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AllowedFirst-tier Tribunal (Property Chamber)·

First-tier Tribunal Rules on Service Charge Arrears

Case No.

📌 In brief

The First-tier Tribunal (a person Chamber) decided that the service charge arrears of £5,399.80 were due and payable by the respondent to the claimant. The tribunal reviewed the budget and expenses related to the a person and pleasure grounds, confirming the validity of the service charge claim.

⚖️ Legal holding

Service charges are due and payable if the costs are reasonable and incurred for the provision of services or carrying out of works.

Topics

service chargeslease agreements

Provisions

Landlord and Tenant Act 1985 s.27A

📖 Technical summary

The tribunal determined the service charge arrears were due and payable by the respondent to the claimant.

📜 Headnote Official document

The First-tier Tribunal (Property Chamber) determined that the service charge arrears of £5,399.80 were due and payable by the respondent to the claimant as of the date of the court proceedings. The tribunal reviewed the budget and expenses related to the property and pleasure grounds, confirming the validity of the service charge claim.

📚 Full judgment Official document

OUTCOME: Allowed

© CROWN COPYRIGHT 2019

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CAM/22HU/LSC/2018/0073 Property : [ADDRESS], [NAME_1], [ADDRESS] [POSTCODE] Applicant : [redacted] : [NAME_3] Counsel Respondent : [redacted] : [NAME_5] of Application : S27A Landlord and Tenant Act 1985 – determination of service charges payable – court referral Tribunal Members : Judge John Hewitt Ms [NAME_6] (EstMan) FRICS Mr N [NAME_6] Date and venue of Hearing : 11 [ADDRESS] [POSTCODE] Date of Decision : 13 February 2019

DECISION

2 The issue before the tribunal and its decision 1. The sole issue before the tribunal was the liability of the respondent to

pay to the applicant service charges in the sum of £5,399.80 being the

balance said to be due set out in a demand or Application for Payment

dated 5 March 2018 issued by the applicant’s managing agent, [NAME_8] [6] to the respondent.

2. The decision of the tribunal is that as at the date of the issue of the

court proceedings the amount of £5,399.80 in respect of service

charges was due and payable by the respondent to the applicant.

Since that time the respondent has made a number of payments to the

applicant. At the hearing the parties were agreed that the sum claimed -

£5,399.80 had now been paid in full.

Report to the court 3. The tribunal reports to the County Court at Central London (Claim

Number E0QZ11D5) that when the claim was issued the service charge

arrears of £5,399.80 were payable by the respondent to the claimant.

As noted above, since the issue of the claim, the sum claimed has been

paid in full.

4. [Not used]

5. In the court proceedings the applicant/claimant also claimed:

5.1 Statutory interest pursuant to s69 County Courts Act 1984;

5.2 Court fee £410.00;

5.3 Legal Representative’s costs £100; and

5.4 Costs (unspecified)

These claims are referred back to the court because the court has

exclusive jurisdiction to determine them.

As to the claim to interest the court may wish to note that the lease does

not contain a provision for the payment of interest on sums not paid by

a due date.

6. The reasons for our decision are set out below.

NB Reference in this Decision to a number in square brackets ([ ]) is a reference to the page number of the hearing file provided to us for our use at the hearing.

Background The Property and the title structure 7. On 20 November 2000 the freehold title of [ADDRESS], [NAME_1] was registered at HM Land Registry with title number EX652164

[41]. The Schedule of notices of leases in the Charges Register [46]

3

records that between December 1976 and January 1980 six leases of

flats within [ADDRESS], [NAME_1] were granted, each for a

term of 999 years from 1 January 1977.

On 20 November 2000 the applicant was registered as proprietor [43].

8. The lease of [NAME_9] is dated 30 June 1978. It is registered at HM Land

Registry with title number EX212260. On 10 October 2012 the

respondent was registered as proprietor [49].

