[2024] UKUT 400 (LC)

The appellants’ point is simple. First, the contract with Y & Y did not include work done in connection with a section 20 consultation. Second, the FTT had already decided what was a reasonable cost for Y & Y’s management on the terms of that contract, i.e. without including work on a section 20 consultation. Therefore it was illogical for the FTT then to decide that that price was also a reasonable charge for work that was not within the scope of that contract; put another way, it was inconsistent for the FTT to approve a management charge as reasonable in amount and then say that that charge should have included further work by the agent, at no extra cost, that was not within the terms of the agreement.

The respondents’ argument focuses on the poor quality of the section 20 consultation and of the work done; they said that the building remains insecure.

In my judgment the appellants are right as a matter of logic. There is some doubt as to whether the FTT was right to say that the annual fee was “at the top end”; the appellants say that that is not what Mr Gurvits said, although Mr Granby acknowledged that it is not open to them to appeal that finding of fact. But that “top end” fee was in any event reduced by 50%, to produce what the FTT regarded as a reasonable annual charge for the regular work done by Y & Y. That must have been intended as a charge for the work done in return for the annual fee according to the terms of the contract. To then say that further work should have been done at no extra charge is inconsistent, because that reasonable charge for the regular management should not have included any slack, so to speak, for additional work that was not within the terms of the contract.

Accordingly I take the view that the FTT’s conclusion was illogical and has to be set aside.

The respondents’ share of that management charge was £16, and it is not proportionate to remit the matter to the FTT for it to be decided afresh. The FTT made clear the very dim view it took of Y & Y’s management performance. I substitute the Tribunal’s decision – taken on an extremely broad brush pragmatic basis – that the charge for the section 20 work was reasonable at half the level charged, namely 7.5% of the contract price plus VAT, and that the respondents’ share should be adjusted accordingly.