Service Charges: Whether the First-tier Tribunal’s Conduct During a Hearing Was Unfair (Sovereign Network Homes (formerly known as Network Homes Limited) v Hakobyan and Others – 2025)

In determining an application as to the liability of tenants to pay service charges, the Upper Tribunal considers whether the First-tier Tribunal’s conduct was unfair.

The background

In Sovereign Network Homes (formerly known as Network Homes Limited) v Hakobyan and others [2025], the tenants had made a s.27A application to the First-tier Tribunal under the Landlord and Tenant Act 1985 for a determination as to the reasonableness of service charges which had been demanded by the appellant landlord.

The FTT raised an issue which had not been pleaded by the parties during the hearing, relating to – and querying – the tenants’ contractual liability to pay service charges under the leases, and required the landlord to address the point despite short notice. The landlord objected.

Proceedings were adjourned by the FTT in order for directions to be given on this new issue, and the FTT’s views indicated that it favoured the tenants’ position. The landlord appealed to the Upper Tribunal on grounds that raising and determining a new, unpleaded, issue went beyond the FTT’s jurisdiction, and that the FTT’s conduct indicated bias.

The decision

The Upper Tribunal found in favour of the landlord, allowing the appeal and setting aside the FTT’s decision.

In its decision, the Upper Tribunal considered that the new issue raised by the FTT relating to contractual liability went beyond the tenants’ application and their arguments which challenged the reasonableness of service charges.

The FTT’s conduct in requiring the landlord to respond to the new issue at short notice, and in giving preliminary views which favoured the tenants, was found to be unfair and gave an appearance of bias by the FTT.

Advice and action for landlords

This is a helpful decision for landlords, establishing the FTT’s boundaries in raising new issues which are unpleaded by the parties.

New issues may be raised in some circumstances, but in this case the new issue went beyond the tenants’ pleaded case and application, and by indicating a preference for the tenants’ position in relation to the new issue, the tribunal gave an appearance of bias.