Liam Philip Spender & Ors v FIT Nominee Ltd & Anor

Liam Philip Spender & Ors v FIT Nominee Ltd & Anor

The correct legal test for whether costs are 'reasonably incurred' under s.19(1) of the 1985 Act in the context of long-term contracts is to assess the reasonableness of entering into the contract at the time it was made, considering both process and outcome, rather than limiting the assessment to market rates at the time of invoicing. The burden is on the tenant to raise a prima facie case of unreasonableness, after which the landlord must justify the costs. As neither party advanced their case on the correct legal test below, the matter must be remitted to the FTT for determination on the proper basis.

Parties
Appellants: Liam Philip Spender & 69 Others; Respondents: FIT Nominee Ltd; Respondents: FIT Nominee 2 Ltd
Jurisdiction
England and Wales
Judgment Date
12 May 2025
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From Upper Tribunal (lands Chamber)
Outcome
Appeal allowed; case remitted to the First-tier Tribunal (FTT) for redetermination.
Legal Topics
Service Charges, Reasonableness of Costs, Long Term Contracts, Burden of Proof, Section 19 Landlord and Tenant Act 1985
Land Law Landlord and Tenant Law Service Charges Reasonableness of Costs Long Term Contracts Burden of Proof Section 19 Landlord and Tenant Act 1985

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Parties

Liam Philip Spender & 69 Others

Appellants

FIT Nominee Ltd

Respondents

FIT Nominee 2 Ltd

Respondents

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From Upper Tribunal (lands Chamber)

Legal Issues

  1. 1 Whether costs incurred by a landlord under long-term contracts for equipment hire and maintenance were 'reasonably incurred' within s.19 of the Landlord and Tenant Act 1985 and thus recoverable as service charges from tenants.
  2. 2 What is the correct legal test for assessing 'reasonably incurred' costs under s.19 in the context of long-term agreements.
  3. 3 Where the burden of proof lies in proceedings under s.27A of the 1985 Act regarding reasonableness of service charges.

Ratio Decidendi

The correct legal test for whether costs are 'reasonably incurred' under s.19(1) of the 1985 Act in the context of long-term contracts is to assess the reasonableness of entering into the contract at the time it was made, considering both process and outcome, rather than limiting the assessment to market rates at the time of invoicing. The burden is on the tenant to raise a prima facie case of unreasonableness, after which the landlord must justify the costs. As neither party advanced their case on the correct legal test below, the matter must be remitted to the FTT for determination on the proper basis.

Court Disposition

Appeal allowed; case remitted to the First-tier Tribunal (FTT) for redetermination.

Orders

  • The appeal is allowed.
  • The case is remitted to the FTT to determine whether the costs were reasonably incurred, applying the correct legal test as identified by the Court of Appeal.