First-tier Tribunal Rules on Service Charges for Fire Alarms

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : MAN/00BY/LSC/2021/0011V

Properties : Blocks 1 – 7 [NAME], [NAME], Liverpool, [POSTCODE] Applicants : [redacted] (2) [COMPANY].

Represented by : [NAME] [COUNSEL] instructed by [RESPONDENT].

Respondent: [redacted] of Application

Date of hearing :

: Under s.27A of the Landlord and Tenant Act 1985

28 February 2022 Tribunal Members Date of Decision Date of Determination :

:

Judge P [NAME]

10 March 2022

11 March 2022

© CROWN COPYRIGHT 2022

DECISION

Decision (1) The 1st Applicant has the right to recover from the Respondents with leasehold interests in flats in Block 2 [NAME], [NAME], Liverpool, [POSTCODE] under the service charge provisions in the respective leases the costs of installing a new fire alarm system in Block 2. In this respect, the costs of £39,000 are reasonable costs.

(2) The Applicants have the right to recover from the Respondents under the service charge provisions in the respective leases the costs of of the professional fees for contract administration and grant application in respect of Blocks 1 – 7, [NAME], [NAME], Liverpool, [POSTCODE]. In this respect, the costs of £2,338.50 for Block 2 and £5,339.74 for Blocks 1, 3, and 7, and £5,339.74 for Blocks 4, 5 and 6 are reasonable costs.

Background 1. This is an application under s.27A of the Landlord and Tenant Act 1985 for the Tribunal to determine the liability to pay and reasonableness of services charges for the costs of installing new fire alarms. The application was initially in respect of seven blocks of flats, Blocks 1 – 7 [NAME], [NAME], Liverpool, [POSTCODE], but is now limited to Block 2. The costs of installing the alarms in Blocks 1, 3, 4, 5, 6 and 7 are to be funded by the Building Safety Fund. Block 2 does not qualify for funding but since a recent change in the qualifying conditions, an application for funding has been submitted.

2. The Applicants also ask the Tribunal to determine the liability to pay and reasonableness of the professional fees for contract administration and grant application in respect of all seven blocks, Blocks 1, 2, 3, 4, 5, 6 and 7.

3. The Applicants are (1) [COMPANY]) [COMPANY]. and (2) [COMPANY]. They are residents’ management companies which are parties within tripartite leases of the seven blocks of flats. The Applicants are contractually responsible for delivering services under the leases. Service charges are payable to the Applicants.

4. [COMPANY]) [COMPANY]. is the management company within the leases of Blocks 1, 2, 3, and 7. [COMPANY]. is the management company within the leases of Blocks 4, 5 and 6.

5. On the evidence provided: the seven blocks contain residential flats. Blocks 1, 3, 4 and 7 have seven floors including the ground floor. The penthouses have a mezzanine floor only accessible from the penthouse. Block 2 has six floors including the ground floor and the penthouse has a mezzanine floor. Blocks 5 and 6 have eight floors including the ground floor and the penthouses have a mezzanine floor. Each block has 2 staircases providing access to all floors. Photographs of the blocks are included in the Applicants’ bundle of documents.

6. [COMPANY]. was appointed in March 2020 as managing agents and carries out the management functions including maintenance. The previous managing agent was [COMPANY].

7. The Respondents are the leasehold owners respectively of each of the flats in the seven blocks. They are listed in the attached schedule.

8. Specimen leases in respect of Blocks 1, 2, 3 and 7 and Blocks 4, 5 and 6 are included in the Applicants’ bundle of documents.

9. The costs which are the subject of the application are:

Block Installation of fire alarm Professional fees 1, 3 & 7

£5,339.74 2 £39,000 £2,338.50

4, 5 & 6

£5,339.74

10. Directions dated 17 February 2021 were issued to the parties providing for them to file a statement of case together with copies of the documents they wish to rely on at the hearing, including signed witness statements. The Applicants complied with the Directions.

