Costs in service charge proceedings: Whether the First-tier Tribunal could make a costs order in favour of all tenants at a property (Plantation Wharf Management Ltd v Fairman and others – 2019)

Where the First-tier Tribunal makes a costs order in favour of more parties than just the tenant who applied for the order, is such an order enforceable?

The background

In Plantation Wharf Management Ltd v Fairman and others [2019], the Upper Tribunal heard an appeal from the First-tier Tribunal concerning a costs order made under s.20C of the Landlord and Tenant Act 1985 in a dispute over a residential service charge.

The FTT made the costs order in favour of all tenants of the property rather than just the tenant who applied for the order. The additional tenants had not made an application under s.20C themselves and they had not authorised any other party to make such an application, so the landlord appealed.

The decision

The Upper Tribunal found that the costs order was much too wide, holding that it should be set aside in respect of all tenants other than the tenant who had made the initial application. The First-tier Tribunal did not have jurisdiction to make an order that extended beyond that set out in s.20C; any order must be made in respect of an application, and in this case those additional tenants included in the costs order had not made an application and were not party to the application under review. The applicant tenant was entitled to seek a costs order, but no other tenants were named applicants or specified in the application.

To be ‘specified’ in the application, tenants did not have to be expressly named provided that they could be identified by alternative means. In this case, the UT decided that a s.20C application could only be binding on parties who were applicants themselves or who were expressly specified in the application; the Court could not assume that the other tenants were willing to be a party to it.

The Court stated that a s.20C costs order made in favour of all tenants of an estate would carry serious consequences for a landlord. The FTT had allowed the tenant’s application in this case, and therefore the landlord was not able to recover costs through service charges demanded of tenants on the estate. The UT held that this significantly interfered with the landlord’s rights under the lease.

Advice and action for landlords

An important decision for landlords facing a s.20C application for a costs order, this case confirms that only those parties making the application, or those specified in it and who have expressly given their consent to the application, should benefit from it.

The First-tier Tribunal did not have jurisdiction to widen the recipients of the order to all tenants on the estate, and it could not assume that all tenants would want to be a recipient of it, ensuring that only the original applicant could receive the benefit of any costs order. Any party specified as a recipient must also have given their consent to the application.