[2023] UKUT 108 (LC)

Bringing and conducting proceedings to recover charges set without any reasonable basis, and prematurely

The first point is that the application for a determination of the reasonableness and payability of the service charges was not based on any realistic assessment of the likely charges. In effect the appellants argued, and Mr Verduyn made the point in a number of different ways at the hearing, that the charges were so unreasonable as to bring the respondents into the realm of rule 13(1)(b) costs.

The FTT disagreed; what it was saying in paragraphs 67-8 was that this was in essence a straightforward application by the management company for the determination of service charges which were bound to be contentious, and that that did not amount to unreasonable behaviour on the part of GPIMCL or its director Mr Gubbay. The FTT was not swayed by the argument that the application was brought too soon, for the same reasons. And I take the view that those were conclusions to which the FTT was entitled to come. It is worth bearing in mind that there has as yet been no adjudication of the claim that the long residential leases are voidable on the grounds of fraud. If that claim fails, the lessees will remain liable to pay service charges, the holiday park will still need maintenance, and GPIMCL will remain responsible for that maintenance. If one views this as a fraudulent scheme as the lessees do then of course the bringing and conducting of proceedings relating to service charges must appear outrageous, but the FTT carefully and correctly put all that out of its mind when considering the service charge proceedings. And with that background ignored this is, as the FTT put it, “a classic situation where a management company may well apply to the Tribunal to seek clarity” (FTT paragraph 67).