First-tier Tribunal Determines Reasonable Service Charge Costs for Tenant

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case reference : LON/00BK/LSC/2018/0365 Property : [ADDRESS] [POSTCODE] Applicant : [redacted] Representative : [RESPONDENT] Respondent : [redacted] : N/A Type of application : For the determination of the reasonableness of and the liability to pay a service charge Tribunal members : (1) Judge Amran Vance (2) [NAME] (3) [NAME] : 10 [ADDRESS] [POSTCODE] Date of decision : 15 April 2019 Addendum to Decision : 22 September 2022

DECISION

2

Decisions of the tribunal (1) The tribunal makes the determinations set out under the headings below in respect of Ms [NAME] liability to pay service charge costs for the 2016/17 and 2017/18 service charge years (actual costs) and 2018/19 budgeted costs. (2) We are unable to determine the specific sums payable by Ms [NAME] for the service charges years in dispute, because the applicant has agreed to make multiple adjustments to her service charge account, having regard to determinations made in our previous decision in application LON/00BK/LSC/2015/0437, where we disallowed certain heads of expenditure, that were repeated in the service charge years in issue in this application. Following receipt of this decision the parties should seek to agree the sums payable by her, or the amount of refund due to her. Only if they are unable to reach agreement should they send their respective calculations to the tribunal and we will then determine the sum payable in a supplemental decision. Background (3) In this application, issued on 4 October 2018, CHG seek a determination pursuant to s.27A of the Landlord and tenant Act 1985 (“the 1985 Act” as to Ms [APPELLANT] service charge liability for the service charge years ending 31 March 2017, 2018 and 2019, in respect of 39 and 41 [ADDRESS] [POSTCODE] (“the [NAME]”). The [NAME] comprises two adjoining buildings, each comprising 18 flats. Ms [NAME] is the long leaseholder of [ADDRESS]. CHG is the freeholder of the [NAME]. (4) There has been very substantial previous litigation between the parties. The most recent tribunal application is LON/00BK/LSC/2015/0437, which was the subject of a determination issued on 19 November 2018, and a subsequent decision in respect of a residual issue, that is to be issued at the same time as this decision. That earlier application concerned Ms [NAME] service charge liability for the 2014/15 and 2015/16 service charge years. Details of four previous tribunal applications, dating back to 19 November 2001, are referred to in paragraph 6 of the decision issued on 19 November 2018, (5) A case management hearing in respect of this new application took place on 15 November 2018. Directions were given at that hearing, and issued on 19 November 2018. They were varied on 20 December 2018, and the application proceeded to a final hearing on 20 and 21 March 2019. Ms [NAME] attended in person and CHG were represented by Mr [NAME], of Dale & Dale, solicitors. Mr [NAME], one of the directors of CHG, was also present. We heard oral evidence, including cross examination, from both Mr [NAME] and Ms [NAME]. Both had provided witness statements in advance of the hearing.

3 (6) Numbers in square brackets and in bold below refer to the hearing bundle prepared by the applicant for this determination. The Lease (7) Ms [APPELLANT] lease (“the Lease”) was granted on 26 September 1997, commencing 25 March 1976, for a term of 99 years. (8) It includes the following terms in respect of service charge liability: 4. [NAME] hereby covenants with [NAME] and with and for the benefit of the lessees and occupiers from time to time during the currency of the term hereby granted of the other flats that [NAME] will at all times hereafter during the said term:- (1) – (3) …………. (4) Pay to [NAME] without any deduction by way of further or additional rent (together with any Value Added Tax or other tax payable): (i) A sum equal to the percentage set out against the demised premises in Column A of the Seventh Schedule hereto of the total of the General Expenses as defined in the Eight Schedule hereto of each year ending 31st March; and (ii) (with the exception of Flats 1 to 4 of each of 39 and [ADDRESS] aforesaid) a sum equal to the percentage set out against the demised premises in Column B of the Seventh Schedule hereto of the total of the Lift Expenses (as defined in the Eighth Schedule hereto) of each year ending 31st March; such further and additional rent (hereinafter referred to as the ‘service charge’) to be paid as follows: (a) – (c) ………… (d) [NAME] shall if required by [NAME] with the payment of rent reserved hereunder pay to [NAME] such sum in advance and on account of the service charge as [NAME] or its [NAME] in their absolute discretion shall specify… (e) as soon as practicable after the signature of the [NAME] shall furnish to [NAME] an account of the service charge payable by [NAME] for the year in question due credit being given therein for all interim payments made by [NAME] in respect of the said year and upon the

4 furnishing of such account there shall be paid by [NAME] to [NAME] the amount of the service charge as aforesaid or any balance found payable or there shall be allowed by [NAME] to [NAME] any amount which may have been overpaid by [NAME] by way of interim payment as the case may require. (9) The Fifth Schedule of the Lease provides as follows: THE FIFTH SCHEDULE (Expenses and outgoings and other heads of expenditure of [NAME] of which [NAME] is to pay a proportionate part by way of Service Charge). (1) The expenses of maintaining and repairing redecorating and renewing amending cleaning and re-pointing repainting graining varnishing whitening or colouring the [NAME] and all parts thereof and all the appurtenances apparatus and other things thereto belonging and more particularly described in Clause 5(6) hereof. (2) The cost of insuring and keeping insured throughout the term hereby granted the [NAME] and all parts thereof and the fixtures and fittings therein and all the appurtenances apparatus and other things thereto belonging as more particularly described in clause 5(2) hereof and also against third-party risks and such other risks (if any) by way of comprehensive insurance as [NAME] shall determine including three years loss of rent and architects and surveyor’s fees. (3) The cost of decorating and the cost of maintenance or repair and otherwise in accordance with clauses 5(7), 5(9), 5(10), 5(11), 5(12) and 5(13) hereof (4) …….. (5) The cost of keeping any parts of the [NAME] not specifically referred to in this Schedule in good repair and condition except those parts of the [NAME] to which the provisions of sub-clause 5(4) hereof apply. (6) The fees of the [NAME] for [NAME] for the collection of the rents of the flats in the [NAME] and for the general management thereof (7) All fees and costs incurred in respect of the annual certificate and of accounts kept and audits made the purpose thereof

