Tenant's Challenge to Service Charges Allowed by First-tier Tribunal

OUTCOME: Allowed

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER

(RESIDENTIAL PROPERTY)

Case Reference

:

CHI/00UC/LSC/2024/0009

Property

:

36 [ADDRESS] [POSTCODE]

Applicant: [redacted]

(2) [NAME] (Flat A)

(3) [COUNSEL] (Flat B)

Representative

:

In person

Respondent: [redacted]

:

In person

Type of Application

:

[RESPONDENT] and Tenant Act 1985 s.27A

Tribunal Member(s)

: Judge M Loveday

B [NAME] and venue

Date of Decision:

:

:

17 October 2024, Havant Justice Centre (hearing) and 21 November 2024 (reconvene)

9 January 2025

DETERMINATION

Introduction

1. This is an application to determine liability to pay service charges for [NAME] flats in Eastbourne. The applicants are the lessees of flats C, A and B, 36 [ADDRESS] [POSTCODE]. The respondent is the [RESPONDENT].

Background

2. The premises comprise an end of terrace building c.1890 in the main retail area of Eastbourne. There is a commercial unit on the ground floor occupied by [NAME]. There are five flats above accessed from a period glazed street door to the side of the hairdressers and an alleyway to the side with a timber gate. The building is of brick with a prominent bay on two floors above the shop and a large original mansard set into a pitched roof.

3. The tribunal was provided with a copy of the relevant lease of Flat C, and it assumes the leases of the other flats are in materially similar form (save for the service charge apportionments). By a lease dated 17 July 1987, Flat C was demised for a term of 99 years from 25 December 1986 (“the 1987 Lease”). By clause 1, there was a provision for payment of an insurance rent, apportioned at 14% of the cost of insuring the block. By clause 4(1), there was an obligation to pay service charge contributions representing 2/16th of the relevant costs set out in Sch.4. The machinery of the service charge included a standard obligation under clause 4(2) to pay an estimated contribution by 25 March in each year. By clause 4(3) the [RESPONDENT] was to calculate “as soon as possible after the end of each year of the term” the actual expenditure it had incurred “for the preceding year” and the [NAME]’s actual contribution and furnish that to the lessees. The [NAME] became liable to pay any difference between the actual contribution and the estimated contribution. Para 10 of Sch.4 included a sweeper clause which required the lessees to contribute to:

“10. All other expenses (if any) reasonably incurred by the Lessor in and about the maintenance and proper and convenient management and running of the building”.

4. The contractual apportionment of the service charges for Flats B and A in clause 4(1) of the leases of those flats is also apparently 12.5%.

5. On 28 November 2017, the respondent granted the first applicant a lease extension under s.56 Leasehold Reform Housing and Urban Development Act 1993. The effect was to surrender the 1987 Lease and re-grant a new lease expiring on 24 December 2175 upon substantially the same terms.

6. It is far from clear which service charges were demanded from the lessees in each year. Only one invoice for payment (dated 28 October 2021) was included in the bundle, and even that failed to comply with s.21B of the 1985 Act and s.47/48 [RESPONDENT] and Tenant Act 1987. The papers included what were described as “summary accounts” for each year between 2017 and 2022, which provided as summaries of accounts under s.21 of the 1985 Act (see below). In addition, the papers include a statement headed “2023 Accounts”, although the provenance of these is unclear. None of these accounts are in the form required by clause 4(6) of the 1987 Lease, nor in the form recommended by para 7.10 of the RICS Service Charge Residential Management Code (3rd ed) and Tech 03/11. Moreover, the figures given in these accounts appeared to be for income and expenditure in each calendar year, which was arguably slightly different to the “year of the term” specified in clause 4(3) of the 1987 Lease. But the above accounts include figures for the relevant costs incurred in each year, and the tribunal (like the parties) adopts them for the purposes of the application.

7. A qualifying majority of tenants has exercised the right to manage the premises under the Commonhold and Leasehold Reform Act 2002. The [COMPANY] acquired the right to manage with effect from 22 May 2024. The application therefore only relates to service charges demanded by the respondent before that date.

8. There have been previous proceedings involving the first applicant and the respondent in the County Court at Hastings. On 15 April 2024, DDJ Hull gave judgment in claim no.468MC784, and parts of the judge’s judgment are referred to below.

9. The present application was originally made by the first applicant on 15 January 2024, seeking a determination in relation to the 2020, 2021, 2023 and 2024 service charge years. This was followed by amended and updated applications on 27 January 2024 and 11 June 2024. Directions were issued on 10 July 2024 listing the application for a case management and dispute resolution hearing on 28 August 2024. On 29 August 2024, the [NAME] and third applicants were joined into the application, as well as a Ms [NAME] (of which more below). A hearing was listed for 17 October 2024 and further directions were given to prepare matters for that hearing.

10. The hearing took place at Havant Justice Centre on 17 October 2024. The tribunal first heard an application by the respondent to strike out the application which had been filed on 10 October 2024. The tribunal then proceeded to hear from the first applicant and the respondent in person. The [NAME] applicant and Ms [APPELLANT] then briefly addressed the tribunal to support the first applicant. Unfortunately, by the conclusion of the hearing, it became clear the tribunal would be unable to reach a decision on certain submissions made in relation to jurisdiction, without having sight of a full copy of the judgment of DDJ Hull given in the County Court at Hastings on 15 April 2024 (case no.468MC784). It therefore directed that various questions of jurisdiction should await the provision of the DDJ’s judgment and that further submissions could be made on this point in writing. Following receipt of the full copy of the judgement and these submissions, the tribunal reconvened and reached its determination.