9. The material provisions of the lease are set out in the Schedule to this

decision. For the moment, the service charge regime set out in the lease

may be summarised as follows:

9.1 The service charge year is the calendar year – 1 January – 31

December;

9.2 The landlord’s managing agents are to prepare a budget and to

ascertain a provisional proportion payable by the lessee which is

payable in advance by two half yearly payments on 1 January

and 1 July in each year. If the sum payable has not been notified

to the lessee by 1 January, then the sum due is payable 14 days

after it is notified to the lessee;

9.3 After the year-end the managing agents are to calculate the

actual amount of the service charge payable for that year. Any

shortfall between the provisional service charge and the actual

service charge is payable 14 days after notification of it. Any

surplus may be carried forward by way of a credit to the account

or repaid to the lessee at the discretion of the landlord.

10. There are two parts to the service charge – the property (the building)

and the pleasure grounds (the estate). As to the property the lease

specifies the lessee’s proportion is a one-fifth part. It appears that it was

originally intended that the property would be adapted to create five

self-contained flats.

Evidently there are six flats within the property and six long leases have

been granted. The papers before us show that the sum demanded is a

one-sixth share of the budget and that proportion is not in dispute.

11. The property was originally constructed in about 1900 as a rather

grand mansion house. Subsequently it was adapted to create six

self-contained apartments. The property stands in about five acres of

land and the estate includes mature woodland (with rare trees)

adjacent to Epping Forest, parkland, landscaped areas, an outdoor

swimming pool with patio, a communal car park for 12 vehicles and a

garage forecourt which give access to six garages,

The property is reached by a 250-metre long private driveway entry to

which is controlled by an entry-phone system.

4

There are two houses adjacent to (or perhaps within) the estate, the

owners of which have the benefit of enjoyment of the estate and its

amenities.

The six leaseholders and the two house owners are all members of the

applicant, a company limited by guarantee. At present the company has

four directors, [NAME_10], [NAME_10], [NAME_10] and [NAME_10].

The claim and the court proceedings 12. The budget for 2018 was set and it comprised:

Expense The Property [ADDRESS] External Amenity

Insurance £8,500 £1,300 LEB (Electricity) £700 £2,300 Cleaning £3,300

Lift £1,250

Health & Safety £880

Repairs & maintenance £2,320 £3,010 Gardening

£7,400 Swimming Pool

£3,600 Security

£2,000 Audit & Man Co

£700 Managing Agents

£3,300 Reserves £50,000 £4,800

Total £66,950 £28,410

Share (6/8) £11,158.33 £3,551.25 Each half-yearly instalment £5,579.17 £1,775.63

13. An Application for Payment dated 6 February 2018 was sent to the

respondent by the applicant’s managing agent, [NAME_8] [166]. It

claimed £8,784.80 made up as to:

Date Description Debit £ Credit £ Balance £

Balance brought forward 1,700.00

1,700.00 01.12.2017 Interim Service Charges (Externals) 01.12.2017 – 31.12.2017 200.00

1,900.00. 01.12.2017 Interim Service Charges (Internals) 01.12.2017 – 31.12.2017 300.00

2,200.00 22.12 2017 Payment received

385.00 1815.00 01.01.2018 Interim Service Charges (Externals) 01.1.2018 – 30.06.2018 1775.63

3,590.63

5 01.01.2018 Interim Service Charges (Internals) 01.01.2018 – 30.06.2018 5,579.17

9,169.80 25.01.2018 Payment received

385.00 8,784.80

14. By a letter dated 23 February 2018 [168], solicitors – [NAME_20] - wrote to the respondent at the request of applicant. The

letter referred to an earlier letter dated 16 February 2018 (which we

have not seen) and enclosed a further copy of the Application for

Payment dated 6 February 2018. The letter stated that the applicant

required immediate payment of £8,784.80.

15. On or about 12 March 2018 the applicant issued the court proceedings.

The claim was for £5,399.80 being “… the provisional service charge in

the sum of £5,399.80 in accordance with the Statement attached

hereto.”

