First-tier Tribunal Rules Service Charges Valid and Reasonable

OUTCOME: Dismissed

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Case Reference :BIR/00CN/LIS/2021/0017

Property : 4 [ADDRESS], [POSTCODE]

Applicant: [redacted]

Respondent : [redacted] [COUNSEL] (deceased)

Representative : [NAME] [COUNSEL] [NAME] of Application : Liability to pay and reasonableness of service charges

Tribunal Members : Judge [NAME] [NAME]

Date of paper : 21st July 2021 determination

Date of Decision : 13th September 2021

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DECISION

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Decision

We determine that the service and administrative charges detailed below for years 2010 to 2020 are payable, reasonably incurred and reasonable in amount, and in relation to year 2021, would be payable and reasonable in amount:

Service charges

2010 £1,995 2011 £1,964.30 2012 £2,507.16 2013 £4,406.73 2014 £3,229.86 2015 £3,493.22 2016 £2,681,76 2017 £2,640.40 2018 £1,743.38 2019 £1,952.88 2020 £2,169.08 2021 £ 1,129.33

Administrative charges

2012 £96 2013 £300 2014 £150 2018 £270 2020 £1500

Reasons for decision

Background

1. [NAME] [APPELLANT] [NAME], the deceased tenant, was registered as proprietor of the leasehold title WM912791, in August 2008, having acquired a 99 year lease of the Property on 10th August 2007 (“the Lease”). A mortgagee held a charge over the leasehold title dated 10th August 2007, and was registered as proprietor of that charge on 23rd August 2008.

2. The Applicants, the landlord, allege that there are service charge arrears going back to 2007 which the Respondent refuses to discharge without a court determination that the charges are validly demanded.

3. Therefore, by application dated 31st March 2021, the Applicants seek a determination under section 27A Landlord and Tenant Act 1985 (“the 1985 Act”) of the payability and reasonableness of service charges for the years 2007 to 2021 inclusive.

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4. Following correspondence between the Tribunal and the Applicants’ representatives, a second Respondent was removed from the application and [NAME] [RESPONDENT] [NAME] (as Executor) was substituted as the Respondent.

5. Following correspondence between the Tribunal and the parties, the Tribunal consented to the withdrawal of that part of the application that refers to service charges 2007 to 2009.

6. There have been previous County Court proceedings prior to [NAME] [NAME] death but they did not result in a determination or judgement.

The Lease

7. The Sixth Schedule of the Lease (‘The Maintenance Expenses’) sets out the Management Company’s obligations for which money can be spent or reserved for periodical expenditure in relation to the maintenance of the parts of the Development within which the Property is situated and as described in the Second Schedule.

8. The Seventh Schedule (‘The [NAME]’s Proportion of the Maintenance Expenses’) provides that the [NAME]’s proportion is one fourteenth of the Maintenance Expenses as defined in the Sixth Schedule.

9. Clause 3 of the Seventh Schedule provides for the [NAME]’s proportion to be paid in advance on the 25th March and 29th September each year with a requirement to pay any balancing figure within 21 days after the service on the [NAME] of the account of the Maintenance Expenses and the accountant’s certificate.

10. Clause 6 of the Eighth Schedule (‘Covenants by the [NAME]’) provides that the [NAME] covenants to pay to the Management Company the [NAME]’s proportion of the Maintenance Expenses at the time and manner as provided as provided in the Lease.

Inspection and Hearing

11. Neither party requested an inspection or hearing. We were satisfied that we had sufficient information in the written representations and could proceed without an inspection or hearing.

12. [NAME] dated 17th May 2021 required the Respondent to identify in relation to each service charge year:

i. the item and amount in dispute; ii. the reason(s) why the amount is disputed; and iii. the amount, if any, the Respondent would pay for that item.

13. The Respondent was required to provide copies of any alternative quotes and any legal submissions if liability to pay was at issue. The Respondent was also given the opportunity to provide a brief supplementary reply to [NAME] submission.