5 (8) The cost of taking all steps deemed desirable or expedient by [NAME] for complying with making representations against or otherwise contesting the incidence or the provisions of any legislation or orders or statutory requirements thereunder concerning town planning public health highways streets drainage or other matters relating to or alleged to relate to the [NAME] and for which [NAME] is not directly liable hereunder (including but without prejudice to the generality of the foregoing the provision of fire fighting equipment and the compliance with fire regulations). (9) …… (10) The cost of providing a sinking fund to allow for reasonable expenses hereinbefore referred to in respect of subsequent years the amount of such sinking fund being at the absolute discretion of the [NAME] for the time being of [NAME] (11) The cost of any service or maintenance or similar contracts entered into [NAME] in relation to the whole or any part or parts of the [NAME] including the lift and other equipment referred to in Clause 5(10) hereof and any other equipment or installation of the [NAME] (10) The Seventh Schedule makes the following provision in respect of apportionment of service charges: THE SEVENTH SCHEDULE (Percentage of General Expenses and Lift Expenses attributable to each Flat) Column A

Column B Percentage of General Expenses Percentage of Lift Expenses

[ADDRESS] 5

2.50%

3.50%

The Hearing (11) CHG’s position is that Ms [NAME] is liable to pay the following sums by way of service charge and that the sums were reasonably incurred: 2016/17 Service Charge year

6 (a) £1,250.21, comprising a 2.5% contribution to General Expenses incurred in the sum of £50,008.61 [153]; (b) £248.56, comprising a 3.5% contribution towards Lift Expenses incurred in the sum of £7,101.74 [154]; and (c) £750, being a 2.5% contribution towards a reserve fund demand in the sum of £30,000. (d) However, CHG considered that Ms [NAME] was entitled to a credit in the sum of £14.02, resulting from the tribunal’s decision in LON/00BK/LSC/2015/0437, that certain costs were not payable by her under the terms of her Lease as they constituted company expenses. (e) The total sum that the applicant considered was payable by Ms [APPELLANT] for this service charge year was therefore £2,234.76. 2017/18 Service Charge year (a) £1,312.42, comprising a 2.5% contribution to General Expenses incurred in the sum of £52,496.96 [182]; (b) £372.45, comprising a 3.5% contribution towards Lift Expenses incurred in the sum of £10,641.59 [183]; and (c) £625, being a 2.5% contribution towards a reserve fund demand in the sum of £25,000. (d) However, CHG considered that Ms [NAME] was entitled to a credit in the sum of £163.36 resulting from the tribunal’s decision in LON/00BK/LSC/2015/0437, that certain costs were not payable by her under the terms of her Lease as they constituted company expenses. (e) The total sum that the applicant considered was payable by Ms [APPELLANT] for this service charge year was therefore £2,146.51. (12) In accordance with the tribunal’s directions, Ms [NAME] set out her challenges to the service charge costs she disputed in the form of a Scott Schedule [142]. Her challenges were based on her inspection of invoices held by CHG relating to costs it incurred in the service charge years in dispute. At the hearing, we dealt with each item on that Schedule in turn, hearing representations from both parties and evidence, as necessary, from Mr [NAME] and Ms [NAME]. We address each item raised by Ms [NAME] in the Schedule in the paragraphs that follow, adopting her description of each item under challenge. 2016/17 Service Charge year

7 Company Accounts (13) In her Scott Schedule Ms [NAME] queried sums of £360 [160] for preparation of CHG’s company accounts; accounting fees of £1,556 and £16.60 corporation tax paid out of service charge funds on behalf of CHG [161]; as well as £25 for electronic confirmation of company records [162]. At the hearing, Mr [NAME] accepted that she had no liability to contribute towards these sums, and that her account would be credited accordingly. In its comments in the Scott Schedule the applicant stated that Ms [APPELLANT] had already received a credit for this sum, but during the hearing Mr [NAME] stated that it appeared that the credit adjustment had not yet been made. In light of the applicant’s concession, Ms [APPELLANT] confirmed that she had no further challenge to these costs. LVT Documents (14) Ms [NAME] challenged the sum of £100, incurred for postal expenses, relating to correspondence with the tribunal and preparation of bundles [162]. Again, in its comments in the Scott Schedule the applicant stated that Ms [APPELLANT] had already received a credit for this sum, although it appears that this has not yet been made. In light of the applicant’s concession that she was not liable to contribute towards these costs, Ms [NAME] confirmed that she had no further challenge. Shareholders Charges (15) Ms [NAME] queried costs of £125 [163] and £135 [170] described in the invoices as payments for the hire of a hall for residents’ meetings. Mr [NAME] confirmed that that was the reason for the expenditure and that one meeting is held each year. In response, Ms [NAME] said that she had no evidence to suggest that residents’ meetings did not take place as stated, but she did not think notice of the meeting was fixed to the notice board in the hallway. (16) We see no reason to doubt Mr [NAME] evidence as to why these costs were incurred, as corroborated by the descriptions in the invoices. We consider that hire of a hall to hold a residents’ meeting is payable under paragraph 6 of the Fifth Schedule as a cost of managing the [NAME] and although Mr [NAME] initially paid the cost himself, it was ultimately paid for by [NAME], the [NAME]. There is no evidence before us to indicate that the amount incurred is unreasonable. [NAME] (17) Mr [NAME] confirmed that given the tribunal’s determination in LON/00BK/LSC/2015/0437, Ms [NAME] would receive a credit for her contribution towards the sum of £425.38 included as expenditure in the annual accounts for Directors’ and Officers’ insurance [153]. Ms [NAME] agreed that this disposed of her challenge.