Striking out

11. The tribunal indicated at the hearing that it refused the respondent’s application to strike out. It sets out below its brief reasons for refusing the application.

12. Rule 9 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (“the Tribunal Procedure Rules”) provides as follows:

“Striking out a party’s case

9.—(1) The proceedings or case, or the appropriate part of them, will automatically be struck out if the applicant has failed to comply with a direction that stated that failure by the applicant to comply with the direction by a stated date would lead to the striking out of the proceedings or that part of them.

…

(3) The Tribunal may strike out the whole or a part of the proceedings or case if—

(a) the applicant has failed to comply with a direction which stated that failure by the applicant to comply with the direction could lead to the striking out of the proceedings or case or that part of it;

(b) the applicant has failed to co-operate with the Tribunal such that the Tribunal cannot deal with the proceedings fairly and justly;

…”

13. The written application filed on 10 October 2024 contended that the first applicant did not comply with the directions given on 29 August 2024 to deliver the full hearing bundle by post. The material directions were as follows:

14. These directions included the following:

(a) By 4 September 2024 the Applicant shall send a statement of case and supporting documents by post to the Respondent (para 20).

(a) By 13 September 2024, the respondent shall send a statement of case and supporting documents to the applicant (para 21).

(b) By 27 September 2024, the applicant may send a concise reply by post to the respondent and that reply should be “included in the hearing bundle” (para 21).

(c) The material directions relating to the hearing bundle were as follows:

“Documents for the hearing

25. The Applicant shall be responsible for preparing the bundle of relevant documents, the contents of which should be agreed by the parties and shall by 27 September 2024 send one copy to the other party by post and send one copy (electronically) to the Tribunal.

26. THE BUNDLE MUST BE IN PDF AND COMPLY WITH THE GUIDANCE ON PDF BUNDLES.

27. If the hearing bundle is not sent to the Tribunal by the said date or not in the required format, the Application will be struck out without further notice.”

15. The respondent stated that previous bundles of documents in the proceedings had been posted to him and required a signature or photographic evidence of receipt. However, the respondent had never received a physical copy of the hearing bundle as directed by para 25 of the directions of 29 August. The application should be struck out under para 27 of the directions.

16. The first applicant argued that it would be completely unjust to strike out the application. He stated that he had asked a friend to deliver the bundle to the respondent’s address, and that the friend delivered it on 27 September 2024. The bundle was contained in a brown envelope and the friend photographed the envelope. A copy of the bundle was sent to the tribunal by email on 27 September 2024, albeit that this was submitted in four separate emails. It would be unjust to strike out the application, because there were multiple issues to be decided.

17. In reply, the respondent argued there had been some misunderstanding. The photograph showed delivery of the applicant’s concise reply to the respondent’s case (as referred to in para 22 of the directions). The respondent accepted he had previously seen most of the documents included in the hearing bundle. The documents which had not previously been seen were 12 photographs showing works to the mansards and windows at high level.

18. The tribunal’s decision. Although the Upper Tribunal has previously given guidance on the exercise of powers under r.9 in Reid v Kaur [2018] UKUT 342 (LC), the circumstances of this dispute are straightforward. Para 27 of the August 24 Directions engages the automatic sanction in r.9(1) of the Tribunal Procedure Rules. Subject to r.9(5), the tribunal has no discretion. Under r.(1), the application is either struck out or it is not struck out. The issue therefore becomes whether, as a question of fact, the first applicant complied with para 25 of the directions. In other words, on the balance of probabilities, did the first applicant “send [a] copy” of the hearing bundle to the respondent by 27 September 2024?

19. The tribunal notes that para 25 of the directions does not require the hearing bundle to be “received”. It merely requires the applicant to “send” a copy of the bundle to the respondent “by post”. This tribunal finds that in the era of [COMPANY] with multiple forms of courier and parcel delivery businesses, the word “post” was used in its non-technical sense. “Sending” a package “by post” may include a friend leaving an envelope at the respondent’s address. On this basis, the tribunal is greatly assisted by the respondent’s concession that the photograph shows an envelope being delivered at his address. The issue therefore becomes rather narrower. It is simply whether the envelope delivered by the friend contained the first applicant’s para 21 reply (as argued by the respondent) or the full para 25 bundle (as argued by the applicant).

20. The tribunal has no hesitation in accepting the first applicant’s evidence that he sent the full bundle to the respondent on 27 September 2024. Having heard the first applicant giving oral evidence, the tribunal considered he was a truthful witness of fact. This finding is supported by other considerations:

a. The suggestion the first applicant complied with para 22 of the directions to send the reply to the respondent by 27 September 2024, but did not comply with para 25 of the directions to deliver the full hearing bundle by 27 September 2024 makes little sense. The most likely course of action was for him to deliver both at the same time.

b. This is particularly the case, given that para 22 required the reply to be included in the hearing bundle.

c. The respondent accepts that previous documents in the proceedings were sent to him by the first applicant.

d. The applicant complied with the other element of para 25 of the directions timeously, namely, to email a copy of the bundle to the tribunal.

e. The respondent’s explanation about the photograph at the hearing is inconsistent with his initial bare denial that the bundle had not been received. One would have expected him to say right at the outset that an envelope had been received, but that the envelope simply contained the reply. Indeed, the respondent has not produced a copy of the envelope containing the reply.

