First-tier Tribunal Rules on Service Charge Reasonableness

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] CHAMBER ([NAME]) Case reference : LON/00AY/LSC/2025/0752 & LON/00AY/LDC/2025/0859 [NAME] : [ADDRESS] [POSTCODE] Applicant : [redacted] : [NAME] [COUNSEL] Respondent: [redacted] : [NAME] [RESPONDENT] of [NAME] : Transfer from County Court, service and administration charges Tribunal members : Judge J Moate and Ms M Bygrave (MRICS) Date of decision : 06 October 2025

DECISION

2

Decisions of the Tribunal (1) The Tribunal determines that conditional dispensation be granted, on the following terms: a) the Applicant pay the costs of the dispensation [NAME]; b) the Applicant deduct £1,000 from the service charge claimed in respect of the Section 20 works in compensation for the turf that was not laid; c) the Applicant deduct £1,000 from the service charge claimed in respect of the Section 20 works in compensation for the side gate (which is wooden instead of metal and has a Yale lock instead of a keypad); d) the Applicant deduct £1,000 from the service charge claimed in respect of the Section 20 works for the electrics. (2) The Tribunal determines that, taking into account the deductions above, the sum of £6,680 is reasonably incurred and payable by the Respondent for the service charge claimed in respect of the Section 20 Works. (3) The Tribunal makes the determinations as set out under the various headings in this Decision. (4) Since the Tribunal has no jurisdiction over county court costs and fees, this matter should now be referred back to the County Court at Wandsworth. The [NAME]

1. Proceedings were originally issued by the Applicant in the County Court at Wandsworth under claim no. L01WT703 on 15 October 2024, in which the Applicant claimed £7,180 for unpaid Service Charges.

2. A Defence was filed on 28 October 2024 which raised the following issues: a) the sum claimed was in respect of works for which consultation was required pursuant to s.20 of the Landlord and Tenant Act 1985 “the Section 20 works” but there was no statutory consultation;

b) much of the work which was supposed to be carried out under the Section 20 works was not done. 3. On 18 March 2025 the proceedings were sent from the County Court to this Tribunal, to determine the issues of reasonableness and payability

3 of the service charges only, pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) and Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). The hearing 4. The hearing took place on 12 September 2025. [NAME] [NAME] [NAME], director of [APPELLANT], appeared on behalf of the Applicant and was represented by [NAME] [COUNSEL] of counsel. The Respondent attended and was represented by her husband, [NAME] [RESPONDENT]. The preliminary issue 5. In its statement of case and witness evidence the Applicant had denied any failure to comply with the statutory consultation requirements in respect of the Section 20 works. However, on 08 September 2025, the Applicant made an [NAME] to dispense with the consultation requirements (“the [NAME] to dispense”) pursuant to s.20ZA of the 1985 Act.

6. The Respondent responded to the [NAME] on 10 September 2025. The day before the hearing, [NAME] sent to the Tribunal and to the Respondent a skeleton argument with reference to the Supreme Court decision in [COMPANY] v Benson [2013] UKSC 14, [2013] HLR 21. [NAME] attached three pages of additional evidence to his skeleton argument, in relation to works allegedly completed.

7. At the start of the hearing, the Tribunal asked [NAME] [RESPONDENT] if he had had an opportunity to properly consider the [NAME] to dispense and [NAME] [NAME] skeleton argument, along with the decision in Daejan Investments. [NAME] [RESPONDENT] said that he had considered and responded to the [NAME] to dispense and [NAME] [NAME] skeleton argument and that he had briefly looked up [NAME] on Google.

8. The Tribunal was concerned that [NAME] [RESPONDENT] might need further time to consider the [NAME] and/or take legal advice and asked if he wished to make an [NAME] to adjourn, given the late service of the Applicant’s [NAME] to dispense. The Tribunal explained to [NAME] [RESPONDENT] the import of the decision in [RESPONDENT] and in particular that the Respondent would need to show relevant prejudice as a result of the landlord’s failure to comply with the consultation requirements. 9. [NAME] [RESPONDENT] said that even if he had more time to consider the [NAME], it would not make any difference; although he was not a lawyer and may not be able to express himself as counsel might, he knew the points he wanted to make and would not be seeking legal

4 advice in any event. [NAME] [RESPONDENT] indicated that he would prefer to proceed with the hearing and that he understood the issue of “prejudice”. 10. [NAME] [APPELLANT] argued on behalf of the Applicant that it would not be in keeping with the overriding objective for the matter to be adjourned, especially as the Respondent had already responded to the [NAME]. The Tribunal’s decision on the preliminary issue 11. The Tribunal decided to proceed with the hearing, including the hearing of the Applicant’s [NAME] to dispense. Reasons for the Tribunal’s decision 12. The Tribunal has a wide discretion as to case management and evidence pursuant to Tribunal Rule 6(1) and 6(2). In the light of both parties’ submissions set out in paragraphs 5-10 above and applying the overriding objective, the Tribunal decided that it was proportionate, fair and just to proceed with the hearing together with the [NAME] to dispense.

