Spender wards off attempt to frustrate his appeal over ‘contract for eternity’ intercom systems

Leaseholders involved in the dispute over a costly long term rental contract for door entry equipment at St David’s Square won a stay for time to appeal the Upper Tribunal ruling on the issue.

In 2023 in the St David’s Square dispute leaseholders won the first round in the First Tier Tribunal concerning a contract with Countryside Contracts for door intercom, TV and satellite that was signed in the year 2000.

For the three-year period in dispute, the total expenditure on the Countryside Contracts was £590,721.43.

FirstPort and the landlord failed to make any payments to leaseholders at the site following the First Tier Tribunal’s decision. That led Mr Spender to issue a County Court claim to enforce the First Tier Tribunal decision and to recover what was due. The issue of the County Court claim produced a part payment from FirstPort, nine months after the FTT’s decision.

Mr Spender argued in the FTT that it was ludicrously expensive to rent the equipment, which he said the landlord’s own market testing showed had cost one-and-a-half times as much as buying and installing a new system.

But the landlord, FIT Nominee Limited and FIT Nominee 2 Limited which are owned by NatWest, argued that the cost was reasonable, contractually binding and that the cost of terminating the contract was far too high. It was also argued that the FTT was unable to consider decisions made in 2000, when the contracts were entered into.

The FTT held that the “20-year contract was on any account onerous” and that the rental agreement for the leaseholders was “on any account a bad deal for them”.

The leaseholders should only be liable for the cost of maintenance and repair for the years in question, and not the rental costs, and as a result should receive a reduction of 81%.

Earlier this year, the Upper Tribunal disagreed with the First Tier Tribunal, ruling that the leaseholders provided no evidence that the deal signed in 2000 was a bad one. The Upper Tribunal decided that leaseholders would get nothing for the first two and a half years of the period in dispute, but that they should have a discount of 25% for last half of the last year because the landlord should have terminated the contract after the initial 20 year fixed term expired.

In a separate decision in August 2023 the Upper Tribunal also reversed the costs protection imposed by the First Tier Tribunal. Both the landlord and FirstPort had ignored the First Tier Tribunal’s costs protection order. They passed on more than £90,000 of legal costs to leaseholders before the Upper Tribunal’s decision.

At a hearing in Clerkenwell & Shoreditch County Court on 18 October 2024, District Judge Sara Beecham heard that the landlord and FirstPort had yet to repay any of the charges found unreasonable by the Upper Tribunal despite the judgment being given in June 2024.

The landlord and FirstPort also oppose paying Mr Spender anything in respect of other items found to be unreasonable and not subject to appeal.

The landlord, represented by barrister Max Gordon, argued that the County Court trial should go ahead as fast as possible to avoid any prejudice to them.

Mr Spender disagreed, saying that he was seeking permission to appeal the Upper Tribunal’s decision to the Court of Appeal and any trial in the County Court should wait until after the position on the further appeal becomes clear.

The County Court ordered a stay and that the landlord should pay costs to Mr Spender for having to bring the application. District Judge Beecham said the stay would cause no prejudice to the landlord.

The decision last month means that Liam Spender, the commercial solicitor who is a trustee of LKP, can proceed with asking the Court of Appeal to hear the case without having to deal with a County Court trial.

Mr Spender is also organising a class action against freeholders’ insurance commissions, reported here:

Freeholders face class action over insurance commissions

Camilla Waszek, formerly of J B Leitch and now of Trowers and Hamlins, analysed the case here

“If a leaseholder wants to challenge an old contract, they will need to show it was a “bad deal” at the time it was entered into.”

Mr Spender says that the Upper Tribunal’s decision should be of concern to leaseholders everywhere. Unless reversed by the Court of Appeal leaseholders will find they have no protection against paying any amount under their landlord’s long term agreement unless they can show the agreement was unreasonable at the outset. Examples of such long term contracts include increasingly communal heat and power systems or connections to District Heat Networks.

The Court of Appeal is expected to decide whether the case will proceed to a second appeal in the near future.