21. On the balance of probabilities, the tribunal finds the hearing bundle was sent to the respondent in accordance with the directions. Rule 9(1) was not therefore engaged.

22. Finally, although the respondent did not advance any argument that the tribunal should exercise its discretion to strike out under r.9(2) of the Tribunal Procedure Rules, the tribunal was satisfied that the respondent was still able to participate fully in the proceedings, notwithstanding the suggestion he had not received the bundle in September 2024. The tribunal forwarded an electronic copy of the bundle to the respondent on 10 October 2024, and he had therefore had sufficient opportunity to prepare his case before the hearing.

[NAME]

23. As explained, [NAME] is the commercial [NAME] of the ground floor unit, which is used as a hairdresser. She was joined as an applicant on 29 August 2024. It is unclear whether the tribunal judge on that occasion was made aware of the fact that [NAME] was a business tenant. She is plainly not a tenant of a “dwelling” under s.18(1) of the [RESPONDENT] and Tenant Act 1985, and therefore cannot bring an application under s.27A of the 1985 Act. Ms [APPELLANT] is therefore removed as an applicant under r.10 of the Tribunal Procedure Rules.

24. The tribunal now turns to the 11 issues identified by the first applicant in his statement of case/witness statement dated 3 September 2024.

Issue 1: 2024 charge for accounts (£300)

25. The applicants contend they have never received accurate, detailed accounts relating to the property, audited or otherwise. On 5 June 2023, the first applicant served a request for a summary of relevant costs under s.21 of the 1985 Act. On 14 June 2023, he requested inspection of supporting accounts, etc. under s.22 of the 1985 Act. By an email dated 2 May 2024, the respondent’s accountant replied that “I have been informed that we will be charging you £300.00 for having to relocate these accounts you had”. The applicants did not consider such charges to be reasonable or in accordance with the terms of the leases. At the hearing, the first applicant stated he had assumed the applicants had been charged £300 each for provision of accounts, but he could not identify the cost in any accounts.

26. In his statement of case, the respondent stated that “no charge for accounts was ever made”. In his oral submissions, the respondent repeated that no charge of £300 had ever been made. However, he stated that he did generally charge lessees for providing copies of service charge accounts.

27. There has been a great deal of confusion on both sides about the issue of the £300 charge. There is an obligation in clause 4(3) of the 1987 Lease to deliver to each [NAME] an annual account of actual expenditure and the [NAME]’s actual service charge contribution. There is also a provision for an auditor’s certificate in para 4(4). By para 7 of Sch.4 to the 1987 Lease, the respondent may properly include the costs of preparing these accounts in the applicants’ service charges (subject of course to s.19 of the 1985 Act). No doubt, the respondent could also include the administration cost of providing further copies of these accounts in later years’ service charges (again subject to the reasonableness requirements of s.19 of the 1985 Act). But the £300 figure referred to in the email of 3 May 2023 did not relate to a service charge at all. According to application, the applicants were concerned about individual charges of £300 for each [NAME], not costs added to the service charges. Moreover, the email was a specific response by the respondent to a specific request by the first applicant for inspection of supporting accounts, etc. under s.22 of the 1985 Act.

28. The tribunal considers the £300 charge threatened in the email of 3 May 2023 is an individual “administration charge” for the provision of documents under para 1(1)(b) of Sch.11 to the Commonhold and Leasehold Reform Act 2002, not a “service charge” under s.18(1) of the 1985 Act. The respondent did not suggest there was any contractual right to levy individual lessees for this administration charge under the 1987 Lease. In any event, as already explained, the email of 3 May 2023 was a response to a request for inspection of supporting accounts, etc. under s.22 of the 1985 Act, and it was unlawful for the respondent to make an individual charge for providing this information: see ss.22(5)(a) and 22(6) of the 1985 Act. Had there been an administration charge of £300 per flat, the tribunal would therefore have found this was not payable.

29. Be that as it may, the tribunal accepts the respondent’s concession that no charge of £300 has ever been made. On this basis, no administration charge of £300 is payable under para 5 of Sch.11 to the 2002 Act.

Issue 2: Exterior works (2024)

30. The issue here related to the cost of exterior works undertaken in mid-2024. The cost did not appear in any of the accounts, but it was common ground that the relevant cost of the exterior works was £6,000.

31. On 17 August 2023, the respondent emailed the lessees what was described as a “Section 20 part 1 Notice”. It described the major works as “Repairs/replacement of felt, lead flashing, guttering, repointing to the rear wall of the building and area of roof which are failing and permitting water ingress”. The wording of the notice appears in Appx.A to this determination.

32. On 22 August 2023, the first applicant nominated two contractors to carry out the exterior works, namely himself and a [NAME] [RESPONDENT]. The respondent engaged a [NAME] [RESPONDENT] [NAME] to undertake the works.

33. On 5 October 2023, there was a what was described as a “Notice of Intention to carry out works: S20 Consultation Part 2”. The wording of the notice appears in Appx.B to this determination.