11. The Applicants served each of the Respondents with the Directions and Response Form. Thirteen Response Forms were returned in respect of 17 flats. Some of the Respondents own more than one flat. Of those who returned Response Forms only three stated that they would submit written submissions and of those, two did so. An additional written submission was made by [NAME] [NAME] who attended the hearing. Only three of the Respondents, not including [NAME] [NAME], asked for a hearing but none of them attended.

12. The hearing was conducted by video on 28 February 2022. The Applicants were represented by [NAME] [COUNSEL], Counsel, instructed by [RESPONDENT]. and [NAME] [COUNSEL] was the only Respondent to attend. The Tribunal heard evidence from [RESPONDENT] on behalf of the Applicants and from [NAME] [NAME]. Oral submissions were made by [NAME], and [NAME] before the Tribunal reserved its decision.

The Applicants’ case

13. The Applicant’s case is set out in detail in their statement of case. The Applicants are named as resident management companies within the long leases of the seven blocks. [RESPONDENT]. is the landlord of the seven blocks under a headlease dated 14 October 1999 for a term of 125 years less 5 days from 14 October 1999. The Respondents hold their leasehold interests under long residential leases. The freehold and leasehold titles are registered at HM Land Registry.

14. The blocks were subject to numerous fire safety defects which gave rise to a significant risk of fire spread on the exterior of the buildings. The Applicants instructed experts to investigate and report on the fire risk. The experts identified the defects and recommended remedial works to be carried out. Interim measures were put in place which included a waking watch. The costs of these actions, some of which were recovered from the Waking Watch Relief Fund, are not the subject of these proceedings.

15. A specification of works and tender documents were prepared on behalf of the Applicants and the works have now been carried out.

The Respondents’ case 16. Only three of the Respondents made written submissions in response to the proceedings, they were [NAME] [NAME], (154 [NAME]), [NAME] [NAME] (76 [NAME]) and [NAME] [NAME] (194 [NAME]). None of these Respondents disputed their liability to pay for the alarms or professional fees under the terms of their leases. Questions were raised about the liability of third parties to meet the costs. Comment was made on the amount of information provided to and consultation with the leaseholders. None of the Respondents disputed the costs of the works or the professional fees.

17. [NAME] [NAME], who was the only leaseholder to attend the hearing, in his email sent on 18 February 2021, said that he did not agree to the costs being added to the service charge because they are for the ongoing maintenance of the building not fixing problems with the original build. He stated these should be at the cost of the landlord or the [NAME] to address issues with the original build quality. [NAME] [NAME] also raised issues in respect of insurance fess and the lack of segmentation between the apartments. He said that the service fees are no longer reasonable.

18. At the hearing, [NAME] [NAME], after listening to what was said, recognized that the issues he had raised are not the subject of the proceedings. Like many leaseholders across the country, he feels that the [NAME] should be the ones paying for the costs of repairing original defects with the buildings. [NAME] [NAME] did not dispute that he or other leaseholders are liable to pay for the costs of the alarms or professional fees under the service charge provisions in their leases and he did not challenge the amount of the costs.

The law 19. S.18 of the Act defines “service charges” 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.

20. S.19 of the 1985 Act deals with limitation of service charges:

(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.

21. S.27A of the 1985 Act deals with the liability to pay service charges:

(1) An application may be made to the Residential Property 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.

Reasons for the decision 22. The title structure is not in dispute. It is set out in detail in the Applicants’ statement of case. Briefly, the landlord of blocks 1 and n7 is [RESPONDENT]., the landlord of blocks 2 and 3 is [COMPANY]) [RESPONDENT]. and the landlord of blocks 4, 5 and 6 is [RESPONDENT]. The term of the leases is 125 years less 5 days from 14 October 1999. The Applicants are respectively the named residents’ management companies in respect of Blocks 1, 2, 3 and 7 and Blocks 4, 5 and 6.

