A order allowing recovery of no more than half of the respondent's administration charges.
- •Appellant argued that the FTT failed to account for substantial concessions made by the respondent before the hearing.
Legal Principles
In service charge disputes, the FTT has discretion under paragraph 5A and section 20C to prevent landlords from recovering litigation costs as administration charges or service charges, overriding contractual entitlements.
Paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002; Section 20C of the Landlord and Tenant Act 1985
When exercising discretion under paragraph 5A and section 20C, the FTT should consider the matters in issue, the tenant's success, the reasonableness of the landlord's claim, and other relevant factors. A robust, broad-brush approach is appropriate; detailed cost assessment is not required.
Church Commissioners v Mrs Khadia Derdabi [2011] UKUT 380 (LC)
The Upper Tribunal will not interfere with the FTT's discretion unless there's an error of law, the FTT considered irrelevant factors or ignored relevant ones, or the decision is perverse.
Johnsey Estates (1990) Limited v Secretary of State for the Environment [2001] EWCA Civ 535
Even a successful party has no automatic expectation of an order under section 20C (or, by parity of reasoning, paragraph 5A).
Tenants of Langford Court v Doren Limited [2001] 3 WLUK 935
Outcomes
The Upper Tribunal set aside the FTT's paragraph 5A order.
The FTT failed to consider the substantial concessions made by the respondent before the hearing, which significantly altered the context of the appellants' non-payment and rendered the FTT's reasoning flawed.
The Upper Tribunal substituted the FTT's decision with an order extinguishing the appellants' liability to pay the respondent's litigation costs as an administration charge.
This was deemed just and equitable given that the appellants were the more successful party in the FTT proceedings.