First-tier Tribunal Varies Order for Service Charges

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AN/LVM/2022/0013

Property : 112 [ADDRESS] [POSTCODE] Applicant : [redacted] : N/A Respondents : [redacted] Mr [NAME] and Ms [COUNSEL] [COUNSEL] (2) Mr [COUNSEL] [NAME] (3) Representative : N/A Type of [NAME] : [NAME] by a tribunal-appointed manager for variation of [RESPONDENT]/directions Tribunal member(s) : Judge H [NAME] Ms A Flynn MA MRICS Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 16th August 2022

2 Covid-19 pandemic: description of hearing This has been a remote hearing on the papers which has not been objected to by the parties. The form of remote hearing was P:PAPERREMOTE. A face-to- face hearing was not held because it was not practicable and all issues could be determined on paper. The documents that I was referred to are in a bundle of 98 pages, the contents of which I have noted. The [RESPONDENT] made is described below. Decisions of the tribunal (1) The tribunal determines that it is just, convenient and proportionate to vary the [RESPONDENT] to include a new paragraph (vi) to the [RESPONDENT] as follows: Service charges for [NAME] are to be billed to the Respondent ([NAME]). The service charges are to be paid by the immediate landlord within 21 days of a Demand identifying: • the total sum claimed; • the manner in which the sum is calculated; • the relevant lease provisions; and • copies of demands served (2) The tribunal determines not to vary the [RESPONDENT] so that all four units pay an equal share of all expenses. The background 2. The background to this [NAME] is set out in previous decisions in particular the [RESPONDENT] made by the tribunal on 18th May 2021 (under ref. LON/00AN/LAM/2020/0013) and the determination in connection with an [NAME] to vary the lease made on 14th January 2022 (under ref. Lon/00AN/LVT/2021/0002) 3. [NAME] the tribunal appointed manager made an [NAME] on 20th May 2022 for variation of the [RESPONDENT]/directions pursuant to section 24 of the Landlord and Tenant Act 1987 (the “Act”).

4. In the directions the tribunal identified the issues to be determined as follows: (i) Whether charging all four units an equal share of all expenses is appropriate? (ii) Should the [NAME]’s share of the service charges be charged directly to the landlord in light of its refusal to contribute and now being in administration

3

THE DETERMINATION THE APPLICANT’S [RESPONDENT]

5. The Applicant argues as follows: the tenant of the [NAME] unit has been charged 1/3 of the general expenses like the buildings insurance, electrical and fire safety work, management fee and accountant’s fee. There is not an official lease agreement between the landlord and the [NAME] as such. The tenants of flats A and B pay 1/3 each of the general expenses and ½ each of the common area expenses like cleaning or internal repairs.

6. No service charges have been demanded from flat C to date as there is no official lease agreement available either.

7. Flat C and the [NAME] unit benefit from the use of the internal common parts, however, do not contribute into the internal expenses.

8. The leases for Flats A and B make reference to a recalculation of service charges if additional properties are added to the [NAME] (whether or not a lease is in place for this additional property).

9. The Applicant asks whether charging all fout units an equal share of all expenses is appropriate and whether the [NAME]’s share should be charged directly to the landlord.

10. The Applicant proposes the following additional paragraphs to the [RESPONDENT] (vi) All service charges are to be split equally four ways between the [NAME] premises and three flats. This split is to have taken effect from the start of the [RESPONDENT] (1st June 2021). (vii) Service charges for [NAME] are to be billed to the Respondent ([NAME]). [RESPONDENT]

11. The Respondent argues that the proposed variation does not fall within any of the grounds set out in s.24 of the Landlord and Tenant Act 1987 and therefore the tribunal should not [RESPONDENT] the proposed variation. 12. [RESPONDENT] Respondent refers the tribunal to its decision in Lon/00AN/LVT/2021/0002 that there should be no variation of the service charge provision.