34. On 23 February 2024, there is a contract notice. The wording of the notice appears in Appx.C to this determination.

35. There is an email estimate for the works from [NAME] [NAME] dated 2 February 2024 for £15,680 (apparently a reduction of £1,744 when compared to an earlier estimate). By the time to right to manage was acquired, [NAME] [NAME] had completed only £6,000 for 3 days’ worth of work.

36. The applicants’ case. The applicants suggested the poor condition of the exterior of the premises was brought to the respondent’s attention several years ago, but that he ignored these requests until he was notified the lessees intended to acquire the right to manage. The application alleged the works were commissioned in an attempt “to empty the sink[ing] fund prior to the handover date”.

37. The application and statement of case raised two main arguments. First, there were defects with the s.20 consultation process. In particular, neither of the contractors nominated by the first applicant were contacted, and other questions and objections raised by the tenants were ignored. Instead, the respondent engaged [NAME] [RESPONDENT], who was a friend and who used the same address as the respondent’s business. Secondly, the applicants believed the works were considerably overpriced. As evidence of this, the first applicant had been told by a [NAME] that the work actually carried out was worth £2,000 (£1,000 roof works plus £1,000 scaffolding). At the hearing, the applicant referred in detail to a s.20 consultation undertaken in 2021 in relation to internal decoration and to the October 2021 invoice which related to that work. The applicant sought a determination that the cost of exterior works should be limited to £250 per lease.

38. The respondent’s case. The respondent argued that the objection to the s.20 notices were considered by the judge at Hastings County Court and the judge dismissed the objections. The roof works were commenced before the right to manage process started. They were altered because the [NAME] had not paid their share of the costs. There were therefore not enough funds to complete everything that was needed. In his oral submissions to the tribunal, the respondent stated he had always followed the s.20 process. He had got the process underway and went to several firms of contractors – one of whom he knew, and the other he did not know. There was a schedule of works, and the respondent decided to retain [RESPONDENT], a well-qualified contractor. He had used [NAME] for several years. He was only able to complete £6,000 worth of works because of the [COMPANY] and the [NAME] had not paid their share of the costs.

39. The tribunal’s determination. The first issue is whether the applicants’ contributions towards the cost of the 2024 exterior works are limited by s.20 [RESPONDENT] and Tenant Act 1985 to £250 per flat.

40. The tribunal rejects the submission that this issue has already been determined by the County Court judge. Once again, there was a fair amount of confusion between the parties about the consultation notices involved. It is certainly the case that at para 17 of the judgment, DDJ Hull found there had been no breach of “the requirements of section 20”. But it is clear enough that DDJ Hull was considering the 2021 consultation about the internal decorations. For example, the transcript of the County Court hearing includes (at p.71) cross examination about a s.20 notice dated 6 May 2021, and (at p.74) to a “third letter” dated 20 September 2021. Copies of both these notices are in the bundle for the present matter, and both relate to “redecoration works”. DDJ Hull’s judgment includes the following observation at para 16:

“… I have seen an email put forward by [NAME] [NAME] suggesting a contractor for internal redecoration as part of the section 20 consultation. I pause there to say that the company proposed by [NAME] [NAME] was a company of which he was a 50% shareholder.”

It is clear enough from this that the judge was dealing with “internal decorations” not external works, and that the contractor was a company, not [NAME] [NAME]. The judgment related to a different s.20 consultation for different works. The judgment of DDJ Hull does not therefore oust the tribunal’s jurisdiction under s.27A(4)(c) of the 1985 Act.

41. As to the Notice of Intention given on 17 August 2023, this must be in the form required by para 1 of Pt.2 of Sch.4 to the Service Charges (Consultation Requirements) (England) Regulations 2003 (“the 2003 regulations”). The wording of the notice in Appx.A does not precisely follow the wording of para 1: The notice states the respondent intends to “enter into an agreement to carry out works”, rather than stating he intended “to carry out qualifying works”. It also invites the lessees to nominate a “company” to provide an estimate for the works, as opposed to a “person” to give such an estimate. But the differences are immaterial.

42. As to the [NAME] notice given on 5 October 2023, this must be in the form required by para 4 of Pt.2 of Sch.4 to the 2003 regulations. It must include a paragraph (b) statement and be accompanied by at least two estimates obtained: see para 4(5) and (9) of Pt.2 of Sch.4. The paragraph (b) statement must include the information in para 4(5)(b) of Pt.2 of Sch.4.

43. As to the third notice given on 25 February 2024, a contract notice must be in the form required by para 6 of Pt.2 of Sch.4 to the 2003 regulations. It must be given within 21 days of entering into the contract. We are not told the date of the contract, but it is plain from its face that the third notice was given before the contract was entered into. It is therefore premature and does not comply with the 2003 regulations. Moreover, the contract notice itself does not state the reasons for awarding the contract to [NAME] [NAME]. This is all the more serious, given the issues expressly raised about his estimate in the October 2023 notice. The notice does not therefore comply with para 6(1)(a) of Pt.2 of Sch.4 to the 2003 regulations.

44. The main gist of the applicants’ submissions relates to the nominations made by the first applicant on 22 August 2023. The first applicant states that the respondent did not approach either himself or [NAME] [RESPONDENT] for estimates and the respondent has not suggested otherwise. The tribunal finds this was a clear breach of para 4(4)(a) of Pt.2 of Sch.4 to the 2003 regulations.

