Tenant Successfully Challenges Unreasonable Service Charges

OUTCOME: Allowed

1 [NAME]/ 45UH/LSC/2024/0121

APPENDIX 1

CHRONOLOGY

12.07.24 Application for determination of liability to pay and reasonableness of service charges submitted with request for disclosure order

23.01 .25 Directions: [NAME] hearing listed 19 March 2025

27.01.25 Applicants' Application for [NAME] orders, to include request for an order for disclosure to be made

12.02.25 Order deferring decisions on [NAME] to the hearing on 19 March 2025

04.03.25 Applicants file and serve their preliminary statement and draft [RESPONDENT] in compliance with directions. The Respondent does not comply.

19.03.25 [NAME] hearing. The Respondent does not attend and says in an email it will not "accept anything which goes beyond standard disclosure". The Order requires written authority by the Respondent compaqny for Mr [RESPONDENT] to represent it. Final hearing listed for 10 September 2025. Disclosure ordered by 9 April 2025.

09.04.25 Mr [NAME] submits an application seeking a variation to directions with regard to disclosure, but he does not provide any authority from the Respondent authorising him to act for it.

10.04.25 Applicants' application for [NAME] order for Respondent's breach of disclosure order with the sanction of debarring for further breach.

11 .04.25 Applicants' statement in opposition to [NAME]'s application dated 9 April 2025.

28.04.25 Order of Judge J [NAME] dismissing [NAME]'s application as he was not an authorised representative of the Respondent.

30.04.25 Order of Judge J [NAME] with new date for disclosure - 16 May 2025, in default of which the Respondent to be barred from further participation in the proceedings.

2 (Undated) Mr [NAME] submits "Grounds of Appeal" in respect of Orders dated 28 and 30 April 2025 and asks for the ‘unless’ order to be set aside. The order for disclosure is not complied with.

19.05.25 Applicants' application for an order that Mrs [RESPONDENT] (as sole director of the [COMPANY]) be required to attend a hearing to produce the documents ordered to be disclosed, and that a declaration be made that the Respondent's conduct is frivolous or vexatious or otherwise an abuse of the process of the Tribunal.

30.05.25 Order of Judge j [NAME] limiting the previous order for disclosure and ordering it to be given by 13 June 2025 with no sanction for non-compliance.

03.06.25 Applicants' application for a [NAME] order seeking reinstatement of the previous order for disclosure with detailed grounds in support (5 x A4 pages)

17.06.25 Order of Judge J [NAME] reciting the woeful progress of the application to that date and the repeated failure by Mr [NAME] to obtain written authority from his mother (the sole director of the [COMPANY]) to represent it. A second [NAME] hearing is ordered to take place on 3 July 2025.

03.07.25 Order of Judge J [NAME]. The hearing date of 10 September 2025 is vacated and a new hearing window notified. Mr [NAME] says he will provide written authority to act for the Respondent, but he gives no explanation for his failure to do so previously. Disclosure ordered to be given by 17 July 2025, a year since the application was submitted and disclosure was first requested by the Applicants.

17.07.25 Disclosure given of most but not all documents ordered.

06.0825 New hearing date of 3 December 2025 notified to the parties.

19.09.25 Applicants' case and evidence served

30.10.25 Respondent's application for a [NAME] order seeking an extension of 10 working days "to provide a full response".

14.11.25 Order of Judge J [NAME] granting an extension to 18 November 2025, in default of which the Respondent will be debarred from taking further part in the proceedings, with the barring order to be issued as soon as practicable following 18 November 2025.

18.11.25 Email from Mr [RESPONDENT] to the Tribunal saying the Respondent relies only on the invoices and the Applicants "have failed to raise much of a prima facie case at all and so the Respondent doesn't wish to provide any further documents at this time"

3 18.11.25 The Respondent does not comply with the Order and the Applicants submit an application seeking a barring order with detailed grounds in support citing applicable case law on ambush at trial.

