The First Tier Tribunal was not bound to follow a decision of the LVT in relation to the construction of a particular term of a lease. In the instant case there were special circumstances which meant that issue estoppel should not prevent the same issues being determined afresh.
The dispute related to, amongst other things, whether a local authority landlord was able to recover service charges in respect of the external communal areas of a large estate. In earlier LVT proceedings, determined in 2005, the Tribunal had found that such charges were not recoverable under the lease. The landlord did not appeal that decision, but continued to levy charges for the maintenance of the relevant areas through the service charge. The tenants made a further challenge in respect of service charges between 2006 and 2014. This time, of course, the case was heard by the First Tier Tribunal (Property Chamber).
Was the FTT bound by the previous decision of the LVT? Specifically, were there special circumstances that meant that the landlord should not be estopped from rearguing a decided issue?
At First Instance, the FTT held that it was not bound by the LVT decision in 2005. It further found that there were special circumstances and therefore no issue estoppel. The special circumstances were that there was an ongoing relationship between the landlord and tenant and the decision of the LVT was plainly wrong. The decision should not be allowed to affect the relationship between the parties for the entire term of the lease.
Decision on Appeal
The Upper Tribunal Lands Chamber upheld the decision at first instance, agreeing that there were special circumstances that prevented an issue estoppel arising in the case.
The special circumstances were as follows:
- the decision of the LVT was plainly wrong;
- there was a continuing relationship of landlord and tenant;
- following the decision would perpetuate that wrong decision;
- the point had originally been taken by the LVT of its own motion without the landlord being given a chance to address it properly; and
- the landlord was not seeking to overturn the LVT’s actual decision in a collateral action, rather it was seeking to re-argue the point in respect of later service charges.
This decision provides useful guidance on the type of circumstances that may prevent an apparently clear issue estoppel from arising. Three out of five of the special circumstances that the Upper Tribunal cited, namely points (2), (3) and (5) would be likely to apply in any service charge case where a landlord has continued to charge for services that the tribunal had previously held were not covered by the lease. It is unlikely, however, that these three factors alone would constitute special circumstances. It is submitted that the exceptional factors in the case that prevented the issue estoppel arising were (Point 1) the fact that it appeared to the FTT that the decision of the LVT was plainly wrong and (Point 4) the fact that the LVT had originally taken the point of its own motion and there was a doubt over whether the landlord had had a chance to address it properly in the earlier proceedings. Therefore, this case should not be viewed as an invitation to reopen old disputes merely because one party considers that the Tribunal had erred.