45. There are therefore two ways in which the relevant consultation requirements were not complied with in relation to the qualifying works. The recoverable relevant costs are limited to £250 for each applicant by s.20 of the 1985 Act.

46. Finally, the tribunal will deal briefly with the argument that the cost of the works was unreasonably incurred under s.19(1) of the 1985 Act. As explained by the respondent, the actual works were curtailed by the acquisition of the right to manage and the [NAME] not paying their share of the costs. The tribunal has only scant details of the works which were completed by [NAME] before his contract was terminated on 22 May 2024. It has not seen the alternative estimate from the [NAME] to do works for £2,000. There is therefore no prima facie case that the costs of £6,000 incurred on the works before the right to manage was exercised were not reasonably incurred, although that has no effect because the recoverable costs are limited to £250 in any event.

Issue 3: CCTV (2023)

47. The 2023 accounts include a figure of £1,624.56 for “repairs & maintenance Camera Installation”. There is no receipt for this expenditure. But the applicants alleged that in 2023, the respondent incurred £1,624.56 for installing CCTV and a 4G router to allow a camera feed. The CCTV system comprised a single camera marking the entrance way and the street.

48. The applicant’s case was that installation of the CCTV system was an improvement to the property (rather than maintenance or repair) and was not the responsibility of the tenants under the 1987 Lease. The respondent contended that the issue of contractual recoverability of the CCTV installation costs was dealt with by the County Court which determined that the cost fell within the sweeper clause in para 10 of Sch.4 to the 1987 Lease.

49. Having considered the transcript of DDJ Hull’s judgment, the judge plainly dealt with the issue of the installation costs for the CCTV system at paras 14-15. On this issue, the judgment ousts the tribunal’s jurisdiction under s.27A(4)(c) of the 1985 Act.

50. In any event, had it had jurisdiction, the tribunal would have agreed with the judge that the sweeper clause at para 10 of Sch.4 to the 1987 Lease is sufficiently widely worded to encompass the installation of a CCTV camera in the common parts. Although the CCTV was a fresh installation, the provision for security in the alleyway falls within the “maintenance and proper and convenient management and running of the building”.

Issue 4: Changing of electricity meter (2023)

51. The 2023 accounts show a figure of £588 for “Changing of electricity meter from flat b to flat e”. There is also an invoice from [COMPANY] dated 10 October 2023 which details the following work:

“Removed the supply to the [RESPONDENT]’s consumer unit from Flat B.

Installed a new 20amp supply from the consumer unit in Flat E to the 1st floor mains cupboard to supply the [RESPONDENT]’s consumer unit.

The cable was contained in surface mini trunking where it could not be hidden under floors / in ceiling space.

I explained how to read the landlords check-meter to the tenant of Flat E.”

52. The applicants’ case was that there were meters for each flat in the common parts. Their statement of case suggested that prior to 2023, the electrical supply for the common parts was routed into the meter for Flat B (the third applicant). This error became known when [NAME]. [APPELLANT] tenant complained about the high charges he was asked to pay for electricity. In October 2023, the respondent arranged for the common parts supply to be disconnected from Flat B’s meter, and connected instead to Flat C, without the first applicant’s knowledge. The quantity of electricity repeatedly overloaded the first applicant’s supply, causing the supply to trip and cut out. The respondent then arranged for it to be moved again to Flat E’s meter. The applicants described this as “stealing electricity” and they had reported it to the police.

53. The respondent’s case was that the electricity supply was in place before he took over management of the building. It related to just one lightbulb in the communal areas. It had now been moved from Flat B to Flat E, where the respondent was [NAME]. At the hearing, he explained that in the past, the communal electricity costs were shared informally, with the other occupiers paying £10 a year to Flat B. The work carried out in 2023 moved the common parts supply directly to Flat E, and it had never been connected to Flat C. He had since asked the [COMPANY] to install a separate standalone supply for the common parts which is not routed through the meter for Flat E.

54. Whatever the historic reasons for running the electrical supply for the common parts from the Flat B’s metered supply, this was plainly and obviously an unsatisfactory arrangement. It prevented anyone from knowing the actual electricity consumed in the common parts, placed an unfair burden on the [NAME] of Flat B, and the voluntary contribution scheme was outside the service charge regime in the leases. On this basis, it was reasonable to incur the costs of an electrician to provide a separate metered supply. However, even leaving on one side the suggestion the communal supply may have been temporarily moved to Flat C, the tribunal finds the cost of connecting the communal electricity supply to Flat E was not reasonably incurred. By connecting the supply to Flat E, the respondent merely repeated the deficiencies with the previous arrangement. Moreover, even the respondent admits the work will now have to be repeated to provide a separate metered supply for the common parts. The tribunal finds the decision to connect the communal parts supply to Flat E’s meter was irrational within the first limb of s.19(1) of the 1985 Act: see [NAME] v Waaler [2017] EWCA Civ 45; [2017] 1 WLR 2817 at [21] to [23]. Nothing is therefore allowed for the costs incurred for these electrical works.

Issue 5: Lighting repairs and reconnection (2023)

55. The 2023 accounts include a figure for £360.00 for “Lighting repairs & Reconnection / [RESPONDENT]”. Both the applicants and the respondent treated these as part of the 2023 electrical reconnection works, although the tribunal was not shown [NAME] [NAME] invoice. The tribunal therefore reaches the same conclusion on this as with issue 4.

