Steven John Newman v Joanna Lucille Birch-Phaure

A tribunal must determine an application under section 20C fairly. Where it proposes to grant relief on reasons not ventilated at the hearing, it must give the affected landlord a proper opportunity to make representations. A general invitation at the end of a hearing to add anything further does not cure the omission where the landlord could not reasonably anticipate that the tribunal would make a section 20C order, or the reasons on which it would do so.

A failure to afford that opportunity is procedural unfairness. The resulting order must be set aside, without the appellate tribunal needing to determine the merits of the discretionary reasons relied upon.

The appellant freeholder applied to the First-tier Tribunal for determinations concerning service charges and consultation for works at a house divided into flats. The First-tier Tribunal found the charges reasonable and payable.

Two participating leaseholders had also applied for orders under section 20C of the Landlord and Tenant Act 1985. Although those applications were not addressed during the hearing, the First-tier Tribunal made limited orders preventing the landlord from recovering specified proportions of his legal costs through service charges.

The landlord appealed, principally contending that he had received no opportunity to address the section 20C applications or the tribunal’s reasons for granting them. The issue was whether that procedure was fair.

1. Appeal allowed. The First-tier Tribunal’s two orders under section 20C of the Landlord and Tenant Act 1985 were set aside because the procedure adopted was unfair.

2. The section 20C applications were not referred to at the hearing. Once the First-tier Tribunal had reached its substantive service-charge decision, it should have invited the leaseholders to state in writing whether they wished to pursue the applications and, if so, why relief should be granted despite that outcome.

3. Instead, the First-tier Tribunal supplied its own reasons for making the orders without allowing the landlord to comment. He could not realistically have inferred, merely from a general invitation for final observations, that section 20C orders were under consideration or anticipated the reasons eventually adopted. He was therefore denied an opportunity to be heard.

4. That procedural defect required the orders to be set aside. It was unnecessary to decide the detailed merits of the First-tier Tribunal’s reasons. The Upper Tribunal nevertheless observed that the written material disclosed a dispute requiring a hearing and substantive decision, and questioned the evidential basis for several of the First-tier Tribunal’s criticisms of the landlord.

5. Either respondent may renew a section 20C application before the First-tier Tribunal within 28 days, with reasons. Any request to extend that period is for the First-tier Tribunal.

• Upper Tribunal (Lands Chamber): allowed the landlord’s appeal and set aside the First-tier Tribunal’s section 20C orders for procedural unfairness.

• First-tier Tribunal (Property Chamber): determined the service charges reasonable and payable, but made limited section 20C orders restricting the landlord’s recovery of legal costs through service charges.