Termhouse (Clarendon Court) Management Limited v Athir Al-Balhaa

A determination under section 27A of the Landlord and Tenant Act 1985 decides what may properly be charged as a service charge. In that context, payable does not mean presently due and outstanding.

A purely declaratory decision of the First-tier Tribunal cannot be enforced under section 176C of the Commonhold and Leasehold Reform Act 2002. This remains so even if the tribunal states what a tenant owes. Such a decision neither orders payment nor requires any other act or omission. A landlord seeking recovery must bring County Court proceedings, in which the tribunal’s determination will bind the parties.

The appellant leaseholder applied to the First-tier Tribunal under section 27A of the Landlord and Tenant Act 1985 concerning service charges for 2015–2017. The tribunal disallowed most of the landlord’s legal costs but otherwise made no disallowance. It did not calculate any balance outstanding from the tenant or order him to pay a sum.

The management company nevertheless obtained a County Court order permitting enforcement of £9,316.04. A District Judge refused to set aside that order, and Her Honour Judge Baucher dismissed the tenant’s appeal. The tenant then appealed to the Court of Appeal. The central issue was whether the tribunal’s section 27A determination could be enforced under section 176C of the Commonhold and Leasehold Reform Act 2002 or section 27 of the Tribunals, Courts and Enforcement Act 2007.

1. Appeal allowed. The First-tier Tribunal’s decision was declaratory and could not be enforced through either section 176C of the Commonhold and Leasehold Reform Act 2002 or section 27 of the Tribunals, Courts and Enforcement Act 2007.

2. Section 176C permits enforcement of qualifying tribunal decisions in the same way as County Court orders. A merely declaratory County Court order is incapable of enforcement. It follows that a tribunal decision which is no more than declaratory is likewise outside section 176C.

3. Section 27A of the Landlord and Tenant Act 1985 concerns whether a service charge may properly be charged, not whether it remains due from a tenant. Section 27A(2), which applies whether or not payment has been made, prevents payable from meaning due and outstanding. Section 27A(4), and the reasonableness cap in section 19, support that construction. Payable has the same meaning in section 81 of the Housing Act 1996; a tenant may still contest whether anything is outstanding in forfeiture proceedings.

4. Even assuming that the tribunal can state what a tenant actually owes, such a statement remains declaratory. It does not order payment, set a time for payment, or direct any other conduct. The appropriate course for a landlord requiring recovery is to commence fresh County Court proceedings, where the tribunal’s determination is binding between the parties.

5. Here, the tribunal only disallowed specified legal costs and made no other disallowance. It did not calculate the tenant’s outstanding liability, and that figure could not be derived from its decision alone. The enforcement order was therefore impermissible. Lord Justice Nugee and Mr Justice Francis agreed with Lord Justice Newey.

• Court of Appeal (Civil Division): allowed the tenant’s appeal and held that the First-tier Tribunal determination was not enforceable: [2021] EWCA Civ 1881.

• County Court at Central London: Her Honour Judge Baucher dismissed the tenant’s appeal against the refusal to set aside the enforcement order.

• County Court at Willesden: a proper officer permitted enforcement of the First-tier Tribunal decision; District Judge Kanwar later dismissed the tenant’s application to set that order aside.

• First-tier Tribunal (Property Chamber): determined the disputed service charges, disallowing most of the claimed legal costs but making no payment order.