Issue 6: Electric cupboard door (2023)

56. The applicants objected to a charge to the first applicant for £1,247.40 for replacing the door to the electricity cupboard in 2023. This figure is made up of a works invoice from [COMPANY] for £945 + VAT and a “management charge” of 10%. These figures are not shown in the 2023 accounts, although they were billed to the first applicant in invoice “INV-0046”.

57. The applicant’s case is that the charge was made because it “was assumed [the first applicant] broke the cupboard”. But the applicants contend that the charge was excessive, pointing to an earlier estimate for £600 for replacing the cupboard door dated 8 June 2023.

58. The respondent’s case is that this was dealt with by the judge in the County Court. The judge found on a balance of probabilities that the first applicant was personally liable for damage to the door and ordered the first respondent to pay damages of £890 plus interest of £22.

59. The tribunal has again considered the transcript of the judgment. In para 5, DDJ Hull identified a cause of action by the respondent against the first applicant under “the tort of trespass” arising from damage to the cupboard door. The judge found for the respondent on this at para 13, awarding him damages of £890. It follows that any claim by the respondent for payment does not relate to service charges under the terms of the applicants’ leases, or for payment of an administration charge under the 1987 Lease of Flat C. The demand for payment is a demand for payment of damages for trespass. The tribunal has no jurisdiction to determine whether damages are payable for trespass, although plainly the figure of £1,247.40 exceeds the damages awarded by the County Court.

Issue 7: Installation of a new side gate (2022)

60. In 2022, the respondent instructed contractors [NAME] to install a 7ft wooden gate in the alleyway adjacent t0 the property. There is an invoice for £333 from the contractors in respect of the works dated 5 July 2022. The cost is not separately identified in the 2022 summary accounts, although they include “maintenance” expenses of £3,794.56.

61. The applicants contended that the new gate was an improvement, that the installation was unsatisfactory and that the gate later had to be replaced. The cost of both installations was the respondent’s responsibility. He had charged £333 plus a subsequent unidentified amount for the installation of the gate and its replacement.

62. The respondent’s case was that this cost was recoverable under the sweeper clause in para 10 of Sch.4. He argued the gate provided security protection.

63. The tribunal agrees with the respondent. Although the gate was a new installation, the provision for security in the alleyway falls within the “maintenance and proper and convenient management and running of the building” as set out in para 10 of Sch.4 to the 1987 Lease.

Issue 8: Refund for overcharging (2023)

64. This issue relates to historic mistakes made with the calculation of ground rent and service charges. The applicants referred to a credit note for £150 dated 14 November 2023 for ground rent charged incorrectly to the first applicant between 2017-22. There is a further undated letter at about the same time which explains that the apportionments used for service charges had also historically been calculated wrongly, and adjusting the service charges for each flat by way of credit and debit notes. For example, the apportionment for Flat C was corrected from £14% to 12.5% and the first applicant was given a credit note for £737.56 as of 15 December 2023. By contrast, Flat D was debited with £4,863.75 for the historic errors.

65. The applicants’ case is that the adjustments made in 2023 did not properly rectify the position. For example, they suggest their solicitors valued the credit due to the first applicant to be “towards £2,500”.

66. The respondent explained that the error in the computation of the service charges arose because of the different apportionments in the leases for calculation of the insurance rent and the service charges. The insurance rent apportionment in each lease had wrongly been applied to the service charges. The mistake had been spotted by the respondent and the apportionments recalculated. He referred to a spreadsheet explaining the adjustments in the hearing bundle. The issue was considered by DDJ Hull.

67. The tribunal cannot make any determination in relation to ground rent. Liability to pay ground rent is outside its jurisdiction.

68. As to the service charges, the 2023 adjustment exercise is referred to in para 8 of DDJ judgment, although the judge did not purport to reach any conclusion about it. But the real difficulty is that the applicants have not attempted to explain how the 2023 spreadsheet produced by the respondent is said to be wrong. There is simply a bare assertion that the adjustments were not carried out properly. The [NAME] difficulty is a lack of the basic evidence needed by the tribunal to make that assessment. It does not have the actual service charge accounts showing the relevant costs incurred in each service charge year. The applicants have not therefore advanced even a prima facie case that (after the 2023 re-assessment was completed) their service charges were not computed in accordance with their leases.

69. It follows that the tribunal rejects the suggestion that the 2017-23 service charges, as re-assessed in 2023, were not apportioned in accordance with the terms of the applicants’ leases.

Issue 9: Internal redecoration (2021)

70. The internal redecorations are referred to above. The total cost was £3,170. There is a work order addressed to contractors [NAME] for the bulk of the works dated 16 June 2022 for £2,390, an estimate dated 4 July 2021 and an invoice for payment dated 14 July 2022. The balance of £780 was apparently made up of works carried out by [NAME], although no invoices for this work were included in the bundle.

71. The applicants sought a copy of the [NAME] invoice. But the main case advanced by applicants was similar to the s.20 arguments relating to the 2023 external works. There was what appears to be a s.20 Notice of Intent dated 20 September 2021 and what appears to be a statement of estimates dated 5 November 2021. The first applicant submitted that he had nominated himself as an alternative contractor, but that the respondent had not invited him to provide an estimate. The recoverable costs should therefore be limited by s.20 of the 1985 Act to £250 per flat.

