The Meaning of Contractual Reasonableness: Issues to be Decided by the Court of Appeal
In respect of the Upper Tribunal’s decision following the leaseholders’ appeal earlier in 2024, permission has now been granted for the landlord to appeal to the Court of Appeal which carries interest industry-wide.
The Court of Appeal will be asked to consider important issues of principle, including (amongst others):
- The meaning of clauses requiring landlords to act reasonably when determining service charges and the approach of the First-tier Tribunal in reviewing the resultant charges;
- Whether a landlord’s decision in this context must be made in a way that is different from a decision to grant consent to assignment or change of use;
- The Upper Tribunal’s decision in Braganza v The Riverside Group Ltd and the role of the First-tier Tribunal following Aviva Investors Ground Rent GP Ltd v Williams; and
- The apparent divergence in approach in recent decisions of the Upper Tribunal.
Given that the approach of the Upper Tribunal appears to differ in recent decisions, permission has been granted on the basis that the Court of Appeal be given opportunity to address this.
It is anticipated that the Court of Appeal’s decision will have widespread implications for landlords and will set an important precedent as regards contractual reasonableness. The decision should also clarify the scope of the First-tier Tribunal’s jurisdictions, currently potentially widened as a result of the Upper Tribunal’s decision.
We will report further following the outcome of the Court of Appeal proceedings.
The Court of Appeal’s decision will have widespread implications for landlords and will set an important precedent with regards to contractual reasonableness.
