Benwell Road RTM Company Ltd v Adam Paul Davies

The Court of Appeal dismissed the RTM Company’s appeal. The court held that the First-tier Tribunal’s (FTT) 2014 determination that an interim service charge was "currently due" did not mean there were enforceable arrears from the date of the 15 May 2014 demand because that demand did not comply with the lease (payment instalment requirement) or the statutory requirements for demands (section 21B of the Landlord and Tenant Act 1985). The Upper Tribunal was therefore correct to conclude there were no relevant arrears before 19 November 2014 and so the RTM Company could not recover its 2014 FTT costs as costs incurred "in connection with the recovery of arrears" under the lease. The court also agreed that, as a matter of statutory scheme, the FTT can determine the reasonableness and payability of service and administration charges under section 27A of the 1985 Act and paragraphs 2 and 5 of Part 1 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, but such determinations do not themselves produce an enforceable court judgment; a compliant demand is required before non-payment consequences or court enforcement arise.

Background and procedure:

• The RTM Company issued County Court proceedings on 11 May 2021 claiming £616.60 in service charge arrears and £3,240 in variable administration charges (including £2,400 alleged as the RTM Company’s costs of earlier FTT proceedings from 2014). The claim was transferred to the FTT on 25 February 2022. The FTT (2022) found for the RTM Company. The Upper Tribunal (Lands Chamber) allowed Mr Davies’s appeal ([2023] UKUT 197 (LC)). The RTM Company appealed to the Court of Appeal.
• The factual background includes an earlier FTT decision in 2014 which found the RTM Company properly constituted and determined an interim demand for 2014/15 of £1,279.02 should be paid by 19 November 2014; the parties dispute whether that meant arrears existed from 15 May 2014.

Nature of the claim / relief sought:

• The RTM Company sought recovery of alleged service charge arrears, a variable administration charge (claimed to include costs of the 2014 FTT), interest and costs.

Issues before the court:

1. Whether the 2014 FTT determination and the 15 May 2014 demand meant that service charge arrears existed from that date, so enabling recovery of the RTM Company’s costs of the 2014 proceedings as costs "in connection with the recovery of arrears" under the lease.
2. Whether the Upper Tribunal was right to exclude £2,400 of administration charges claimed as the 2014 FTT costs and to set aside the 2022 FTT’s costs award.
3. Whether the 2022 FTT’s award of its own costs could properly be recovered as a variable administration charge under paragraph 5 of Part 1 of Schedule 11 to the 2002 Act, and whether a formal demand and statutory summary were required before such a charge became payable.

Court’s reasoning (concise):

• The court agreed with the UT that the 15 May 2014 demand did not comply with the lease’s instalment/payment provisions and did not comply with the statutory demand requirements (section 21B 1985 Act), and that the 2014 FTT did not determine when the sum first fell due. Accordingly, there were no arrears before 19 November 2014 for purposes of invoking the lease provision that authorised recovery of costs in connection with recovery of arrears.
• The court reiterated that the FTT can determine the reasonableness and payability of service and administration charges under section 27A of the 1985 Act and paragraph 5 of Part 1 of Schedule 11 to the 2002 Act, but such determinations are not in themselves enforceable court judgments; enforcement requires court processes and, where relevant, a demand in the prescribed form accompanied by the statutory summary.
• The UT was right to set aside the 2022 FTT’s costs assessment because that assessment proceeded on the basis the RTM Company had succeeded on its full claim when on appeal it had largely failed; the correct approach to legal costs alleged as variable administration charges is to treat them as a reasonableness inquiry under Schedule 11 rather than a CPR summary assessment, and a proper demand was required before the charge became payable.

Result: The Court of Appeal dismissed the RTM Company’s appeal, upholding the UT’s conclusions on limitation, the absence of arrears before 19 November 2014, and the non-payability of the contested administration charges.

The appeal is dismissed. The Court of Appeal upheld the Upper Tribunal’s determinations that the 15 May 2014 demand did not give rise to arrears before 19 November 2014 because it did not comply with the lease payment provisions and the statutory demand requirements, that the RTM Company could not therefore recover the 2014 FTT costs as incurred in connection with recovery of arrears, and that the 2022 FTT’s costs award should not stand because (i) the FTT’s role is to determine reasonableness under the statutory regime rather than to produce an enforceable judgment and (ii) a compliant demand is required before such charges become payable and before court enforcement can follow.

County Court claim issued 11 May 2021 and transferred to the First-tier Tribunal (Property Chamber) on 25 February 2022. FTT decision dated 31 August 2022 in favour of the RTM Company. Upper Tribunal (Lands Chamber) allowed Mr Davies’s appeal ([2023] UKUT 197 (LC)). Appeal to the Court of Appeal determined in this judgment ([2025] EWCA Civ 368). Earlier related FTT determination dated 17 October 2014 (the 2014 FTT) concerned RTM Company constitution and an interim 2014/15 demand.