13. The Tribunal notes the Respondent’s further submissions sent on 16 September 2025 after the hearing, arguing that all submissions and evidence filed by the Applicant after 5 September 2025, including the decision in [NAME] should be inadmissible and/or dismissed. The Tribunal further notes the Respondent’s further submissions dated 24 September 2025 on the content of the electrical certificate.

14. The Tribunal did not invite further submissions from the parties and the Applicant has not had any opportunity to comment on the Respondent’s submissions dated 16 and 24 September 2025. However, as set out above, the Tribunal carefully consulted with both parties at the hearing about how to proceed and made its decision accordingly. The Respondent’s further submissions do not change this decision. The background 15. The [NAME] which is the subject of this [NAME] is a 2- bedroom flat in a block of 6 flats, built around 1900. Neither party requested an inspection and the Tribunal did not consider that one was necessary, nor would it have been proportionate to the issues in dispute.

5 16. The Respondent holds a long lease of the [NAME] which requires the landlord to provide services and the tenant to contribute towards their costs by way of a variable service charge. The specific provisions of the lease and will be referred to below, where appropriate.

The issues 17. At the start of the hearing the parties identified the relevant issues for determination as follows: (i) Whether the statutory consultation requirements had been complied with in relation to the Section 20 works. (ii) If not, whether the Tribunal should dispense with the consultation requirements either entirely or with conditions. (iii) The reasonableness and payability of the Section 20 works with respect to the garden, the side gate and the entry phone. [It later transpired that the entry phone was not an issue but that the electrics were an issue].

18. Having heard evidence and submissions from the parties and considered all of the documents provided, the Tribunal has made determinations on the various issues as follows. Whether the Applicant complied with the statutory consultation requirements in relation to the Section 20 works 19. Although the Applicant had denied any failure to consult in its statement of case and witness evidence, in its [NAME] to dispense, it admitted the breach and acknowledged that the Section 20 notice was “not sent to [NAME] at correspondence address until November 2018 after works had commenced”.

20. Given the Applicant’s admission that it had not complied with the statutory consultation requirements in relation to the Section 20 works, the Tribunal did not need to determine this issue. [NAME] to dispense with consultation requirements 21. [NAME] [APPELLANT] argued on behalf of the Applicant that there was no relevant prejudice to the Respondent and that none had been asserted.

6 He contended that the points raised by the Applicant were relevant to the question of reasonableness only. 22. [NAME] [RESPONDENT] said that the Respondent had been significantly prejudiced by the Applicant’s failure to consult and that if there had been consultation they would have pointed out that the quote from [NAME]: a) did not include VAT and if VAT had been added, it would not have been the lowest quote; b) did not contain details about the proposed electric works; c) included different works to those in the quote from [COMPANY] so the quotes did not compare like with like; d) did not appear to come from a reputable builder – [NAME] was not registered at [COMPANY], [ADDRESS], London, as claimed, and was untraceable at that address. 23. [NAME] [RESPONDENT] argued that if the Respondent had been properly consulted, they would have challenged the authenticity of [NAME]. He provided evidence from [COMPANY] that [NAME] was not and had not been registered there for the last 10 years. He said that if all these matters had been investigated, more competent [NAME] would have been instructed and the works would have been carried out properly. 24. [NAME] [RESPONDENT] identified the following items which were not properly completed: a) the side gate was wooden and not metal; both quotes included the installation of a metal side gate; b) new turf was not supplied or laid in the garden; this was included in the [NAME] quote but was never completed; c) the electrical works carried out were not identified and it was not clear which items were included in the quote. 25. [NAME] [RESPONDENT] argued that a similar wooden door to the one fitted (which he had identified online) cost just £100 whereas the [NAME] quote included a fitting a “new metal gate with keypad entry system” at a cost of £1,300. The quote from [NAME] included “supply and fit hot dip galvanised garden gate at a cost of £1,437.50”. 26. [NAME] [RESPONDENT] accepted that the entryphone had been installed, the issue was that it had not been connected to Flat 2. He admitted that the Respondent had not seen the email from [RESPONDENT] dated 21/01/19 trying to arrange access to connect this and agreed that it could be connected to Flat 2 on a date in the future. This point of dispute was withdrawn.

