First-tier Tribunal Rules Service Charges Payable Under Landlord and Tenant Act 1985

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In the FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Tribunal Case reference : LON/00AY/LSC/2024/0669 LON/00AY/LSC/2024/0698 Property : Flats 4 & 6, 54-56 [ADDRESS] [POSTCODE] Applicant: [redacted] Respondent : [redacted] [NAME] : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985

Tribunal : [NAME] siting as a Tribunal Judge Sarah Beckwith MRICS Owen Miller BSc Venue

Date of hearing : : 10 [ADDRESS] [POSTCODE]

27 June 2025 Date of decision : 2 July 2025

ORDER

Decisions of the Tribunal

(1) The tribunal determines that the sum of £18,172.48 is payable by the Respondent in respect of the service charges for the years 2017/2018 to 2021/2022 inclusive in respect of [ADDRESS] [POSTCODE] (2) The tribunal determines that the sum of £18,172.48 is payable by the Respondent in respect of the service charges for the years 2017/2018 to 2021/2022 inclusive in respect of [ADDRESS] [POSTCODE]

2 (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, these matters should now be referred back to the County Court at Staines The [NAME]

1. Proceedings were originally issued in the County Court Money Claims Centre under claim number J74YX914 in relation to Flat 4 and under claim number J74YX927 in relation to Flat 6. The claims were transferred to the County Court at Staines. Claim J74YX914 was transferred to this tribunal by order of District Judge McCulloch on 16 August 2024. Claim J74YX927 was transferred to this tribunal by order of District Judge Murphy on 4 October 2024. Both Claims were transferred for the Tribunal to determine the payability and reasonableness of the service charges under section 27A. The hearing 2. The Applicant was represented by Mr [COUNSEL] of Counsel at the hearing and the Respondent appeared in person and was accompanied by her husband Mr [NAME] who also spoke for her. The background 3. The property which is the subject of this [NAME] relates to two of eight leasehold units within a block of flats across five floors. The respondent owns flats 4 and 6, and these are described in the leases. [NAME] is liable for a due proportion of the total service charge expenditure incurred by the landlord. The lease sets out the percentage liability for the tenant.

4. 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. The Respondent holds long leases of two flats in the property 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 6. At the start of the hearing the parties identified the relevant issues for determination as follows:

3 (i) The Respondent’s [NAME] for relief from sanctions (ii) The payability and/or reasonableness of service charges for the years 2017/2018 to 2021/2022 relating to Flats 4 & 6, 54-56 [ADDRESS] [POSTCODE]

7. Having heard evidence and submissions from the parties and considered all of the documents provided, the tribunal has made determinations on the various issues. Relief from sanctions - procedural background 10. The Applicant issued proceedings in the County Court in October 2022 as follows;

a. J74YX927 [tribunal ref; 0669] [Flat 6] – Ground Rent and Service Charges - £21,441.95 b. J74YX914 [tribunal ref; 0698] [Flat 4] – Ground Rent and Service Charges - £21,441.95

11. By orders dated 16 August and 4 October 2024, the court transferred the matters to the tribunal to adjudicate on the reasonableness and payability of service charges and administration charges.

12. On 20 December 2024, Judge Martynski issued standard directions which included an order that: The Respondent’s case 4. The Respondent must by 21 February 2025 deliver (by email) to the Applicant and to the tribunal the form attached setting out her case in full in respect of Service and Administration Charges.

5. If the Respondent intends to rely upon any documents not already seen by the Applicant, then copies of those documents must be sent to the Applicant at the same time.

13. In response to an [NAME] by the Applicant, on 7 March 2025 Judge Martynski issued a notice of intention to debar the Respondent for failing to comply with, in particular, Directions 4 and 5 cited above.

14. On 10 March 2025 the Respondent emailed the Tribunal requesting not to be disbarred.

15. In response the Tribunal amended the directions on 21 March 2025 permitting compliance with [NAME] and 5 by 28 March 2025.

