Service Charges: Whether Tribunal decision that service charge contributions were payable should be enforced (Termhouse (Clarendon Court) Management Ltd v Al-Balhaa – 2021)

The background

In Termhouse (Clarendon Court) Management Ltd v Al-Balhaa [2021], the appellant tenant held a long lease of a flat in a building. The respondent management company managed the building. Earlier, in the First-tier Tribunal, the FTT had determined the amount of service charge recoverable from the tenant, and the management company then applied to the County Court to enforce the FTT’s decision under Rule 70.5 of the Civil Procedure Rules and s.176C of the Commonhold and Leasehold Reform Act 2002, as well as s.27 of the Tribunals, Courts and Enforcement Act 2007 which allows for the enforcement of FTT decisions in the County Court.

The County Court found that the management company was able to rely on s.176C of the CLRA 2002 and the tenant appealed, arguing that the FTT’s decision was declaratory and that, as a result, neither s.176C CLRA 2002 nor s.27 TCEA 2007 applied.

The decision

The Court of Appeal allowed the tenant’s appeal, agreeing that the FTT’s decision was declaratory and did not require the tenant to make payment. The FTT’s decision was not therefore enforceable in the County Court under s.176C CLRA 2002 or s.27 TCEA 2007.

• 176C CLRA 2002 provides that decisions of the FTT or the Upper Tribunal, save for a decision ordering a sum to be paid, is enforceable by an order of the County Court.
• 27 TCEA 2007 provides that sums payable following a decision of the FTT or UT are recoverable as if they were payable under a County Court or High Court order.

In this case, the FTT’s decision did not order the tenant to make a payment or to take (or not take) any other action. The decision was declaratory and not enforceable under these provisions. The landlord would be required to issue new County Court proceedings; the decision of the FTT could not be enforced in its present form.

Advice and Action for landlords

This decision has significant implications on procedure for payability and recovery of sums for landlords and management companies, requiring the commencement of new proceedings which in turn will incur additional costs and time.

Parties seeking to recover unpaid service charges are advised to bring claims in the County Court initially, rather than the FTT, meaning that any judgment will then be enforceable and can be actioned quickly.