Limehouse East Management Limited v Simon Butler & Ors

Orders under section 20C of the Landlord and Tenant Act 1985 and paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 are discretionary. They concern whether it would be unjust to allow a landlord to recover litigation costs through service or administration charges; they are not ordinary costs orders and do not automatically follow the event. An appeal will succeed only for an error of law or a decision no reasonable tribunal could have made. The tribunal need not calculate success mechanically by reference to the amount of service charge in dispute, or obtain the landlord’s costs before deciding the application. There is likewise no automatic entitlement to reimbursement of tribunal fees, even for a wholly successful party.

The First-tier Tribunal determined a service charge dispute involving Limehouse East Management Limited and three leaseholders. The leaseholders had mixed success and sought orders under section 20C of the Landlord and Tenant Act 1985, paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, and for reimbursement of tribunal fees.

The FTT ordered that only 75% of the landlord’s costs could be passed through the service charge and refused to reimburse the leaseholders’ fees. Limehouse appealed against the costs orders. The leaseholders cross-appealed, seeking complete relief from the landlord’s costs and reimbursement of their fees. The central issues were whether the FTT had erred in exercising its discretion and whether its decisions were irrational or inadequately reasoned.

1. Appeals dismissed. The FTT’s orders under section 20C and paragraph 5A, and its refusal to reimburse fees, stood.
2. Both statutory provisions confer a broad discretion to make whatever order is just and equitable. They concern whether the landlord should be permitted, in principle, to exercise its contractual right to recover litigation costs through service or administration charges. They are not ordinary costs orders and do not simply follow the event. An appeal lies only where the FTT made an error of law or reached a decision that no reasonable tribunal could have made.
3. The FTT was entitled to relieve the leaseholders of liability for 25% of the landlord’s fees, having regard to their partial success and the fact that Limehouse was a leaseholder-owned management company. The order did not have to correspond mechanically with the percentage of service charges successfully challenged. The tribunal could assess the litigation in the round, including the time and energy spent on individual issues.
4. The level of the landlord’s costs was irrelevant to the section 20C and paragraph 5A applications. If costs were later demanded as service charges, their reasonableness could be scrutinised under section 19 of the Landlord and Tenant Act 1985. It was therefore unnecessary for the FTT to obtain the costs figure or invite submissions on proportionality.
5. Although the FTT should give reasons, the absence of reasons for refusing reimbursement of fees did not justify intervention. The FTT’s reasoning was readily inferable from the parties’ partial success and the relief already granted. No party, including one wholly successful, has an entitlement to reimbursement of tribunal fees. The refusal involved neither an error of law nor irrationality.

• Upper Tribunal (Lands Chamber): [2026] UKUT 118 (LC) dismissed all four appeals and upheld the First-tier Tribunal’s orders on costs and fees.
• First-tier Tribunal (Property Chamber): determined the underlying service charge dispute on 21 February 2025 and ordered that no more than 75% of the landlord’s costs could be passed through the service charge; it refused reimbursement of the leaseholders’ fees.
• Upper Tribunal (Lands Chamber): in the related substantive appeal, E14 Limited v Limehouse East Management Limited [2025] UKUT 426 (LC), set aside the FTT’s decision concerning E14’s liability, but the present costs and fees appeals remained unsuccessful.