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MacGregor v B M Samuels Finance Group Plc [2013] UKUT 471 (LC)

How far does the jurisdiction of the First-tier Tribunal (Property Chamber) extend when dealing with service charge disputes?

A comment on the decision in MacGregor v B M Samuels Finance Group Plc [2013] UKUT 471 (LC).

The Upper Tribunal (Lands Chamber) recently gave a ruling limiting the First Tier Tribunal (Property Chamber) (“the Tribunal”)’s jurisdiction when making a determination in accordance with sections 19 and 27A of the Landlord and Tenant Act 1985.

Section 19 of the Act relates to the reasonableness of service charges and section 27A of the Act concerns a leaseholder’s liability to pay service charges and governs their ability to apply to the Tribunal for a determination about whether service charges are payable and, if they are, the amount payable.

This case concerned a service charge dispute relating to a block of flats. The landlord had sought a determination in the Tribunal that several leaseholders were liable to pay service charges. The application by the landlord had been mostly successful but one leaseholder appealed the decision of the Tribunal. The other leaseholders chose not to participate in the appeal.

Prior to the start of the hearing, the solicitors acting for the leaseholder raised a preliminary issue. He argued that should the leaseholder be successful in showing that the service charges had not been reasonably incurred by the landlord (in accordance with section 19 of the Act), then each leaseholder of the building should be refunded those sums, not just the leaseholder making the application.

The barrister for the landlord argued that the jurisdiction of the Tribunal was limited to the parties before it, and did not extend to all the other leaseholders liable to pay the service charges. He suggested that the other leaseholders would no doubt be interested in the findings of the Tribunal, but would have to raise this with the landlord separately.

The Judge agreed with the landlord’s arguments and ruled that the jurisdiction of the Tribunal was limited to determining the amount payable by the particular leaseholder who made the application, and not the amount payable by each and every leaseholder.

It follows, therefore, that if a leaseholder argues successfully before the Tribunal that the service charges he has been asked to pay were not reasonable under section 19 of the Act, only that particular leaseholder will receive a reimbursement from the landlord.

This article is for information purposes only and is not legal advice. It should not be acted or relied upon and legal advice should be sought before applying any of the information in this article to any facts or circumstances.

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