First-tier Tribunal Rules on Validity of Service Charges

OUTCOME: Dismissed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference

:

CHI/00HH/LIS/2021/0025

Property

:

2 [NAME], Babbacombe, Torquay, Devon [POSTCODE]

Applicant: [redacted]

:

Respondent: [redacted]

:

Ms [COUNSEL], counsel [NAME] of Application

:

Determination of service charges

Tribunal Member(s)

:

Judge [NAME] [NAME] of Hearing

Date of Decision

:

:

16th and 17th November 2021

11th January 2022

DECISION

2

Background

1. The Applicant issued proceedings in the County Court which were transferred to the Tribunal. Various sets of directions were issued.

2. The Respondent had issued an application for the appointment of a manager under case reference CHI/00HH/2021/0008. Separate directions were issued but a single hearing bundle was prepared by the Applicants to this application for use in both applications. The same panel has determined both applications.

3. The Respondent made applications for Orders pursuant to Section 20C of the Landlord and Tenant Act 1985 and Paragraph 5A of Schedule 11 of the Commonhold and Leasehold Reform Act 2002.

4. The Tribunal in its directions of 1st July 2021 identified the following issues to be determined:

• The validity, reasonableness and payability of the service charges for the periods; 2016, 2017, 2018, 2019, 2020 and 2021;

• Whether the demands issued on 9 July 2020 are valid and enforceable;

• Whether the sums demanded are due and payable;

• Whether the costs of the works are reasonable, in particular in relation to the nature of the works, the contract price and the supervision and

management fee;

5. References in [ ] are to pages within that bundle.

The Law

6. The relevant law is contained within sections 19 and 27A of the Landlord and Tenant Act 1985. A copy is attached marked Annex A.

The Hearing

7. The hearing took place remotely by video. No party objected to this process and at the conclusion of the hearing all parties confirmed they had made all submissions they wished to make.

3 8. The Tribunal did not inspect the premises. The Tribunal had viewed the premises online and various photographs were contained within the hearing bundle.

9. The Tribunal confirmed to the parties it had read the bundle, the Applicant’s skeleton argument and the Applicant’s costs schedule.

10. The Applicant was represented by Ms [COUNSEL] of counsel and Ms [COUNSEL] of [NAME] was in attendance. The Respondents witness Ms [NAME], director of [COMPANY] (“[NAME]”) was present as well as the actual property manager [NAME]. Mrs [APPELLANT] appeared for herself. She confirmed none of her witnesses would be taking part in the hearing or attending the same.

11. This decision records the most salient parts of the hearing which the Tribunal took account of in reaching its determination. It is not however a transcript of all that took place.

12. It was agreed that the estate consisted of 54 flat being those contained within what are known as Blocks A, B & C. There are 20 flats known as [ADDRESS] which are also within the freehold title but are managed separately by an [COMPANY].

13. Mrs [APPELLANT] explained that she believed the demands should all have referred to [RESPONDENT] and [RESPONDENT] as the freeholder. In her submission many only referred to “[NAME]”. She suggested she was given no information that a trust owned the freehold until March 2021. In her submission the requirements of sections 47 & 48 of the Landlord and Tenant Act 1987 were not met in that she was not given the proper name and address of her landlord.

14. Mrs [APPELLANT] submitted she would have expected to have been told the names of the actual trustees as registered at the Land Registry. Further she was concerned that both service charges and ground rent appeared to be paid into the same account.

15. Mrs [APPELLANT] submitted she objected to the service charges which were in her submission excessive. Mrs [APPELLANT] spoke to the Scott Schedules in the bundle [638-708]. She suggested a number of fees were matters which should be included within the management fee charged by [NAME] and separate fees should not be charged. She stated she had not been provided with a copy of the contract appointing [NAME] or the [COMPANY] statements for the service charge account.

16. Mrs [APPELLANT] suggested that a charge for replacement of a balcony window pane was not a service charge item. In her submission this was not

4 a matter the landlord was obligated to repair and was not recoverable [661].

17. In respect of the installation of smoke alarms Mrs [APPELLANT] suggested the alarms fitted were not suitable. She suggested the use of a firm, [NAME], who were based in the Midlands led to excessive costs due to the costs of travel.

18. Mrs [APPELLANT] suggested the placing of air fresheners in the communal hallway was not reasonable.

19. Mrs [APPELLANT] explained that all amounts she had paid had been made under protest.

20. Miss [APPELLANT] cross examined Mrs [APPELLANT].

21. Mrs [APPELLANT] confirmed she purchased her flat in March 2016. She explained other leaseholders were not attending as many of them suffered from poor health.

22. She explained how she had been paying weekly amounts as this was easier for her to budget as she received her pension credits weekly. She suggested the property managers did not make it easy for her to make weekly payments.

23. In her opinion a local manager would be cheaper and they would use [NAME] who would prove cheaper.

24. She confirmed her counterclaim was on the basis that invalid invoices had been issued and so she had not been required to make any payments.

