[2024] UKUT 120 (LC)

The FTT conducted a hearing on 7 June 2023 at which the applicants were represented by Mr Rhodes and the respondent by Mr Morris. I am told that witnesses were cross-examined (Mr Rhodes had made a witness statement, and the applicants also called Mr Calum Watson), but there is no mention of any evidence in the FTT’s decision. The FTT set out the facts, rather more briefly than I have done but in similar terms. One difference was that the FTT said that the hours when the gym was available to the residents was reduced in 2013; at the hearing of the appeal the parties agreed that that was a misunderstanding and that although there was an agreed reduction in 2010 there was no further change in until 2020.

The FTT summarised the applicants’ case as follows:

“21.

The Applicants contend that in the light of the gym lease and the restricted hours during which the tenants are now permitted to use the facilities the allocation of 100 per cent of the gym service charges to the tenants is unfair and unreasonable and Respondent should re-apportion the gym service charge to reflect the current situation ie to allocate a fair proportion of those charges to the gym tenant consistent with that tenant’s use of the gym. Those reallocated charges would have to be borne by the freeholder because the gym lease contains no provisions for the gym tenant to contribute to the service charge.”

Next the FTT found that it had no jurisdiction to make a determination about the charges from 2013 to 2020, because it found that in paying without demur from 2013 to 2020 the applicants had agreed the service charges, referring to Cain v Islington [2015] UKUT 542 (LC) (which I explain below).

As to the charges beyond 2020, and indeed for the earlier years in case it was wrong in concluding that it lacked jurisdiction, the FTT considered the terms of paragraph 10 of Schedule 4 to the lease. It quoted from Woodfall’s Law of Landlord and Tenant paragraph 7.193, which is about whether costs, in respect of which a service charge is demanded, were reasonably incurred. At its paragraph 28 it said:

“28.

In the present case the landlord appears to have had two options from 2013 onwards: to continue to charge the gym expenses to the tenants as before or to bear part of the charges itself to reflect the shared use of the gym between the residents and the gym tenant. The Respondent landlord chose the first option which it was entitled under the terms of the lease to do. That choice, though unpalatable to the residential tenants, cannot therefore be said to be unreasonable. It was not a decision of the type where it could be said that no reasonable landlord in a similar position could ever have made it.”

The FTT went on to say that the applicants had produced no quotations to show that the amounts charged were unreasonable.

The FTT made a finding, which is not appealed, that the consultation process for the major works was carried out correctly.

The FTT found at its paragraph 37 that the litigation costs of the respondent, allocated to the residential service charge, were payable by the residential tenants.

The applicants asked for an order under section 20C of the Landlord and Tenant Act 1985, for their own benefit and also for the benefit of 61 other leaseholders who they said supported their application, to prevent the respondent from recovering the costs of the present litigation from the service charge; the FTT declined to make that order.