In this case review, the team at specialist property solicitors JB Leitch, look at a recent Upper Tribunal case which asked that in determining an application as to whether service charge amounts claimed were reasonable, whether the First-tier Tribunal gave sufficient information in its judgment such that service charges were payable.
The background
In The Garden Quarter (Caversfield) Management Company Ltd v Ortet [2025], the leaseholder held a 175-year lease of a flat, granted in 2012. The building contained 4 flats in total, all held on long leases.
The leaseholder’s lease contained standard provisions for the payment of service charge. Works had been undertaken to the building, including paintwork to the leaseholder’s flat, the costs of which totalled £3,392.16. The paintwork undertaken at the leaseholder’s flat was thought to have been completed to a poor standard, with missed paintwork, putty and generally poor application. The leaseholder had expressed dissatisfaction with the work after it had been completed, in summer 2023. The service charges had been demanded in March 2023, before the work had been carried out.
The First-tier Tribunal found that only £1,000 of the demanded amount should be payable by the leaseholder owing to the poor quality of the works. The management company appealed this decision, stating that the FTT had not sufficiently explained its findings or rationale in its decision and that it was therefore unable to determine the nature or extent of works charged for.
The management company was unable to determine from the judgment how the FTT had calculated its sum of £1,000.
The decision
The Upper Tribunal allowed the appeal, setting aside the FTT’s decision as a result of its insufficient explanation in its judgment.
The UT considered a number of issues:
- Whether the FTT had sufficiently explained its decision relating to service charges;
- Whether the date the service charge was demanded impacted the payability of service charge by the leaseholder; and
- Whether the management company could claim its costs associated with the appeal as a service charge payable by leaseholders.
The FTT is required to clearly explain its decisions when determining payability and quantity of service charges. The UT found that the FTT had inadequately explained its decision, failing to address issues including the timing of the service charge demand and the issues raised by the leaseholder regarding the quality of work, and set aside the decision. However, the management company was unable to claim its costs of the appeal through the service charge. The case was remitted back to the FTT for a further decision.
The Upper Tribunal noted the pressures that courts and tribunals are under in terms of time, giving some guidance as to key points the FTT should include in a decision. Nevertheless, it is critical that clear and thorough reasoning is given by courts and tribunals in their decisions.
This decision is reassuring for management companies and landlords. Where courts and tribunals make a finding that service charges are payable only in part, or not at all, the parties are entitled to clear explanations and thorough rationale as to why and how sums have been calculated.