25. Mrs [APPELLANT] explained the current property manager only visits every 2 months. Previously the manager would visit every 6 weeks at a pre-arranged date and time. She accepted some people appear to still be told when the manager is attending but she says she is not. In her view this attendance is insufficient to adequately manage the site.

26. Mrs [APPELLANT] explained that a [COMPANY] was being formed but in early stages. She understood they had not got the numbers which were required. She suggested those forming the Association agree with her the charges are astronomical. Sadly a lot of people are unwell and so she is effectively speaking for all.

27. Mrs [APPELLANT] accepted she had received the disclosure which the Tribunal had ordered the Applicant to provide [65]. She stated she had raised no issues with the year 2016/2017 as time did not allow. It was for this reason she had been unable to obtain alternative quotes.

5 28. In respect of the insurance Mrs [APPELLANT] did challenge the cost as unreasonable. She accepts insurance has to be paid for but in her experience it could be obtained cheaper. This is what Mr [NAME] (her proposed manager to be appointed) has advised her but she has no alternative quote.

29. Mrs [APPELLANT] was referred to clause 4(4) of [NAME] [6] which provides that:

“(4) At weekly or more frequent intervals during the term hereby granted to water plants (if any) and to clean all stairs halls lobbies passages and where applicable external porchways serving the said flat and so that the Lessee shall be responsible for cleaning the flight of stairs and windows adjacent to the door of the said flat and landing or entrance lobby terminating that flight”

30. Mrs [APPELLANT] does not suggest it is reasonable that the leaseholders should undertake the cleaning. In her opinion this should be the responsibility of the [NAME] agent and freeholder. In her submission this is impractical.

31. Mrs [APPELLANT] suggested the costs charged for fire signage installation was excessive. She believed the manager could have installed signage having downloaded templates from the internet.

32. Mrs [APPELLANT] was questioned by the Tribunal.

33. She explained the [COMPANY] was quite new. She was not personally involved.

34. Miss [APPELLANT] presented the case for the Applicant.

35. She referred to [NAME] [2-13]. Clause 4(23) required the leaseholder to pay towards the service charges in accordance with the Schedule. Miss [NAME] confirmed each flat pays 1/54th.

36. Miss [NAME] then called Ms [NAME]. She confirmed that her statement was true and accurate [635-637].

37. Ms [NAME] explained the insurance cost had risen because the costs of reinstatement had been reviewed. This was a process they undertook every three years to ensure the re-build costs are correct.

38. Mrs [APPELLANT] then cross examined.

39. Ms [APPELLANT] explained the freeholder did not provide cleaning as [NAME] does not provide for them to do so.

40. She explained that they work to ensure they get the most competitive quotes for services. They do struggle sometimes with obtaining local companies. She explained they often use national

6 companies following a tender process they undertake every year which in her opinion provides the most competitive quotes.

41. In respect of the insurance she confirmed this is arranged through a broker. [NAME] receives a commission of 14.9%.

42. The management fees are calculated on a per unit basis which she believes is about £220 plus vat per annum. There is a written contract with a schedule of other costs. She stated the contract had not been disclosed as it was confidential with her client.

43. She confirmed contractors have to join her firms’ accreditation scheme. They must go through a process of due diligence but no fee or commission is charged.

44. Ms [NAME] was questioned by the Tribunal.

45. She confirmed [NAME] manages about 80 blocks nationwide consisting of approximately 1600 units. They manage 2 other blocks in the area surrounding [NAME].

46. Ms [NAME] explained her company has one global trust account with each property they manage having a separate virtual account. The [COMPANY] administration fee is for undertaking postings and covers fees they are charged by the [COMPANY].

47. Also charge fees for preparing for the audit undertaken. The audit fee itself is what the accountant charges.

48. Miss [APPELLANT] explained that Mrs [APPELLANT] began to fall behind with charges in 2018. Initially Mrs [APPELLANT] had raised a technical defence as to the name on the demands. Even if this was right the issue of amended demands on 9th July 2020 corrected any issue and payments were due. In her submission there is no question of who the Landlord is now.

49. The 2016/2017 service charges are not challenged.

50. She suggests the landlords evidence should be preferred. Further if the demands are valid the Counterclaim falls away and cannot succeed.

51. Mrs [APPELLANT] then made her closing submissions.

52. She suggested it was unreasonable to have the rebuild costs again assessed by the landlords surveyor as this was conducted less than once every three years. Similarly she suggested the commission which was being received by [NAME] made the premium unreasonable.

7 53. Mrs [APPELLANT] believes a local manager would be more pro active and cheaper.

54. Both Mrs [APPELLANT] and [NAME] confirmed they had made all submissions they wished to make. The Tribunal adjourned confirming it would outline its decision the following morning before Judge Whitney would determine any and all outstanding County Court matters.