The statement is at [6] and provides:

Date Description Debit £ Credit £ Balance £

Balance brought forward

1,815.00 01.01.2018 Interim Service Charges (Externals) 01.1.2018 – 30.06.2018 1775.63

3,590.63 01.01.2018 Interim Service Charges (Internals) 01.01.2018 – 30.06.2018 5,579.17

9,169.80 25.01.2018 Payment received

385 8,784.80 16.02.2018 Payment received

3,000 5,784.80 26.02.2018 Payment received

385.00 5,399.80

16. A defence was filed.

17. By an order made 18 September (and drawn 31 October) 2018 [29]

Deputy District Judge Gillman ordered that: “The case is transferred to

the First Tier Tribunal.”

18. The tribunal received the court file on 15 November 2018 and gave

directions on 28 November 2018 [30].

Inspection 19. At 10:00 on Monday 11 February 2019 the members of the tribunal had

the benefit of an external inspection of [NAME_1]. The applicant was

represented by [NAME_3] of counsel, her instructing solicitor and [NAME_10], a director. The respondent was represented by [NAME_5], a property consultant.

20. The focus of the case was a major works project concerning external

repairs and redecorations (the project). As we went around the outside

of the building, a number of defects and wants of repair were drawn to

our attention.

6

Hearing 21. The hearing commenced at 11:15.

[NAME_3] presented the case on behalf of the applicant. [NAME_3]

handed in a skeleton argument. [NAME_3] called [NAME_10] to

give oral evidence. [NAME_10] was cross-examined by [NAME_5]

and also answered questions put to her by members of the tribunal.

[NAME_5] presented the case on behalf of the respondent. [NAME_5]

gave oral evidence. He was cross-examined by [NAME_3] and also

answered questions put to him by members of the tribunal.

At the conclusion of the evidence both representatives made closing

submissions.

The nub of the issue 22. The nub of the issue was the inclusion in the 2018 budget of the

allocation of £50,000 to the sinking fund in respect of the project.

There is a bit of history to the project. For reasons which will become

clear shortly we need not recount that history in any detail.

23. The applicant held an AGM on 11 July 2016. The minutes are at [69].

They record [NAME_5] was present on behalf of [NAME_9]. Amongst other

things some roof repair works were discussed. [NAME_10] reported

that additional external works were needed the cost of which estimated

at £32,000. At that time the agreement or consensus of the meeting

was that each lessee would contribute a one-off levy of £5,000 to

provide a fund for the cost of the works. These works included masonry

works and redecoration. The managing agent recommended that a

building surveyor be instructed to prepare a condition survey. This was

duly done. A copy of the report dated 10 October 2016 is at [72]. In

broad terms this indicated that slightly more extensive works were

required. It was evident that the cost would exceed the initial estimate

of £32,000. The directors decided to obtain fresh estimates for

budgeting purposes. Five potential contractors were invited to tender

for the works, but only three tenders were submitted. The tenders

ranged from £69,000 to £141,000 excluding VAT and professional fees.

24. The potential cost of the project was much higher than anticipated. The

managing agent convened a meeting of the lessees to discuss the

project. This was held on 28 March 2017. The minutes are at [100]. It is

recorded that [NAME_14] (a director of the respondent) had sent

apologies for absence. It is recorded it was contemplated that a 5/7 and

10-year forecast “… for contribution to sinking fund from the service

charge with the aim of avoiding future levys and to comply with the

terms of the lease.” [sic] would be prepared.

In general discussion about the project there was a notion that there

should be a main contractor to include the scaffolding sub-contract

because that would simplify project management be undertaken by [NAME_18] and [NAME_10], at no cost to the applicant. The minutes

record that there was consensus to proceed and award a contract to

[NAME_16] and also to investigate the inclusion of some additional works

to the portico.

25. An AGM was held on 28 June 2017. The minutes are at [102]. The

respondent was neither present nor represented. The project was

discussed. The minutes record that stage 1 and stage 2 s20 consultation

notices had been issued. The managing agent reported that a levy had

been raised on the six lessees, four had paid and that payment from the

fifth was expected imminently. The minutes make no reference to the

sixth lessee, but we infer the sixth lessee is the respondent and that it

had not paid the levy. The minutes also record the advice of the

managing agent that if the contract could not be placed by the summer

and the works were deferred to the next year, the cost of the works will

increase.