8 Maintenance (18) Ms [NAME] challenged an invoice from SAWS Property and Grounds Maintenance for £150 [164]. The invoice records that the work in question was for the removal of items stored within the storage cupboard/bin store for [ADDRESS]. Ms [NAME] agreed with Mr [NAME] that this area is a bin store and not a storage area. Mr [NAME] explained that, unfortunately, residents left personal belongings there, such as bicycles and that every few years the area has to be cleaned out. Ms [NAME] suggested that this work was not carried out and that bicycles are still present. We see no reason to doubt Mr [NAME] evidence that these costs were incurred for the reasons stated in the description in the invoice and determine that the cost is payable by Ms [NAME] as a cost of maintaining the [NAME]. (19) Two invoices from [NAME] dated 14 April 2016, both in the sum of £282, were queried by Ms [NAME]. The invoices are identical, and Ms [NAME] suggested that the same invoice has been paid twice, as indicated by payment stamps on the two invoices. The description of the work carried out in the invoices concerns the fixing of carpets in the communal areas of [ADDRESS]. In its response in the Scott Schedule, CHG conceded that this appeared to be a duplicate payment of the same invoice, but that as [NAME] had gone into liquidation, and the position could not be clarified, the sum was still payable by Ms [NAME]. However, at the hearing Mr [NAME] agreed to waive one of the invoices. One payment of £282 is therefore not payable by Ms [NAME]. Repairs (20) Ms [NAME] challenged an invoice for £1,460.400 from AS [NAME] Contractors for works described in the invoice as relating to water ingress repair works, comprising extending scaffolding to access the chimney and the supply and installation of a new chimney pot and cowl. Mr [NAME] evidence was this work resulted from damp and water ingress along the party wall between number 39 and [ADDRESS], affecting flat 39, situated at the top of the [NAME]. Ms [NAME] did not dispute his evidence, and accepted that this work was carried out. She made no challenge to the amount incurred or the quality of the work carried out and, as such, we determine that the cost is payable by her. She accepted that consequential internal redecoration works in the sum of £1,464 [168] were payable by her. (21) Ms [NAME] initially queried an invoice for £2,340 [169] concerning the alteration of scaffolding to enable access for gas main repair works, but at the hearing agreed that this sum was payable by her. Mr [NAME] explained that scaffolding in place for the purposes of major works had to be moved to allow this repair. [NAME]

9 (22) In her Scott Schedule Ms [NAME] queried costs specified in the accounts in the sum of £14,479.40 [153]. The applicant’s response indicated that these costs concerned [NAME]’s fees for managing the [NAME]. Ms [NAME] only comment in the Scott Schedule was “what are their duties”. (23) As the applicant had not included [NAME]’s invoices in the hearing bundle, nor a copy of its management agreement with CHG, we requested that copies be produced on the second day of the hearing. An examination of the invoices shows that [NAME]’s charges were calculated at £312.13 per unit, including VAT, per annum, across the 38 residential flats. (24) At the hearing, Ms [NAME] argued that as she has been previously been told to direct all her communications to Mr [NAME] directly, rather than to the agents, she should not have to pay towards [NAME]’ fees. She also complained that [NAME] refuse to give her receipts for documents she delivers to them, and that when she attended their offices to deliver a skeleton argument for the previous tribunal application, they refused to accept it. Mr [NAME] informed us that a few weeks previously Ms [NAME] had been told to direct all communications to Mr [COUNSEL], CHG’s solicitor. (25) We have concerns about the instruction that all communications from Ms [NAME] be directed to Mr [NAME]. We recognise why this instruction was given, having regard to the history of litigation between the parties, including prosecutions in the magistrates’ court initiated by Ms [NAME]. However, it does not seem appropriate to us to shut off Ms [NAME] from contacting the agents altogether. It cannot be right, as Mr [NAME] suggested in his response to a question from us, that Ms [NAME] must contact Mr [NAME] even in the case of an emergency in the [NAME] such as a burst pipe when such an incident could occur when his offices are closed. Further, one of the [NAME]’s responsibilities under its management agreement with CHG is to deal directly with tenants, including arbitrating in disputes between them, if required. We suggest that this instruction is reviewed. It is clearly appropriate for communications from Ms [NAME] regarding this application, or other actual or anticipated litigation, to be directed to Mr [NAME]. However, we do not see why Ms [NAME] should be prevented from contacting the [NAME] if she has concerns regarding issues such as the repair and management of the [NAME]. (26) Despite these concerns, we are satisfied that the sum of £312.13 per unit, including VAT is payable by Ms [NAME]. Ms [NAME] did not produce any alternative quotes from agents or other evidence that these costs were unreasonable. The agent’s duties under the management agreement include managing the [NAME], collecting service charges, paying invoices for costs incurred in management, maintaining management information sufficient for preparation of the accounts, maintaining the [NAME] in good repair, entering into service contracts, and insuring the [NAME]. Even allowing for the difficulties Ms [NAME] experienced in communicating with them, we consider a fee in this amount is reasonable given the work undertaken by the agents.