Decision

55. The Tribunal thanks both parties for their submissions and evidence.

56. At the resumption of the hearing on 17th November 2021 we explained our determination that we were satisfied that valid demands had been given in 2020. We indicated that certain costs predominantly relating to additional management fees were found unreasonable but in the main the case was provided. This is now our reasoned decision. We attach the Scott Schedules recording our comments on particular items.

57. Mrs [APPELLANT] suggests that the demands did not comply with the requirements of Sections 47 and 48 of the Landlord and Tenant Act 1987. We do not agree with Mrs [APPELLANT]. All demands explained that her landlord was “[NAME]” and provided an address for the same. The [NAME] agents address was given as the address for service in accordance with Section 48 [347-363]. Later demands issued by [NAME] also have named two of the trustees. In our determination these demands met the statutory requirements.

58. We refer to the Scott Schedules in which we set out our determination on individual items challenged. We note the Applicant did not provide a copy of their contract, in our judgment such documents should be disclosed. That being said overall we are satisfied that a reasonable service is being provided. Bi-monthly visits are, in our judgment, reasonable for a development of this type. Further whilst it may be said that the manager resides some distance away any costs of travel are subsumed into the management fee. This is a decision of [NAME] as to how they manage their business. We are satisfied that the day to day management is undertaken to a reasonable and proper level and the base cost is reasonable.

59. Mrs [APPELLANT] takes issue over the lack of communal cleaning. We accept the submissions of Ms [NAME] that the freeholder is not obligated to clean and in fact the leases place an obligation upon the leaseholders. We agree with Mrs [APPELLANT] that practically such an arrangement may be unworkable and other issues arise

8 however all are bound by [NAME]. Within this application we have no jurisdiction to vary [NAME].

60. Turning to the use of non-[NAME] it is for the agent to determine whom they may use. Mrs [APPELLANT] was unable to produce any alternative quotes for the works objected to. We accept the evidence of Ms [NAME] that her company has a list of accredited contractors and re-tenders each year. She talked about this achieving economies of scale although no specific information was provided. We do accept that various of these contractors whilst Midlands based are national companies. We had no real evidence to challenge the costs and we were satisfied that the same were reasonable.

61. Ms [NAME] openly accepted her company receives a commission for the placing of the insurance. Again no alternative quotes were supplied by Mrs [APPELLANT]. Looking at all the evidence we heard we are satisfied that the cost of the insurance is reasonable. We are not satisfied that the commission received makes the cost unreasonable.

62. Mrs [APPELLANT] appears to take issue with the fact the [NAME] agent will not accept weekly payments. As a Tribunal we accept this would involve the agent in considerable further work in allocating payments correctly. We are satisfied it is reasonable of them to refuse such payments without further costs being incurred.

Conclusion

63. In the main we found the service charges to be due and payable save for those items we disallowed on the Scott Schedules.

64. Mrs [APPELLANT] has made an application for orders pursuant to section 20C and paragraph 5A. Such orders are at the discretion of the Tribunal. In this instant case it would in our judgment be unreasonable to make any such order and we decline to do so.

RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application by email to [EMAIL] to the First-tier Tribunal at the Regional office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

9 3. If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.

Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025

SCHEDULE 03

DISPUTED SERVICE CHARGE INVOICES S/C YEAR ENDED 30th September 2018

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) Audit Accounts marked in green £1,886.40 1,2,3) [NAME] provides for recovery of these charges pursuant to Paragraph 9 of the Schedule to [NAME]. The Respondent claims that the charges are exceptional in amount and inexplicable. However, the Respondent has failed to substantiate this claim. The Applicant asserts that the fees in the matter are reasonable in amount. Invoices have been provided in support of this item of expenditure namely: These costs are disallowed as not being reasonable. [650] appears to indicate these are fees charged by the [NAME] agent. In our judgment these are costs which should be included within the standard management fee. None of the costs are recoverable. “Professional Fee amount of – Schedule 1” on charges. page 1 of year Inexplicable. end audited Invoices shown accounts for below but not all September 2018 found in + Page 3 of disclosures. Audit. Premises: [NAME], Torquay. [POSTCODE] Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025

125108: £489.60 125892: £489.60 130613: £204.00 138746: £120.00 116183: £583.20 The Applicants note that the Respondent has also sought to challenge individual items under this head as separate disputed items below. 129236 – £583.20 1,2,3) The Applicants anticipates that the Respondent is referring to the Insurance Admin Fee as detailed within the expenditure report for the year ending 2018 under the sub- heading “Insurance- Schedule 1”. The Applicants assert that this charge has already been removed from this subsection as shown by the credit in the expenditure report and reallocated within the “Professional Fees” head of expenditure. This item has already been addressed above. The Respondent is invited The Applicant accepts this fee should not be charged. We agree, no charge should be levied for insurance administration given the disclosed commission received. 31/10/2017 [COMPANY]. Insurance Insurance part Admin Fee of the management fee.

