Mark Saunders v Shenfield Limited

Case management directions in service-charge proceedings must enable a fair and just determination. A tribunal should consider an issue arising from documents disclosed shortly before the hearing where the issue could not reasonably have been identified earlier and the parties have had a fair opportunity to address it. Conversely, a leaseholder who already possesses sufficient information to formulate a challenge should identify the substance of that challenge within the directed timetable and cannot reserve the position for later. For section 20 purposes, an agreement is a qualifying long-term agreement only where it is made for a term of more than 12 months. An agreement terminable on notice expiring on its first anniversary is not such an agreement.

Shenfield Limited applied to the First-tier Tribunal (Property Chamber) for a determination under section 27A of the Landlord and Tenant Act 1985 of service charges payable by Mark Saunders for 2020 and 2021. The FTT’s standard directions required Mr Saunders to identify disputed expenditure and his reasons before receiving the landlord’s supporting documents.

Mr Saunders appealed in relation to cleaning, security-equipment costs and major refurbishment works. He argued that the FTT had denied him a fair hearing by refusing further disclosure and by declining to consider issues arising from documents disclosed later. The central questions were whether the FTT had acted fairly in managing the proceedings and whether the cleaning contract was a qualifying long-term agreement.

1. Appeal allowed in part. The FTT had acted unfairly in refusing to consider the cleaning-contract issue and the issue concerning repairs to windows in individual flats. Those points had been raised as soon as they could reasonably be identified from the documents disclosed, and the FTT’s formulaic conclusion did not constitute an adequate determination of them.
2. Case management decisions attract a high threshold on appeal. They may be set aside where the tribunal failed to take account of a relevant factor, considered an irrelevant factor, or reached a decision that was plainly wrong. That threshold applies even where the decision substantially affects the proceedings, as explained in English Rose Estates Ltd v Menon [2022] UKUT 347 (LC), referring to Mannion v Grey [2012] EWCA Civ 1667 and Abdulle v Commissioner of Police of the Metropolis [2016] 1 WLR 898.
3. The cleaning contract could not have been challenged specifically before it was disclosed. Its clause permitting termination on notice expiring on the first anniversary meant that it could end after an initial period of 12 months. It was therefore not an agreement for a term of more than 12 months under section 20ZA(2) of the Landlord and Tenant Act 1985, and the section 20 consultation requirements did not apply. The appeal succeeded procedurally, but the cleaning charge of £11,728.43 remained payable.
4. The security-equipment issue had also been raised in time. Four invoices totalling £688.30 related to repairs to windows demised to individual leaseholders and were not recoverable through the service charge. The recoverable sum was therefore reduced to £4,065.
5. The appeal concerning the refurbishment works was dismissed. Mr Saunders had possessed detailed information about the works, had tendered for the contract, and had prepared detailed snagging and valuation schedules. He could have identified the substance of any challenge when directed to file his case but instead reserved his position. The FTT was entitled to refuse late disclosure and an adjournment in relation to those matters.
6. The Tribunal noted that standard directions requiring a leaseholder to identify issues before receiving potentially adverse documents may create a risk of injustice. More bespoke case management or an early procedural hearing might sometimes be appropriate.

• Upper Tribunal (Lands Chamber): appeal from the First-tier Tribunal was allowed on the cleaning and security-equipment issues, with the service-charge determination varied by £688.30; the appeal concerning refurbishment works was dismissed.
• First-tier Tribunal (Property Chamber): determined the service charges payable for 2020 and 2021 on 20 December 2022.