[2024] UKUT 37 (LC)

Ground 5 is simply that because the gateway in section 35(2)(f) was passed, the variation applied for should be made. That is, as already noted, a large question; passing the gateway does not mean automatic variation. Insofar as the appellant sought to argue that it does, the ground fails, but of course since grounds 1 and 2 succeed I have to come back to this.

Ground 6 is that for the same reason there should be a variation pursuant to section 35(2)(e). The appellant argued that the condition in section 35(2)(e) was satisfied for the same reason as the condition in section 35(2)(f) was satisfied, namely that the lease fails to make satisfactory provision for:

“(e)

the recovery by one party to the lease from another party to it of expenditure incurred or to be incurred by him, or on his behalf, for the benefit of that other party or of a number of persons who include that other party”.

That does not follow at all. The example in paragraph 30 again demonstrates the problem; where there are 9 lessees, each paying 10% of the whole expenditure, leaving the landlord to pick up the other 10%, and the size and consumption of the flats are equal, the condition in section 35(2)(f) is met but the condition in section 35(2)(e) is not.

In the present case the FTT held that the appellant did not get through the gateway in section 35(2)(e) because it took the view that the service charge provisions were “perfectly workable and satisfactory”. I might not be quite so optimistic, but in the circumstances I do not regard that as an irrational conclusion for the FTT to have reached. It was an evaluative decision, and on the basis of the evidence before it – particularly where the appellant had made no attempt to produce evidence as to what proportion of the expenditure on the Block was in fact for the benefit of the Commercial Unit – there is no reason for the Tribunal to interfere. The appeal fails on this ground.

Ground 7 is that having reached the wrong conclusion on the gateway provisions in section 35(2) the FTT failed to go onto section 38 and consider whether the service charge proportions in the leases should be varied as the landlord sought. In light of what I have said about grounds 1 and 2 this ground succeeds.