[2024] UKUT 431 (LC)

The appellant has permission to appeal on two grounds.

The first is that the legal costs were payable under clause 3(7) of the lease on the basis that the service charges were reserved in the lease as rent, so that proceedings to recover service charges were in fact proceedings to recover rent and were within the scope of the clause.

On perusal of the lease it is clear that that is not the case. On page 3 of the lease, in clause 2, the underlessee covenants to pay “by way of further or additional rent” the appellant’s costs of insuring the building; but the covenant to pay service charges is simply a covenant to pay, and payment is not said to be by way of rent. The appeal therefore fails on that point.

The other ground of appeal is that the FTT was not correct to find that there was insufficient information on which to base a determination of the service charges payable in the 18 months ending in December 2023.

On that point I take the view that the appellant is correct: a breakdown of the £1,070 was provided. It may not have been entirely easy to find, because it was part of a document attached to the invoice for 2023, in which the charges for the 12-month 2023 service charge period were set out side by side with the amounts charged for the preceding 19-month period. True, the appellant had not provided to the FTT a copy of the identical breakdown sent to the tenant with the demand for the £1,070, dated 1 August 2022 (which the appellant has now sent to the Tribunal in the course of the appeal, but which is irrelevant to the appeal because it was not shown to the FTT). But the FTT did have the breakdown. Had there been a hearing the appellant would have been able to point the FTT to the relevant document.

The other difficulty with the FTT’s decision about this period is that the absence of accounts for the period, is not relevant to what the FTT had to decide, which was whether the charges for the 18-month period were reasonable.

The FTT in making its decision insofar as it related to the period from 1 July 2021 to 31 December 2022 failed to take into account a relevant consideration, namely the breakdown of charges, and took into account an irrelevant consideration, the absence of accounts, and is set aside.