4 16. A request was made for a further extension to comply with [NAME] & 5, This was refused in relation to [NAME] but compliance with Direction 5 was extended to 2 April 2025.

17. On 2 April 2025 [NAME] filed a respondent’s defence, in response to which the Applicant completed a schedule with their answer to the points raised by the Respondent, through her daughter.

18. As [NAME] of the order had still not been complied with the Applicant made a further [NAME] to debar. Judge Donegan then directed that any [NAME] for relief from sanctions should be made by 17 June 2025.

19. An [NAME] was made for relief on the basis that:

The issues couldn't be adequately represented in the standard reply form format - i.e. disputes on legitimacy and authority of the managing agent, improper service charge apportionment, lack of proper documentation, and non-compliance with the lease. The Respondent submitted representations under Direction 5 on 2/4/25. The Applicant responded on 25/4/25 including reply and supporting documents. Therefore both parties have engaged and submitted their representations. The omission of the [NAME] table does not prejudice the proceedings. The Respondent respectfully requests relief to allow the matter to proceed as scheduled…

20. The issue of relief from sanctions was directed to be determined as a preliminary matter at the hearing on 27 June 2025.

Relief from sanctions

21. The parties had been advised to have regard to [COMPANY] v Ramsdale and others [2023] UKUT 247 (LC) as to the principles to be applied to a relief from sanctions [NAME] in the Tribunal. Mr [NAME] orally expanded on his skeleton argument:

a. There was a breach which was serious and no good reason had been given. The reason they had seemingly given was that they had decided the direction did not need complying with notwithstanding judicial direction. b. In relation to the third [NAME] criteria, it was said that: i. the continued breach had caused an unnecessary use of judicial time and resources. ii. It was the respondent’s case that service charges are not payable such that it was incumbent on her to comply and plead her case coherently. The failure prejudiced the Applicant and caused increased costs. iii. The [NAME] for relief was only made because of Judge Donegan’s order and could not be described as prompt.

5 iv. [NAME] who had made the representations was not regulated under the Legal Services Act 2007 and they had not complied with Rule14(2) and 14(3)(b) such that actions taken by her daughter were void. v. Further the statement of case had at best fanciful prospects of success.

22. The Respondent had clearly not read the [RESPONDENT] case notwithstanding a clear direction that the parties should have regard to it. They were given time to consider highlighted paragraphs of the decision and also to prepare a response to Mr [NAME] arguments.

23. In response Mr [NAME] argued that the breach was not serious as the argument was that no service charges were payable rather than individual items, bar the management fee. He also explained that they had had serious health problems and their daughter had been managing the case. The [NAME] he said was prompt because it came soon after Judge Donegan’s order. It was later explained that their daughter had intended to attend for the hearing but had been unable to do so. They therefore were representing themselves and appealed to the Tribunal for fairness and that they were passionate to resolve the matter.

24. In response Mr [NAME] argued that their representations were unsupported by evidence, that no witness evidence had been supplied and they were introducing matters that were not in the [NAME].

25. The Tribunal considered the representations and determined to allow limited participation in the proceedings.

Reasons 26. The Tribunal recognised the force of Mr [RESPONDENT] submissions.

27. The Tribunal noted that [NAME] had intended to represent her and had she attended then Rule 14(6) would have applied, though in her absence Mr [RESPONDENT] point still had force.

28. The Respondent’s case had consistently been that no service charges were payable due to, inter alia, the illegitimacy of the managing agents and defective notices. They had raised other arguments that will be dealt with briefly below but this ground of their case appeared to be one that the Tribunal could investigate as the property manager, Mr [NAME], had provided a witness statement and attended the hearing.

