First-tier Tribunal Rules on Service Charge Payment Distribution

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AN/LVM/2022/0021 Property : [ADDRESS], London, W14 OSR Applicants : [redacted] 2. [COUNSEL] and [COUNSEL] (Ground Floor Flat) Representative : In person Respondents : [redacted] Floor Flats) 2. [COMPANY] : In person Manager : Mr [COUNSEL] : [COUNSEL] Solicitors Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 2 September 2025

DECISION

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Decisions of the Tribunal On 24 July 2025, Mr [NAME], the Manager, applied to the Tribunal for Directions as to how he should treat a sum of £4,975.77 which had been paid by [NAME] [NAME] pursuant to the determination of a Tribunal in LON/00AN/LSC/2020/0067. The Case was listed for a Case Management Hearing today. All the parties appeared in person. The three tenants agreed on the direction that the Tribunal should make. The Tribunal directs the Manager to credit the sum of £4,975.77 to the service charge account and should be apportioned to the accounts of the tenants as follows: (i) [NAME] [NAME] (Garden Flat): 25% (ii) [NAME] and [NAME] [NAME] (Ground Floor Flat): 25% (iii) [NAME] [NAME] (First and Second Floor Flats): 50%.

Reasons 1. There is a long and unfortunate history to this property which has been converted to create four flats. [NAME] [NAME] [NAME] is the leaseholder of the Garden Flat; Mr [NAME] and [NAME] [NAME] [NAME] are the leaseholders of the Ground Floor Flat and [NAME] [NAME] [NAME] is the leaseholder of both the First and Second Floor Flats. The freehold is held by [COMPANY], a company in respect of which one share is held by the leaseholder of each flat.

2. In 2017, [NAME] [NAME] and [NAME] [NAME] [NAME] applied for the appointment of a manager. On 27 January 2017, a tribunal appointed Mr [NAME] to manage the property for a period of five years.

3. On 22 August 2019, Mr [NAME] applied to vary the management order by substituting Mr [NAME] as the Tribunal appointed Manager (LON/00AN/LVM/2019/0018). On 12 March 2020, a Tribunal made an order substituting Mr [NAME] as the Tribunal appointed Manager. Mr [NAME] appointment started on 1 April 2020 and was for a period of three years.

4. On 17 October 2022, [NAME] [NAME] and [NAME] [NAME] [NAME] applied to extend the appointment (LON/00AN/LVM/2022/0021). On 9 March 2023, a Tribunal extended Mr [NAME] appointment for a further period of five years from 31 March 2023. A varied management order was made.

5. The current [NAME] relates to a sum of £4,975.77 paid by [NAME] [NAME] to Mr [NAME]. On 4 January 2020, [NAME] [NAME] issued an [NAME]

3 under section 27A of the Landlord and Tenant Act 1985 against Mr [APPELLANT], the then Manager, seeking a determination of the service charges which she was required to pay (LON/00AN/LSC/2020/0067). On 21 October 2021, a Tribunal issued its decision in respect of this [NAME]. On 26 January 2022, the decision was amended under the slip rule. On 20 February 2023, a Tribunal ordered [NAME] [NAME] to pay this sum of £4,975.77 to Mr [NAME] within 28 days. £1,500 related to contributions towards a reserve/sinking fund and the remainder in respect of arrears of service charges. It is to be noted that this determination relates to the period when Mr [NAME] was the Manager. The Tribunal made this order having reconciled the service charge accounts during the period of Mr [NAME] management from 2017 to 31 March 2020.

6. When Mr [NAME] took over the role as Manager on 1 April 2020, there was only a nominal sum of £24.68 in the service charge account. The order of 12 March 2020, had therefore provided for the Manager to invoice £1,500 from each lessee to ensure that he had sufficient funds to manage the property. There would have been a more substantial balance had [NAME] [NAME] paid the sums which had been demanded from her. It is also apparent that Mr [NAME] had used sums paid by the other leaseholders to fund [NAME] [NAME] arrears. The effect of the Tribunal's decision of 20 February 2023 was to make good this shortfall. Had this sum been paid by [NAME] [NAME], the service charge account for the property would have been in credit by this sum of £4,975.77. This sum should therefore be apportioned to the service charge accounts of leaseholders according to their service charge contributions.

7. When the situation was explained to the leaseholders, they all agreed that this was the appropriate apportionment of this sum.

8. In his written submissions, Mr [NAME] suggested that there was a further sum of £4,514.55 which should be credited to his account. It is apparent that at some date, Mr [NAME] and [NAME] [NAME] had each loaned the Manager a sum of £2,000 so that the Manager could pay for the property to be insured. However, that sum had been repaid. Mr [NAME] denied that there was any further adjustment to be made. This is not an issue which is currently before the Tribunal.

9. The Tribunal is concerned at the extent of the litigation that has been generated in respect of this property. The Tribunal would urge all the parties to cooperate with the Manager. If there is any further issue to be resolve, paragraphs 31 to 33 of the current management order make provision for the resolution of any dispute.

Judge Robert Latham 2 September 2025

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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).