Bucklitsch v Merchant Exchange Management Company Limited  UKUT 0527 (LC)
30th January 2017
The Upper Tribunal remitted a case back to the First Tier Tribunal (Property Chamber) (“FTT”) because the FTT had not been entitled to come to the decision it had on the limited facts before it.
The parties were in dispute about the service charges that were recoverable for various years. The lease provided that service charge demands should be certified by an accountant. No such certification had taken place. However, neither party raised this issue until the day of the trial, when the tenants asserted that no service charge was recoverable because the accountant’s certification was a condition precedent to recovery. The parties had been involved in earlier litigation in 2014 and had also failed to raise this point on that occasion.
The FTT were concerned about whether, in the light of the decision in Henderson v Henderson, it was an abuse of process for the appellants to raise an argument about the need for certified accounts when it could have been raised earlier.
The FTT also raised the point that, in the light of Clacy v Sanchez  UKUT 0387 (LC), the appellants may be precluded from relying upon any condition precedent because, having failed to raise the issue before and having paid their service charges whether or not the demands had been certified, they were now estopped from arguing that the condition applied.
Having taken written submissions from the parties, the FTT held that the certification of the accounts was a condition precedent to recovery. However, it went on to hold that there was an estoppel or a waiver which prevented the appellants relying on the condition, because they had been tenants for eleven years and were shareholders in the management company, yet had never complained about the non-compliance.
It was therefore not necessary for the FTT to consider the abuse of process argument.
Decision on appeal
On appeal, the appellants complained that the FTT had raised both the abuse of process and the estoppel point even though those arguments were not made by either party in the proceedings. However, the Upper Tribunal made no criticism of the FTT for this conduct as both parties were un-represented and the issue of the condition precedent had only been raised at the final hearing. The FTT were entitled to ask the parties to address them on the legal issues arising on that point.
However, the Upper Tribunal found that the FTT had not been entitled to find that an estoppel by convention had arisen merely because the appellants had never raised the issue relating to the certified accounts before. The facts before the FTT were not sufficient to support the findings made.
The Upper Tribunal was not able to determine the abuse of process argument, as this was a matter on which the FTT made no finding.
Accordingly, the decision was set aside and the matter remitted back to the FTT for reconsideration as to whether a) there was a condition precedent to the recovery of service charges; b) whether any estoppel or waiver had arisen; and c) whether to raise the argument now amounted to an abuse of process.
This case shows the importance of being fully prepared for hearings and the problems that might arise when arguments are raised at the very last minute. It is a cautionary tale not only for litigants but also to the judicial members of the FTT of the dangers in coming to a conclusion on matters of fact without the benefit of proper evidence and cross examination.
Further, it is good authority for the proposition that a Tribunal is entitled to raise matters of law with the parties even though neither party has raised the issue themselves.
Team: Katie Gray
Expertise: Landlord & Tenant
, Service Charges
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