RTM costs (or, how not to grant permission to appeal)

Wilson v Lesley Place (RTM) Company Ltd [2010] UKUT 342 (LC)

I confess to being a bit bitter about this case. The Upper Tribunal (Lands Chamber) is hideously overworked. It can (and often does) take over a year for an appeal from an LVT to get before the Upper Tribunal. Matters aren’t helped when cases like this come along and take up the valuable time of the Upper Tribunal.

The respondent was an RTM company and the appellant a non-participating tenant. The RTM company demanded various sums that primarily appeared to relate to the establishment and running of the RTM company (insurance, accountancy fees, Companies House fees, etc) as a service charge. The appellant refused to pay and the dispute ended up in the LVT.

The LVT determined that:

(a) the charges were res judicata as they were sufficiently similar to earlier charges which had previously been determined as due;

(b) as a result of representations made by the appellant in earlier proceedings, she was now estopped from challenging the charges.

(c) in any event, the costs were correctly chargeable under the terms of the lease.

The LVT granted permission to appeal on (c), taking the view that whether the direct and indirect costs of running and establishing an RTM company were a service charge was a point of general importance.

In the Upper Tribunal, the President expressed some dissatisfaction at this course of events. Even if he found that the LVT was wrong on (c), given that there was no challenge to (a) or (b), the appeal would have to be dismissed and the charges would remain payable. It is fair to say that the President was somewhat dubious about the correctness of these findings, in particular (b), and considered simply refusing to hear the case. Ultimately, however, he relented and, on (c), attempted to give general guidance.

The key thing to remember (said the President, correctly in my view) is that an RTM company steps into the shoes of the landlord and, hence, can only recover costs that are recoverable under the lease. It will be a question of fact for each case and each lease as to what recovery is permitted. An RTM company does not, however, have any additional right to costs, other than that under the lease. He then proceeded to deal with the individual costs in the particular case.

About J

J is a barrister in London. He loves service charges and all things leasehold law related. He also likes beating rogue landlords and mortgage companies.
Posted in Housing law - All, Leasehold and shared ownership and tagged , , .

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