26. At [105] there is a two-page letter sent by [NAME_14] to the managing

agents. So far as material, it draws attention to certain terms of the

lease and asserts that the 2017 budget issued in December 2016 did not

make reference to the costs of the project and that it was not open to

the applicant to impose a levy part-way through the year. It was

suggested that if the works were carried out in 2017 the cost could be

included in the year-end statement and any balancing debit would be

payable within 14 days of demand.

27. In the event a contract was not placed. Those lessees who had paid the

£5,000 levy were refunded. At some point, it was not entirely clear to

us when, a representative of the respondent suggested that the project

ought to be supervised by a project manager and a surveyor. The

applicant agreed to this suggestion, even though it increased the cost of

the project.

28. The directors of the applicant met in the autumn of 2017. They decided

that in the absence of funds it would not be wise to place the contract

for the works. They considered the costs involved, including the

additional costs of the project manager and the surveyor, the urgency of

some of the works, the possible increase in costs due to inflation and

further deterioration if there was too much delay to the project and

affordability for the lessees and came to the decision to raise £100,000

to cover the costs and for this to be funded by an allocation of £50,000

to the sinking fund in the 2018 budget and £50,000 in the 2019 budget

with a view to the works being carried out in late 2019 or in 2020.

29. The 2018 budget was duly prepared on that basis. The budget was sent

out to lessees under cover of a letter dated 11 December 2017 [109]. A

copy of the budget is at [110].

The budget as regards the property - [NAME_1] - includes the

£50,000 allocation to the sinking fund for the costs of the project. The

budget totals £66,950.00. Each lessee’s contribution is £11,158.58

8

which means that each half-yearly instalment (due 1 January and 1

July) is £5,579.17.

A demand for the instalment due on 1 January 2018 was sent to the

respondent on 6 February 2018 [166].

The respondent’s position 30. [NAME_5] confirmed that the only entry on that demand which is in

issue is the £5,579.17 – and that is because it includes a contribution to

the allocation of £50,000 to the sinking fund.

31. [NAME_5] agreed that in broad terms the works comprising the project

need doing, and that they should be done sooner rather than later

because if left too long there will be much more deterioration.

32. [NAME_5] had no objection to a reserve fund of £100,000 being built up

to fund the project. His main complaint was that to raise £100,000

over two years was unreasonable and that it should have been raised

over three years. [NAME_5] sought reliance on the opening sentence of

paragraph three of the Third Schedule to the lease to the effect that

allocations to the sinking fund should be phased so as avoid

‘abnormally high charges in any year’. He said that a £50,000

allocation in one year was a ‘spike’ and the lease terms were that such a

spike should be avoided.

33. [NAME_5] was also critical that the directors had never properly got to

grips with a 5/7 or 10-year plan for the property, whether as regards the

project or other costs recurring costs that inevitably arise in a historic

and prestige property such as [NAME_1]. Further, he was critical that

major expenditure was incurred on internal redecorations and

refurbishment in 2016 and argued that the external works should have

taken precedence.

34. [NAME_5] also drew attention to paragraph 7 of the Third Schedule to

the lease which provides for disputes in relation to the service charge or

the provisional service charge should be decided by the managing

agent. He said that he had drawn this provision to the attention of [NAME_8] in a telephone call prior to the court proceedings being issued.

Discussion 35. With no disrespect to the parties’ final submissions or to [NAME_3]’s

skeleton argument, we need not cover ground that was not in issue.

The applicant asserts that the decision to allocate £100,000 to the

sinking fund over two years was a reasonable decision.

The respondent says there is no dispute over the £100,000 but it

asserts it should have been raised over three years, and not two years.

Arithmetically, that would amount to £33,333 each year although

during the hearing [NAME_5] mentioned £30,000 per year.

