[2025] UKUT 00018 (LC)

This issue is an issue of law about the FTT’s approach to the valuation it was required to undertake after it had decided that the presumption of an RPI increase had been displaced. It arises because a finding by the FTT that it is unreasonable in the circumstances to apply the presumption is not a complete answer to the question which it is required to determine. That question is: what increase in the pitch fee for each individual pitch would be reasonable at this review date? When the presumption applies it will provide the answer; but when the presumption has been displaced the answer must be arrived at by the FTT undertaking an assessment which takes account of all relevant considerations.

The Tribunal explained what was required in the passage from Wyldecrest vWhitely referred to above. In that case the FTT had been satisfied that there had been a relevant loss of amenity at two parks which made it unreasonable for pitch fees to be increased by RPI. The FTT’s conclusion was upheld by this Tribunal but the decisions were nevertheless set aside and the cases remitted to the original tribunals because they had either adopted a binary approach i.e. that the pitch fee could either increase by RPI or not increase at all, with no room for an intermediate position, or they had given insufficient reasons to explain why they had considered that a nil-increase was appropriate.

As has often be noted, the tribunal’s task is not to determine what fee the pitch would command if it was available under a new agreement, it is to determine by how much it would be reasonable for the fee which the parties originally agreed to be further increased. The Act gives no guidance on how that should be done, other than (it can be inferred) that the new fee should be the one which the tribunal considers to be reasonable for the pitch. In Wyldecrest v Whitely, at [67], I rejected an argument that the reasonable pitch fee might depend on the personal characteristics of the occupier of the pitch. I also suggested that tribunals would be justified in adopting a relatively simple approach and should not feel obliged to differentiate between different pitches unless they were affected to a materially different degree by a relevant loss of amenity. Beyond those quite simple points I was unable to give any more helpful guidance to tribunals than this, at [71]:

“They should determine what in their view is a reasonable increase or a reasonable pitch fee having regard to the owner’s expenditure on improvements, and to the loss of any amenity at the park or deterioration in its condition and having regard to the change in the general level of prices measured by RPI or CPI, and such other factors as they consider relevant. They should use whatever method of assessment they consider will best achieve that objective.”

Although the approach to be adopted may be simple, it is still essential that the FTT explain what it is doing and why. In a case like this, that involves making it clear to the parties why the presumption of an RPI increase has been displaced, as the FTT, but it also involves explaining the next stage of the assessment. The Park owner’s complaint under the final ground of appeal in this case is the same as in Whitely, that the FTT either adopted a binary approach and, having been satisfied that the presumption was displaced, had automatically ordered a nil increase, or had given no explanation of what it had done so that its reasons could be understood.

In this case the FTT gave itself a detailed direction on the law and referred to a number of this Tribunal’s decisions in which the pitch review process was explained. In paragraphs 59 and 60 the FTT explained first that there was no limit to the matters which could potentially be given weight if the presumption was disapplied, and then that “The pitch fee will be the amount the Tribunal determines taking account of any relevant matters”, which “may be the amount sought to be charged by the site owner or may be a different amount”. Those passages suggest that the FTT had well in mind that, if the statutory presumption was disapplied, it was required to make a determination of the appropriate increase having regard to all relevant matters.

But in the critical passages of its decision in which it determined that there should be no increase for Nos.4a and 16 the FTT made no such assessment. In paragraph 86 it said only that the flooding at No. 4a had been “serious enough” to amount to a deterioration in the amenity of the site and that “[a]ccordingly” the amenities of the pitch were “sufficiently prejudiced to justify a freeze of the pitch fee at its previous level”. In relation to No. 16 the flooding “sufficiently prejudiced [the pitch] to justify a freeze of the pitch fee”. In neither of these passages did the FTT identify any other factor it had taken into account in determining the new pitch fee. The FTT had earlier drawn attention to the fact that the Park was in a reasonable condition and that certain improvements had been made. Those were matters which would have supported an increase, at a time of high inflation, but there was no reference to them in the critical passages of the decision and no indication that they had been taken into account in the valuation process. Nor did the FTT suggest that it had considered whether the impact of the deterioration or loss of amenity was equivalent in valuation terms to the RPI increase which it had decided should be foregone.

At a time of very high inflation the financial impact of a nil increase is substantial; its effect will be compounded into the future since each subsequent RPI increase on review will be calculated from a lower base. It is therefore particularly important in a period of high inflation that a decision to entirely cancel out an inflation increase should be properly explained. In the cases of Nos. 4a and 16 I am not satisfied that the FTT did explain its decision adequately and there is real doubt about the process by which it decided a nil increase was appropriate. For No 4a, an RPI increase would have been almost £25 a month on a pitch fee of £216. The increase at No. 69 would have been more than £21 a month on a fee of £191. It was incumbent on the FTT to explain why it considered that increases in the reasonable pitch of that magnitude were cancelled out by the problems of intermittent flooding of the road and inundation of the pitches themselves. One way of looking at the question might be to ask whether, if the challenge had been made in a year when inflation was nominal, would the FTT have considered that a reduction of £25 or £19 in the pitch fee was reasonable to reflect the deterioration in amenity?

The FTT’s decision in relation to No. 69 was more nuanced as it allowed an increase equivalent to 50% of the RPI increase, but once again the decision lacks any real explanation how the FTT arrived at that figure and what other matters, if any, it had taken into account.

I should emphasise that the FTT was entitled to freeze the pitch fee for Nos. 4a and 16 and restrict the increase for No.69 if it considered that the impact the drainage problems had on the pitches reduced their value by 11.4% or 5.7% respectively. But it could only reach that conclusion after taking account of all relevant matters, including the impact of inflation on the value of money and the improvements and changes which had been made to the Park. The Tribunal and the parties cannot be confident that was done in this case and for that reason it is necessary to set aside the FTT’s determination of the increase and remit the applications to it so that it may reconsider its figures and either explain how it arrived at them or substitute different figures which, on consideration of all relevant matters, it decides are reasonable.