72. The respondent’s case was that this issue was expressly considered and rejected by DDJ Hull.

73. The respondent has provided invoices and other supporting document in relation to the [NAME] element of the works. As to jurisdiction, the material parts of the judgment of DDJ Hull on this point are set out at para 40 above. The whole issue of compliance with the s.20 consultation requirements was expressly dealt with by the judge in relation to the internal decorations. DDJ Hull expressly dealt with the argument raised by the applicants in this application. The tribunal again therefore has no jurisdiction to deal with the matter under s.27A(4)(c) of the 1985 Act.

Issue 10: Guttering replacement (2020)

74. The application objects to guttering costs of £1,430 incurred on 5 June 2020.

75. In 2020, the respondent carried out extensive external redecorations using contractors [NAME]. As part of these works, there is an invoice from the contractors dated 26 June 2020 for the “final payment” for works to replace the gutters (£390). The 2020 summary accounts show maintenance costs of £11,007.12, but do not separately deal with guttering works.

76. The applicants again argue that the guttering works exceed the threshold for consultation under s.20 of the 1985 Act. It is said there was no consultation in relation to the guttering works, and that the contributions from each flat should consequently be limited to £250.

77. The respondent suggests the guttering works were merely part of the exterior decoration works which were the subject of consultation in 2018, but that the works were delayed by the Covid-19 pandemic and only undertaken in 2020. He referred to consultation notices dated 1 August and 1 October 2018, which respectively specified the proposed works as “exterior decoration” and “external redecoration of the front and rear of the building”. If the guttering costs were considered separately, the contributions from each of the applicants’ flats did not meet the consultation threshold of £250.

78. The tribunal rejects the suggestion that the respondent consulted about the guttering works in 2018. The 2018 s.20 notices refer to external decoration, not guttering works. But whatever the costs incurred for guttering in 2020, none of the relevant contributions from the applicants’ [NAME] flats met the consultation threshold of £250 set by reg.6 of the 2003 regulations. If the guttering costs were £1,430 (as suggested by the applicants), the relevant contribution of each of the [NAME] flats was 12.5% x £1,430 = £178.75. If the guttering costs were £390 (as suggested in the contractor invoice), the relevant contribution of each of the [NAME] flats was 12.5% x £390 = £48.75.

79. There was therefore no need to consult about the guttering works.

Issue 11: flat roof works 2020

80. This issue is closely linked to the guttering costs. As part of the works carried out in 2020, it is said the respondent incurred costs of £2,760 for repairs to a flat roof, although there are no contractor invoices to support this cost.

81. The applicants argued the roof works again required consultation and that there had been no consultation. The relevant contributions were limited to £250 per flat. The suggestion the works were too “urgent” for consultation to be carried out were belied by the very long delay after the original 2018 consultation.

82. The respondent explained the works were carried out by [NAME] and that they were urgently required because of water ingress to one of the flats. He accepted he had not consulted about the works to the flat roof. When asked by the tribunal, the respondent admitted he had not applied for dispensation from the consultation requirements under s.20ZA of the 1985 Act. He did not need to, because all the lessees had agreed to the extra works.

83. There is no dispute here that the works to the flat roof related to qualifying works under s.20 of the 1985 Act and that the relevant contributions of the [NAME] flats to these costs met the contribution threshold of £250. The suggested urgency might be relevant to an application to dispense under s.20ZA of the 1985 Act. But it is not a defence to the statutory limitation under s.20. The tribunal accordingly limits the applicants’ contributions to the cost of 2020 roof repairs to £250 each.

Section 20C

84. The applicants seek orders pursuant to Section 20C of the [RESPONDENT] and Tenant Act 1985 and para 5A of Sch.11 to the 2002 Act. The respondent appears in person and has not made any claim for legal costs. Only the issue of s.20C costs therefore remain. Section 20C provides:

“20C.— Limitation of service charges: costs of proceedings.

(1) A tenant may make an application for an order that all or any of the costs incurred, or to be incurred, by the [RESPONDENT] in connection with proceedings before a court, residential property tribunal or leasehold valuation tribunal, or the Upper Tribunal, or in connection with arbitration proceedings, are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person or persons specified in the application.

85. The starting point is the tribunal is not exercising a conventional costs jurisdiction, but is determining to what extent the applicants should be relieved of a contractual obligation which they have willingly entered into: see, for example, [NAME] v [NAME] [2022] UKUT 121 (LC) at [53]. The presumption is therefore that no s.20C order is made.

86. The applicants have succeeded in part. The conduct of the parties in the proceedings has not been ideal – neither decided to engage legal representation and as a result many relevant documents were not disclosed by the respondent or included in the bundle by the applicants. In many instances both parties were unable to focus on the issues. Having heard from each of the parties, it is just and equitable to order that 50% of any costs incurred by the respondent in connection with proceedings before the tribunal are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the [NAME].

