[2023] UKUT 208 (LC)

43 Wimpole Street is a mixed-use building with commercial premises on the lower floors and 15 flats on the upper floors. Mr Saunders holds a long lease of Flat 2. Shenfield Ltd is the head leaseholder of the building and is liable under the terms of Mr Saunders’ lease to provide the usual services in return for payment of an annual service charge.

In March 2020 the landlord entered into a contract for the refurbishment of the entrance hall and internal common parts of the building. The work involved redecoration, the replacement of doors to individual flats, the renewal of carpets and tiled finishes, the replacement of the existing lighting installation and the renewal of the fire alarm. The contract sum was £194,000. The work was carried out during the period of restrictions imposed in response to the covid pandemic and practical completion was certified on 22 January 2021.

It is an unusual and not insignificant feature of this case that Mr Saunders runs his own property maintenance company and was invited to tender for the contract. His firm was supplied with a detailed specification of the works, and it submitted a tender, but was not selected.

After practical completion of the contract Mr Saunders provided detailed comments on snagging issues to the contract administrator, including two versions of a schedule comparing the successful tenderer’s price with his own assessment of the quality and value of the work.

Snagging works were undertaken but no final agreement was reached between the landlord and Mr Saunders on the value of the work. On 17 March 2022 the landlord therefore applied to the FTT for a determination of the service charges payable by Mr Saunders for the years 2020 and 2021. The application gave no details of the dispute other than to suggest that the only matter remaining in issue concerned the renewal of the front doors of individual flats. The only document provided in support of the application was a copy of the standard form of lease.

After considering the application the FTT gave directions on 16 May 2022. The procedural judge was able to identify the issues to be determined in only the most general terms, and the directions were in a standard form. The landlord was first directed to produce “copies of all relevant service charge accounts and estimates for the years in dispute together with all demands for payment and details of any payments made.” Mr Saunders was next required to prepare a schedule identifying the items and amounts in dispute, the reasons why each item was disputed, and the amount he proposed to pay for it. He was also directed to provide copies of any alternative quotes or other documents on which he wished to rely together with a statement identifying the relevant service charge provisions in the lease and making any legal submissions in support of his challenge.

The standard directions then required the landlord to complete the schedule, providing its comments on the items the tenant had put in issue and supplying copies of all relevant invoices relating to those matters, together with any other documents or photographs on which the landlord intended to rely. It was also given the opportunity to provide witness statements and legal submissions.

The original timetable then allowed one week for the tenant to file “a brief supplementary reply” in response to the material supplied by the landlord. In this case that period was extended to three weeks when the original directions were revised on 30 August 2022 and the hearing was scheduled to take place on 5 December.

Mr Saunders filed a schedule of the items he disputed together with a statement of case on 29 September. The main point he made about each of the items which still remain contentious was that he needed further information to determine whether the sums claimed were properly chargeable.

On 21 October the landlord responded with its own statement of case and reply to the schedule. The statement of case responded to the suggestion that Mr Saunders had insufficient information to determine whether the costs of the refurbishment contract were recoverable. It pointed out that he had received the original specification, he had made a competitive tender for the contract, and had prepared a detailed snagging list, and suggested that he already had full details of the works.

On 10 November 2022, the day before Mr Saunders was due to file his “brief reply” to the landlord’s case, he asked the FTT to order further specific disclosure in relation to six of the twenty items in the schedule and to adjourn the hearing on 5 December while it was provided. He explained in his application that the only documents relating to the major works which the landlord had provided with the schedule were the contractor’s applications for payment. He explained in some detail why the additional documents were necessary to enable him to ascertain whether the sums claimed were chargeable. For example, a copy of the cleaning contract was requested ascertain whether it was a long-term agreement which would trigger the consultation requirements in section 20, 1985 Act. The documents requested in respect of the common parts refurbishment included confirmation of insurance cover, a copy of the contract administrator’s appointment, contractual certificates including in relation to defects, confirmation that planning permission had been obtained and CDM regulations complied with, and a detailed final account with the contractor setting out material rates and quantities.

The landlord’s surveyor, Mr Maunder Taylor, responded to the application, repeating that Mr Saunders already had a full copy of the specification as well as invoices and certificates and had previously prepared his own schedule of the costs he thought should have been paid.

On 10 November the FTT refused the application for disclosure and for an adjournment. The following rather delphic reasons for refusal were reported to the parties in a letter on 15 November:

“[the procedural judge] considers the directions (as amended) are sufficiently clear for the parties to know and understand what is required from them with sufficient time allowed in which to comply. The parties are reminded that failure to comply with the directions may lead to an adverse outcome for the defaulting party.”

The landlord’s representative provided an electronic hearing bundle on 23 November. That bundle included a copy of the cleaning contract, which Mr Saunders had not previously seen.