20.11.25 Order of a legal officer of the Tribunal that ‘only those documents already sent to the Applicant as per the disclosure shall be the documents that the Tribunal will base its determination on’.

20.11.25 In light of it being unclear as to whether the Respondent will be permitted to rely on evidence at the final hearing in addition to the documents, an application for reconsideration is submitted.

21.11.25 Order of Judge J [NAME] records in his decision that he took the Respondent's email of 11 November 2025 to positively state that the Respondent did not wish to rely upon any case and any documents beyond those previously provided. He therefore removes the barring order and says the Respondent can participate but may only present a positive case to the extent of the documents produced.

24.11.25 As the Respondent is no longer barred, it is required to be asked what documents it wished to be included in the hearing bundle. No reply is received after 48 hours.

28.11.25 Due to an absence from the [NAME] caused by sickness, the bundle is still being indexed and tabbed when an order is made by Judge J [NAME] striking out the application for missing the 27 November 2025 deadline.

28.11 .25 The hearing bundle is lodged less than 24 hours late and an application is made for reinstatement.

01.12.25 (Monday) Order: Judge J [NAME] grants the application and the case is reinstated.

02.12.25 (Tuesday) Respondent's first application for an order delaying the hearing, on grounds that Mr [NAME] was away from the office on ‘Thursday and Friday’ (being 27th and 28 of November respectively), but he had just seen "this" and he had cancelled counsel who had already prepared the case but who was now not available for the reinstated hearing.

02.12.25 Email from Applicants' representative to the Tribunal pointing out the discrepancies in the Respondent's application and stated timeline.

02.12.25 In response Mr [NAME] changes his application to say he had not been working on Friday(28th November) and Monday (1st December). 02.12.25 Order of Judge J [NAME] refusing the application and describing the shift in the Respondent's position and the nature of the assertions as ‘troubling at best’.

4 03.12.25 (Wednesday) On the morning of the hearing Mr [NAME] submits a third application for a ‘delay of the hearing’ which is refused by the Tribunal members. The hearing proceeds in the absence of the Respondent.

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[NAME]/45UH/LSC/2024/0121

APPENDIX 2

RELEVANT LAW

The Landlord and Tenant Act 1985

Section 18 (1) In the following provisions of this Act “service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent – (a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord’s costs of management, and (b) the whole or part of which varies or may vary according to the relevant costs.

(2) The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable.

(3) For this purpose – (a) “costs” includes overheads, and (b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.

Section 19 (1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period – (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly.

(2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.

Section 20 (1) Where this section applies to any qualifying works or qualifying long term agreement, the relevant contributions of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either— (a) complied with in relation to the works or agreement, or (b) dispensed with in relation to the works or agreement by (or on appeal from) the appropriate tribunal.

(2) In this section “relevant contribution”, in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement.

(3) This section applies to qualifying works if relevant costs incurred on carrying out the works exceed an appropriate amount.

(4) The Secretary of State may by regulations provide that this section applies to a qualifying long term agreement— (a) if relevant costs incurred under the agreement exceed an appropriate amount, or (b) if relevant costs incurred under the agreement during a period prescribed by the regulations exceed an appropriate amount.

(5) An appropriate amount is an amount set by regulations made by the Secretary of State; and the regulations may make provision for either or both of the following to be an appropriate amount— (a) an amount prescribed by, or determined in accordance with, the regulations, and (b) an amount which results in the relevant contribution of any one or more tenants being an amount prescribed by, or determined in accordance with, the regulations.

(6) Where an appropriate amount is set by virtue of paragraph (a) of subsection (5), the amount of the relevant costs incurred on carrying out the works or under the agreement which may be taken into account in determining the relevant contributions of tenants is limited to the appropriate amount.

(7) Where an appropriate amount is set by virtue of paragraph (b) of that subsection, the amount of the relevant contribution of the tenant, or each of the tenants, whose relevant contribution would otherwise exceed the amount prescribed by, or determined in accordance with, the regulations is limited to the amount so prescribed or determined.