Decision

87. For the reasons given above, the tribunal finds as follows:

a. Issue 1: 2024 charge for accounts (£300). No administration charge of £300 is payable under para 5 of Sch.11 to the 2002 Act.

b. Issue 2: 2024 exterior works (£6,000). The recoverable relevant costs are limited to £250 for each applicant by s.20 of the 1985 Act.

c. Issue 3: 2023 CCTV (£1,624.56). The tribunal has no jurisdiction to make any determination in relation to these costs.

d. Issue 4: 2023 Changing of electricity meter (£588). Nothing is allowed for these costs.

e. Issue 5: 2023 Lighting repairs and reconnection (£360).

f. Issue 6: 2023 Electric cupboard door replacement (£1,247.40). The tribunal has no jurisdiction to make any determination in relation to these costs.

g. Issue 7: 2022 Installation of a new side gate (£333). The applicants are liable to contribute to these costs.

h. Issue 8: The 2023 adjustment exercise. The tribunal has no jurisdiction to make any determination in relation to ground rent. The tribunal rejects the suggestion that the 2017-23 service charges, as re-assessed in 2023, were not apportioned in accordance with the terms of the applicants’ leases.

i. Issue 9: 2020 internal redecorations (£3,170). The applicants are liable to contribute to these costs.

j. Issue 10: 2020 guttering costs (£1,430). The applicants are liable to contribute to these costs.

k. Issue 11: 2020 works to the flat roof (£2,760): The applicants’ contributions are limited to £250 each under s.20 of the 1985 Act.

l. S.20ZA: The tribunal orders that 50% of any costs incurred by the respondent in connection with proceedings before the tribunal are not to be regarded as relevant costs to be considered in determining the amount of any service charge payable by the [NAME].

88. The tribunal is mindful that the right to manage has been exercised, and the above will affect the sums to be handed over to the [COMPANY]. The tribunal directs that following its decision, the respondent recalculates the service charges for each applicant and submits the schedule to the applicants for agreement, in accordance with the procedure suggested in [NAME] v [NAME] ([COMPANY] [2016] UKUT 0345 (LC) at [11].

Appeals

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 [NAME] 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.

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.

APPENDIX A: NOTICE GIVEN ON 17 AUGUST 2023

NOTICE OF INTENTION TO CARRY OUT WORKS;

S20 CONSULTATION

17th August 2023

To all [NAME] of:

36 [ADDRESS] [POSTCODE]

1. It is our intention to enter into an agreement to carry out works in respect of which we are required to consult [NAME].

2. The works to be carried out under the agreement are:

Repairs/replacement of felt, lead flashing, guttering, repointing to the rear wall of the building and area of roof which are failing and permitting water ingress.

3. We consider it necessary to carry out the works to ensure that: under the terms of the lease the building is kept in proper repair.

4. We invite you to make written observations in relation to the proposed work by sending them to: [NAME], 16 [ADDRESS], [POSTCODE]. Observations must be made within the consultation period of 30 days from the date of this Notice.

The consultation period will end on: 16th September 2023

5. We also invite you to propose, within the 30 days from the date of this Notice, the name of the company from whom we should try and obtain an estimate to carry out the proposed works described in Paragraph 2 above. Any contractor nominated must carry full public and personal liability insurances, must be fully conversant with the Health and Safety CDM Construction (Design & Management) Regulations 1994 including developing the Heath and Safety Plan and implementing on site and be fully qualified to carry out the expected works. The contractor will be required to provide references of similar works undertaken.

APPENDIX B: NOTICE GIVEN ON 5 OCTOBER 2023

Notice of Intention to carry out works : S20 Consultation Part 2

[NAME]

To all [NAME] of 36 [ADDRESS] [POSTCODE]

1. It is the intention of the [NAME], [NAME] to enter into an agreement to carry out works in respect of which we are required to consult [NAME].

2. The works to be carried out under the agreement are:

External repairs to the roof and rear of the building to prevent water ingress and ensuing issues with damp.

3. We consider it necessary to carry out the works to ensure that under the terms of the lease the building is kept in proper repair.

Details of the quotations received from [NAME] and [NAME]. [NAME] are attached for your information. The quotation from [NAME] is higher and does not include repairs to the internal meter cupboard door. We have enquired whether his quote can be reduced to keep costs down and await his reply. We requested a quotation from [NAME] but he has failed to quote.

4. We invite you to make written observations in relation to the proposed work by sending them to: [NAME], 16 [ADDRESS], [POSTCODE] or by email to [EMAIL]. Observations must be made within the consultation period of 30 days from the date of this Notice.

5. We also invite you to propose, within 30 days from the date of this notice, the name of a person from whom we should try to obtain an estimate to cany out the proposed works described in Paragraph 2 above. Any contractor nominated must cany full public and personal liability insurances, must be fully conversant with the Health and Safety CDM Construction (Design & Management) Regulations 1994 including developing the Health and Safety Plan

APPENDIX B: NOTICE GIVEN ON 5 OCTOBER 2023

Re: [ADDRESS] [POSTCODE]

1. It is the intention of the [NAME], [NAME], to enter into an agreement to carry out works in respect of which we are required to consult [NAME].

2. The works to be carried out under the agreement are:

Repairs/replacement of felt, lead flashing, guttering, repointing/rendering to the rear wall of the building and area of roof which are failing and permitting water ingress.

As no alternative quotations or recommendations have been received from lessees, It is the intention of [NAME] to proceed with the quote from [NAME] [NAME] for £15,600 as he is trusted and highly regarded contractor.

This work will commence soon and a final date will be confirmed shortly.