Service Charge: Whether an Application for Determination Should Have Been Struck Out Where the Relevant Period Related to an Earlier Application (Connell and another v Beal Developments Ltd and others – 2024)

The Upper Tribunal considers an appeal of a First-tier Tribunal decision which struck out an application for determination of service charges on the grounds that it related to years already considered in an earlier application.

The background

Connell and another v Beal Developments Ltd and others [2024] concerned a mixed-use development containing residential and commercial units in Lincoln. The appellant leaseholders held leases of properties on the development, and the respondent companies were landlords of parts of the estate.

The First-tier Tribunal struck out an application by the leaseholders made in 2020 under s.27A of the Landlord and Tenant Act 1985 for determination of service charges in respect of service charge years 2013-2020. Aspects of the 2020 application had already been brought by another leaseholder in 2018, and the FTT had determined against him. In considering the 2018 application, full investigation had already been undertaken in respect of the stated periods.

The FTT subsequently struck out the remaining aspects of the 2020 application, stating that the determination made in 2018 would be similarly applied to later years which would not be fair or just. The FTT ruled that to determine this application would amount to an appeal of the tribunal’s decision on the 2018 application, and struck out on the basis that the application was frivolous and vexatious. The leaseholders appealed, and the respondent landlords agreed that the FTT should not have struck out the application concerning service charges payable by the leaseholders.

The decision

The Upper Tribunal set aside the FTT’s decision, finding that it had not been entitled to strike out the 2020 application for determination of service charges made by the appellants. The application was remitted for further determination by a different FTT panel.

The UT considered whether the FTT was right to strike out the 2020 application insofar as it related to service charge years already determined under the 2018 application, and in relation to the service charge years which had not previously been determined.

Leaseholders enjoy the right, contained at s.27A of the Landlord and Tenant Act 1985 and protected by article 6 of the European Convention on Human Rights, to determination by the FTT of the service charges demanded, whether or not the FTT had decided an earlier application by a third party, or whether the expenditure listed was the same.

The remaining issues raised in the 2020 application had not been considered in 2018. They related to service charges payable by the appellants, in respect of which the appellants were entitled to supply their own evidence (which may or may not be the same as that considered in 2018), and there was no justification for denying the appellants the opportunity to seek a determination in respect of their own liability.

Advice and action for landlords

This judgment supports the rights of leaseholders to a fair determination of the service charges they are liable to pay, whether or not the tribunal has considered the same expenditure on a previous application by another party.

The right to a fair trial was protected, and this right was not removed by an earlier decision made by the tribunal about service charges payable by a third party, even if the expenditure referred to in both applications was the same.