10 (27) However, we determine that Ms [NAME] liability should be limited to her contribution of the sum of the invoices presented by [NAME], which total £14.233.13. We do so as Mr [NAME] could not explain the variation between that figure and the figure of £14,479.40 that appears in the accounts. Lift Maintenance Contract (28) In her Scott Schedule, Ms [NAME] queried the sum of £527.62 [171], but accepted at the hearing that this was a credit sum carried over from the previous service charge year and did not pursue her challenge further.

General Repairs (29) Ms [NAME] challenged an invoice in the sum of £540 [172] from Finnegan Property Services for preparation of an inspection report concerning [ADDRESS]. Mr [NAME] case was that there had been significant water ingress into this flat and several inspections were required to remedy the problem. Ms [NAME] queried why several reports were needed. However, there is no evidence to suggest that multiple reports were prepared; the invoice refers to only one. Nor is there any evidence to suggest that the work undertaken was unnecessary and there is no challenge to the amount of costs incurred. We accept Mr [NAME] evidence that this was a problem that went on for 3-6 months and determine that the cost is payable by Ms [NAME]. (30) Ms [NAME] also challenged the sum of £78 for work to repair a locked shutter, suggesting that this should be billed to the leaseholder of the flat concerned. Mr [NAME] evidence was that when access to the roof was being sought, a key to the lock in the skylight of flat 18, [ADDRESS] snapped, and a locksmith was needed to resolve the problem. We accept that this was a cost, albeit an unforeseen one, that arose during an inspection of the roof of the [NAME] and that it is payable by Ms [NAME] under paragraph 1 of Schedule Five of the lease. 2017/18 Service Charge year Accountancy Fees (31) Ms [NAME] challenged accountancy costs invoiced by [NAME] in the sum of £1,620 [18]. She considered that these related to preparation of audited accounts and that the costs incurred were unreasonable, as an audit was unnecessary. (32) We agree with Ms [NAME] that an audit of service charge accounts is unnecessary for a [COMPANY] of this size, and having regard to the amount of money that passes through the service charge account. We

11 understand why she concluded that [NAME] carried out a full audit, given that on the first page of the accounts [180], the accountants state that they audited the accounts. (33) However, Mr [NAME] evidence was that the accountants do not carry out a full audit, and that the sum of £1,620 was for their preparation of the service charge accounts. In our view it is unlikely that full audited accounts could have been secured at a cost of £1,350 plus VAT. We therefore accept as credible Mr [NAME] evidence that the [NAME] were not instructed to carry out an audit of the accounts and that the costs refer to preparation of the accounts. Even if that conclusion is wrong, and [NAME] did carry out an audit, as well as preparing the accounts, in our determination the costs incurred, of £1,620 were not unreasonable. They amount to £35.53 plus VAT per [NAME], and costs in that amount would not be unreasonable if the only work that was carried out was preparation of the service charge accounts alone. Ms [NAME] did not contact any other accountants to secure alternative quotes and in our opinion, costs in this sum are not unreasonable. However, for future years, CHG should, clarify whether [NAME] are carrying out a full audit and, if not why this is suggested in the service charge accounts. Annual Lift Audit (34) Ms [NAME] challenged an invoice in the sum of £799.33 [194] for fees described as being for an annual lift audit. Mr [NAME] stated that this concerned a health and safety inspection required in order to secure insurance for the lift. Ms [NAME] argument was that this cost should be covered by the lift maintenance contract. We disagree, this is an entirely separate issue to a maintenance contract, which Mr [NAME] informed us is held by a different company. We accept as credible Mr [NAME] explanation that the audit was required as a prerequisite to providing insurance cover for the lift. Ms [NAME] had no evidence to the contrary and did not challenge the amount of the cost incurred. We determine it was reasonably incurred and is payable by her. [NAME] (35) The applicant conceded in its comments to the Scott Schedule that this item, in the sum of £419 was not payable by Ms [NAME] given our determination in LON/00BK/LSC/2015/0437 and that a credit in her apportioned share will be paid to her. Health & Safety (36) We reject Ms [NAME] challenge to this item, at a cost of £25.72 [196], which Mr [NAME] explained concerned the fire brigade’s instruction that a Fire Evacuation Plan needed to be placed on the notice board of each [NAME]. Ms [NAME] acknowledged that there might be a plan on the notice board and we therefore accept Mr [NAME] evidence. The amount is clearly reasonable, and we determine it is payable by Ms [NAME].