23. The flats are subject to long residential leases. The same terms apply in all of the leases. The terms of the leases are not in dispute. [COMPANY]. manages the blocks on behalf of the Applicants.

24. The leases are in similar terms with some variations between the 1st and 2nd Applicants’ leases. [NAME] [APPELLANT] very fairly accepted that the 2nd Applicant is in some respects in a less robust position than the 1st Applicant, but he submitted, and the Tribunal accepted that the relevant provisions in all the leases establish the Respondents’ liability to pay for the fire alarms and professional fees.

25. The relevant clauses in the 1st Applicant’s leases are clauses 1 and 6, and Part II of the Seventh Schedule.

26. The relevant clauses in the 2nd Applicant’s leases are clauses 1 and 5, and paragraphs 7 of the Second Schedule, paragraphs 1 and 2 of the Fourth Schedule, and paragraphs 2 and 4 of the Fifth Schedule and Part B of the Sixth Schedule and the Eighth Schedule.

27. The blocks have numerous fire safety defects which give rise to a significant risk of fire spread on the exterior of the buildings. The Applicants applied to the Building Safety Fund for the costs associated with the cladding replacement on Blocks 5 and 6. These are the only blocks which meet the 18-metre height threshold. Applications were also made to the Walking Watch Relief Fund and the Temporary Fire Alarm Fund.

28. The capital costs of new fire alarms are due to be or have been met by the Building Safety Fund in six of the seven blocks. The Tribunal is only asked to make a determination in respect of Block 2. The Applicants also ask for a determination in respect of the professional fees for all seven blocks.

29. The Respondents do not oppose the application. This leaves the Tribunal to consider the evidence submitted and in particular to consider the terms of the various leases. There is no question that the works were necessary to ensure the safety of everyone in the seven blocks. There is no challenge to the scope of the works. The Tribunal finds that under the relevant provisions in the leases the Respondents are liable to pay the Applicants for the works and professional fees claimed as a service charge. It is worth making the point that the Respondents are the owners of the [NAME]. They may feel with some justification that the original [NAME] or landlords should be liable for the costs incurred but it is clear that the burden falls on them under the structure of the leases.

30. [NAME], an Associate Director at [COMPANY]., in her witness statement dated 11 February 2022, and [NAME], another Associate Director, in her statement dated 10 March 2021, explain how the works have been funded and the work undertaken to obtain the funding. [NAME] [NAME] provides evidence about the costs of the works, totaling £326,710.23, and a breakdown between the blocks. She also provides evidence about the amount of professional fees incurred and how they are attributable to each of the blocks. Within the Applicants’ bundle of documents relevant invoices are produced to support the Applicants’ claims.

31. The amounts claimed by the Applicants are not challenged. On the evidence provided, the Tribunal finds that the costs of the works and the professional fees are reasonable.

32. The leaseholders who responded to the proceedings expressed some concerns about the amount of consultation that has taken place between them and the Applicants. There was no express reference to the statutory consultation provisions in s.20 of the Commonhold and Leasehold Reform Act 2002 and none of the Respondents have sought to rely on these provisions.

33. There is no application under s.20C of the 1985 Act to prevent the costs incurred in connection with these proceedings from being recovered as part of the service charge. Nor has paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 been raised to reduce or extinguish the Respondents’ responsibility to pay an administration charge. The Tribunal makes no order in respect of either of these provisions.