9 36. It is not for the tribunal to impose its decision in place of that of the

applicant. It is not for the tribunal to decide what another landlord

might have decided. What we have to decide is whether the actual

decision of this landlord in context and circumstanced as it was, was so

unreasonable that no landlord in such circumstances, acting

reasonably, would have arrived at it.

37. On the evidence before us we find that it was not unreasonable for the

applicant to have decided to collect the funds over two years. The

reasons given by [NAME_10] and set out in paragraph 28 are

compelling. The directors were acting on professional advice about the

urgency of the works and the risk of increased costs if there was delay.

These points were not in dispute. The applicant is a company limited by

guarantee. It does not have shareholders. The leases are for 999 years

at the rent of a red rose. There is little, if any, value in the freehold. The

applicant is not in a position to raise a loan because there is little it can

offer by way of security. It is entirely reliant on the lessees putting it in

funds. It is also wise that the directors should not place a substantial

contract unless and until it was holding funds in a significant amount.

38. In these circumstances we cannot find that the subject decision was

unreasonable or perverse.

39. We accept [NAME_3]’s submission that paragraph 3 of the Third

Schedule entitles the managing agent to allocate sums to a sinking fund

with a view to avoiding abnormally high charges in any one year, but it

does not impose an obligation on the managing agent to do so. There is,

of course, a major difference between an entitlement to do something

and an obligation to do something.

40. We also accept [NAME_3]’s submission that paragraph 7 of the Third

Schedule is void by virtue of s27A(6) Landlord and Tenant Act 1985.

41. We have some sympathy with [NAME_5]’s criticism about a coherent

5/7 or 10-year rolling plan for the Property. [NAME_1] is a

substantial and sophisticated high-end building with services to match.

To maintain it to the required standard will require careful and long-

term planning. The financial consequences ought to be factored into the

planning and such a course is to be preferred over ad hoc projects.

However, that does not detract from the overall reasonableness of the

budget set for 2018.

42. We also add, for avoidance of doubt, that we are aware the project was

reviewed at the 2018 AGM and some modifications were made. We

need not go into the detail. We have to decide the reasonableness of the

budget for 2018 when it was set in the autumn of 2017 in the light of

the information and advice available to the directors at that time and

when the decision was made.

43. During the course of the hearing [NAME_5] raised some concerns that

the condition survey carried was not sufficiently detailed and in

10

consequence the tenders allowed for several ‘provisional sums’. [NAME_5] said that in his experience as a property consultant this was

unsatisfactory and allowed for uncertainty over the final cost of a

project. [NAME_5] suggested that some less urgent works might be

deferred and that a cherry picker instead of scaffolding might allow a

saving to be made. In general discussion on these matters it became

apparent that they can be picked up in due course when the project is to

go ahead and when the applicant will give its further s20 consultation

notices.

44. For the reasons set out above we find that arrears of service charges of

£5,399.80 were due and payable by the respondent to the applicant in

March 2018 when the court proceedings were issued.

Judge John Hewitt 13 February 2019

The First Schedule (Extracts from the Lease)

Recital (1) Definitions ‘the property’ the building comprising five flats … at [ADDRESS]…;

‘the pleasure ground’ the amenity land for ornamental and recreational

purposes and access to the property shown edged yellow

on the plan number 2 …;

‘Grantees’ persons (not being tenants of a flat in the property) in

whom a right of use and enjoyment of the pleasure

ground is for the time being and from time to time vested;

‘the service charge’ the cost to the Landlord in a given year of

complying with its obligations in sub-clauses 1, 2 and 4-12

(inclusive) of Clause 4 together with the costs referred to

in ??? ;

‘the provisional service charge’ the likely cost of the service charge

in any given year; Clause 3 The Tenant hereby covenants with the Landlord as follows:-

