[2023] UKUT 207 (LC)

Boswell Court and Hitherwood Court are two adjacent blocks of flats in north London containing a combined total of 157 flats or apartments let on long leases. Each of the leases is made between the landlord, the leaseholder, and a management company which is now under the control of the leaseholders of the two blocks. The leases oblige the management company to procure buildings insurance from an insurance company nominated by the landlord. The leaseholders are required to pay a service charge to the management company including a contribution towards the cost of insurance. The issue in this appeal is whether the First-Tier Tribunal (Property Chamber) (FTT) was right to strike out an application brought by a group of leaseholders under section 27A, Landlord and Tenant Act 1985, for a determination of the amount of the service charge payable by them for that insurance.

The appellants are Mr Douglas, the leaseholder of Flat 30, Boswell Court, and the leaseholders of a further 48 flats in the two blocks.

The first respondent, RMB 102 Ltd (RMB), is the owner of the freehold of the two blocks and the reversion to the leases of the individual flats. The second respondent, Ayre & Johnson Ltd, is RMB’s insurance agent. I was told that both respondents are members of the same group of companies, the E & J Estates Group.

On 2 December 2021 the leaseholders applied to the FTT for a determination of the reasonableness of the service charges for buildings insurance policy in the year 2021-22, and of their liability to pay those charges. They explained in their application that the cost of insurance for their buildings had increased by more than 180% compared to the previous year, whereas the average increase experienced by six immediately neighbouring blocks of similar size was 17%.

The respondents applied to strike out the application and, for reasons explained in a decision of 15 August 2022, the FTT acceded to that request and the application was struck out.

The FTT gave permission to appeal, remarking that the law on the ability of leaseholders to challenge insurance charges was complex and that the issues were potentially of wider significance. It might be thought that those were both good reasons why the application ought not to have been struck out and which would have allowed any complex issues which do arise to be considered on the basis of established facts.

At the hearing of the appeal the leaseholders were represented by Mr Douglas and by Ms Deborah Cole, and the respondents by Mr Allison. I am grateful to them all for their submissions.