First-tier Tribunal Determines Reasonable Service Charges for Tenant

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference :

LON/00BG/LSC/2024/0697

Property :

77 [ADDRESS] [POSTCODE]

Applicant : [redacted] : Mr [COUNSEL] Respondent : [redacted] : In person Type of [NAME] : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985 Tribunal members : [NAME] [NAME] : 10 [ADDRESS] [POSTCODE] Date of hearing : 28 March 2025 Date of decision : 16 June 2025

DECISION

2 Decisions of the Tribunal (1) The Tribunal determines that the amount of service charges payable by the Applicant is £11,939.79. (2) The case is now remitted to the County Court at Clerkenwell & Shoreditch for other matters to be determined. The [NAME]

1. The Applicant seeks a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to the amount of service charges payable by the Respondent in respect of the period 1 April 2015 to 1 April 2023 totalling £11,387.94. It also sought contractual interest at 8% per annum from 29 April 2015 to 14 August 2023 of £3410.67 and thereafter at a daily rate of £2.48.

2. Proceedings were originally issued in the County Court at Clerkenwell and Shoreditch under claim number K3D4D6Z. The claim was transferred to this tribunal by order of District Judge Bell on 6 March 2024.

3. The Directions stated “The tribunal will only deal with the issue of reasonableness and payability of the Service Charges and Administration Charges. Once the tribunal has made its decision, the case will be sent back to the County Court for it to deal with any other matters.” The hearing and Procedural Matters 4. The Applicant appeared by Mr [COUNSEL], an in-house solicitor of the Applicant. The Respondent appeared in person. [NAME] to debar the Respondent 5. On 27 March 2025 the Applicant applied to strike out the [NAME] under rule 9 on the grounds that his case did not comply with directions and no statement of case had been given by the Respondent. The Applicant sought an order the Respondent be debarred from giving evidence.

6. The Respondent apologised to the tribunal and the Applicant and said that these breaches had been caused by family issues.

7. The tribunal carefully considered the [NAME], having regard in particular to the overriding objective under rule 3. It decided to refuse the [NAME] primarily because it was made only the day before the hearing.

3 Respondent’s statement 8. At the hearing the Respondent wished to provide a short written statement. This was just over one page in length and referenced matters already raised in correspondence. The tribunal agreed to admit this. The Lease and Property 9. The tribunal did not carry out inspection as it did not consider it necessary. From the plans in the lease it is clear that the property comprises a three-bedroom maisonette. This is let out by the Respondent.

10. The lease grants a term of 125 years from 16 January 1989. By clause 4 (4), the lessee covenants to pay an interim charge and the service charge. In the Fifth Schedule the service charge is defined as such reasonable proportion of the total expenditure as is attributable to the demised premises. The Applicant’s case 11. The Applicant’s pleaded case in the County Court may be summarised as follows. The claimant is registered proprietor of 77 [ADDRESS] [POSTCODE] being a leasehold title. Pursuant to the lease the defendant covenanted to pay rent and other monies including service charge. The defendant failed to pay the claimant’s demands for rent and service charge. The tenant is also liable for the landlord’s costs in contemplation of service of a notice under section 146 of the Law of Property Act [1925]. The determination sought is in contemplation of such notice. The amount of the claim totalled £11,387.94 as set out in the Particulars of Claim dated 17 August 2023.

12. A summary of service charge costs was sent to the defendant on or around 30 September each year. The Respondent had already received these. The claimant did not know what was disputed in the Particulars of Claim.

13. The property is managed by [COMPANY], an arm’s length management organisation which manages the housing stock of the London Borough of [NAME].

14. The service charge apportionments are based on the proportion of Gross Value between the subject flat and the Building or Estate, depending on the relevant service. The Applicant provided extensive schedules of categorised expenditure (“macros”) and copies of service charge demands sent to the Respondent, which showed the apportionment.

4 15. The Respondents’ opening balance was £5523.79 debit as of 1 April 2016 [42].

16. The Applicant called Ms [APPELLANT] an Insurance Manager for the Applicant. Ms [APPELLANT] had provided a witness statement verified by a statement of truth. Her evidence may be summarised as follows. The [NAME] not the council sets insurance premiums. The level of premium depends on market factors and the claims history. In 2023-2024 reinstatement values increased by 20%. The cost of claims has been very high. It was close to or higher than the overall premium, such that the [NAME] is [NAME] a loss or very little profit. Consequently the [NAME] adjusted the premium accordingly. There has also been a reduction in the leasehold property insurance market with fewer insurers wishing to participate. In [NAME] only one [NAME] offered cover so there was no option but to accept the terms on offer.

17. The Applicant entered a five-year insurance contract but before doing so complied with section 20 of the 1985 Act. Sample consultation notices were exhibited. In 2018 the Applicant outsourced the preparation consultation notices but the list of addressees included 77 Burley House, for which the Respondent’s correspondence address of [ADDRESS] Ham London [POSTCODE] was shown. The subject policy covers parts of flats common parts and the exterior of buildings. A separate policy covers individual leasehold flats and their respective responsibility for common parts under the leases. The two policies were independent. The policies do not cover council buildings and schools which are insured separately. The policy excess is £2 million for each claim and therefore claims up to that level are self-insured by the council. The Respondent’s case 18. In the County Court, the defendant admitted liability for £1,822.29 and disputed the balance. His defence may be summarised as follows. The Respondent had not addressed his complaints. Payment by cheque for £2000 was made on 7th of September 2017. Payment by cheque for £2000 was made on 30th of May 2018. An online payment of £1,576.06 was made on 14th of January 2020. The service charge entry of 1 April 2023 on the schedule to the Particulars of Claim should not be included as the actual service charge invoice had not been produced by [COMPANY]. The Respondent set up a standing order from 27th of July 2023 to pay £200 per month. [COMPANY] are set up as an arm’s length organisation and has mismanaged services.