(1) To pay the reserved rent (if demanded) on the day aforesaid and by way

of further rent the Tenant’s proportion of the service charge and

provisional service charge allocated to the flat in the Second Schedule

at the times specified in the Third Schedule

Clause 4 The Landlord … hereby covenants with the Tenant as follows:-

11

(1) To pay all … rates …

(2) To insure and keep insured the property …

(3) …

(4) To keep the property and including the roof and foundation and

common parts in good and substantial repair and condition and to

redecorate the exterior of the property and the interior staircases halls

and landings of the property … whenever necessary and in any event at

least once in every five years

(5) – (6) …

(7) To keep the pleasure ground including grassed areas and shrubs and

flower beds neat and tidy and properly cared for … and to maintain in

good repair (and working condition if appropriate) any ornamental or

recreational structures or features …

The Second Schedule 1. As to that part of the provisional service charge and the service charge

which shall be incurred wholly or partly in respect of the property each

tenant of a flat in the property shall be liable for one-fifth part thereof;

2. As to that part of the provisional service charge and the service charge

which shall be incurred wholly or partly in respect of the pleasure

ground each tenant of a flat in the property and grantee shall be liable

for the following proportion thereof:-

(i) One-seventh part until the event specified in sub-clause (ii) shall occur; (ii) Eight sixty-third parts in the event that [NAME_17] and his successors in title to Lodge Cottage shall become entitled to the use and enjoyment of the pleasure ground

3. For the purposes of Clauses 1 and 2 hereof any expenditure in respect

of the property and the pleasure ground jointly shall be apportioned

fairly between the property and the pleasure ground according to the

nature of such expenditure …

The Third Schedule 1. The Landlord shall be entitled to appoint Managing Agents …

2. The Managing Agents shall in respect of each year commencing on the

First day of January determine the provisional service charge and

notify the Tenant thereof and the Tenant shall pay his proportion of the

same by two half-yearly payments in advance on the First day of

January and the First day of July in question or if the same shall not

have been notified to him fourteen days before the First day of January

12

in question then (so far as the first instalment is concerned) fourteen

days after the same is notified to him.

3. I determining the provisional service charge and the service charge the

Managing Agents shall be entitled with a view to avoiding abnormally

high service charges in any year to include such sum (to be fixed them

annually) as shall be estimated by them annually as necessary to

provide a sinking fund for:

(a) the replacement of the lifts in the property;

(b) the cost to be incurred by the Landlord in redecorating the

exterior and common parts of the property at the intervals

referred to in clause 4 hereof and in carrying out repairs thereto

when required; and

(c) the costs of complying with any of the Landlord’s other

obligations where substantial expenditure at intervals less

frequently than annually is involved

4. At the end of each year to the Thirty-first day of December the

Landlord’s Managing Agents will calculate the service charge fir that

year and will provide the Tenant with a statement thereof. Any shortfall

between the provisional service charge and the service charge for that

year shall be payable fourteen days after the production of the

statement. Any surplus may be carried forward and the provisional

service charge for the following year or years accordingly reduced or

may at the discretion of the Landlord be wholly or partly repaid to the

Tenant and the other lessees at the property or grantees

5. [not used]

6. The Managing Agents shall where practicable put any sinking fund or

monies held by them on account of the provisional service charge and

not immediately required to be spent on deposit with a repayable bank

to the intent that any interest earned thereon may be set off against the

service charge for the year in question

7. Any dispute in relation to the service charge or the provisional service

charge shall (where but only where Managing Agents have been

appointed) be decided by the Managing Agents of the Landlord acting

as experts and not as arbitrators and their decision shall be final and

binding on all parties to the dispute. If Managing Agents shall not have

been appointed then the same shall be referred to the decision of an

arbitrator …

7. Number Duplicated. Where Managing Agents shall not have been

appointed by the Landlord the tasks allocated to them under this deed

shall (subject to provision 6 of this Schedule) be exercised by the

Landlord.

13 8. …

The Second Schedule (Material Statutory Provisions)

Landlord and Tenant Act 1985

18.— Meaning of “service charge” and “relevant costs”. (1) In the following provisions of this Act “service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent—

(a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord's costs of management, and

(b) the whole or part of which varies or may vary according to the relevant costs.