12 (37) Ms [NAME] also challenged an invoice in the sum of £210 [197] on the basis that the work described in the invoice was to visit the [NAME] to test a lightning protection system. However, it is then stated in the invoice that no system was found. She considered the inspection pointless. (38) Mr [NAME] evidence was that the purpose of the visit was to identify if a lightning protection system was in place. There is no evidence to the contrary and we consider that it is not unreasonable for a landlord to incur a one-off expense to identify if a [NAME] contained such a system. We determine the sum is payable by Ms [NAME]. (39) Ms [NAME] also challenged the need for an asbestos inspection, invoiced at a cost of £480 [198]. However, given Mr [NAME] explanation that there are asbestos panels present in the risers in the stairwells, and asbestos present in the lift motor room, we accept that it is reasonable to carry out periodic asbestos inspections. There is no challenge to the amount incurred and we determine that the sum was reasonably incurred and is payable by Ms [NAME]. (40) Although in her Scott Schedule Ms [NAME] queried an invoice in the sum of £559.64 for the provision of signage, she dropped that challenge at the hearing, following the explanation provided by CHG in its Scott Schedule that only £10.50 of that sum related to this [NAME]. Maintenance (41) Although Ms [NAME] listed this item of expenditure in her Scott Schedule, she confirmed at the hearing that it was not being challenged. Repairs - Electrical (42) Ms [NAME] challenged an invoice in the sum of £282 [203] concerning the supply and installation of LED motion sensor floodlights to the entrance porch area of the [NAME]. Her complaint was that the system works erratically. However, she acknowledged that she had not raised the issue with CHG and she provided no examples of when and how the system operated erratically in her Scott Schedule, statement of case, or witness statement. In the absence of such evidence we determine that the cost was reasonably incurred and is payable by Ms [NAME]. (43) She also challenged an invoice for £198 [205] for attending the [NAME] and checking bathroom lights, suggesting that this should be paid by the leaseholder of the individual flat concerned. We determine the sum is payable by her and accept Mr [NAME] evidence that the inspection was needed following water penetration into the flat through the structure of the [NAME]. Ms [NAME] suggestion is pure speculation and we consider Mr [NAME] is better placed to identify the purpose of the inspection. Repairs – Plumbing and drainage

13 (44) Ms [NAME] advanced the same argument in respect of an invoice for £90 [207] for a contractor who investigated a leak at [ADDRESS] in which it examined underneath the bath and behind the WC. She argued that this should be paid by the leaseholder of the flat. We disagree, for the reason advanced by Mr [NAME], namely that CHG had to arrange an inspection due to uncertainty as to whether the water leak was emanating from the flat itself, or if a structural problem was causing damp penetration. We also accept as reasonable, his evidence that it would have been inappropriate for an insurance claim to be made for this inspection, as the amount invoiced was within the excess under the buildings insurance policy. To make such a claim would also impact on the applicant’s claims record. The cost was reasonably incurred, in our view, and is payable by Ms [NAME]. (45) In her Scott Schedule Ms [NAME] had included a challenge to the cost of works relating to removal of a redundant compactor unit located in the bin area of the [NAME]. However, that challenge was not pursued at the hearing. Repairs - General (46) Ms [NAME] queried why the sum of £11.04 was incurred in respect of a filing tray [206]. Mr [NAME] explained that the tray was placed in the common hallway of the [NAME], so that residents could utilise it for unwanted post, that was to be returned to the sender. Ms [NAME] suggested this was unnecessary, but we accept that it was of use to residents, that the expenditure was reasonably incurred, and that the cost is payable by Ms [NAME]. (47) She also challenged an invoice in the amount of £240 for cleaning and removing rubbish from the front balcony, including water jetting [220]. Photographs shown to us at the hearing indicate that the [NAME] has a mansard roof. Mr [NAME] explained that the roof leads to a concealed gutter, with a hidden rainwater outlet, behind a parapet wall, and that from time to time that gutter and the surrounding area must be cleaned, to remove debris, including fallen leaves. This area comprised the balconies of flats 17 and 18, and Ms [NAME] argued that that the cost should be payable by the [NAME] of those flats. (48) We disagree. Clause 5(6)(i) of the Lease obliges CHG to maintain, and keep in good and substantial repair and condition, the main structure of the [NAME], including the roof and their gutters, rain water pipes and floors. These costs fall within that covenant, and Ms [NAME] is obliged to contribute to them by virtue of paragraph 1 of the Fifth Schedule. There is no evidence to suggest that these costs were not reasonably incurred and we determine they are payable by Ms [NAME]. (49) Also challenged by Ms [NAME] was an invoice for £120 for investigating damp in Flat 1. Again, she suggested this should be payable by the leaseholder of the Flat concerned. Again, we disagree. We accept Mr [NAME] evidence that these costs were incurred to investigate the cause of damp affecting the exterior wall of this lower ground floor flat. Ms [NAME] suggests that because the invoice

14 records that no leak was found from other flats, there was no need for the inspection. However, a landlord who has reason to suspect that dampness affecting a flat might be caused by a structural problem has an obligation to investigate this. The invoice records that the source of the dampness may be penetrating dampness from the exterior of the [NAME]. The costs clearly fall within CHG’s obligations under Clause 5(6)(i) of the Lease. We determine that they were reasonably incurred and are payable by Ms [NAME]. (50) Ms [NAME] objected to the cost of £2,484.48 for the replacement of the [NAME]’ individual mail boxes located in the hallway [223]. In her Scott Schedule, she records her challenge as being that these were “unwanted” and that mail is “diverted to wrong boxes”. Mr [NAME] evidence was that the previous mail boxes were the original ones installed when the [NAME] was built in the 1970’s and that they had been significantly damaged over time. They were replaced by boxes with combination locks rather than the key locks used previously. Whilst Ms [NAME] might not have wanted the boxes replaced, other residents may disagree. She accepted that the former boxes had been damaged, which she said was due to residents trying to retrieve misfiled post. In our determination, there is no evidence to suggest that CHG acted unreasonably in incurring this cost, that it was unnecessary to replace the original mail boxes, or that the cost is unreasonable in amount. The cost is payable by Ms [NAME]. Fees – Legal & Professional (51) Ms [NAME] included legal costs in her Scott Schedule. The accounts show that the sum charged to the service charge account was £631.51 [182]. However, Mr [NAME] confirmed that Ms [NAME] has no liability to pay towards these costs, which are only payable by those [NAME] who have entered into Deeds of Variation with CHG (the background to these variations was explained in our last decision). He confirmed that Ms [NAME] service charge account would be credited to reflect her nil liability. [NAME] (52) The sum specified in the accounts for management is £14,281.84. Ms [NAME] repeated the challenge she made in respect of the costs incurred in the 2016/17 service charge year and we reject her challenge for the same reasons as stated above. (53) We were provided with a copy of a single invoice from [NAME] for this year, covering the period 25 March 2017 to 23 June 2017, in [NAME]’s charges remained at £312.13 including VAT, per unit per annum. For the reasons stated above, we determine that these costs were reasonably incurred and that the sum payable by Ms [NAME] is her apportioned share of £14,233.13. Lifts - telephone