19. In his statement in the Tribunal, the Respondent raised the following matters: (i) The sums demanded should total £9,730.34 against which the Respondent had paid £5,576.06 leaving a balance of £4153.74

5 (ii) the Applicant did not provide information on consultation carried out under section 20 major works costing £1403.68 but only submitted an invoice in that amount. (iii) The level of the insurance premium was challenged and the Respondent asserted that the five-year insurance contract gives an unfair advantage to the [COMPANY] as it was subject to yearly claims performance and insurance premium tax increases. (iv) The Respondent disputed the antisocial behaviour management charge. (v) Costs for resident engagement were challenged (vi) The Applicant failed to provide evidence of charges relating to residential engagement and no evidence is provided as to what engagement was carried out. (vii) The caretaking charge was not passed on or apportioned fairly it was only passed on to [NAME]. Applicant’s response to the Respondent’s case 20. The Applicant addressed the Respondent’s issues as follows, in correspondence in the bundle and via verbal submissions: (i) The sums credited to the account by the Respondent were used to pay previous debts and did not extinguish any of the debts on the particulars of claim (ii) consultation was not required for the expenditure in relation to the front door as it was below the threshold of £250. (iii) A consultation was carried out to comply with section 20. Only one [NAME] will cover the portfolio. The landlord is not required to obtain the cheapest quote in any event. (iv) The cost antisocial behaviour addresses fly tipping, vandalism, begging, drug dealing, and other related activities. This service includes a Police team of two sergeants and 12 constables. Clause 5 (5)(o) of the lease empowers the landlord to “do all works installations acts matters or things which in the absolute discretion of the landlord is considered necessary or advisable for the proper maintenance management safety amenity or administration of the building”. Therefore this cost is recoverable under the lease.

6 (v) Resident engagement includes the cost of providing information to residents and engaging in informal consultation. It has always been a cost recharged to the [NAME]. It falls within clause 5 (5)(o) of the lease. Findings 21. As to the reasonableness and payability of service charges, the Tribunal accepts the Applicant’s case. It found Ms [APPELLANT] to be a credible witness and accepts her evidence. It finds that the consultation for the long-term insurance contract was carried out correctly and that the insurance premiums are payable. It finds that the basis of apportionment is rational. It finds that anti-social behaviour and residents’ engagement both fall within the scope of the service charge. It finds that the door entry costs did not trigger the consultation requirements.

22. The tribunal has had to deliberate without the benefit of a Scott Schedule and refer instead to correspondence between the parties. Nevertheless, there is clear documentary evidence that each of the disputed three payments of £2000, £2000 and £1576.06 were made by the Respondent. Further, an email from [RESPONDENT] of [COMPANY] dated 30 May 2018 acknowledged one of the £2,000 payments. Although the statement of account on [42] shows a credit for £1,576, neither of the credits of £2000 are shown as single receipts. Mr [NAME] submitted that that arose because the payments had been used to discharge previous unpaid liabilities. However, credits totalling £4000 are shown on the account statement [28-29] together with £0.30 for credit interest.

23. The Tribunal therefore finds that the statement of account [29/31] does reflect all the payments made prior to proceedings being issued. It also finds that the estimated accounts forming the basis of the County Court action should be superseded by actual amounts where ascertained, which was a contention put forward by the Respondent. However the Tribunal rejects the submission by the Respondent that the invoice dated 1 April 2023 for £1822.29 should be excluded on the basis the actual service charge invoice had not then been produced by [COMPANY]. The Tribunal is not concerned with the costs of £87.50 as that is a matter for the County Court.

24. The Tribunal therefore finds that the position is as follows:

7

25. The amount of service charges payable is therefore £11,939.79. 26. However, with effect from 30 July 2023, the Respondent has made 17 payments at £200, or £3,400. This is evidenced at the running account at [33/34]. The case will now be returned to the county court. Name: Mr [NAME]: 16 June 2025

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) 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 [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the Tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the Tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber). Year On account Adjustment Amount payable 2016/2017 1,181.57 £ 12.52 -£ 1,169.05 £ 2016/2018 1,245.13 £ 63.95 £ 1,309.08 £ 2018/2019 1,336.74 £ 54.84 £ 1,391.58 £ 2019/2020 1,478.32 £ 239.32 £ 1,717.64 £ 2020/2021 1,476.20 £ 190.53 -£ 1,285.67 £ 2022/2023 1,494.68 £ 211.51 -£ 1,283.17 £ 2022/2023 1,470.72 £ 103.51 £ 1,574.23 £ 2023/2024 1,822.29 £ 387.08 £ 2,209.37 £ Totals 11,505.65 £ 434.14 £ 11,939.79 £