7 27. [NAME] [RESPONDENT] argued that the quote from [NAME] included supplying and laying turf in the central area of the garden at a cost of £1,000, which had not been done. He said the failure to complete the garden works and lay a new turf particularly affected Flat 2 because they were the only flat with access to the garden and the poor state of the garden impacted the tenants living there.

28. As to the electrical works, [NAME] [RESPONDENT] said he did not know what works had been carried out as the quote from [NAME] simply stated “Electrical works – subject to electrical assessment” at a cost of £2,000 and he had received no further communication about the electrical works. 29. [NAME] [RESPONDENT] also raised a suspicion that the owner of Flat 6, a [NAME] [NAME], might be connected to the payee at [NAME], a [NAME] [APPELLANT]. 30. [NAME] [APPELLANT] on behalf of the Applicant gave oral evidence in response. He confirmed that [NAME] [NAME] was no connection to [NAME] [NAME]. In respect of the wooden door [NAME] [NAME] explained that [NAME] “kept to” the fee quote so when they found other important jobs which needed to be done, they did those instead of the items on the fee quote. For example, they washed down the face of the building and spent time working on the pebble approach to the [NAME]. This meant they did not have enough money to install a metal door, so they installed a wooden door, which was cheaper. When asked who made the decision to substitute works on the quote for other unidentified works, [NAME] [NAME] said that he did. When asked whether he had consulted the [NAME] over these changes, he said he had not. He said the wooden door had cost just £320 (as opposed to the £1,300 quoted). It had a Yale lock as opposed to a keypad lock.

31. In respect of the garden, [NAME] [NAME] said there was a lot of rubbish to be removed and admitted that the turf had not been laid. Rather than lay the turf he decided to upgrade the push button lighting system in the hallway to a sensor system. He admitted using the “garden funds” for that work.

32. As for the electrics, [NAME] [NAME] said that [NAME] had re- wired the hallway, changed the lighting and enclosed the fusebox. He acknowledged that he had not provided any document showing what works would be done and said that this had been communicated between him and [NAME] orally. There was no written quote from [NAME]. There were some photographs in the bundle showing the before and after lights and the new fusebox enclosure in the hallway. When questioned by the tribunal about the certificate for the electrical works, [NAME] [NAME] said that he had not sent a copy of the electrics certificate to the [NAME] or the tribunal, but that he had one which he could provide.

8 33. In respect of the entryphone, [NAME] [NAME] agreed to connect this to Flat 2 (as this had already been charged) but that there would be a call-out fee. 34. [NAME] [APPELLANT] made a concession on behalf of the Applicant that £1,000 be deducted from the overall service charge in respect of the turf which had not been laid. He calculated that this amounted to £167 per flat.

35. He submitted that none of the matters raised by the Applicant amounted to “relevant prejudice” as defined by the decision in Daejan as there was a lack of any financial loss. He said that prejudice would for example mean that the freeholder had gone with [NAME] who were more expensive, which was not the situation here. He submitted that these were matters which went to reasonableness only; “general prejudice” was not adequate. He further submitted that the only area of contention which could amount to financial loss was the “garden works” but as the alternative quote did not include laying turf and the Section 20 Consultation did not include laying turf, there was no relevant financial loss. He further submitted that the VAT issue was not relevant because [NAME] had not charged VAT. 36. [NAME] [NAME] argued that the alternative works which [NAME] carried out (in place of the works on the quote) such as more work on the exterior front of the building and a light sensor system in the hallway instead of a push button system, were all works which were reasonably incurred and reasonable to charge to the [NAME].

37. As to the failure to provide any documentation about the electrical works carried out by [NAME], [NAME] [NAME] contended that this issue had only just arisen so the Applicant had not submitted evidence on this point. When the Tribunal pointed out that the Respondent had challenged the lack of detail in the electrical works on p25 of his statement of case and the Applicant had included in the bundle several photographs as evidence of the electric works, [NAME] [NAME] changed tack and proposed that [NAME] [NAME] provide an electrical certificate within 7 days.

38. The Tribunal gave permission for [NAME] [NAME] to provide an electrical certificate by Monday 15 September to confirm that electrical works were completed as claimed by [NAME] [NAME] in his oral evidence. 39. [NAME] [APPELLANT] accepted that the Applicant pay the costs of the dispensation [NAME].