Conclusions

34. The Tribunal makes the determinations as sought by the Applicants which are set out above.

Dated 10 March 2022 Judge P Forster

Annex A

MAN/00BY/LSC/2021/0011

[NAME] [NAME],

Apartment 1, 1 [NAME] [NAME] & [NAME] [NAME], Apartment 2, 1 [NAME] [NAME] & [NAME], Apartment 3, 1 [NAME] [NAME],

Apartment 4, 1 [NAME] [NAME],

Apartment 5, 1 [NAME] [NAME],

Apartment 6, 1 [NAME] Miss [NAME] & [NAME],

Apartment 7, 1 [NAME] [NAME] & [NAME] [NAME],

Apartment 8, 1 [NAME] [NAME] and [NAME] [NAME] 9, 1 [NAME] Dr [NAME],

Apartment 10, 1 [NAME] [NAME] & [NAME] [NAME] 11, 1 [NAME] [NAME],

Apartment 12, 1 [NAME] [NAME],

Apartment 14, 1 [NAME] [NAME] & [NAME] [NAME], Apartment 15, 1 [NAME] [NAME],

Apartment 16, 1 [NAME] [NAME] & [NAME] [NAME],

Apartment 17, 1 [NAME] [NAME],

Apartment 18, 1 [NAME] [NAME],

Apartment 19, 1 [NAME] & [NAME],

Apartment 20, 1 [NAME] [NAME] & [NAME] [NAME], Apartment 21, 1 [NAME] [NAME],

Apartment 22, 1 [NAME] [NAME],

Apartment 23, 1 [NAME] [NAME],

Apartment 24, 1 [NAME] [COMPANY],

Apartment 25, 1 [NAME] [NAME] & [NAME], Apartment 26, 1 [NAME] [NAME] & [NAME] [NAME],

Apartment 27, 1 [NAME],

Apartment 28, 1 [NAME] [NAME],

Apartment 29, 2 [NAME] [NAME] & [NAME] [NAME], Apartment 30, 2 [NAME] [NAME],

Apartment 31, 2 [NAME] [NAME],

Apartment 32, 2 [NAME] & [NAME],

Apartment 33, 2 [NAME] [NAME],

Apartment 34, 2 [NAME] & [NAME] [NAME] & [NAME] [NAME],

Apartment 35, 2 [NAME] [NAME],

Apartment 36, 2 [NAME] [NAME] [NAME],

Apartment 37, 2 [NAME] [NAME],

Apartment 38, 2 [NAME] [NAME] & [NAME] [NAME],

Apartment 39, 2 [NAME] [NAME],

Apartment 40, 2 [NAME] [NAME] and [NAME],

Apartment 41, 2 [NAME] [NAME],

Apartment 42, 2 [NAME] [NAME],

Apartment 43, 2 [NAME] [NAME],

Apartment 44, 2 [NAME] Dr [NAME],

Apartment 45, 2 [NAME] [NAME] and [NAME] [NAME],

Apartment 46, 2 [NAME] [NAME],

Apartment 47, 2 [NAME] [NAME] [NAME],

Apartment 48, 2 [NAME] [NAME] & [NAME] [NAME] ,

Apartment 49, 2 [NAME] [NAME] [NAME],

Apartment 50, 2 [NAME] [NAME] & [NAME] J [NAME] 51, 2 [NAME] [NAME] & [NAME], Apartment 52, 2 [COMPANY],

