Primeview Developments Limited v Ahmed and Others [2017] UKUT 57 (LC)

Background

When Primeview Developments Limited consulted its leaseholders regarding works to be carried out to the roof of their block of flats, they asked them to sign a formal agreement that the costs were reasonable.  When one of the flats was sold, the new owners were not happy with the proposed works and made unsuccessful requests for mediation with Primeview.

First Tier Tribunal proceedings

Primeview brought proceedings in the First Tier Tribunal (‘FTT’).  Unusually Primeview were asking the FTT to find that it lacked jurisdiction (under section 27A of the Landlord and Tenant Act 1985) to determine the service charges because the leaseholders had signed a written agreement stating the works and their cost were reasonable. 

The FTT held that it did have jurisdiction because the agreement relied on by Primeview was void since it sought to determine issues within the remit of the FTT (see section 27A(6) of the Landlord and Tenant Act 1985).

Although Primeview succeeded on other issues in the proceedings, the FTT ordered that only some of Primeview’s costs of the proceedings could be recovered as the service charge because they had not succeeded on all their arguments (for example the jurisdiction point).

The leaseholders sought their costs, arguing Primeview was unreasonable in seeking to oust the FTT’s jurisdiction and in refusing to mediate.  The FTT agreed with the leaseholders on the first point but not the second.

Upper Tribunal proceedings

The Upper Tribunal agreed with the FTT that Primeview had been entitled to refuse to mediate: the costs of mediation would have been significant and the prospects of the mediation succeeding were slim.

The Upper Tribunal decided that Primeview had not been unreasonable in seeking to oust the FTT’s jurisdiction. Unusual though it was for Primeview to initiate proceedings in the FTT in order to argue that the FTT had no jurisdiction, Primeview had been entitled to do so in order to resolve the matter once and for all.  Given that the Landlord and Tenant Act 1985 provides for the FTT’s jurisdiction to be ousted by certain agreements (see section 27A), Primeview were entitled to run the argument which they did.

Finally, on the extent to which Primeview were entitled to recover their costs of the proceedings through the service charge, the Upper Tribunal decided that the FTT had been wrong to take an “issues based approach” (i.e. awarding costs as a proportion of the number of issues before the FTT on which Primeview had succeeded).  Although there is nothing wrong in principle with an issues based approach, care must be taken to ensure that it does not lead to an unjust outcome.  Although Primeview had not succeeded on all issues, it had recovered some 95% of the sums which it had set out to recover in the FTT claim.  Accordingly the Upper Tribunal held that Primeview was entitled to far more than the 30% costs allowed by the FTT.

James Sandham of Arden Chambers acted for the appellant landlord.

Arden Chambers is a leading set specialising in property, housing, local government and planning. Arden Chambers has a strong and experienced team who provide a full range of services for freeholders and leaseholders in relation to residential property including enfranchisement, lease extension, right to manage and service charge disputes. Chambers has extensive experience of FTT litigation and advisory work, with members appearing both in the FTT and Upper Tribunal on a regular basis.

Find out more at www.ardenchambers.com