40. On 15 September, [NAME] [NAME] sent an electrical safety certificate to the Tribunal which showed that electrical work was done on the hallway of the [NAME] and was signed off by [NAME] on 05 April 2019. The certificate says “alteration to an existing installation” in the “[NAME]'s hallway” but provides no further detail as to what work was done. The Tribunal’s decision on the [NAME] to dispense with consultation requirements 41. The Tribunal determines that conditional dispensation be granted, on the following terms: a) the Applicant pay the costs of the dispensation [NAME]; b) the Applicant deduct £1,000 from the total invoice for the Section 20 works to compensate for the turf that was not laid; c) the Applicant deduct £1,000 from the total invoice for the Section 20 works to compensate for the sidegate (which is wooden instead of metal and has a Yale lock instead of a keypad); d) the Applicant deduct £1,000 from the total invoice for the Section 20 works to compensate for the electrical works which have not been fully identified. Reasons for the Tribunal’s decision 42. The Applicant belatedly accepted that it failed to consult with the Respondent in respect of the Section 20 works carried out at the [NAME]. It now admits that it sent the consultation documents to the [NAME] when Ms [RESPONDENT] had requested that all documents be sent to her correspondence address. This resulted in Ms [RESPONDENT] being unable to comment on the quotes provided. In fact, the works started before Ms [RESPONDENT] had received late notification of the consultation documents in November 2018, meaning she was deprived of the ability to participate in any meaningful consultation over the works.

43. The purpose of the Section 20 Consultation procedure is to ensure that tenants are protected from paying for inappropriate works or from paying more than would be appropriate. Based on the Supreme Court decision in Daejan, the dispensing jurisdiction under section 20ZA(1) of the 1985 Act is not a punitive or exemplary exercise.

44. The ratio of the Supreme Court decision in Daejan is that on a landlord’s [NAME] for dispensation under section 20ZA(1) whilst the legal burden is on the landlord, the tenant must show “relevant” prejudice which the landlord can seek to rebut. Relevant prejudice is any prejudice which the tenant would not have suffered had the consultation requirements been fully complied with but would suffer if an unconditional dispensation were granted, for example as to the extent, quality or cost of the works. The Tribunal should adopt a sympathetic approach to the lessee’s case and may impose conditions

10 on dispensation, including as to costs, to compensate the tenant for any prejudice found.

45. The question for the Tribunal is therefore “what prejudice would the Respondent not have suffered had the consultation requirements been complied with?”.

46. This is a difficult exercise because it is impossible to know what would have happened if the Respondent had been able to comment, as she has now, on the proposed quotes. It is likely that [NAME] [RESPONDENT] would have investigated [NAME] and noticed that they were not registered at [COMPANY], had no VAT number and had provided an inadequate quote for the electrical repairs in the hallway and common parts. It is likely that these matters would have led either to the instruction of [COMPANY], who provided the alternative quote, or a different contractor entirely, as the competence and professionalism of [NAME] would have been called into question. This in turn would likely have led to the instruction of a contractor who a) set out in detail the works to be completed, and b) completed the works in accordance with the quote.

47. The Tribunal finds on the balance of probabilities that [NAME] did not act with the level of professionalism to be expected in the building trade. They used a business address where they were not registered (this was not disputed by the Applicant), their quote stated that “all prices are subject to VAT” when they were not VAT registered, and according to [NAME] [NAME], they never provided any details of the electrical works to be completed. Furthermore, they did not complete all the works set out on the quote. Whilst this may have been due in part to them undertaking additional works and “running out of funds”, as described by [NAME] [NAME], the Tribunal finds on the balance of probabilities that [NAME]’ management of the works was careless and that they should have carried out the works included on the quote first.

48. What then is the relevant prejudice to the Respondent? It is true, as [NAME] [RESPONDENT] points out, that on a pure cost analysis, the works were not more expensive as a result of the failure to consult. However, based on the Tribunal’s findings above, the quality of the management of the works was substandard and some of the works on the quote were not completed. This resulted in relevant prejudice which the Tribunal finds, adopting a sympathetic approach, that the Respondent would not have suffered if the consultation requirements had been complied with.

49. The Tribunal does not find that the relevant prejudice was such that dispensation should not be granted at all. This would effectively give the [NAME] “a windfall” as per Lord [NAME] at paragraph [74] of the decision in [NAME] because they did receive the

11 benefit of most of the Section 20 works. Instead, the Tribunal finds that dispensation should be granted on terms, as set out below.

50. The Tribunal finds that if the consultation requirements had been complied with the works would have included the installation of a metal gate at the side of the building as specified in the Statutory Section 20 Notice (and included in the quote from [NAME]). For this, the Tribunal deducts £1,000 as a term of the dispensation, which is the difference between the cost of £300 which the Tribunal allows for the installation of a wooden gate and the cost of £1,300 charged on the quote.

