Case No. UKUT-273-(LC)-UTLC-Case-Number:-LC-2022-172

25.I do not agree that the issue of construction of the lease was not part of the appellant’s case before the FTT, although it does not seem to have been clearly articulated. The disparity in the management fee for properties of different tenure on the estate is mentioned several times in the annexe to the appellants’ application to the FTT, and that disparity and the terms of clause 5 are clearly raised in the appellant’s statement of the case in the FTT. Mr Verduyn did not appear for the appellant in the FTT; counsel for the appellant raised the point in her skeleton argument (at her paragraph 40: “it is simply not open to R to charge different sums given the terms of Clause 5.”). How counsel presented her argument before the FTT I do not know, and the FTT did not address the construction point in its decision; but the point was plainly in issue before it and I take the view that the appellants are entitled to succeed on appeal rather than merely to have, as Mr Bates suggests, a narrative judgment in their favour.26.What are the consequences of that successful appeal? Mr Verduyn explained that the appellant would be content to pay a management fee of 15% of the rest of the service charge just as the assured tenants do, and as the FTT decided was a reasonable charge in decisions it made in 2005 and 2007 about the respondent’s nearby Hemlington estate. In effect the appellant is content to use 15% as a proxy for the (d) stream in the Annual Service Charge. But it is not open to me to substitute the Tribunal’s decision to that effect, because that is not how the lease says item (d) is to be calculated, and there is no evidence before me to provide the information on which it would have to be calculated. The parties may be able to agree a proxy figure, of course, but I cannot impose one.27.If agreement cannot be reached then the respondent will have to calculate the Annual Service Charge for each of the leases by adding its direct and indirect management costs to the figures it already has for items (a), (b), (c) and (e) and then dividing the whole amount by one figure, namely the figure already determined for the rest of the Annual Service Charge which appears to be agreed at 1/138 for all four properties; I take it that that is agreed by the parties to be a “proportionate part” in respect of 84 The Meadowings and a “fair proportion” in respect of the two Sheepfoote Hill properties, and it is in any event not open to the respondent to change that denominator now nor to the appellants to challenge it in the FTT. Once it has done so, if the appellants wish to pursue their challenge to payability and/or reasonableness the FTT will be able to determine that challenge.28.Accordingly the matter is remitted to the FTT for it to determine the payability and reasonableness, for the three years in question, of that element of the Annual Service Charge that represents the management fee under clause 5(2)(d). 29.I hope of course that the parties will be able to reach agreement so that a further hearing is not necessary. I direct that if no agreement has been reached within 56 days of the date of this decision the respondent shall disclose to the appellant and to the FTT the amount of the Annual Service Charge for the three years in question together with the information that indicates how the management fee element of that charge has been calculated, so that the FTT can then assess whether it has been calculated correctly if payability is still challenged and can determine whether the management fee element of the Annual Service Charge meets the requirements of section 19(1)(a) and (b) of the 1985 Act. The FTT will then give directions. If that information is not provided to the FTT and the appellant within that period, the appellant may apply to the FTT for directions.Judge Elizabeth Cooke18 October 2022