to withdraw this disputed item on the basis that it is already addressed within “Professional Fees” disputed item. 157702- 31/01/2018 SDL £144.00 1,2,3) All above comments. [NAME] provides for recovery of these charges pursuant to Paragraph 4 of the Schedule to [NAME]. The Respondent has stated that these charges are exceptional in amount and that they are inexplicable. However, the Respondent has failed to substantiate this allegation. These fees are charges issued by the [COMPANY] for maintaining the service charge account. The Applicant affirms that the [COMPANY] charges are reasonable in amount. We do not agree this fee is reasonable. Ms [NAME] referred to the [COMPANY] charging a fee to [NAME] but she was unable to explain how the fee charged by [NAME] was calculated. In our determination the costs of administering the service charge account should be properly included within the management fee. [COMPANY]. Banking Admin Fee 171137- £489.60 1,2,3) All above [NAME] provides for recovery of these charges pursuant to Paragraph 9 of the Schedule to [NAME]. The Respondent has disputed these charges on Not reasonable: this is a cost which should be within the standard management fee. 22/02/2018 [COMPANY]. Annual comments. Audit- Property Inspection 2017/2018

the basis that they are an exceptional amount and inexplicable. However, the Respondent has failed to substantiate this allegation. The Applicant affirms that these charges incurred in relation to the annual audit are reasonable in amount. Furthermore, the Applicants note that this charge is included within the “Professional Fees” sub-heading of the expenditure report and therefore is already addressed above. The Respondent is invited to withdraw this disputed item on the basis that it is already addressed above. The Applicant confirms that [NAME] analysed the [NAME] expenditure from SDL, and it was apparent that the property audit fee had been charged twice by SDL. In the circumstances, [NAME] obtained a refund from SDL for this amount, which is evidenced within

the expenditure report for 2020 under professional fees on 28 May 2020. This amount was returned into the service charge. 177105 - 22/02/2018 SDL £489.60 1,2,3) All above comments. [NAME] provides for recovery of these charges pursuant to Paragraph 9 of the Schedule to [NAME]. The Respondent has disputed these charges on the basis that they are an exceptional amount and inexplicable. However, the Respondent has failed to substantiate this allegation. The Applicant affirms that these charges incurred in relation to the annual audit are reasonable in amount. Furthermore, the Applicants note that this charge is included within the “Professional Fees” sub-heading of the expenditure report and therefore is already addressed above. The Respondent is invited to withdraw this disputed item on the basis that it is Not reasonable: this is a cost which should be within the standard management fee. [COMPANY]. Annual Audit- Property Inspection 2017/2018

already addressed above. ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) 193002- 29/03/2018 [COMPANY] [NAME] £204.00 1,2,3) All above comments. Item description unknown. [NAME] provides for the recovery of these charges pursuant to Paragraphs 6 and/ or 9 of the Schedule to [NAME]. To clarify, this charge relates to a review of the long term maintenance plans for the Development assessed by submitted statistics rather than a visit by an inspector. The Respondent has disputed this fee on the basis that the charge is an exceptional amount and inexplicable. However, the Respondent has failed to substantiate this claim. The Applicant affirms that this fee is reasonable in amount. Again, this charge forms part Not reasonable: this is a cost which should be within the standard management fee.

of the “Professional Fees” which are disputed above. The Respondent is invited to withdraw this disputed item on the basis that it is already addressed above.

Furthermore, [NAME] have confirmed that this charge was incurred as a result of SDL arranging the long-term maintenance plan, and [NAME] have confirmed that they have received this report from SDL. 215730 – 31/05/2018 [NAME] £432.00 1,2) Service charge accounts preparation part of the management fee. [NAME] provides for the recovery of these charges pursuant to Paragraph 9 of the Schedule to [NAME]. The Respondent has disputed this fee on the basis that the charge is an exceptional amount and inexplicable. However, the Respondent has failed to substantiate this allegation. This fee is charged by the [NAME] in respect of preparing the service charge accounts as opposed to a fee incurred by the [NAME] We accept the fee charged is reasonable and recoverable under [NAME].

agents. The Applicant affirms that this fee is reasonable in amount. 272271 – 28/09/2018 [COMPANY]. AC Prep Fee £120.00 1,2) As above. [NAME] provides for the recovery of these charges pursuant to Paragraphs 6 and/or 9 of the Schedule to [NAME]. The Respondent has disputed this fee on the basis that the charge is an exceptional amount and inexplicable. However, the Respondent has failed to provide any evidence, by way of comparative quotes or the like, that the costs are unreasonable or that they have been unreasonably incurred. The Applicant affirms that this fee is reasonable in amount. This is a fee incurred by the [NAME] [NAME] agent SDL, charged for the preparation of the accounts. Not reasonable: this is a cost which should be within the standard management fee.

[COMPANY] statements for service charge account [COMPANY] statements to check against expenditure. This is not a specified disputed service charge item, but a request for information.

Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the scott schedule. Expenditure Report on Reserve Account + [COMPANY] Not had sight of Reserve Account although previously requested. This is not a specified disputed service charge item, but a request for information.

Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the scott schedule. Contract between landlord and management companies Annual management charge not fixed or capped. Do not know how it is calculated or increased. Plus % charged on extra services ie Section 20’s. This is not a specified disputed service charge item, but a request for information. The Respondent is invited to either set out their allegation formally or remove this from the scott schedule accordingly.

Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025 10

SCHEDULE 02

DISPUTED SERVICE CHARGE INVOICES S/C YEAR ENDED 30th September 2019

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) Invoice No. £144.00 1,2,3) [NAME] provides for recovery of these charges pursuant to Paragraph 4 of the Schedule to [NAME]. The Respondent has stated that these charges are exceptional in amount and that they are inexplicable. However, have failed to substantiate this claim. These fees are charges issued by the [COMPANY] for maintaining the service charge account. The Applicant affirms that the [COMPANY] charges in the matter are reasonable in amount. See 2018. Not reasonable: this is a cost which should be within the standard management fee. 151649 – [NAME] making 28/03/2019 SDL this charge or [COMPANY] why it’s made. Admin Fees Jan – Part of the Dec 2019 management charge. Charge Fee not shown overlaps by 3 on expenditure months with report & work [NAME] charge unknown. on Schedule 01, first row which commences on 01/10/2019 Premises: [NAME], Torquay. [POSTCODE] Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025

The Applicant affirms that this fee is evidenced on the expenditure report under banking charges, as there was a £36.00 brought forward prepaying from the 2018 accounts. Therefore, this invoice amount is included within the £180.00 evidenced on the expenditure report. 1193 – £53.50 As above with [NAME] provides for recovery of these charges pursuant to Paragraph 4 of the Schedule to [NAME]. The Respondent has stated that these charges are exceptional in amount and that they are inexplicable. However, the Respondent has failed to substantiate this allegation. These fees are charges issued by the [COMPANY] for maintaining the service charge account. The Applicant affirms that the See 2018. Not reasonable: this is a cost which should be within the standard management fee. 01/07/2019 further 2 month [COMPANY]. overlap. Banking Charges July to September 2019.

[COMPANY] charges in the matter are reasonable in amount. , Upon review, it appears as though there has been an overlap in respect of the charges for 2019, as a result of SDL preparing an invoice for the entire period as opposed to an invoice prepared on a pro-rata basis. In the circumstances, the Applicant shall arrange for a credit to be applied to the service charge account in the sum of £108.00. 2700 – 09/08/2019 £360.00 1,2,3) Should be incorporated [NAME] provides for the recovery of these charges pursuant to Paragraphs 6 and/or 9 of the Schedule to [NAME]. The Respondent has disputed this fee on the basis that the charge is an exceptional amount and inexplicable. However, the Respondent has failed to See 2018. Not reasonable: this is a cost which should be within the standard management fee. [COMPANY]. Issue within of Year End management Accounts Pack. charge, not an extra charge.

substantiate this claim. The Applicant affirms that this fee is reasonable in amount. This fee is charged by the [NAME] in respect of preparing the service charge accounts as opposed to a fee incurred by the [NAME] agents. 2101 -12 08 £441.36 1) Chargeable to [NAME] provides for the recovery of this sum pursuant to Paragraph 2 of the Schedule to [NAME]. The balconies are not demised to the individual leaseholders. Therefore, the replacement of the balcony pane would be recoverable as a service charge item in accordance with Paragraph 2 of the Schedule to [NAME]. Not recoverable. We are not satisfied that the cost of replacement of a glass pane is recoverable under [NAME]. Paragraph 2 of the Schedule specifically excludes glass. On the plan annexed to [NAME] the whole of the balcony appears to be demised to the leaseholder. 2019 Roman leaseholder of Glass Flat 24 not Replacement Service Charge balcony pane of Account. Flat 34.

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL ) 2093 – 18/08/2019 Fast £1,056.00 2) Company travelled from [NAME] provides for the recovery of this fee pursuant to Paragraphs 2 and 6 of the Schedule to [NAME]. The Applicant affirms that tendering for Fire Risk and General Risk Assessment is based on economies of scale. Therefore, nationwide companies are often more competitive than local companies. The quote obtained by the Respondent from [NAME] does not include a GRA (General Risk Assessment), whereas the quote obtained by the Applicant from [COMPANY] does. The Applicant asserts that [COMPANY] have the correct accreditation to carry out these reports on their behalf and offer the Applicant comparative rates as they undertake work for the entire portfolio. We are satisfied that the costs of the Fire Risk Assessment and General Risk Assessment is reasonable. Whilst Mrs [APPELLANT] suggested a fire risk assessment could be obtained at a lower price this was actually two assessments and in our judgment the sum is reasonable. Simply because an item may be obtained cheaper does [COMPANY]. Worcester of Fire Risk over 4 hour Assessment. drive of 155 miles. See below for local [NAME] quote for £660.00.

