Case No. UKUT-285-(LC)-UTLC-Case-Numbers:-LC-2022-125

26.One of the items in the appellant’s claim in the county court was and administration charge £2,045, being the fees charged to it by Eagerstates Limited for the management of the claim and the fixed costs charged by its solicitors up until the issue of the proceedings in the county court on 20 September 2019 (see paragraph 9 above). The sum was explained in the appellant’s Statement of Case in the FTT as being made up of a number of standard sums for sending notice of proceedings, for preparing the file for solicitors and assisting the solicitors, the solicitors’ own fees for preparing and issuing the claim, as set out in the service charge demand of 13 August 2019. The figures in that demand add up to £2,040, as do the figures in the Statement of Case, and I take it that the additional £5 claimed is an error on the part of the appellant.27.Of this item the FTT said at its paragraph 16:“The tribunal finds the lease makes no provision for the payments of such charges and therefore determines these sums are not payable by the respondent.”28.For the appellant Mr Granby points out that the lease contains a “section 146 clause” in standard form, set out at paragraph 4 above (and to which the FTT referred later in its decision, as we shall see under ground 4) which enables the landlord to recover costs incurred “for the purpose of or incidental to the preparation and service of a notice under Section 146 of the Law of Property Act 1925”.29.Paragraph 2 of the appellant’s particulars of claim in the county court stated “The claimant has brought this claim as they require a determination of the outstanding sums for the purposes of section 81 of the 1996 Housing Act pursuant to an intention to serve a notice under section 146 of the Law of Property Act1925.” A section 146 notice is an essential precursor to forfeiture of the lease for breach of covenant; section 81 of the Housing Act 1996 provides:“(1) A landlord may not, in relation to premises let as a dwelling, exercise a right of re-entry or forfeiture for failure [by a tenant to pay a service charge or administration charge unless(a) it is finally determined by (or on appeal from) [the appropriate tribunal]2 or by a court, or by an arbitral tribunal in proceedings pursuant to a post-dispute arbitration agreement, that the amount of the service charge or administration charge is payable by him, or(b) the tenant has admitted that it is so payable.”30.Therefore a landlord who wants to serve a notice under section 146 of the Law of Property Act 1925 in order to forfeit the lease for non-payment of service charges must first obtain a determination that they are payable. 31.It is well-established that a “section 146 clause” of the kind included in the respondent’s lease will enable the landlord to recover as an administration charge under the lease the costs of county court and FTT proceedings brought as a precursor to forfeiture, being “for the purpose of” the preparation and service of a section 146 notice, provided that he can show that the costs were indeed incurred for that purpose: Barrett v Robinson [2014] UKUT 322 (LC).32.Accordingly the FTT’s explanation of why the charges were not payable was incorrect and is set aside. No challenge has been made to the reasonableness of the sums claimed in respect of the pre-issue legal and administrative costs of the current proceedings. The Tribunal substitutes its own decision that the sum of £2,040 is reasonable and payable.