15 (54) Ms [NAME] challenged a British Telecom bill for £218.92 [217] suggesting that it was not payable, as it was addressed to a third party and did not appear to concern the [NAME]. Mr [NAME] explained that the bill was for the emergency telephones located in the two lifts servicing the [NAME], and that it was addressed to the previous [NAME] of the [NAME], Barley Chambers. He said that from April 2017 the cost of these telephones was about £60 per month. Ms [NAME] challenge is, once again, speculative, and we see no reason to doubt Mr [NAME] evidence. The costs indicated by Mr [NAME] appear to us to be reasonable in amount for what is an essential service. The cost was reasonably incurred and is payable by Ms [NAME]. Major Works Expenditure (55) In her Scott Schedule, Ms [NAME] queried the sum of £4,974.55, invoiced by [NAME] S [NAME] Contractors [224]. Her only comment in the Scott Schedule is “From what fund”. Mr [NAME] response in the Scott Schedule was that the invoice related to the costs of major works to the exterior of the [NAME] and were funded from the service charge reserve fund. At the hearing he stated that this was the final payment made to that contractor in respect of the major works that had straddled both the 2016/17 and 2017/18 service charge years. The sum invoiced was within the sum of £9,559.03 identified in the service charge accounts as being reserve fund expenditure [185]. (56) Mr [NAME] evidence answers Ms [NAME] query, and in the absence of any substantive challenge to these costs, we determine they were reasonably incurred and are payable by her. 2018/19 Budget (57) The budget for this year appears at [230]. Ms [NAME] challenged the following items of anticipated expenditure. Audit Fees - £2,472 (58) Ms [NAME] maintained that there was no need for audited service charge accounts to be prepared. Mr [NAME] response was that £2,000 of this sum was for the preparation of unaudited service charge accounts and £400 for the preparation of company accounts, for which Ms [NAME] is not liable. For the reasons stated above, we accept Mr [NAME] evidence that these are not audited accounts (despite the description in the budget). Ms [NAME] suggested that the amount allowable should be the same as the cost incurred in the previous year, £1,620. We consider some allowance should be made for inflation and increased costs but that no satisfactory explanation has been given to warrant an increase of around 25%. We determine that the appropriate budgeted sum payable by Ms [NAME] is her contribution towards the sum of £1,800. Directors and Officers Insurance - £418

16 (59) Mr [NAME] confirmed that Ms [NAME] has no liability to contribute towards these anticipated costs. General Repairs - £10,000 (60) Although Ms [NAME] included these anticipated costs in her Scott Schedule, she confirmed at the hearing that she did not dispute them. Legal & professional fees - £10,000 (61) Mr [NAME] acknowledged that legal fees might not be payable by Ms [NAME] and he agreed to a budget of £1,000 to cover the possible need to instruct a professional such as a surveyor. Managing Agent’s fees - £15,128.40 (62) This represents just over a 5% increase from the fees of £14,233.13 that we determined were payable for the previous service charge year. We do not accept Ms [NAME] submission that the costs should remain static and agree with Mr [NAME] that a modest allowance needs to be made for an increase in costs and inflation. A 5% increase is reasonable given that the unit rate charged was the same in the past two previous service charge years. Reserve Fund Demands (63) The sums demanded from [NAME] for reserve fund contributions were £30,000 in 2016/17 [156]; £25,000 in 2017/18 [185] and £20,000 for the for 2018/19 budget. (64) Mr [NAME] explained that the major works that commenced in the 2016/17 service charge year, and which involved roof replacement and structural repairs, including to the facade of the [NAME], cost £218,752.75. He stated that the sum of £30,000 demanded in 2016/17 was necessary to fund these works, as was the further demand of £25,000 made in 2017/18, because at the end of the 2016/17 service charge year only about £17,000 was left in the reserve fund. (65) As for the 2018/19 budget, the covering letter dated 16 March 2018 from [NAME] to [NAME] [228], enclosing the budget, explained that there was about £38,671 in the general reserve, and £16,718 in the lift reserve. They state that the intention was for the £20,000 contribution to be allocated to the general reserve and that in the forthcoming year the intention was to replace the entry phone system, as well as the carrying out of some minor works. (66) Clause 4(d) of the Lease allows the landlord to operate a reserve fund. It operates two reserve funds. One for general expenditure and for expenditure on the lifts. In a repeat of arguments made to previous tribunals, including in

