[2025] UKUT 298 (LC)

We turn now to Ground 5 where permission to appeal was refused by the FTT and this Tribunal directed that permission should be decided as part of the substantive hearing and if granted, the Ground considered and decided.

This ground concerns the term “qualifying lease” as defined in section 119 of the BSA and a presumption found in paragraph 13 of Schedule 8. As we have seen section 119(2) provides that:

“(2)

A lease is a qualifying lease if:

(a)

it is a long lease of a single dwelling in a relevant building,

(b)

the tenant under the lease is liable to pay a service charge, 

(c)

the lease was granted before 14 February 2022, and

(d)

at the beginning of 14 February 2022 … —

(i)

the dwelling was a relevant tenant’s only or principal home,

(ii)

a relevant tenant did not own any other dwelling in the United Kingdom, or

(iii)

a relevant tenant owned no more than two dwellings in the United Kingdom apart from their interest under the lease.’”

So far as is relevant, paragraph 13 of Schedule 8 provides:

“13 (1) This paragraph applies in relation to a lease that meets the conditions in paragraphs (a) to (c) of section 119(2)

(2)

The lease is to be treated for the purposes of this Schedule as a qualifying lease unless –

(a)

the landlord under the lease has taken all reasonable steps (and any prescribed steps) to obtain a qualifying lease certificate from a tenant under the lease, and

(b)

no such certificate has been provided to the landlord.

(3)

In this paragraph “qualifying lease certificate” means a certificate, complying with any prescribed requirements, that the condition in section 119(2)(d) was met in relation to the lease at the qualifying time.”

In the FTT the issue of whether the paragraph 13 presumption applied to a number of leaseholders fell for consideration. The FTT found that:

“(3)(b) The presumption in paragraph 13(2) of schedule 8 applies to flat numbers 5, 15, 17, 18, 19, 22, 28, 29, 31, 33, 34 and 35 (‘those flats’) that they are held under qualifying leases”

The appellant contends that the FTT was wrong to find and/or conclude that the effect of the presumption is that no service charge or reserve fund is recoverable from those lessees in respect of the Proposed Scheme of works and associated costs under the qualifying long term agreement (under section 20 of the 1985 Act).

The basis of the contention is not that the FTT was wrong or had no jurisdiction to determine which of the respondents were, as at the date of its determination, presumed to hold a “qualifying lease” pending the landlord obtaining any qualifying lease certificate which rebutted the presumption. The point taken is that it is said they appeared to have made an unqualified finding of fact as to who holds a qualifying lease and thus, from whom services charges would (and would not) be recoverable.

The question of whether any finding on the presumption was final for all purposes was not raised by the appellants or the respondents before the FTT. However on receipt of the decision, Almacantar sought clarification of the import of the decision and asked the FTT to review its decision which it declined to do stating:

“15.

Paragraph 4 of the ‘Summary of Reasons’ [for appeal] is the first time this argument was properly put before the Tribunal (it should be noted that the first time this argument was raised was in a letter purporting to seek clerical corrections to the Tribunal’s determination dated 26 March 2024). The Applicants did not make this argument in their pleadings, at the hearing, or by their Skeleton Argument.

16.

In light of that, in order to review its decision, the Tribunal would need to reopen submissions from all sides. We do not consider it proportionate or fair to do so.

17.

Contrary to paragraph 4(3) of the Applicants’ reasons, the relevant question is not when (or indeed whether) the Respondents provided a list of their asserted qualifying status. That complaint places the burden on the wrong party. As paragraph 13(2) makes amply clear, it is for the Landlord to take positive steps, failing which the presumption applies.

18.

The requirement for the Applicants to take all reasonable steps to obtain a qualifying lease certificate in order to rebut the presumption was raised by the Tribunal itself both at the Pre-Trial Review in November 2023, and the emergency CMH a week before the hearing.

19.

It cannot be a correct proposition of law that a landlord who chooses to fail to engage with the positive steps required of him to rebut a presumption, in a case in which the question is clearly in issue, thereby deprives the Tribunal of the ability to make a finding that the presumption applies to particular qualifying leases. What otherwise is the point of a presumption?

……..

21.

The opportunity to rebut the presumption is and always was the Applicants’ burden, of which it ought to have been aware and actively taking steps from the date that the paragraph 8 argument was notified by the Respondents’ statement of case, i.e. 28 April 2023. Having taken no steps, the presumption applies. That is the effect of the legislation.

22.

That is not to say that in the future, the question whether or not one of the flats holds a qualifying lease could change, whether by a change of use or portfolio. The Applicants go too far when they interpret our finding as a ‘finding forever’; our finding is a finding ‘for now’. We have made it clear in paragraph 193 of the Decision that our finding is on the basis of no steps having been taken to rebut the presumption. It remains the Applicants’ burden to rebut the presumption if, at a later

date, it asserts a change in circumstances.”

At the substantive hearing of this appeal we gave permission to Almacantar to pursue Ground 5. The reason that we did so was that although the meaning of the FTT’s decision was tolerably clear, we were concerned by the FTT’s observation in paragraph 22 of the refusal of the permission to appeal to the effect that the question whether or not one of the flats is subject to a qualifying lease “could change, whether by a change or use or portfolio.” That statement cannot be correct as the status of “qualifying lease” is fixed as at 14^th February 2022. Any change following that date would be immaterial. That concern was sufficient to persuade us that there was a reasonable prospect of the Ground being successful.

However, having heard further argument made by Ms Holmes on behalf of Almacantar we decided that the Ground of appeal should not succeed.

Ms Holmes contended that where the FTT went wrong was to seemingly make an unqualified determination that particular leaseholders hold a “qualifying lease”. In oral submissions she went further and said that the FTT must have gone beyond the paragraph 13 presumption and made findings of fact about the lease status.

Although Ms Holmes said that the appellants merely seek clarification that such a determination only applies unless or until the presumption is rebutted, her difficulty is that the point was not argued either way at first instance. She said that the finding had already caused difficulties in enforcement proceedings.

The main argument on behalf of the respondents was led by Mr Amin. He contended that Ground 5 ought to be refused. He said that the respondent leaseholders were entitled to know where they stood in the proceedings and that Almacantar had avoided the question of whether a lease was a qualifying lease (other than under the presumption) throughout the proceedings. He contended they should be able to rely on the FTT’s finding as the final word.

It is certainly the case that no reasonable steps had been taken to obtain a certificate and in questioning from the Tribunal Ms Holmes seemed unable to provide an answer to the question whether Almacantar was seeking to avoid a FTT determination on the issue. However, the fact remains that no evidence or argument was led on the issue before the FTT.

Mr Amin referred us to the case of Rhine Shipping DMCC v Vitol SA [2024] EWCA 580, in support of the proposition that we should not allow the point to be taken. In particular he said that had the point been raised prior to trial, the respondents would have conducted their case differently and would have provided witness and documentary evidence and also that the FTT would have made findings of fact which it did not need to make given the deeming effect of paragraph 13. He submitted that this Tribunal should endorse the FTT’s finding.

In our view it would be inappropriate for us to decide whether or not the finding of the FTT is binding or whether it may be rebutted. The issue was not raised and was not decided. We are satisfied that the FTT did not make any determination on evidence, it simply applied the presumption.

Ground 5 is dismissed on the basis that it is a new point which we will not admit on this appeal. Although we were initially swayed by the wording of the FTT’s refusal of permission to appeal, that does not form part of its decision and is not under appeal. It also does not influence our determination.

Accordingly Ground 5 is dismissed.