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Jurisdiction over leasehold issues – county court or First-tier Tribunal?

by Naomi Raymond-George, Legal Adviser

June 2015

Download a template letter to the court asking for the case to be transferred to First-tier Tribunal

Leaseholders and landlords alike should know that legal proceedings issued at county court, may not end up there and could ultimately be determined by a completely different forum altogether.

It is possible for an applicant (usually a landlord) to bring a case at county court for the recovery of outstanding service charges and for that case to be transferred to the appropriate property tribunal where its expertise in leasehold matters is called upon.

The appropriate tribunal in England is the First-tier Tribunal (Property Chamber) (“Tribunal”) and in Wales it is the Leasehold Valuation Tribunal.

Section 176A of the Commonhold and Leasehold Reform Act 2002 gives all courts the power to transfer matters to the appropriate tribunal where there are matters falling within the Tribunal’s jurisdiction. This is called a transferred application

The legislation

The 2002 Act provides that

    1. Where in any proceedings before a court there falls for determination a question falling within the jurisdiction of a leasehold valuation tribunal, the court-
  1. may by order transfer to a leasehold valuation tribunal so much of the proceedings as relate to the determination of that question, and
  2. may then dispose of all or any remaining proceedings, or adjourn the disposal of all or any remaining proceedings pending the determination of that question by the leasehold valuation tribunal, as it thinks fit.

Why would a case be transferred?

Scenario:

A leaseholder refused to pay certain service charges they considered to be excessive.

After demanding the sums on various occasions the landlord applied to county court for recovery of the outstanding sums.

The leaseholder asks the court to transfer the matter to the appropriate tribunal as he feels the sums are not reasonable and therefore not payable. The court may also use its discretion to transfer the matter without one of the parties requesting this.

The leaseholder does not feel that this is a straightforward breach of covenant matter and whilst the court has the power to make a ruling on such cases it does not have the expertise to determine the reasonableness of the charges.

The court makes an order to transfer the matter to be decided by the Tribunal.

The Tribunal has statutory jurisdiction under section 27A of the Landlord and Tenant Act 1985 to determine the reasonableness of service charges. The Tribunal hears the case.

The Tribunal’s jurisdiction explained

The jurisdiction of the Tribunal in a transferred application is confined to the question transferred and all related issues.

In Lennon v Ground Rents (Regisport) Limited [2011] UKUT the landlord issued proceedings in the Lambeth County Court for the recovery of service charge plus administration charges. The leaseholder disputed his liability to pay certain parts of the sums claimed.

District Judge Wakem ordered that the matter should be transferred to the Tribunal for determination of the reasonableness of only the service charges part of the amount in dispute.

However, despite the wording of the court’s transfer order, the Tribunal also went on to determine the reasonableness of the administration charges and other service charges not mentioned in the transfer order.

At the Upper Tribunal Judge Nicholas Huskinson said that ‘the Tribunal’s jurisdiction flows from the County Court and such jurisdiction is limited to the amount claimed in respect of the service charge dispute only. Other issues, such as interest and County Court costs remain within the jurisdiction of the County Court.’

However in the recent case of Cain v London Borough of Islington [2015] UKUT 117 (LC), deputy president Martin Rodger QC clarified that ‘the principle ought to be applied in a practical manner, with proper recognition of the expertise of the F-tT in relation to residential service charges‘.

The point being that often court orders for a transfer are expressed in general terms and the Tribunal should not apply too strict an approach to its jurisdiction so as to ‘be a disservice to the parties’. If the matter falls within the Tribunal’s jurisdiction, it could be more cost-effective and timely for the parties if any subsidiary issues are dealt with by the Tribunal, particularly if there is no indication that the county court intended to retain any questions.

Procedure

In the Court of Appeal case of Aylesbond Estates Ltd v Fiona Macmillan (1998) EWCA it was decided that whether or not a case will be transferred will depend upon the complexity of the case and the benefit of the Tribunal’s expertise, the likely costs-saving and, whether there are other pertinent issues which must remain to be determined at court.

To this end, other legal issues can be retained by the court and by virtue of Rule 6 (3) (n)of the Tribunal Procedure (First-tier Tribunal (Property Chamber) Rules 2013 , the Tribunal can use its discretion to transfer matters to another court or even back to the county court if the Tribunal does not consider it has jurisdiction to deal with them, or if it considers there is more appropriate forum for the determination of the case..

Paragraph 15 of the Practice Direction to the Civil Procedure Rule 56 requires the following to be satisfied where there is a transfer of a case;

  1. Send a notice of the transfer to all parties to the claim, and
  2. Send to the tribunal –
    1. The order of transfer, and
    2. All documents filed in the claim relating to the question.

Rule 28 of the Tribunal Procedure Rules is designed to keep the parties abreast of progress in the matter. It places an obligation on the Tribunal to notify the parties of the date they receive notice that the matter was transferred to them and the names and known addresses of the parties to the proceedings.

After a case has been transferred it is treated by the Tribunal in the same way as a direct application and the claimantand defendant at county court become the applicant and respondent at the Tribunal.

Fees

A fee will be payable upon transfer from the court to the Tribunal. This will be ‘the fee due less the total amount of any fees previously paid by the applicant to the court in respect of the court proceedings.’*

* The First-tier Tribunal (Property Chamber) Fees Order 2013

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