29. The Tribunal had regard to the overriding objective under Rule 3 in exercising its powers under the rules. Particularly,

c. Dealing with the case in a proportionate manner d. Avoiding unnecessary formality and seeking flexibility e. Ensuring, so far as practicable, that the parties are able to participate fully in the proceedings

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30. The Tribunal considered the prejudice to the Applicant and did not consider it was particularly prejudiced were the Tribunal to proceed:

f. The Respondent had put in no witness evidence and had on their own case disavowed raising specific items of the service charge that they had incurred in the service charge years 2017/18 to 2021/22 g. As a consequence their participation would be to test the evidence of the Applicant limited to the case they had raised h. At its best that case was one of payability rather than reasonableness i. The Applicant had responded in full to the case made by the Respondent in relation to Direction 5 so was prepared to deal with the Respondent’s case

31. As there was no [NAME] to adjourn for more time to provide witness evidence and given the Respondent’s position that she only wanted to rely on the response to Direction 5, it seemed fair and just to allow the Respondent to try and prove her case purely by questioning Mr [NAME] and in submissions.

The substantive hearing

32. The Tribunal had a bundle of 600 pages. An additional bundle was issued on 25 June 2025 so that supplier invoices were included in the bundle. In addition reference was also made to the service charges calculations for 2021 and 2022 which it was said were inadvertently excluded from the original bundle.

33. The supplier invoices were not necessary for the Tribunal to consider given the basis of the Respondent’s case and the service of the calculations was a matter that could be dealt with by Mr [NAME]

34. The Tribunal heard evidence from Mr [NAME] further to his witness statement. Mr [NAME] cross examined him with the assistance of the Tribunal who also asked questions in relation to matters raised by the Respondent.

35. The following matters were considered in accordance with the Schedule drafted by [NAME] agent fees 36. It was the Respondent’s case that the lease did not provide for the payment of managing agent fees and that a similar lease for [ADDRESS] had been interpreted, presumably by a Tribunal as not being recoverable. No evidence had been disclosed beyond the assertion.

37. The difficulty for the Respondent is that this issue had been determined by a Tribunal in 2008 [LON/00AYILSC/200810271]. The issue was

7 raised again by the Respondent in a further Tribunal [LON/00AY/LSC/2016/0002]. That Tribunal found

The 2008 decision was also good authority for confirmation that managing agents fees were payable. In clause 17 of that decision the tribunal made it clear that a management fee of £2200 for 2007 was reasonable and payable and this tribunal sees no reason to depart from that decision. The amounts claimed as management fee: £2360 for the year 2010 and £2440 for 2011 are within a reasonable range of fee and are allowed in full

38. Even if the Tribunal is not bound by those two previous decisions on the same issue between the same parties as urged by Mr [NAME], the Tribunal respectfully agrees with the interpretation of Clause 7(b) of the two leases that it does include management fees and the reasonableness of those fees was not in issue before this Tribunal.

39. The Tribunal dismisses the Respondent’s argument on this point.

Failure to notify leaseholders of managing agent change 40. In June 2020, the former managing agents [COMPANY] merged with [COMPANY]. The former company assigned its management contract to [COMPANY]. The office address did not change and the people employed by [NAME] transferred to [COMPANY] including Mr [NAME].

41. Mr [RESPONDENT] evidence was that this was notified to the Respondent in an email and also posted to the Respondent with a payment demand on 26 June 2020. Receipt of this was confirmed in the Respondent’s Schedule drafted for this hearing.

42. The relevant notification was at page 600 of the bundle and, while sufficient, the Tribunal did note its apparent lack of formality.

43. Mr [NAME] further tried to imply that [COMPANY] were in some way not a genuine legal entity and therefore it was reasonable for them to withhold payment. The Respondent provided no relevant evidence to substantiate this other than assertions.

44. It also did not appear to be a genuine reason for non-payment as they had not paid the service charges for the three years prior to [APPELLANT] taking over and as pointed out by the Applicant they were content to contact [APPELLANT] over repairs issues in various emails in 2022.

45. The Tribunal is satisfied that the Applicant notified the Respondent of the change of managing agent and that the Respondent’s arguments on the point did not justify withholding the service charges.

8 Unfair apportionment of service charge 46. This is another argument of the Respondent that has previously been considered by the Tribunal and Court. Notwithstanding there being 8 flats in the building, Flat 4 and 6 carry a 25% share each of the service charge.

