[2023] UKUT 231 (LC)

The respondent is the freeholder of 2-4 Thurlow Road; it is a Victorian building, originally two semi-detached houses, now containing nine flats. The appellant was granted a long lease of his flat in 2006; he and the respondent are the original parties to the lease. The lease requires the freeholder to maintain the property and the lessee to pay a service charge; the payment mechanism is a little unusual and there will be more to say about it shortly.

The payment of service charges is regulated by the provisions of the Landlord and Tenant Act 1985, which state that costs can be recouped as service charges only insofar as they were reasonably incurred (section 19), and confers upon the FTT jurisdiction to decide whether service charges are payable (section 27A).

Great difficulties have arisen between the parties about work done to the driveway of the property and the retaining wall which supports it alongside a steep bank.

The work on the driveway and retaining wall was on a scale that made it “qualifying works” as defined in section 20 of the Landlord and Tenant Act 1985, so that the respondent was obliged to follow the consultation requirements provided for by that section. In 2013 the respondent applied to the FTT for a dispensation from those requirements; the FTT ordered that it was to follow the procedure but that the time periods for some of the stages should be truncated.

In 2016 in a second set of proceedings the FTT had to decide the reasonableness of service charges imposed for the years 2006 to 2015, including those demanded in respect of the work on the drive and the retaining wall. A number of leaseholders including Mr Lacy argued that the level of costs for that work was unreasonable and would have been lower if the respondent had taken action sooner; the FTT gave its decision in March 2016, and that challenge failed.

The present proceedings were commenced by Mr Lacy in March 2021; he sought a determination under section 27A of the 1985 Act in respect of service charges for 2006/7 to 2017/18 inclusive, despite the fact that a number of those years had been the subject of the 2016 proceedings. The FTT gave directions limiting the application to two periods; first. the period from March 2015 to March 2018, and second the period from June 2014 ending on 24 March 2015 in respect of matters not included in the 2016 proceedings.

At paragraph 28 of the decision now appealed the FTT summarised the issues before it; I reproduce the list here, in the order in which the FTT decided the issues:

The appellant has permission to appeal the decisions made by the FTT on points 1 to 5, and there is a limited permission in respect of point 6. I shall take each in turn, explaining the decision, the grounds of appeal, the arguments and the outcome of the appeal.

It is worth pointing out at this stage that the Tribunal was not provided with service charge demands, by either party. Instead, the service charge accounts were produced. They record debits and credits entered by the respondent and in effect indicate what the respondent thinks the appellant owes by way of service charge and what he has paid. Obviously the fact that the respondent has recorded a debit, representing a sum owed to it by the appellant, does not mean that it has been the subject of a service charge demand, let alone that that demand was made in proper form. And it is impossible to discern from the service charge account what were the costs in respect of which the charge was made. The FTT did see service charge demands and made decisions about their content and their compliance with statutory requirements, but none of those decisions was in issue in the appeal.