Triplerose Ltd v Ms Bronwen Stride  UKUT 99 (LC)
29th November 2019
There was inadequate evidence to conclude that a lease was ‘unsatisfactory’ for the purposes of s.35 of the Landlord and Tenant Act 1987 (‘the 1987 Act’), and an FTT order varying the lease was overturned. The FTT decision finding no prejudice due to a lack of expert evidence was also set aside: this decision could not stand in circumstances where an application to adjourn to obtain expert evidence had been refused due to there being an expert surveyor on the panel.
The Claimant Triplerose is the lessee of a basement flat in a converted four-storey house. Unlike the other three flats in the building, under its lease Triplerose is not required to contribute to any of the cost of the repair and maintenance of the building, save for external painting.
Triplerose applied to the FTT for an order under s.27A of the Landlord and Tenant Act 1985 (‘the 1985 Act’) as to whether a service charge was payable, and if so, what amount was payable, having been charged for items that were apparently not related to external painting. The freeholder (a lessee-owned company with the sole purposes of holding the freehold of the building) cross-applied to vary the terms of C’s lease to contribute to the repair and renewal of the entire building, pursuant to s.35 of the 1987 Act.
- Was Triplerose’s lease ‘unsatisfactory’ for the purposes of s.35 of the 1987 Act, such that it should be varied?
- If so, was it appropriate to make an order compensating Triplerose for any loss it was likely to suffer as a result of variation, pursuant to s.38(10) of the 1987 Act?
This was an appeal from a decision of the First Tier Tribunal (FTT). The FTT determined that Triplerose’s lease should be varied so that it should pay one quarter of the cost of repair and renewal of the main building and the cost of staff and agents employed by the landlord.
The FTT did not exercise their discretion to compensate C for any loss that might flow from this amendment under s.38(10) LTA87, citing an absence of any expert evidence required for it to reach a view on this.
The appeal was heard before Judge John Behrens and A J Trott FRICS on permission from the Deputy President of the Upper Tribunal. Permission was given for a rehearing with expert evidence on prejudice and compensation to Triplerose from any variation of the lease.
Ms Stride, in her capacity as the lessee of the First-Floor Flat, continued as the Respondent to the appeal as the freehold company could not obtain the authority needed to continue in this role.
The FTT’s decision was set aside, as there was no evidence to conclude that Triplerose’s lease was unsatisfactory for the purpose of s.35 of the 1985 Act. Neither the fact that the fraction of the service charges paid for under the 4 leases did not cover 100% of the service charge costs, nor the fact that different tenants made different contributions, necessarily made the lease unsatisfactory.
The Upper Tribunal also found there was “considerable force” in Triplerose’s submission that the FTT had treated it unfairly in refusing to adjourn a hearing to obtain expert evidence and thereafter finding no prejudice at least in part due to a lack of expert evidence. Such evidence was called, and while not necessary to reach a conclusion due to its decision on issue 1, the Upper Tribunal nevertheless assessed an appropriate level of compensation at £9,500.00.
As a point of note for general practice, a submission that a lease is ‘unsatisfactory’ requires evidence to support it, e.g. that a building requires repairs which are beyond the means of the freeholder. Even a lack of adequate contributions from one party does not make the lease unsatisfactory per se.