17 the last application before us, [NAME] suggested that there was a third fund, that was set up in 1977, from which money has gone missing. We stated at paragraph 61 of our previous decision that it was her contention that hundreds of thousands of pounds, possibly as much as £500,000, had been misappropriated from reserve funds. In both applications she contended that given this misappropriation, it was unreasonable for CHG to demand additional contributions from her. She argued before us that it amounted to double collection by CHG. In her Scott Schedule she also argued that she had not been provided with information as to why reserve funds were being demanded from her. (67) We consider Ms [NAME] must have been aware that the intention behind the collection of the reserve fund contributions for the 2016/17 and 2017/18 service charge years was to fund the ongoing major works. Mr [NAME] confirmed that those works had been the subject of statutory consultation, and she did not dispute this. We note that the hearing bundle for the last application contains a Notice of Intention to carry out those works dated 22 May 2015 [144] and a letter dated 28 August 2015 from [NAME] to [NAME] stating that a reserve fund demand was to be issued to fund the works [147]. The purpose behind the collection of the 2018/19 reserve fund was made clear in [NAME]’s letter of 16 March 2018. (68) Ms [NAME] acknowledges that we have no jurisdiction to determine issues relating to breach of trust in respect of reserve fund monies, except to the extent that this is necessary to decide a question arising under section 27A of the 1985 Act. We do not consider it necessary in this case given that, as in the last application, Ms [NAME] was unable to say when funds were misappropriated, by whom, and in what amount, nor could she provide any evidence to corroborate her assertions. Mr [NAME] position was that nobody at CHG had any idea what Ms [NAME] was referring to when she mentioned the existence of a third reserve fund. (69) In our determination, the sums demanded for the 2016/17 and 2017/18 reserve funds were reasonable in amount and are payable by Ms [NAME]. She has raised no substantive challenge to these costs and we consider they were reasonable in amount having regard to the cost of the major works and the amount held in the reserve fund at the end of the 2016/17 service charge year. (70) However, we are not persuaded that it is reasonable to budget for a £20,000 reserve fund contribution for 2018/19. When we made our last decision, we were informed by Mr [NAME] that a planned maintenance programme was in place for the [NAME] and we had regard to that assurance when deciding whether reserve fund contributions for the 2014/15 and 2015/16 service charge years were payable by [NAME]. (71) At the hearing of this application, Mr [NAME] stated that there was no maintenance programme in place at the moment. He said that the only planned works for the 2018/19 service charge year were the possible entry phone works, for which quotes in the sum of around £18,000 had been received. He also

18 suggested that within the next five years internal redecoration to the common parts was likely to be needed and that the [NAME]’s façade will need repainting in about 10 years’ time. (72) We asked Mr [NAME] if he was familiar with the Service Charge Residential Management Code, 3rd Edition, published by the Royal Institution of Chartered Surveyors, and he stated that he was not. We would hope that [NAME] are familiar with the Code but in any event, given that he is a director of the [COMPANY] we suggest that he familiarises himself with its contents which is designed to promote desirable practices in respect of the management of residential leasehold property. (73) Section 9.3 of the Code deals with planned and cyclical works and states as follows: “You should use scheme inspections to inform a programme of planned and cyclical works. This plan should be used to inform budget calculations and reserve fund contributions and should cover a minimum period of three years. Programmes for large, more complicated developments should cover a longer period.…… The programme should reflect a realistic cost of maintenance including periodic redecoration work. ……..Your planned and cyclical works programmes should be agreed with your client, communicated to [NAME] and be included as a note in each year’s service charge budget. A budget for the cost of maintenance should be included in each year’s service charge budget to ensure an adequate fund to meet the cost where permitted in the lease.” (74) We consider this correctly reflects best practice. Given the absence of a programme of planned and cyclical works, we do not consider it reasonable to budget for any anticipated reserve fund contribution for this service charge year. Despite the reference to planned entry phone works in [NAME]’s letter of 16 March 2018, no such works appear to have been carried out in the 2018/19 service charge year. As [NAME] stated in that letter that £38,671 was being held in the general reserve fund, we do not see why a further reserve fund demand for 2018/19 was required, given that no major works were undertaken in 2018/19 and none appear planned for 2019/20. Rule 13 Costs Application (75) In its statement of case the applicant states that it will be seeking an order under Rule 13 The Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013, that Ms [NAME] pay its costs in relation to this application. As agreed at the hearing, we consider the applicant should have regard to the contents of this decision before proceeding to make that application. Without prejudging such an application, it should have regard to the fact that it issued this application; Ms [NAME] is a litigant in person; it has

19 made multiple concessions in respect of the service charges payable by her in light of our determination in LON/00BK/LSC/2015/0437; and that Ms [NAME] has succeeded in some of her challenges. (76) That said, we are concerned about the large number of invoices that Ms [NAME] challenged in this application. To dispute payability of costs such as those incurred in buying a filing tray, where she is liable to pay about 29 pence, raises real issues about the proportionality of such a challenge. (77) If CHG wish to pursue a Rule 13 costs application in respect of this application, it must be made to the tribunal within 28 days after the date on which the tribunal issues this decision. Name: [NAME]: 15 April 2019

