[2024] UKUT 180 (LC)

After its consideration of the validity of the pitch fee review form and notice the FTT went on to consider whether it was reasonable for the pitch fee to be changed, in case it was wrong in its conclusion about the notice and form.

It went through the concerns raised by the respondents, all but one of which it rejected including, as we have seen, the argument that the pitch fee was raised for spurious reasons and should be reduced (paragraph 31(b) above). What it did accept was the respondents’ argument that the pitch fee was a payment “just for the concrete slab” without any services, because they were paid for separately under the service charge provisions of the agreements. The FTT reasoned that there was no need for an increase because the pitch fee did not represent any cost to the owner; the services it provided were paid for separately, and since the appellant’s lease was granted for no premium and at an annual rent of £150 it had no capita costs associated with the site. It said:

Whilst provision for a separate service charge is perhaps unusual in an agreement to which the 1983 Act applies, it is not unknown and certainly not prohibited by the statute, and indeed the FTT did not suggest that it was; nor did the FTT suggest that the presence of a service charge was by itself a weighty factor that could displace the presumption of an RPI increase. Instead it appears to have made an evaluation of the advantages and disadvantages conferred by these specific agreements on the parties. But it did not explain that evaluation. No reference was made to the amounts being charged by way of service charge. In saying “all the costs normally associated with the pitch fee have been stripped out by the Appellant and recovered by means of additional charges and a service charge” the FTT appears to have made an assessment that the respondents were not getting enough in return for their pitch fee. But there is no analysis to explain that. One is left with the impression that the FTT felt that the pitch fee was too high, did not think it was able to go into the reasons the respondents put forward as to why it was too high, and did what it thought was the best it could by denying the appellant an increase.

In my judgment the FTT did not properly explain its finding that it was unreasonable for the pitch fee to be changed, and that finding is set aside.

As I discuss below, since the date of the FTT decision now appealed, a different panel of the FTT in proceedings involving the appellant, most of the respondents, and several other companies has decided that the appellant is not entitled to receive the service charge; so had the FTT’s decision on this point been upheld the situation would have been quite complex, but as the appeal succeeds on this point that difficulty does not arise. But the later FTT decision presents further problems which I discuss below.