The landlords and tenants of a holiday park are involved in a long-running service charge dispute. Each party has a decision of the First-tier Tribunal in their favour in relation to the recoverability of charges for the provision of on-site accommodation for holiday park wardens. What is the effect of the two inconsistent decisions on a subsequent appeal to the Upper Tribunal (Lands Chamber), where the recoverability of these charges are again in dispute in respect of the estimated service charge for another period? This was the unusual question faced by the UT in Francis and another v Sandoz and others [2021] UKUT 174 (LC).
In 2016, the FTT determined that the lessees of the Atlantic Bays Holiday Park at St Merryn, Cornwall, were liable to pay £18,000 on account for the provisions of accommodation for holiday park wardens in their 2015 estimated service charge.
In 2017, the FTT, comprising the same panel as in 2016, considered the recoverability of charges for the provision of warden accommodation at the holiday park in respect of the annual service charge for the years 2008 to 2012. In its 2017 decision, the FTT determined that the provision of accommodation for wardens was not recoverable as it was a notional cost to the landlord rather than actual expenditure incurred. Under the service charge provision of the leases, which were all in substantially the same form, such notional costs were not recoverable.
Faced with the conundrum of inconsistent decisions on the same issue involving the same parties, the UT asked itself whether it was bound to decide which view of the meaning of the lease was correct or was it bound to choose between the previous inconsistent decisions on some other basis? The UT concluded that this unusual scenario amounted to a “special circumstance” that enabled it to disapply the doctrine of issue estoppel. It was both just and necessary for the issue to be decided on its substantive merits rather than on the basis of the FTT’s 2016 or 2017 decisions, especially as neither had been the subject of an appeal.
Having regard to the substantive merits of the case, the UT observed that the recoverability of notional costs of accommodation had been considered in Retirement Lease Housing Association and another v Schellerup and others [2020] UKUT 0232 (LC). It was held in that case that the recoverability of costs forgone depended on the specific wording of the lease, “read as a whole and in their relevant context, with the well-known principles of contractual interpretation in mind”.
Applying the above principles to the present case, the service charge provisions of the lease enabled the landlords to recover “the aggregate of the sums actually expended or the liabilities incurred by the [landlords] … in connection with the management and maintenance of the Estate and the provision of such services as herein described”. Accordingly, only costs “actually expended” in connection with the management and maintenance of the holiday park were recoverable. The rent which the landlords could have obtained by letting a unit of accommodation to a paying tenant rather than using it to house a member of staff was not a sum “actually expended” nor was the rent forgone a liability.
Elizabeth Dwomoh is a barrister at Lamb Chambers