13. The Respondent also argues that Judge McGrath in the case of [NAME] v [COMPANY] & Others [2019] UKUT 0371 (LC), noted that only section 24(4) allows the Manager to apply for directions for the variation or discharge of an [RESPONDENT] under section 24(9). Importantly, she provided that such an [NAME]

4 would not be suitable to deal with service charges. See paras [55] – [57] of that case.

14. The Applicant has provided no evidence to support their request for a variation, including no specific statutory provision for the basis of this [NAME]. THE

DECISION OF THE TRIBUNAL 15. The tribunal determines that it is proportionate, just and convenient to vary the [RESPONDENT] as follows: To add a paragraph (vi) to the [RESPONDENT] as follows: Service charges for [NAME] are to be billed to the Respondent ([NAME]). The service charges are to be paid by the immediate landlord within 21 days of a Demand identifying: • the total sum claimed; • the manner in which the sum is calculated; • the relevant lease provisions; and • copies of demands served

THE REASONS FOR THE DECISION OF THE TRIBUNAL

16. The tribunal agrees with the Respondent that, in the light of its decision in Lon/00AN/LVT/2021/0002 , it is not appropriate for the tribunal to [RESPONDENT] that the costs are divided equally between the four parties and therefore it makes no [RESPONDENT] in connection with this.

17. The tribunal notes that the Respondent has not commented on the second aspect of the [NAME], whether the service charges owed by the [NAME] should be paid by the Respondent except in so far as the Respondent says that the Applicant has not made clear the statutory basis for the [NAME].

18. Section 24(9) of the 1987 Act provides as follows: “9. The appropriate tribunal may, on the [NAME] of any person interested, vary or discharge (whether conditionally or unconditionally) an [RESPONDENT] made under this section; and if the [RESPONDENT] has been protected by an entry registered under the Land Charges Act 1972 or the Land Registration Act 2002, the tribunal may by [RESPONDENT] direct that the entry shall be cancelled.” 19. S.24(9A) provides as follows:

5 9A "The tribunal shall not vary or discharge an [RESPONDENT] under subsection (9) on the [NAME] of any relevant person unless it is satisfied: (a) that the variation or discharge of the [RESPONDENT] will not result in a recurrence of the circumstances which led to the [RESPONDENT] being made, and (b) that it is just and convenient in all the circumstances of the case to vary or discharge the [RESPONDENT].

20. The tribunal agrees that the Applicant has not made the statutory basis for the [RESPONDENT] explicit but considers that there is implicit in her [NAME] the argument that it is just, convenient and proportionate.

21. The tribunal notes that the Applicant is not legally represented, and that the property is a low value property. It is not appropriate in these circumstances to expect the Applicant to present her [NAME] in the manner of an expert lawyer. Nor would it be proportionate for her to engage the services of such a lawyer. If the [NAME] is sufficiently clear then the tribunal is able to determine whether it should exercise its discretion and grant the variation.

22. In the particular circumstances of this case the tribunal considers that it is clear what the Applicant wants to achieve and why and that it is for the tribunal to make a determination as to whether to exercise its discretion and find that the variation sought is just, convenient and proportionate.

23. The tribunal considers that it is just and convenient to vary the [RESPONDENT] in the way it has because the shortfall in contributions from the [NAME] is [NAME] it difficult for the manager to fulfil her obligations to manage the property.

24. It draws on the decision of Deputy Regional Judge Vance in [NAME] v [COMPANY] and others LON/00BG/2021/0005 to reach its determination. In that case the [NAME] ceased to trade and the Judge accepted the argument that a useful starting point is to consider what the position would be if there was no manager appointment in place. In those circumstances the landlord would be obliged to meet the shortfall in service charges from its own resources. This was so even though the landlord had no control over the decision of the [NAME]. The judge determined to vary the [RESPONDENT] so that the manager was able to collect the outstanding service charges from the landlord.

25. The position is even more compelling in this case as (a) it is not clear what the relationship between the Respondent and the [NAME] is or has been, although there is some evidence that it was not an arms length relationship and (b) it is within the Respondent’s control as to whether or not the [NAME] premises are relet and service charges raised from the new [NAME].

6 Name: Judge H [NAME]: 16th August 2022

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).