[2025] UKUT 120 (LC)

Both parties had instructed counsel for the hearing before the FTT, but the appellant’s counsel did not attend (apparently due to transport difficulties). The FTT’s decision to proceed in his absence may have contributed to the confusion which followed.

The FTT issued its decision on 19 January 2024, but on 6 June 2024 it issued a revised version in response to the appellant’s request for permission to appeal. It said that it had reviewed its decision and issued an amended version correcting accidental errors and omissions. This Tribunal subsequently granted permission to appeal the reviewed decision of 6 June.

The FTT identified four issues. The first was whether the appellant was entitled to retain the year end surplus in a reserve fund or whether it had to be credited back to the respondent. It decided that the surpluses for each year should be credited back to the service charge account. It then quantified what it understood to be surpluses for each of the years in dispute and directed an adjustment in the respondent’s favour, as follows:

“The following amounts based on the amounts in the Income and Expenditure Accounts should be credited to the service charge account for Palace Court and the appropriate percentage share deducted from the applicant’s outstanding account:

2019: £29,502 Applicant’s share £1,799.62

2020: £8,744 Applicant’s share £533.38

2021: £10,559 Applicant’s share £644.10

2022: £17,125 Applicant’s share £1,044.62”

The fourth issue identified by the FTT was whether the appellant had incurred the sums shown in its annual accounts for repairs and maintenance and for electricity. It recorded in the decision that the dispute regarding charges for electricity was agreed during the lunch break. That left only the charges for repairs and maintenance. The respondent’s counsel was recorded by the FTT as having confirmed that only external repairs and maintenance were challenged. Counsel proposed that the FTT should simply add up the invoices which had been disclosed and then compare the result with the expenditure recorded in the annual accounts. The FTT then recited that calculation as follows:

“37.

2019: The invoices total £964. The accounts recorded £1897 therefore the service charge account should be reduced by £933 and the applicant’s contribution by £60.55.

38.

2020: The invoices total £3027.66. The accounts recorded £6416 therefore the service charge account should be reduced by £3,388.34 and the applicant’s contribution by £220.24.

39.

2021: The invoices total £7790.53. The accounts recorded £10,085.63 therefore the service charge account should be reduced by £2,295.10 and the applicant’s contribution by £149.18.

40.

2022: No invoices had been disclosed for 2022. It is assumed that some maintenance has been carried out therefore the applicant proposes that a 50% reduction be made in the expenditure in the accounts of £4,500 based on previous year’s amendments. This would reduce the applicant’s contribution by £137.25.”

After mentioning some points made by the parties the FTT continued:

“43.

After lunch the repairs and maintenance issues were agreed between the parties. £472 was agreed on the balance of probabilities to be a not unreasonable contribution for the repairs and maintenance for 2022.

44.

The Tribunal has no jurisdiction following the agreement between the parties.”

Although the FTT recorded what had been agreed for 2022 (which I interpret as meaning that £472 was payable by the respondent as her contribution rather than that £472 had been expended by the appellant) it did not say what had been agreed for the earlier years. When it was later asked to clarify what it meant it declined, repeating that, after the parties had reached agreement, it no longer had jurisdiction. It then added: “The figures provided were for the benefit of the parties and were not disputed at the hearing.” That might be taken to imply that the figures at [37]-[39] recorded what the FTT understood to have been agreed for the years 2019 to 2021.

Finally, the FTT considered that it was just and equitable in the circumstances for an order to be made under section 20C, 1985 Act, so that the appellant “may not pass any of its costs incurred in connection with the proceedings before the tribunal through the service charge.” When it was asked for permission to appeal the FTT clarified that the order was intended to benefit the respondent only and did not prevent the appellant from recovering the costs of the proceedings through the service charges payable by other leaseholders.