47. The case before this Tribunal is pursuant to section 27A of the Landlord and Tenant Act 1987 and the issue of the structure of the lease is not a matter that comes within the Tribunal’s jurisdiction. The Respondent has been informed by previous Tribunals back to 2008 that an [NAME] has to be made pursuant to sections 35 to 40 of the Landlord and Tenant Act 1987.

Calculations 48. The Respondent sought to rely on accounting issues to argue that the quantum outstanding was not properly reflected in the accounts. She maintained mis-accounting by a failure to reflect previous tribunal decisions and to account for the payments that had been made.

49. These are matters that may or may not provide a defence in the County Court, though they were not seemingly pleaded there. These are not issues that go to the reasonableness and payability of service charges and are outside the Tribunal’s jurisdiction under section 27A.

Failure to provide proper service charge statements 50. The Tribunal asked Mr [NAME] questions about the service of demands, accounts and accountancy certificates which were exhibited to his witness statement. The Tribunal accepted his evidence as it was clearly supported by the documents and actually reinforced by evidence provided by the Respondent’s husband. The Tribunal did not see that the documentation provided was defective.

51. The Tribunal was satisfied that estimates, schedules and statements along with accountant certificates were served and were not defective. The Respondent provided no evidence of why they questioned the probity of the documents.

52. On 21 September 2022 Mr [COUNSEL] wrote to the solicitors acting for the Applicant questioning the demands that had been sent for the years including those between 2017 and 2022. The letter states “Mrs [NAME] cannot accept these demands for payment as they have not been served under the terms of the lease” and ends with “The demands are returned”.

53. The Respondent argument was that documents had to be served at specific times and as they were not, there was no requirement to pay.

9 They had provided no evidence of which documents they say were late or not provided.

54. The lease has some requirements relating to the timing of actions in relation to documentation. The financial year runs from 25 December to 24 December :

j. Clause 7(d) – “The Landlord shall at the commencement of the Financial year estimate the Total Expenditure for that financial year…” k. Clause 7(f) – “As soon as practicable after and in any event within six months of the end of the financial year and shall have it certified by an independent accountant.”

55. Under Clause 7(1) the Landlord is to deliver to the tenant the accountant’s certificate, schedules giving a breakdown of the total expenditure between different categories of expenditure and a statement showing the service charge less instalments already paid.

56. The lease does not provide for a time period in which to provide the documents under clause 7(1).

57. Clause 7(f) while it does not say so in terms must refer to the final accounts for the previous financial year.

58. Under Clause 7(e) the Tenant is to pay on account his proportion of the estimated charges in advance on 25 December and 24 June of each year.

59. The payment of the estimated service charge is not made contingent on the Landlord, for example, finalising the accounts and getting an accountant’s certificate within 6 months of the end of the financial year.

60. The Respondent’s argument appears to be if the landlord does not finalise the service charge account and get the certificate from the accountant by 24 June of the following financial year, they are not liable to pay the estimated service charges of the current year.

61. [NAME] Management Company [COMPANY] v [NAME] & Another [2015] 427 (LC) cited with approval paragraph 50 of Pendra Loweth Management v North [2015] UKUT 91 (LC):

50. Nonetheless, a failure on the part of the Management Company to provide annual certified accounts does not seem to me to suspend the [NAME]’s obligation under clause 10 to pay the Estimated Service Charge on demand. There is simply no connection between the performance by each of the parties of their respective obligations. The obligation to pay the Estimated Charge is not expressed as being subject to the production of the audited accounts, and the Management Company is in a position to make an estimate each year

10 whether or not the accounts are available. There is therefore no practical reason to treat the production of the accounts as a condition of payment.

62. The Tribunal finds that the Respondent’s argument is very similar to the arguments made in the Upper Tribunal and following the cases of [NAME] and Pendra finds that there is no connection between the obligation to pay estimated service charges for the current year and the finalisation of the previous year’s accounts.