14. Following a review of the papers, further [NAME] dated 26th July 2021 were issued seeking clarification regarding a loan referred to as part of the service charges and also in relation to the administration charges of £1500 in 2020. [NAME] provided the

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information requested and the Respondent did not submit any comments in response to that information.

Submissions

Applicants

15. The Applicants have submitted an arrears schedule for the period 25th December 2007 to 27th July 2020. The schedule includes details of half yearly service charges; interest chargeable; administration fees for default notices and referral to solicitors; Landlord loan interest; legal costs and details of payments made. They have also provided copies of the service charge accounts from year ended 2008 to year ended 2017 with the exception of years ending 2009 and 2010; report on expenditure for 2018; the majority of service charge demands between 2008 and June 2017 and statements of account from 25th December 2017 to 21st April 2021.

Respondent

16. The Respondent did not provide the information required by the [NAME] identifying the items in dispute nor did he provide a supplementary reply. By email dated 12th June 2021 the Respondent’s representative stated that he did not intend to object to the application and determination being sought. The Respondent did not provide comments in response to [NAME] information provided as required by the further [NAME] dated 26th July 2021.

Deliberations

This Tribunal has jurisdiction under section 27A of the Landlord and Tenant Act 1985 to determine the payability and reasonableness of service and administration charges but not rent, County Court costs or statutory interest.

Payability

Service charges

17. The Respondent has not disputed the Lease provisions allowing service charges to be charged and we therefore have not recited in full the relevant Clauses. We have had regard to Schedules Six, Seven and Eight of the Lease. We find that the service charges are payable under the provisions of the Lease.

Administration charges

18. Clause 14 of the Sixth Schedule of the Lease includes as Maintenance Expenses the costs of generally managing and administering the Development including the employment of managing agents and enforcing the observance of covenants by Lessees. The Respondent has not disputed the payability of administration charges. We find that administration charges are payable.

Reasonableness

Service charges

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19. In the absence of any submission or evidence from the Respondent regarding items of expenditure being unreasonable, we determine that the Respondent’s service charges charged in 2010 to 2020, as detailed below, relate to expenditure which has been reasonably incurred and is reasonable in amount, and in relation to 2021, the service charge amount would be payable and reasonable. There is a lack of clarity as to whether the withdrawal of the application relating to service charges 2007 to 2009 includes or excludes the service charge dated 25th December 2009 which covers the period to 23rd June 2010. We have therefore included it in the figures below. However, the matter of the limitation period and the enforcement of the payment of the service charge is a matter for the parties and/or County Court and not the Tribunal.

£ 2010 £1,995 (£997.50 x 2) 2011 £1,964.30 (£982.15 x 2) 2012 £2,507.16 (£1,253.58 x 2) 2013 £4,406.73 (£1,598.40 x 2 and £1,209.93 service charge shortfall for year ended 2013) 2014 £3,229.86 (£1,614.93 x 2) 2015 £3,493.22 (£1,746.61 x 2) 2016 £2,681,76 (£1,340.88 x 2) 2017 £2,640.40 (£1,320.20 x 2) 2018 £1,743.38 (£871.69 x 2) 2019 £1,952.88 (£976.44 x 2) 2020 £2,169.08 (£1,084.54 x 2) 2021 £ 1,129.33

Administration charges

20. Administration fees were charged variously including £96 for legal costs, £60 and £90 for a default Notice and £90 and £180 for a solicitor referral. The Respondent has not disputed the amount of the administration charges nor suggested an alternative amount. We find the charges detailed below to be reasonably incurred and reasonable in amount.

Service charge year

2012 £96 2013 £300 2014 £150 2018 £270 2020 £1500 (for 0ngoing legal action)

Costs

21. Neither party has made an application for costs and we make no such order.

Appeal

22. If either party is dissatisfied with this decision, they may apply to this Tribunal for permission to appeal to the Upper Tribunal (Lands Chamber). Any such application must be received within 28 days after these written reasons have been sent to the parties and must state the grounds on which they intend to rely in the appeal.

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…………………………

Judge [NAME]