Transfer to First-tier Tribunal

Transfer from the county court

Service charge and administration charge disputes

If the county court has a claim which involves a dispute about the amount of a service or administration charge or insurance it may transfer that issue to the First-tier Tribunal under paragraph 3 of Schedule 12 to the Commonhold and Leasehold Reform Act 2002 (as amended). The county court may wish to do that because of the expertise in the Tribunal in these cases, and / or because District Judges find these issues to be a pain! (See also PD 56, Schedule 2, para 15.1 - which still refers to the Leasehold Valuation Tribunal).

If the county court does order such a transfer it must clearly identify the question which it wishes the Tribunal to consider. It does not transfer the whole case. The Tribunal has no jurisdiction to deal with claims for interest, court fees or costs of the court proceedings. Those parts of the claim will have to be stayed pending the Tribunal’s determination.

The court order making the transfer might look something like this:

  1. These proceedings are transferred to the First-tier Tribunal (Property Chamber) (Residential Property) to determine the amount of service charges charges payable by the Defendant to the Claimant for the period from xxxx to xxxxx.
  2. Costs of the proceedings and costs incidental to the transfer are reserved.
  3. The remainder of the claim is stayed pending the determination of the Tribunal on that issue.
  4. Permission to either party to apply to lift the stay.

 

Jurisdiction of the Tribunal on transfer

Holding and Management (Solitaire) Limited v Miller

[2019] UKUT 402 (LC)

Summary

The FTT does not have an inherent jurisdiction to determine disputes. It can therefore only determine questions, on a transfer, which are specifically referred to it. The FTT improperly purported to determine matters, which it had no statutory authority to do on the basis of the generality of the County Court’s order transferring the matter to it.

Facts

The lessee held his flat (“the Property”) pursuant to a 125-year lease (“the Lease”).  The Lease demised the window glass, but not the window frames to him.  The Lease contained the usual covenants imposed upon the Appellant freeholder as to the repair of the structure of the Property.

On 15 January 2019, the management company brought a claim against the lessee in the County Court in relation to unpaid service charges and administration charges.  Legal costs and statutory interest were also claimed.

The lessee's defence was that he should not have to pay for the replacement of the windows on the basis that he had replaced the windows of the Property himself and had paid the company £200 for its consent for him to do so.

The lessee also brought a counterclaim of £480 for damage to his health and associated costs.

On 29 March 2019, the matter was transferred to the FTT following what was, in effect an application by the lessee under s27A of the 1985 Act.

First instance

The FTT determined that a reasonable cost of replacement windows and the front door of the Property was £280 including VAT and £224.36 for surveyors’ fees and associated costs of that project, totalling £504.36.

The claim for administration charges was dismissed on the basis that it was irrecoverable under the Lease and an order under s20C was made.

The Tribunal dismissed the lessee's counterclaim on the basis that:

“we have decided that the District Judge intended to pass the whole of the claim to the Tribunal, otherwise he would have made that clear (e.g. if limited to a s27A unreasonable charges claim). We therefore intend to deal with the whole of the claim, having already disposed of the counterclaim”. (para 11) 

The company’s claim for legal costs and statutory interest on the sums claimed was also dismissed.

Issues

Did the FTT have jurisdiction to dismiss the company’s claim for legal costs, statutory interest and to dismiss the lessee’s counterclaim?

Decision on appeal  

The lessee challenged the FTT’s jurisdiction to dismiss the counterclaim.

This ground was upheld as s176A of the Commonhold and Leasehold Reform Act 2002 provides that where the court has to decide a question arising under any of a list of statutes, which includes the 1985 Act, “which the First-tier Tribunal … would have jurisdiction to determine”, it:

“may by order transfer to the First-tier Tribunal so much of the proceedings as relate to the determination of that question”.

The FTT therefore may only determine questions within proceedings that are transferred to it, which it has jurisdiction to determine.  The FTT has no inherent jurisdiction.  The mere generality of an order transferring a matter to it does not serve to furnish it with jurisdiction over matters, which as a matter of statute, it does not have.

The FTT therefore did not have jurisdiction to dismiss the counterclaim, nor the claim for legal costs, nor the claim for statutory interest.

It was also held that the FTT confused the administration charge (£60) with the claim for legal costs in the sum of £1,056.  The lessee made a bare assertion that the administration charges were exorbitant. The FTT’s dismissal of the claim for administration charges, in the absence of any elaboration as to why these were unreasonable, was said to be irrational and was set aside. 

Comment

This case is a salutary reminder that the FTT may only decide matters which it has statutory jurisdiction to do so.  This is still the case where orders of the County Court transferring such matters to the FTT lack particularity.

 

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