In the circumstances, the Respondent has failed to provide a comparative quote. The Applicant asserts that this fee is reasonable in amount. not make the cost unreasonable. Brokers Ref: PROX02PO01 £2,584.74 2) Expenditure Report marked [NAME] provides for recovery of these charges pursuant to Paragraph 1 of the Schedule to [NAME]. The Respondent has disputed the reasonableness of this charge. However, the Respondent has failed to substantiate this claim. The Applicant affirms that that the invoice amount of £2,584.74 is the insurance increase for the entire portfolio. Therefore, the uplift of £368.13 is the amount of the increase that is attributable to this Development. The Applicant asserts that this fee is reasonable in amount. These increases are reasonable given the explanation as to re- valuing the building. 26/09/2019 green for [NAME] [NAME] [NAME] Insurance Increases. £11,485.14 + Fee not shown Uplift of £368.13 on expenditure = £11,853.27. report. Total annual cost £14,438.01.

Audit Accounts show £11,853.27 £11,853.27 2) Shown in green on scan [NAME] provides for recovery of these charges pursuant to Paragraph 1 of the Schedule to [NAME]. The Respondent has disputed the reasonableness of this charge. However, the Respondent has failed to substantiate this claim. The Applicant asserts this insurance fee is reasonable in amount. The expenditure report records a total of £11,853.27 being incurred in respect of “Building Insurance – Apartment Service Charge”. This figure is shown within the accounts as under the heading “Insurance”. The Applicant again affirms that only £368.13 is attributable to this Development from Invoice 50805. marked in green below. Audit, actual insurance expenditure cost on page 3 of report and year end audited invoices do not accounts for agree. September 2019. Audited accounts Not valid Above The year end accounts were finalised on 3 August 2020, after [NAME] [RESPONDENT]’s for the year end mentioned scan 2019 in show [NAME]: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025

disclosures. [RESPONDENT] & death. In the circumstances, the accounts for the year end 2019 refer to the landlords at the time they were finalised. The Applicant affirms that the accounts are valid. This is not a disputed item of service charge and the Respondent is invited to remove this item from the scott schedule accordingly. [NAME] [RESPONDENT] not [NAME] deceased until as Trustees. April 2020 or TR5 completed. 1st October 2018 – 30th £13,782.50 2) £13,782.50 divided by 54 [NAME] provides for the recovery of these charges pursuant to Paragraphs 6 and/or 9 of the Schedule to [NAME]. The Respondent has disputed the management fee on the basis that the management fees for the years 2019 and 2020 are exceptionally high with very poor-quality management. However, the Respondent has failed to substantiate this allegation. The Applicants assert that the fee in the matter is reasonable in amount. We are satisfied that the base management fee is reasonable and payable given the service provided including bi- monthly personal visits by the property manager. September 2019 flats = £255.23 Total Service per flat. Charge Exceptionally high with very poor quality management located miles away.

ITEM COST TENANT’S COMMENTS* [APPELLANT]* LEAVE BLANK (FOR THE TRIBUNAL) Audit Accounts marked in green £1,620.00 1,2,3)Invoice not found. [NAME] provides for the recovery of these charges pursuant to Paragraphs 1 and/ or 9 of the Schedule to [NAME]. These charges have been incurred in relation to preparing an insurance valuation for the Development including both site inspection and desktop study. Such report is prepared as part of renewing insurance for the Development and is often undertaken every couple of years to ensure that sufficient cover is obtained. A copy of the relevant invoice has been disclosed under Invoice Number: 141856. The Applicants assert that this fee is We accept such fee is reasonable and payable for a re- assessment. We accept undertaking such assessments from time to time represents good and prudent management and the costs is recoverable under the Schedule to [NAME] as a service charge item. show Question what Reinstatement this fee covers. Cost Assessment on page 3 of year end audited accounts for September 2019.

reasonable in amount. [COMPANY] statements [COMPANY] This is not a specified disputed service charge item, but a request for information.

Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the scott schedule. for service statements to charge account check against expenditure. Expenditure Not had sight of This is not a specified disputed service charge item, but a request for information.

Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the scott schedule. Report on Reserve Account Reserve Account although + [COMPANY] previously Statements

requested. Contract between Annual This is not a specified disputed service charge item, but a request for information. Accordingly, the landlord and management management charge not fixed companies or capped. Do not know how it is calculated or increased. Plus

% charged on Respondent is invited to either set out her allegation formally or remove this from the scott schedule. extra services ie Section 20’s. * 1) Chargeable under lease? 2) Reasonable in amount / standard? 3) Correctly demanded?

Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025 12

SCHEDULE 01

DISPUTED SERVICE CHARGE INVOICES S/C YEAR ENDED 30th September 2020

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) 2582 – 01/10/2019 £320.00 1,2,3) [NAME] making [NAME] provides for recovery of these charges pursuant to Paragraph 4 of the Schedule to [NAME]. The Respondent has stated that these charges are exceptional in amount and that they are inexplicable. However, the Respondent has failed to substantiate this claim. These fees are charges issued by the [COMPANY] for maintaining the service See 2018. Not reasonable: this is a cost which should be within the standard management fee. [NAME] [COMPANY]. this charge or Service why it’s made. Charge Part of the Banking management Charges. charge. [NAME], Torquay. [POSTCODE] Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025

charge account. The Applicant affirms that the [COMPANY] charges in the matter are reasonable in amount and it is reasonable that they are incurred separately to the management charge. 3405 – 24/10/2019 £348.00 1,2) Not chargeable [NAME] provides for recovery of these charges pursuant to Paragraph 2 and/or 9 of the Schedule to [NAME]. The signs have been supplied and replaced to ensure that certain speed limits are in force around the development, which is vital and in accordance with good and proper management. The Applicant affirms that these charges are reasonable in amount. We are satisfied this charge is reasonable and payable. The provision of such signage represents good estate management in our judgment. [NAME].J.[NAME] under [NAME] as no speed Ltd. Supply limit 10mph sign restrictions. and replacing Placed on facing main road & removed in breach of traffic regulations. Then inappropriately repositioned at end of service road. 3388 – 07/10/2019 £14,468.56 2) £10,941.96 in 2018 to [NAME] provides for recovery of these This sum is reasonable. The [NAME]: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025

Building £14,743.56 in 2020 increase of £3,801.60 charges pursuant to Paragraph 1 of the Schedule to [NAME]. The Respondent has not stated upon what basis they believe that there has been an unreasonable increase in insurance fees incurred. The Applicant affirms that the insurance has increased due to a reinstatement cost assessment. The Applicant affirms this fee is reasonable in amount. Tribunal accepts the cost of insurance increases, no evidence of any alternative quotes were provided and we were satisfied that the amount is reasonable and payable. Insurance Ref: Item L of Statement refused details to obtain quote Formatted: Font color: Auto

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) 3589 – 05/11/2019 £324.00 1) Not required under fire [NAME] provides for recovery of these charges pursuant to Paragraph 2 and/or 9 of the Schedule to [NAME]. The supply of smoke alarms concerns clear health and safety matters and is vital for good and proper management being effected, and for there to be compliance with statutory requirements. We are satisfied that the cost is payable and reasonable. In our determination it was reasonable for the [NAME] agent to install such alarms and the cost is modest. [NAME] legislation. [COMPANY]. Supply & fix 9x smoke alarms. Ref: Item 11 of Statement 6797 – 25/01/2020 £48.74 1) Not required under fire [NAME] provides for recovery of these charges pursuant to Paragraph 2 of the Schedule to [NAME]. The testing of the smoke alarms concerns clear health and safety matters and is vital for good and proper We accept this is reasonable and payable. The cost is modest and regular testing represents good practice. [NAME] legislation. Group. (Smoke alarms Carried out 6 must be tested monthly smoke alarm monthly.) test. Ref: Item 11 of Statement

management being effected, and for there to be compliance with statutory requirements. The Applicant affirms that the smoke detectors are tested every six months. The Applicant asserts that this fee is reasonable in amount. 6530 – 02/03/2020 £30.00 1,2,3) Land registry charge [NAME] provides for recovery of the fees pursuant to Paragraphs 4 and/or 9 of the Schedule to [NAME]. This fee relates to the Land Registry’s fee and [NAME]’s administration fee for dealing with this matter, and the Applicant asserts that this is part of the debt recovery process. The Applicant affirms that this charge is of a reasonable amount. This sum is not allowed. We would expect the [NAME] agent to hold such information having been supplied with this by their client. [COMPANY]. £9.00 max. Title Plan from Should be Land Registry incorporated within management charge, not an extra. 9916 – 25/06/2020 £48.74 1) Not required under fire [NAME] provides for As above: we accept

[NAME] legislation. recovery of the fees pursuant to Paragraph 2 of the Schedule to [NAME]. The testing of the smoke alarms concerns clear health and safety matters and is vital for good and proper management being effected, and for there to be compliance with statutory requirements. The Applicant again asserts that the smoke alarms are tested half yearly. The Applicant affirms that this charge is of a reasonable amount. such sum is reasonable and payable. Group. (Smoke alarms Carried out 6 must be tested monthly smoke alarm monthly.) test. Ref: Item 11 of Statement 10329 – 08/07/2020 £9.00 1) 9 Air fresheners This item was supplied for the purpose of good estate management and the Applicant affirms that it is a reasonable amount. The amount attributable to the Respondent is deminimus at best. The Applicant affirms Not allowed. Whilst modest no evidence was produced as to why they are required and in our judgment it is not good estate practice to leave moveable items such as this in the communal areas of an estate. [COMPANY]. placed in each Air Fresheners hallway. Not Ref: Item M of required and Statement fire hazard.

that this charge is of a reasonable amount.

