Tribunals: how (and when) should they review their own decisions?

Mistakes can and do happen. I’m sure that on an everyday basis most of us come across errors that, with a little bit of time can be rectified, but what happens when that error was made by the First-Tier Tribunal?

This issue, amongst other things was considered in the case of Point West Ground Rent Limited v Bassi and ors [2019] UKUT 137 (LC).

 

Background

This case involved a challenge by leaseholders in respect of service charge items that had been claimed over a number of years by Point West GR Limited (“the Landlord”).

The Landlord had acquired a headlease of Point West building (“the Development”) in July 2014. This acquisition was from administrators of the previous landlord, Point West London Limited, which had gone into administration in June 2012.

 

Service charge challenge

14 leaseholders made an application to the Tribunal under section 27A of the Landlord and Tenant Act 1985 challenging the landlord’s entitlement to recover service charges amounting to £557,557.

These service charges were in fact claimed by the liquidated landlord and were believed to incorporate charges incurred by the liquidated landlord for services carried out while the liquidated landlord was in administration.

The leaseholders disputed these charges that had been paid out of the service charge account by the landlord and the leaseholders argued that these costs were not recoverable through the service charge as they were costs incurred by the liquidated landlord while it was in administration. The leaseholders argued that the invoices amounted to costs of the administration rather than true service charge costs.

Without going into too much detail in respect of the charges that were contested, overall the FTT determined that the contested management fees, the administrator’s fees and management costs were all reasonable and recoverable from the leaseholders.

 

The appeal

In September 2016 the leaseholders applied for permission to appeal the decision of the FTT. The only ground for appeal was in respect of the FTT’s approach to the administrator’s fees. The appeal argued that the FTT was incorrect in allowing the costs of the administration of the liquidated landlord to be recovered through the service charge and that the administration fees were over and above what would be considered ordinary management fees. It was argued that the FTT’s determination allowed the recovery of a management fee for the normal staff employed in respect of the management of the Development together with additional charges for the administrators. This, it was argued, was not a reasonable charge for management.

The FTT had found that 50% of the administrator’s fees were recoverable but, it was cited, that there was no evidence for this and as a result all of the disputed invoices should have been unrecoverable.

The FTT found that one of the grounds for appeal was likely to be successful and suggested that it would review the part of it’s decision relating to the administrator’s fee and its relationship with the management fees.

The FTT reviewed its decision and on 23 January 2018 issued a new decision which favoured the leaseholders position and found that they were not liable to pay at least part of the disputed service charges. Unfortunately the FTT failed to set out clearly how much, of its original decision should remain the same and how much had been treated as effectively being set aside.

On this basis both the landlord and the leaseholders sought permission to appeal to the Upper Tribunal to appeal the decision made by the FTT in 2018. Both applications were granted.

The landlord forwarded arguments that the FTT had gone beyond its jurisdiction in respect of the original decision by having a rehearing into a new factual question rather than reviewing the point of law raised in the original application for permission to appeal and failing to explain sufficiently which parts of the 2016 decision were still applicable.

The leaseholders appeal was to uphold the decision made by the FTT in 2018.

On appeal, the UT disagreed with how the FTT had gone on to determine that, on review of its original decision, none of the challenge costs were payable. The UT did however confirm that the FTT was entitled to review its original decision in the manner that it had done.

As a further issue in this matter the Upper Tribunal also determined whether the FTT had been correct in its finding that nothing was payable by the leaseholders because the Landlord had not been under an obligation to pay the liquidated landlord.

The Upper Tribunal determined that the FTT was wrong in this finding the only basis for the FTT’s decision in 2018 was that there had been no evidence put forward of a contractual obligation by the Landlord to pay the invoices. The FTT had already set aside its 2016 decision (in respect of the administrator’s fees) and this decision to set aside was therefore not subject to an appeal. The FTT could not therefore reinstate its reasoning in 2016.

Finally, the Upper Tribunal was asked to consider whether the sums demanded by the Landlord had been demanded within the scope of section 20B of the Landlord and Tenant Act 1985. The Upper Tribunal made it clear that the time for in respect of the 18-month rule ran from the date that the services had been provided therefore, the majority of the costs had not been demanded within 18 months of being incurred and consequently were not recoverable.

 

Commentary

This is a useful case in relation to the complex procedures at the Tribunal and made it clear that the Tribunal is entitled to review it’s own decisions but when doing so should make it clear what elements of its decisions it is reviewing and should stick strictly to this narrow parameter.

In terms of the 18 month rule it confirmed the pitfalls of not demanding incurred costs in sufficient time thus making them unrecoverable.

 

 

Liz Rowen

With over 10 years specialist property management litigation experience, Liz has accrued a wealth of knowledge and experience in all things property management.

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