20 ADDENDUM TO

DECISION (78) As stated in paragraph two above, the original tribunal was unable to determine the specific sums payable by Ms [NAME] for the service charges years in dispute, because the applicant had agreed to make multiple adjustments to her service charge account, having regard to determinations made in our previous decision in application LON/00BK/LSC/2015/0437. (79) Following issue of the above decision the applicant sought, unsuccessfully, to agree the sums payable by Ms [APPELLANT]. As agreement could not be reached the applicant’s solicitors wrote to the tribunal on 1 June 2022, requesting that it determine the sum payable by Ms [NAME] in a supplemental decision. I issued directions on that application on 22 June 2022 (varied on 8 July 2022) requiring that parties to provide statement of cases addressing the specific sums payable for: (a) the 2016/17 and 2017/18 service charge years (actual costs); and (b) the 2018/19 service charge year (budgeted costs). I stated that a full calculation as to the sums payable should be provided which must address: (a) the heads of expenditure that were the subject of the above determination; and (b) the adjustments that the Applicant agreed to make to the Respondent’s service charge account. (80) Both parties have provided written statements of case as required by my directions. In a letter to the tribunal dated 8 August 2022, the applicant’s solicitors said that the submissions Ms [APPELLANT] had now provided to the tribunal were the first time she had provided them with a calculation as to the amount she considered was payable. They stated that Ms [NAME] had calculated the sum payable by her as £5,895.47, whereas the applicant’s calculation was that £6,074.72 was payable by her. The difference between them was £176.25. The solicitors stated that although they did not agree with Ms [APPELLANT] calculations, the applicant, for commercial reasons, was prepared to agree to her figure. The applicant now invites the tribunal to determine that the parties have agreed that the sum payable by Ms [NAME] is £5,895.47. Determination (81) I determine that Ms [NAME] has agreed that the sum payable by her for (a) the 2016/17 and 2017/18 service charge years (actual costs); and (b) the 2018/19 service charge year (budgeted costs) amounts to a total of £5,895.47. This is the figure that appears on page two of her statement of case dated 31 July 2022, at the end of the following calculation. The numbers in brackets refer to pages in the above decision:

21 “ Year ending March 2017

2.5% Deducted (13)

360.00

1,556.00

16.60

25.00

1957.60 48.94 (14)

100.00

2.50 (17)

425.38

10.63 (19)

282.00

7.05 (27) Claimed 14,479.40

Allowed 14,233.13 Diff 246.27 6.16 £75.28

Year ending March 2018

2.5% Deducted (35)

419.00

10.48

(51)

631.51

15.79 (53) Claimed 14,281.84 Allowed 14,233.13 Diff 48.71 1.22 £27.49 Year ending March 2018

2.5% Deducted (58)

1,800.00

16.40 (59)

418.00

10.45 (61) Claimed 10,000.00 Allowed 1,000.00 Diff 9,000 225.00 (74)

20,000.00

500.00 £751.85

22

2017

2018 2019 TOTAL CHG Claimed 2,234.76

2,146.51 2,368.82 Less as above 75.28

27.49 751.85

2,159.48

2,119.02 1,616.97 £5,895.47 ”

(82) In preparing her calculation, it is clear that Ms [NAME] has considered carefully the above decision, and where the tribunal determined that sums were not payable by her, she has made appropriate deductions to the sums sought by the applicant. The figure she arrives at, £5,895.47, must therefore constitute agreement by her that this is the sum payable by her as a consequence of the determinations made in the tribunal’s April 2019 decision. (83) Given the applicant’s request that the tribunal determine that this is the sum payable by her, no further determination is required of me. However, if I was required to determine the sum payable, I would concur with Ms [NAME] calculations. There is one very minor error that makes no difference to the eventual outcome. The figure of £16.40 deducted in respect of accountancy fees in the 2018/19 service charge year should have read £16.80 (2.5% of £672), but the difference is so small as to be insignificant. Other than that, I agree with her calculation. There appear to be a few errors in the applicant’s calculation, for example they do not appear to have made allowance for the sum of £1,556 in respect of accountancy fees that Mr [NAME] agreed were not payable by her for the 2016/17 service charge year (para. 13 of the decision). Given the applicant’s agreement to accept the sum of £5,895.47, I do not need to address those errors further. (84) The sum of £5,895.47 is therefore payable by Ms [APPELLANT] to the applicant. Other Matters (85) [NAME] requested that there be an oral hearing before I made this determination. I refuse that request as there to do so would serve no purpose, and would result in wholly unnecessary costs being incurred by the applicant and the tribunal. Ms [APPELLANT] has agreed the sum payable by her, and I have concluded that the said sum accords with the tribunal’s April 2019 determination. There is nothing left for the tribunal to determine and, in fact, given her agreement, the tribunal has no further jurisdiction in this matter. (86) In her statement of case of 31 July 2022 Ms [APPELLANT] went on to comment about alleged misuse by the applicant of trust fund monies. Her comments are not relevant to this determination, and nor are the comments she made at paragraphs 19 – 21 of her statement of case which appear to be further

23 challenges to the service charge costs that were the subject of the April 2019 decision. Those costs have already been determined by the tribunal and cannot be revisited. (87) By letter dated 5 August 2022, Ms [NAME] requested that the ‘slip rule’ be applied in respect of the sum of £631.51 referred to in paragraph 51 of the April 2019 decision regarding legal and professional fees for the 2017/18 service charge year. She appears to be suggesting that sums paid by the applicant for legal costs exceeded that amount. She refers to an amount of £24,075.35 and says that “This discrepancy requires explanation, without which the Slip Rule should be applied. This is a considerable oversight, and adjustments should be made at the final hearing”. (88) Rule 50 of the Tribunal Procedure (First-tier Tribunal)([NAME]) Rules 2013 allows the tribunal to correct clerical mistakes, or other accidental slips or omissions in a decision. The matters identified by Ms [NAME] do not fall within those categorises and no correction under Rule 50 is possible.

Judge Amran Vance

22 September 2022 Appendix - Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).