(2) The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable.

(3) For this purpose—

(a) “costs” includes overheads, and

(b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.

19.— Limitation of service charges: reasonableness. (1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—

(a) only to the extent that they are reasonably incurred, and

(b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly.

(2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.

(2A)-(3) (4) … [repealed]

14 (5) If a person takes any proceedings in the High Court in pursuance of any of the provisions of this Act relating to service charges and he could have taken those proceedings in the county court, he shall not be entitled to recover any costs.

27A Liability to pay service charges: jurisdiction (1) An application may be made to the appropriate tribunal for a determination whether a service charge is payable and, if it is, as to—

(a) the person by whom it is payable,

(b) the person to whom it is payable,

(c) the amount which is payable,

(d) the date at or by which it is payable, and

(e) the manner in which it is payable.

(2) Subsection (1) applies whether or not any payment has been made.

(3) An application may also be made to the appropriate tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to—

(a) the person by whom it would be payable,

(b) the person to whom it would be payable,

(c) the amount which would be payable,

(d) the date at or by which it would be payable, and

(e) the manner in which it would be payable.

(4) No application under subsection (1) or (3) may be made in respect of a matter which—

(a) has been agreed or admitted by the tenant,

(b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,

(c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

15 (5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.

(6) An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination—

(a) in a particular manner, or

(b) on particular evidence,

of any question which may be the subject of an application under subsection (1) or (3).

(7) The jurisdiction conferred on the appropriate tribunal in respect of any matter by virtue of this section is in addition to any jurisdiction of a court in respect of the matter.

ANNEX - RIGHTS OF APPEAL

1. 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.

2. 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.

3. 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.

4. 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.

📊 How courts decide similar cases

Among 12 similar decisions in this collection:

A snapshot of this collection — not a prediction of your case's outcome.

⚖️ What tends to weigh in cases like this

✅ Tends to be accepted

  • The landlord's decision to collect funds over two years was reasonable due to professional advice on urgency and cost increase risks.
  • The applicant company is entirely reliant on tenants for funds as it cannot raise a loan due to lack of security.
  • The lease provision allowing the agent to allocate sums to avoid abnormally high charges is an entitlement, not an obligation.
  • The lease clause providing for disputes to be decided by the agent is void under the Landlord and Tenant Act 1985.

Patterns observed in similar cases in this collection — every case is unique.

❓ Frequently asked questions

What did this decision decide?

The decision confirmed that the service charge arrears of £5,399.80 were due and payable by the respondent to the claimant.

Who was involved?

The case involved the claimant, who sought to collect unpaid service charges, and the respondent, who owed the service charges.

How did the court decide, and why?

The court decided that the service charge arrears were due and payable based on the reasonable costs incurred for the provision of services and works.

Which laws or rules were applied?

The Landlord and Tenant Act 1985, specifically section 27A, was applied to determine the service charge arrears.

What was the argument that mattered most?

The argument that mattered most was the reasonableness of the costs incurred for the provision of services and works.

Was the decision for or against the person who brought the case?

The decision was in favour of the claimant.

What does this mean for someone in a similar situation?

Someone in a similar situation should ensure that their service charges are reasonable and properly documented.

What evidence or documents mattered?

The evidence and documents that mattered included the budget and expenses related to the property and pleasure grounds.

Can a decision like this be appealed?

Yes, a decision like this can be appealed to the Upper Tribunal (Lands Chamber).

Is it worth getting a solicitor for a case like this?

It is always recommended to seek advice from a qualified solicitor for cases involving service charges.

Official source: First-tier Tribunal (Property Chamber) headnote and full judgment reproduced from the court's public records. View on the official source ↗Summary, holding, technical summary and questions: produced by Artificial Intelligence based on the official headnote and judgment. These are VadeLab’s own material and are not the work of the Court.This decision was issued by the First-tier Tribunal (Property Chamber) and is reproduced from its published records. VadeLab is not affiliated with, and this page is not endorsed by, that court or tribunal.