Leaseholder Not Liable for Unreasonable Administration Charges Due to Landlord's Poor Practices

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : LON/OOAH/LSC/2021/0270 Property : [NAME], [ADDRESS], South Croydon, CR2OAG

Applicant: [redacted]

Respondents : [redacted] [NAME] : For determination of reasonableness and payability of administration charges Tribunal Member : Judge Shepherd Date of Decision : 8th February 2022

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1. This is an [NAME] for a determination as to liability to pay and reasonableness of certain administration charges. The applicant is Mr [APPELLANT]. He is the leaseholder of flat 4, [NAME], [ADDRESS]., South Croydon, CR2OAG (“The premises”). The Respondents to the [NAME] are [COMPANY]. They are the freeholder of the premises.

2. The administrative charges in dispute value £2340. They consist of a number of administration fees and other fees. The. Applicant purchased the premises on the 3rd of January 2020 and the [NAME] for the freeholder at that time confirmed that all payments were paid and there were no arrears. The Applicant paid the 2021 ground rent and administration fee and emailed the [NAME] to confirm this. The [NAME] subsequently claimed there were arrears outstanding and sought to enforce this debt against the Applicant.

3. When he bought the premises the Applicant’s solicitor served notice of transfer on the registered owner of the freehold, [COMPANY]. No reply was received. On the 8th of December 2020 [COMPANY], the Respondent’s agents wrote a letter to the Applicant claiming that he was in breach of covenant for failing to serve a notice of transfer and stating that there were arrears of £4477.35. The Applicant’s solicitors replied stating that there were no arrears. [NAME] did not reply. On the. 29th of June 2021 [NAME] sent a statement of account still claiming arrears. On the 7th of July 2021 the Debt Recovery Agency sent a letter claiming there were arrears of £6359.56. Although he did not receive a demand for the 2020 ground rent the Applicant paid this amount.

4. The applicant disputes the administration fees. He says that his solicitor served the correct notice of transfer on the registered landlord but received no reply. [RESPONDENT] failed to register their transfer at the Land Registry and have still failed to do this, some four years after purchasing the premises. Further, he states

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[NAME] fraudulently tried to obtain £2913.77 for unpaid service charges notwithstanding the fact that they knew that these sums had already been paid by the vendor (see letter dated 19th December 2019).

5. In their statement of response the Respondents rely on the fact that the Applicant failed to serve notice of the on them of the transfer. They state that the Applicant and his solicitors were aware of the [NAME] and rely on correspondence at pages 10 and 14 of the bundle. At page 10 is the letter from the debt recovery agency dated the 29th of June, 2021 which mentions [COMPANY] and the Respondents. At page 14 is an email from the agents dated 23rd December 2019.

6. The Respondents break down the costs that they say are due. The breakdown is not entirely clear. There is a referral fee but it’s not clear what this covered by this. The review and correspondence fee is equally unclear as to its provenance. The letter before action relates to the issue of whether the charges were valid in the first place. It is not clear why there are administration charges for the collection of ground rent when that sum was not even demanded – however the Applicant has paid this sum. The notice fee may be due and as the Tribunal understands the Applicant is happy to pay it. Again the admin costs associated with debt collection are only due if the collection was valid.

Determination

7. The Tribunal is satisfied that the Applicant’s solicitors did not fall into error when serving notice on the registered owners of the premises. The fact that [NAME] had not registered their ownership was their problem. Whilst the Applicant became aware of the Respondent’s agents his solicitor was not provided with

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evidence of ownership by [NAME] until 22nd November 2021. A registration fee for the notice of transfer will be paid according to the Applicant.

8. It is of some concern that the Respondents are seeking to justify the cost of the debt collection when they had apparently instructed the debt collectors that the Applicant had substantial outstanding service charge arrears when that patently was not correct.

9. The principal problems in this case have been caused by poor administration by the Respondents. They failed to register their ownership of the premises with the Land Registry and of more concern they sought to pursue the Applicant for sums that had already been paid. The sums that they now claim in admin fees are unclear and not justifiable. They appear to originate from the errors already cited. It is not fair or reasonable for the Applicant to pay the cost of the Respondent’s errors.

10. The Tribunal has no hesitation in confirming that none of the remaining disputed sums of £2340 are due. The Tribunal also orders that no costs of the current proceedings should be added to the service charge account pursuant to s 20C Landlord and Tenant Act 1985 and Para 5A of Schedule 11 to the Coommonhold and Leasehold Reform Act 2002.

Judge Shepherd

8th February 2022

Rights of appeal

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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].