Southern Land Securities Limited v Zelda Reynolds

In proceedings before the First-tier Tribunal, procedural flexibility and proportionality are substantive requirements of fair adjudication. A party’s failure to present evidence in a formally orthodox way does not entitle the tribunal to disregard written material which identifies and answers the issues. The tribunal must consider the parties’ cases in the round, scrutinise the evidence critically, and give reasons for preferring one account over another. It must not treat a case as unopposed merely because no formal witness statement has been filed where the party’s written case and supporting documents contest the issue. The tribunal must decide whether an inspection is necessary or desirable according to the nature of the dispute, the evidence, the parties’ representation and all the circumstances. Appellate intervention remains limited to cases involving a material error of law or principle, a plainly wrong finding, or a conclusion outside the range of reasonable disagreement.

Southern Land Securities Ltd appealed against a decision of the First-tier Tribunal, Property Chamber, concerning service charges for external works to two residential buildings. The FTT accepted the leaseholder’s evidence that the external redecoration was poorly performed and would need to be repeated, and substantially disallowed the redecoration costs.

The landlord contended that the FTT had wrongly treated the leaseholder’s evidence as uncontested, disregarded its written responses and supporting documents, and adopted an over-technical approach to the absence of a formal witness statement. The central issue was whether the FTT had dealt with the application fairly and justly in accordance with its procedural rules and overriding objective.

1. Appeal allowed in part. The FTT’s decision was set aside insofar as it concerned the value of the exterior decorations, excluding gutters and downpipes. The professional-fee decision and the FTT’s conclusions on the other issues were left undisturbed. The relevant orders were set aside and the application was remitted to a differently constituted FTT panel for redetermination.
2. The appellate restraint principles summarised in Walter Lilly & Co Ltd v Clin [2021] EWCA Civ 136 applied. Intervention may be justified where the tribunal misunderstood the issue or evidence, failed to take material evidence into account, made an identifiable error of law, or reached a conclusion outside the bounds of reasonable disagreement. Evaluative findings must be examined for an identifiable flaw rather than reconsidered afresh.
3. The FTT’s rules create a flexible procedural regime. Rule 6(1) gives the FTT control of its procedure, subject to statute. Rules 18 and 19 allow it to regulate how evidence is given and to admit or exclude evidence. Rule 8 requires the tribunal to decide how to deal with procedural non-compliance; an irregularity does not automatically invalidate proceedings.
4. The overriding objective under rule 3 required the FTT to avoid unnecessary formality and enable full participation. The FTT was entitled to require statements of truth, but it was not entitled to treat that formal requirement as a bar to considering the landlord’s statement of case, schedule of disputes and supporting documents. The attendance of the landlord’s agents and surveyor provided an available means of clarifying or verifying the material.
5. The FTT erred by treating the leaseholder’s evidence as effectively unopposed and accepting that the decoration had no value by default. The written case and snagging material disclosed a live dispute about quality. The tribunal could prefer the leaseholder’s evidence, but only after critical consideration of all the evidence and with adequate reasons.
6. The FTT was not subject to a general obligation to inspect. It had to decide in each case whether inspection was necessary or desirable to determine the issues fairly.
7. The application under section 27A of the Landlord and Tenant Act 1985, together with the orders under section 20C of that Act and paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, was remitted if the parties could not reach agreement.

• Upper Tribunal (Lands Chamber): the FTT decision was set aside in relation to the value of the exterior decorations and the relevant issues were remitted to a differently constituted panel. Other conclusions remained binding.
• First-tier Tribunal (Property Chamber): the redecoration costs were substantially disallowed and professional fees were limited to 10%.