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) 1562 – 10/07/2020 £600.00 1,2,3) Project Fee not shown [NAME] provides for recovery of this charge pursuant to Paragraph 9 of the Schedule to [NAME]. This fee was incurred in addition to the standard management fee and as a result of the additional redecoration works project which is being undertaken as detailed within the invoice provided. The Applicant affirms that this fee is reasonable in amount. This amount is disallowed. The cost of overseeing routine maintenance we would expect to be covered within the standard management fee being a normal repair. [NAME] [COMPANY]. on expenditure Project Fee. report & work unknown. 11147 – £2,059.20 1,2,3) [NAME] [NAME] provides for recovery of this charge pursuant to Paragraph 2 of the Schedule to [NAME]. The Respondent’s dispute is misguided, as the maintenance and We are satisfied that this is a service charge item which is reasonable and payable. 15/07/2020 J insist door C Security. entry repairs Upgrade to 50 are paid by – 60 leaseholders in [NAME] the specific close door communal entry system. hallway, not To be from the

refunded to service charge renewal of entrances or other common parts of the Development is a service charge item. The Applicant affirms that this charge is reasonable in amount. service charge account. account. 11545 – £562.50 1,2,3) [NAME] provides for recovery of this fee pursuant to Paragraph 9 of the Schedule to [NAME]. The Applicant notes that this fee corresponds with an “Accrue accountancy fee to 300919” and therefore no charge is actually applicable in 2020. See 2018. Not reasonable: this is a cost which should be within the standard management fee. 04/08/2020 be incorporated [COMPANY]. within 2019 Year End management Accounts Fee charge, not an extra. 10354 – £66.96 1,2) [NAME] provides for recovery of the fees pursuant to Paragraph 2 of the Schedule to [NAME]. The supply of fire notices concerns clear health and safety We are satisfied that this is reasonable and payable. We do not accept Mrs [APPELLANT] submission, good estate management requires proper signage to be in place. 08/07/2020 priced A4 size [COMPANY]. 9 notices that Fire Action should be Notices. supplied within A4 notices management placed in charge. noticeboards These are free by property to download

manager. from various sites on the matters and is vital for good and proper management being effected, and for there to be compliance with statutory requirements. The Respondent states that this charge is overpriced, however they have failed to provide any evidence to substantiate this allegation. The Applicant affirms that this charge is reasonable in amount. internet. Invoice 30531 £9,587.76 2.3) Fee not This fee is accounted for in the 2020 reserve fund expenditure in relation to Blocks A & B, as these works were completed first and totalled £6,392.76. The remaining £3,195.00 relates to the works for Block C, and will be accounted for in the 2021 expenditure. The Applicant affirms See above: we are satisfied that this cost is reasonable and payable. The landlord is obligated to undertake such works. – 27/08/2020 shown on [NAME] expenditure Group. Install report. EML & Smoke Detectors in Block A & B for 36 flats. Item K of Statement

that this charge is reasonable in amount.

ITEM COST TENANT’S COMMENTS* LANDLORD’S COMMENTS* LEAVE BLANK (FOR THE TRIBUNAL) 1st October S/Charge 2) £14.590.00 [NAME] provides for the recovery of these charges pursuant to Paragraphs 6 and/or 9 of the Schedule to [NAME]. The Respondent has disputed the management fee on the basis that the management fees for the years 2019 and 2020 are exceptionally high with very poor- quality management. However, the Respondent has failed to substantiate this claim. The Applicant asserts that the management fee in the matter is reasonable in amount. We accept the management fees are due and payable and reasonable. It is for the freeholder to determine whom they appoint and the location and we are not persuaded that the costs charged are unreasonably high. 2019 – 30th £13,940 + divided by 54 September Out of flats = £270.19 2020. Total Hours per flat. Service Charge Exceptionally Charge £650.00 = £14,590.00 high with very poor quality management located miles away. [COMPANY] [COMPANY] This is not a specified disputed service charge statements for statements to service charge check against

account expenditure.

item, but a request for information.

Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the scott schedule. Expenditure Not had sight of This is not a specified disputed service charge item, but a request for information.

Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the scott schedule. Report on Reserve Reserve Account Account + although [COMPANY] previously Statements requested.

Contract

This is not a specified disputed service charge item, but a request for information. Accordingly, the Respondent is invited to either set out her allegation formally or remove this from the between Annual management landlord and charge not management fixed or companies capped. Do not know how it is calculated or increased. Plus % charged on extra services

ie Section 20’s. scott schedule.

* 1) Chargeable under lease? 2) Reasonable in amount / standard? 3) Correctly demanded?

Item 11, Item K and Item M of statement: Can be found on PDF 28 08 2021 Ground for an Application by a Tenant for the Appointment of a New Manager. Hearing on 17th November 2021.

Case References: CHI/00HH/LAM/2021/0008 & CHI/00HH/LIS/2021/0025 13