Apartment 53, 3 [NAME] [NAME],

Apartment 54, 3 [NAME],

Apartment 55, 3 [NAME] & [NAME] [NAME],

Apartment 56, 3 [NAME] [NAME] & [NAME] [NAME],

Apartment 57, 3 [NAME] & [NAME],

Apartment 58, 3 [NAME] [NAME] and [NAME] [NAME], Apartment 59, 3 [NAME] [NAME],

Apartment 60, 3 [NAME] [NAME],

Apartment 61, 3 [NAME] & [NAME] [NAME],

Apartment 62, 3 [NAME] [NAME],

Apartment 63, 3 [NAME] [NAME],

Apartment 64, 3 [NAME] Dr [NAME],

Apartment 65, 3 [NAME] [NAME],

Apartment 66, 3 [NAME] [NAME] [NAME],

Apartment 67, 3 [NAME] [NAME] Said,

Apartment 68, 3 [NAME] [NAME],

Apartment 69, 3 [NAME] Dr [NAME] and [NAME] [NAME],

Apartment 70, 3 [NAME] [NAME] and [NAME] [NAME],

Apartment 71, 3 [NAME] [NAME] 72, 3 [NAME] [NAME],

Apartment 73, 3 [NAME] [NAME],

Apartment 74, 3 [NAME] [NAME] & [NAME] [NAME] [NAME],

Apartment 75, 3 [NAME] [NAME],

Apartment 76, 3 [NAME] [NAME],

Apartment 77, 3 [NAME] [COMPANY],

Apartment 78, 3 [NAME] [COMPANY],

Apartment 79, 3 [NAME] [NAME] [NAME] and [NAME] 80, 3 [NAME] [NAME],

Apartment 81, 3 [NAME] [NAME],

Apartment 82, 3 [NAME] Miss [NAME],

Apartment 176, [NAME] [NAME],

Apartment 177, 7 [NAME] [NAME] and [NAME] [NAME] [NAME], Apartment 178, 7 [NAME] [NAME] [NAME],

Apartment 179, 7 [NAME] [NAME] and [NAME] [NAME], Apartment 180, 7 [NAME] [NAME] & [NAME] [NAME],

Apartment 181, 7 [NAME] Dr [NAME] [NAME],

Apartment 182, 7 [NAME] & [NAME],

Apartment 183, 7 [NAME] [NAME],

Apartment 184, 7 [NAME] [COMPANY],

Apartment 185, [NAME] [NAME] [NAME],

Apartment 186, [NAME] [NAME] [NAME],

Apartment 187, 7 [NAME] [NAME],

Apartment 188, 7 [NAME] [NAME] & [NAME] [NAME] 189, 7 [NAME] & [NAME] [NAME] ,

Apartment 190, 7 [NAME] [NAME],

Apartment 191, 7 [NAME] [NAME],

Apartment 192, 7 [NAME] [NAME] [NAME],

Apartment 193, 7 [NAME] [NAME],

Apartment 194, [NAME] [NAME],

Apartment 195, 7 [NAME] [NAME] [NAME],

Apartment 196, 7 [NAME] [NAME],

Apartment 197, 7 [NAME] [NAME],

Apartment 198, [NAME] [NAME],

Apartment 199, 7 [NAME] [NAME],

Apartment 200, [NAME] [NAME],

Apartment 201, [NAME] [NAME],

Apartment 83, 4 [NAME] [NAME],

Apartment 84, 4 [NAME] Dr S A Quah & Dr [NAME],

Apartment 85, 4 [NAME] [NAME] [NAME],

Apartment 86, 4 [NAME] [NAME],

Apartment 87, 4 [COMPANY],

Apartment 88, 4 [NAME] N Master & A M V Maljee & B Saudinow, Apartment 89, 4 [NAME] [NAME],

