Priyanj Shah v Assethold Limited

A tenant challenging service charges under sections 19 and 27A of the Landlord and Tenant Act 1985 must first raise a prima facie case indicating that the cost was not reasonably incurred. The tenant need not prove the correct alternative cost, but must identify a reason or evidence requiring examination.

A tribunal must engage with material arguments and relevant earlier decisions, even where those decisions are not binding. Where a strong prima facie case is unanswered, remittal may be disproportionate. The Upper Tribunal may instead substitute a reasonable figure supported by the evidence.

The appeal concerned three buildings-insurance service charges payable by the leaseholder of Flat 2 at Chandos Court. The First-tier Tribunal had allowed the charges in full but had not addressed the tenant’s evidence of substantial increases, an alternative quotation, the extent of the insurance cover, or an earlier First-tier Tribunal decision concerning the same insurance costs for Flat 7.

The central issues were whether the tenant had raised a sufficient prima facie case under sections 19 and 27A of the Landlord and Tenant Act 1985, whether the First-tier Tribunal had adequately considered the arguments and earlier decision, and whether the matter should be remitted or determined by substitution.

1. Appeal allowed. The First-tier Tribunal’s decision was set aside in relation to the three insurance charges.
2. Under section 19 of the Landlord and Tenant Act 1985, a cost is recoverable through a service charge only to the extent that it was reasonably incurred. A tenant challenging reasonableness must raise a prima facie case by producing a reason or evidence indicating that the cost was unreasonable. The tenant cannot merely require the landlord to prove reasonableness. A cheaper quotation is one possible form of evidence, but relevant circumstances may also suffice.
3. The First-tier Tribunal failed to engage with the tenant’s material points, including the increases above inflation, the alternative quotation, the extent of the insurance cover, and the earlier decision concerning Flat 7. Its brief conclusion that the tenant had provided no persuasive evidence did not adequately address those matters.
4. The earlier Flat 7 decision, recorded at LON/ooAQ/LSC/2022/0290, was not binding because it involved a different tenant. It could not create an issue estoppel between the parties. Nevertheless, it was plainly relevant because it concerned the same property and insurance cost. Fairness and common sense required the First-tier Tribunal to explain any disagreement with it rather than ignore it.
5. Remittal was neither useful nor proportionate. The tenant had raised a strong prima facie case based on the disproportionate increases and the substantially lower quotation, while the landlord had not properly answered the points. Taking a pragmatic approach and having regard to the earlier decision, the Upper Tribunal substituted a reasonable cost of £2,705 for each year. Flat 2’s share was therefore £259.38 for 2019/20, 2022/23 and 2023/24.
6. The application concerning reimbursement of First-tier Tribunal and Upper Tribunal fees was left for determination after the respondent had been given an opportunity to respond.

• Upper Tribunal (Lands Chamber): On 5 June 2025, the appeal was allowed in relation to three insurance charges. The First-tier Tribunal’s decision was set aside for those charges and the Upper Tribunal substituted reasonable costs of £259.38 for each year.
• First-tier Tribunal (Property Chamber): Determined several applications concerning service charges at Chandos Court and allowed the three insurance charges in full, without adequately addressing the tenant’s arguments.