The obvious answer to the question above, and the answer that the First-Tier Tribunal (“FTT”) gave in this matter at first instance, was ‘no’.  Where the FTT has already decided a matter the same claim cannot be brought again in the FTT.  There is nothing wrong with that finding you might think.  But what happens if the claim is brought by a different applicant, does that change things?

The above question arose in the case of Connell and another v Beal Developments Ltd and others [2024] UKUT 54 (LC) which was an appeal from the FTT up to the Upper Tribunal, the details of which are as follows.

Background

Mr Connell and Ms Lynn were owners of long leasehold properties on the Burton Waters Estate, a mixed residential and commercial estate in Lincoln which includes 361 houses and flats arranged around a marina.  In 2018 Joshua Fernie, another leaseholder on the development, brought in the FTT an application concerning service charges for the years 2015, 2016, 2017 and part of 2018, challenging in all, 278 individual service charge items worth about £4,000. 

After a hearing lasting five days in 2021 and conducted by Mr Fernie’s father, Darren Fernie, the FTT dismissed all but six of Mr Fernie's challenges and reduced his service charges by only £10.44!  The FTT also ordered Mr Fernie to pay the landlord's costs of the application, and later still, it made an order for the payment of wasted costs against Mr Darren Fernie because of the manner in which he had represented his son during the hearing.

The crux of the above is that, due to Mr Fernie’s claim, the FTT had already determined the service charges for the development for the periods 2015, 2016, 2017 and part of 2018.

The application by Mr Connell/Ms Lynn

In 2020, Mr Connell or Ms Lynn brought a new and separate application in the FTT in relation to service charges for the financial periods 2013 - 2020.  Because at the time of the 2020 application by Mr Connell and Ms Lynn, Mr Fernie’s application from 2018 was still running in the FTT, the FTT directed that Mr Connell and Ms Lynn’s application be "stayed"  while Mr Fernie's 2018 application was determined.    

In October 2022, the FTT made the decision to strike out Mr Connell’s and Ms Lynn’s application, insofar as it related to the years 2015 - 2018.  Its reasoning was that it was a duplication of the claim by Mr Fernie, insofar as it related to the same period and sums, and that the Landlord had already incurred expenditure of nearly £140,000 in proceedings brought by Mr Fernie which had resulted in a service charge refund of £10.44.  It concluded:

"The Tribunal conducted a very thorough examination of service charge costs over approximately three and a half service charge years. The decisions made in that case have been considered by all possible appellate Tribunals and Courts. It is perfectly reasonable, fair and just for the Tribunal to use the decisions in [the application by Mr Fernie] as a reliable start point for any future consideration of the same areas of service charge costs. It is vexatious of the Applicants in this present case to attempt to undertake a further examination of service charges in the same areas of costs"

The Upper Tribunal’s decision

Mr Connell and Ms Lynn appealed that decision to the Upper Tribunal (“UT”) who allowed the appeal, holding that neither Mr Connell nor Ms Lynn were parties to the earlier claim brought by Mr Fernie and, as such, Section 27A(1), Landlord and Tenant Act 1985 gives any leaseholder the right to apply to the FTT for a determination on whether a service charge is payable. 

Whilst no such application may be made in respect of a matter which has already been agreed or admitted by the applicant leaseholder, referred to arbitration, or been the subject of determination by a court or an arbitrator (Section 27A(4)), it is also a general principle of public policy that once any court or tribunal has given a decision, no party to that decision can raise the same dispute for a second time in different proceedings.  That general principle is reflected in the FTT's rule 9(3)(c), which allows it to strike out proceedings if: "the proceedings or case are between the same parties and arise out of facts which are similar or substantially the same as those contained in proceedings or case which has already been decided by the Tribunal".

The UT went on to say that Rule 9(3)(c) did not apply to the application by Mr Connell and Ms Lynn as they were not parties to the earlier application brought by Mr Fernie. 

The FTT obviously appreciated that distinction and it did not rely on rule 9(3)(c) when it struck out the Connell/Lynn application in respect of the years 2015 - 2018 covered in the action by Mr Fernie.  It relied instead on rule 9(3)(d), and on the proposition that it would be "frivolous or vexatious or otherwise an abuse of the process of the Tribunal" for Mr Connell/Ms Lynn to require the FTT and the landlord to investigate once again the matters which had already been considered in Mr Fernie’s failed application. 

The UT disagreed with the FTT's approach holding instead that every leaseholder is entitled to a determination by the FTT of the service charges that they are liable to pay.  That right cannot be removed from them by a decision made by the FTT about the service charge payable by someone else, whether or not the expenditure on which both service charges are based was the same.  That right is conferred by Section 27A.

Accordingly, Mr Connell and Ms Lynn are entitled to bring their application and include within that the service charges for the period 2015 - 2018, notwithstanding that an earlier action brought in the FTT by another leaseholder had determined those charges.

Conclusion

The decision confirms that a landlord may have to revisit the same dispute several times over if leaseholders bring separate, unrelated claims for the same financial periods.  From the leaseholder’s perspective, the decision confirms that if a neighbour brings a claim and loses, perhaps as a result of, in your view, making a poor job of presenting their claim, then, so long as you were not a party to that failed claim, you can revisit the issues raised.

In reality, if the new dispute is over the same issues (as opposed to completely new ones), then the Court/FTT (whilst not bound to) is likely to follow the earlier decision given that disputes in relation to service charges are fact based.  Additionally, where a dispute is decided by higher authority (e.g. appellant courts/tribunals) then the lower courts/tribunals at first instance will be bound by those decisions where it concerns the same issues.

Whilst there is no way to prevent what, in effect, amounts to repeat claims, the chances of that are likely to be low, in part because of the will and potential cost for the applicant, but also because most potential applicants will be swayed by the first finding of the FTT no matter how well they feel the claim may have been conducted. 

It does not harm though, taking account of the above, for the landlord to make evidence available to any other disgruntled party in a block where claims are expected.  Additionally, if wind is caught of a second claim, efforts should be made, with full transparency, to sit down with those mooting a second claim to see if it can be avoided by disclosure and discussion.  Note should be had to the suggestion by the FTT in the above case that the landlord, it is said, incurred over £140k in disposing of Mr Fernie’s claim only then to be presented with a potential further cost in dealing with Mr Connell and Ms Lynn.

We (and we suspect everyone else!) will be very interested to see if Mr Connell and Ms Lynn obtain any greater success in their claim against their landlord given the disparaging comments of the tribunal as to the conduct of Messrs Fernie in the first run of that claim.

If you have any queries on this week’s Legal Update, please contact a member of the team on 01435 897297 or info@kdllaw.com.  

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