Apartment 90, 4 [NAME] [NAME],

Apartment 91, 4 [NAME] Dr [NAME] Al Alawi,

Apartment 92, 4 [NAME] [NAME] [NAME],

Apartment 93, 4 [NAME] [NAME] ,

Apartment 94, 4 [NAME] V [NAME],

Apartment 95, 4 [NAME] Miss K [NAME],

Apartment 96, 4 [NAME] and [NAME],

Apartment 97, 4 [NAME] [NAME],

Apartment 98, 4 [NAME],

Apartment 99, 4 [NAME] [NAME],

Apartment 100, 4 [NAME] [NAME] & [NAME],

Apartment 101, 4 [NAME] Dr [NAME] ,

Apartment 102, 4 [NAME] & [NAME] [NAME],

Apartment 103, 4 [NAME] [NAME],

Apartment 104, 4 [NAME] [NAME],

Apartment 105, 4 [NAME] [NAME] & [NAME] [NAME] 106, 4 [NAME] [NAME],

Apartment 107, 4 [NAME] [NAME],

Apartment 108, 4 [NAME] [NAME],

Apartment 109, 4 [NAME] Dr [NAME],

Apartment 110, 4 [NAME] [NAME],

Apartment 111, 4 [NAME] [NAME] & Miss A [NAME],

Apartment 112, 4 [NAME] [NAME] & [NAME] [NAME],

Apartment 113, 5 [NAME] [NAME],

Apartment 114, [NAME] & [NAME] [NAME],

Apartment 115, [NAME] [NAME],

Apartment 116, 5 [NAME] [NAME],

Apartment 117, [NAME] & [NAME],

Apartment 118, 5 [NAME] [NAME] [NAME],

Apartment 119, 5 [NAME] [NAME],

Apartment 120, [NAME] [NAME] & [NAME] [NAME],

Apartment 121, 5 [NAME] [COMPANY],

Apartment 122, [NAME] [NAME],

Apartment 123, 5 [NAME] and [NAME],

Apartment 124, 5 [NAME] [NAME],

Apartment 125, 5 [NAME]

[COMPANY],

Apartment 126, [NAME] [NAME],

Apartment 127, [NAME] [NAME],

Apartment 128, 5 [NAME] [NAME],

Apartment 129, [NAME] & [NAME] [NAME],

Apartment 130, 5 [NAME] [NAME],

Apartment 131, [NAME] [NAME],

Apartment 132, [NAME] [NAME],

Apartment 133, [NAME] [NAME] & [NAME] [NAME] 134, [NAME] & [NAME] [NAME] W [NAME],

Apartment 135, [NAME] & [NAME] [NAME],

Apartment 136, [NAME] [NAME],

Apartment 137, [NAME] [NAME],

Apartment 138, [NAME] & [NAME] [NAME] W [NAME],

Apartment 139, [NAME] [NAME],

Apartment 140, [NAME] [NAME] and [NAME] [NAME],

Apartment 141, 5 [NAME] [NAME],

Apartment 142, 5 [NAME] [NAME] & [NAME],

Apartment 143, [NAME] & [NAME] [NAME],

Apartment 144, [NAME] [NAME] & [NAME] [NAME] 145, 6 [NAME] [NAME],

Apartment 146, 6 [NAME] & [NAME] [NAME],

Apartment 147, 6 [NAME] & [NAME] [NAME],

Apartment 148, 6 [NAME] & [NAME],

Apartment 149, 6 [NAME] [NAME] & [NAME] [NAME],

Apartment 150, 6 [NAME] [NAME],

Apartment 151, 6 [NAME] [NAME] [NAME],

Apartment 152, 6 [NAME] [NAME],

Apartment 153, 6 [NAME] [NAME],

Apartment 154, 6 [NAME] [NAME],

Apartment 155, 6 [NAME] [COMPANY],

Apartment 156, 6 [NAME] [NAME],

Apartment 157, 6 [NAME] [NAME] & [NAME] [NAME],

Apartment 158, 6 [NAME] [NAME],

Apartment 159, 6 [NAME] Dr [NAME],

Apartment 160, 6 [NAME] [NAME],

Apartment 161, 6 [NAME] [NAME],

Apartment 162, 6 [NAME] [NAME],

Apartment 163, 6 [NAME] [NAME],

Apartment 164, 6 [NAME] [NAME] & [NAME] [NAME] 165, 6 [NAME] [NAME],

Apartment 166, 6 [NAME] [NAME],

Apartment 167, 6 [NAME] [NAME],

Apartment 168, 6 [NAME] [NAME] & [NAME] [NAME] 169, 6 [NAME] [COMPANY],

Apartment 170, 6 [NAME] [NAME],

Apartment 171, 6 [NAME] [NAME],

Apartment 172, 6 [NAME] Dr [NAME] & [NAME],

Apartment 173, 6 [NAME] [NAME] & [NAME] [NAME],

Apartment 174, 6 [NAME] [NAME] & [NAME], Apartment 175, 6 [NAME]