63. The Tribunal finds that the Respondent was liable to pay the estimated eservice charges levied between 2017/2018 and 2021/2022 and the final reconciled charges as and when Clause 7(1) was complied with.

Lack of supporting evidence for excessive charges and Poor property condition and claimed maintenance costs

64. The Respondent has provided no evidence to support these allegations which are denied by the Applicant. These arguments were exactly what [NAME] was aimed at and the Respondent chose not to comply or to provide witness evidence.

65. There is no evidence provided by the Respondent to substantiate excessive charges or poor property conditions. The Tribunal dismisses this aspect of the Respondent’s case.

Costs 66. Mr [RESPONDENT] sought costs pursuant to Rule 13(1)(b) on the basis that the Respondent had acted unreasonably in defending or conducting these proceedings.

67. The Tribunal had regard to the Court of Appeal case [NAME] v GP Ilfracombe Management Co [COMPANY] [2025] 1 WLR 371 which confirmed the appropriate test was that set out in Ridehalgh v Horsefield [1994] Ch. 205, [1994] 1 WLUK 563, [ADDRESS] Co (1985) [COMPANY] v Alexander [2016] UKUT 290 (LC), [2016] L. & T.R. 34, [2016] 6 WLUK 512 and [NAME] v Lanyon Bowdler LLP [2017] EWCA Civ 269, [2017] C.P. Rep. 25, [2017] 4 WLUK 299.

68. The Tribunal reminded itself of paragraph 24 of [ADDRESS]:

An assessment of whether behaviour is unreasonable requires a value judgment on which views might differ but the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level. We see no reason to depart from the guidance given in Ridehalgh at 232E, despite the slightly different context. “Unreasonable” conduct includes conduct which is vexatious, and

11 designed to harass the other side rather than advance the resolution of the case. It is not enough that the conduct leads in the event to an unsuccessful outcome.

69. The Respondent has not been vexatious or run the case to harass the Applicant but was the running of their case otherwise unreasonable?

70. On the one hand re-running arguments in relation to the managing agent fees and the apparently unfair proportion of the service charge her two flats incur would seem unreasonable as the arguments have been run unsuccessfully twice before. However the rebuttal of those parts of the case was a relatively straightforward matter for the Applicant and the Tribunal.

71. Further the failure to comply with [NAME] and the need for an [NAME] for relief might also be seen as potentially unreasonable. However, their failure to comply undermined their own case. The absence of a witness statement or breakdown of the specific service charges they were contesting meant the Tribunal could not consider the reasonableness of any charges. The limiting of their case simplified the response by the Applicant and the time taken in the Tribunal. However misguided their approach it was not unreasonable

72. The test to be applied at the first step is on an objective basis as to whether a reasonable person without legal advice would have run the case they did? Running an argument that being late with compliance with obligations under the lease in the absence of advice is not in itself unreasonable. The Tribunal doubts the reasonable person would have been aware or able to access the [NAME] case, for example.

73. Further it was evident from the letter Mr [NAME] wrote on 21 September 2022 that he had concerns over [COMPANY]. Mr [NAME] said the letter had never been answered and there was no evidence before the Tribunal that it had been. Given that the notification did not appear on any letterhead and was merely a note addressed to the leaseholders it perhaps may have been wise for the Applicant’s solicitors to have replied to clarify. Again absent legal advice a reasonable person may have felt there would have been greater formality for a change of managing agent.

74. The other arguments over the calculations of the outstanding sums owed is also not unreasonable for a person to think in the absence of legal advice that this might be a matter that goes to payability. It was also clear that the remaining arguments were undermined by their own running of the case.

75. Only behaviour related to the conduct of the proceedings themselves may be relied on at the first stage of the assessment and the Tribunal is not satisfied that the misguided running of this case was in itself unreasonable and does not mean the threshold for an order under Rule 13(1)(b) is satisfied.

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The next steps 72. The tribunal has no jurisdiction over ground rent or county court costs. These cases should now be returned to the County Court at Staines.

Name: [NAME]: 2 July 2025

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).