51. In respect of the garden works, the Tribunal does not accept [NAME] [NAME] argument that because the laying of turf was not included in the Statutory Section 20 Notice or the quote from [NAME], the failure to complete this work did not result in “relevant prejudice”. The Tribunal finds that if the Applicant had consulted properly with the Respondent, the Respondent would have identified that the laying of turf was included in the quote from [NAME] but not in the quote from [COMPANY] and would have queried this discrepancy. Given the importance of turf laying to Flat 2 as described by [NAME] [RESPONDENT], the Tribunal finds that a discussion would have ensued which would likely have resulted in it being agreed that laying turf should be included as part of the garden works in any event.

Accordingly, the Tribunal deducts £1,000 as a term of the dispensation, which is the cost of the laying of turf which was never undertaken. This is the same as the amount which [NAME] [APPELLANT] has already conceded on behalf of the Applicant should be deducted.

52. As regards the electrical works, the Tribunal notes the Applicant’s electrical certificate dated 06 April 2019. The Tribunal also notes the Respondent’s submissions dated 16 and 25 September 2025 about the admission of this evidence. During the hearing, [NAME] [NAME] gave oral evidence about the electrical works completed which he said could be backed up by an electrical certificate. The Tribunal has a wide discretion as to the admission of evidence pursuant to Tribunal Rule 6(1) and (2). It is helpful to both parties and the Tribunal to have clarity about which electrical works were completed. The Tribunal does not consider that the Respondent is prejudiced by the admission of this late evidence.

53. The Tribunal finds that on the balance of probabilities the hallway was re-wired, the lighting was changed and the fuseboxes were boxed in as per [NAME] [NAME] oral evidence and photographs (in part confirmed by the electrical certificate). However, the Tribunal does not find that the value of this work amounts to the £2,000 claimed for this work by [NAME]. Given the absence of any supporting evidence it is impossible to assess how this figure was calculated, what, if any, other works were completed and what was involved in this work. The

12 Tribunal finds that if the Applicant had complied with the consultation requirements, the Respondent would have identified this lacuna and particulars of the works would have been provided. In the circumstances, taking a sympathetic approach, the Tribunal deducts £1,000 as a term of the dispensation, which is the difference between the cost of £1,000 which the Tribunal allows for the hallway re-wiring, lighting and fusebox work and the cost of £2,000 charged on the quote.

54. The Tribunal also makes an order that the Applicant is responsible for the costs of the dispensation [NAME]. This was conceded by [NAME] [NAME] and is just and equitable in circumstances where the [NAME] has been brought and argued due to the Applicant’s own non-compliance.

The reasonableness and payability of the Section 20 works with respect to the garden, the side gate and the electrics 55. [NAME] [NAME] submitted that the Tribunal could consider applying “terms” of dispensation or make findings in respect of reasonableness, but could not make double reductions.

56. As set out above, [NAME] [NAME] argued that the alternative works which [NAME] carried out (in place of the works on the quote) such as more work on the exterior front of the building and a light sensor system in the hallway instead of a push button system, were all works which were reasonably incurred and reasonable to charge to the [NAME]. 57. [NAME] [RESPONDENT] argued that it was not reasonable to charge for works which were not undertaken (the turf and the metal door) or works which were not properly identified (the electrics). The Tribunal’s decision 58. The Tribunal determines that the amount payable in respect of the Section 20 works is £43,080 less £3,000 (£40,080). The amount payable by the Respondent is one sixth of that sum which amounts to £6,680. Reasons for the Tribunal’s decision 59. The Tribunal finds that it is not reasonable to charge for works which were not undertaken, even if they were substituted by

13 alternative works. The Tribunal finds that it was not reasonable for [NAME] [NAME] to change the scope of the Section 20 works unilaterally, without consultation with the [NAME].

60. In the circumstances, the Tribunal determines that a) the cost of £1,000 charged for laying turf, which was not undertaken, is not reasonably incurred and not payable; b) the cost of the metal gate in the sum of £1,300 which was not installed, is not reasonably incurred and not payable but that the sum of £300 is payable for the installation of a wooden door; c) the cost of £2,000 for unspecified electrical works is not reasonably incurred and not payable but the sum of £1,000 is payable for the hallway re-wiring, lighting and fusebox works.

61. The decision on reasonableness produces the same outcome as the terms of dispensation. The Tribunal agrees with the Applicant that the Tribunal cannot make double deductions. For the avoidance of doubt, the deductions are only applied once in the calculation of the total amount payable. The next steps 62. The Tribunal has no jurisdiction over county court costs. This matter should now be returned to the County Court at Wandsworth.

Name: Judge J Moate Date: 06 October 2025

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME] 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.

14 The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the [NAME] 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).