Section 20ZA - Consultation requirements: supplementary (1) Where an application is made to the appropriate tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.

(2) In section 20 and this section— “qualifying works” means works on a building or any other premises, and “qualifying long term agreement” means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months.

(3) The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement— (a) if it is an agreement of a description prescribed by the regulations, or (b) in any circumstances so prescribed.

(4) In section 20 and this section “the consultation requirements” means requirements prescribed by regulations made by the Secretary of State.

(5) Regulations under subsection (4) may in particular include provision requiring the landlord— (a) to provide details of proposed works or agreements to tenants or the [COMPANY] representing them, (b) to obtain estimates for proposed works or agreements, (c) to invite tenants or the [COMPANY] to propose the names of persons from whom the landlord should try to obtain other estimates, (d) to have regard to observations made by tenants or the [COMPANY] in relation to proposed works or agreements and estimates, and

(e) to give reasons in prescribed circumstances for carrying out works or entering into agreements. (And in the case of works to which section 20D applies (remediation works), regulations under subsection (4) may also include provision requiring the landlord— (a) to give details of the steps taken or to be taken under section 20D(2), (b) to give reasons about prescribed matters, and any other prescribed information, relating to the taking of such steps, and (c) to have regard to observations made by tenants or the [COMPANY] in relation to the taking of such steps.

(6) Regulations under section 20 or this section— (a) may make provision generally or only in relation to specific cases, and (b) may make different provision for different purposes.

(7) Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.)

Section 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 landlord in connection with proceedings before... the First-tier 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 tenant or any other person or persons specified in the application.

(2) The application shall be made— (a) in the case of court proceedings… (b) in the case of proceedings before the First-tier Tribunal, to the tribunal; (c) in the case of proceedings before the Upper Tribunal… (d) in the case of arbitration proceedings...

(3) The court or tribunal to which the application is made may make such order on the application as it considers just and equitable in the circumstances.

Section 20B - Limitation of service charges: time limit on making demands. (1) If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2) ), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred.

(2) Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.

Section 27A – Liability to pay service charges – jurisdiction (1) An application may be made to the appropriate tribunal for a determination whether a service charge is payable and, if it is, as to – (a) the person by whom it is payable,

(b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable

(2) Subsection (1) applies whether or not any payment has been made.

(3) An application may also be made to the appropriate tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to – (a) the person by whom it would be payable, (b) the person to whom it would be payable, (c) the amount which would be payable, (d) the date at or by which it would be payable, and (e) the manner in which it would be payable.

(4) No application under subsection (1) or (3) may be made in respect of a matter which – (a) has been agreed or admitted by the tenant, (b) has been, or is to be, referred to arbitration pursuant to a post dispute arbitration agreement to which the tenant is a party, (c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

(5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.

The Commonhold and Leasehold Reform Act 2002 Schedule 11

Part 1 Paragraph 1 (1) In this Part of this Schedule “administration charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent which is payable, directly or indirectly— (a) for or in connection with the grant of approvals under his lease, or applications for such approvals, (b) for or in connection with the provision of information or documents by or on behalf of the landlord or a person who is party to his lease otherwise than as landlord or tenant, (c) in respect of a failure by the tenant to make a payment by the due date to the landlord or a person who is party to his lease otherwise than as landlord or tenant, or (d) in connection with a breach (or alleged breach) of a covenant or condition in his lease.

(2) ……………

(3) In this Part of this Schedule “variable administration charge” means an administration charge payable by a tenant which is neither— (a) specified in his lease, nor (b) calculated in accordance with a formula specified in his lease.

(4) …………….

Paragraph 2 A variable administration charge is payable only to the extent that the amount of the charge is reasonable.

Paragraph 3 ………….

Paragraph 4 (1) A demand for the payment of an administration charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to administration charges. (2) The appropriate national authority may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations. (3) A tenant may withhold payment of an administration charge which has been demanded from him if sub-paragraph (1) is not complied with in relation to the demand. (4) Where a tenant withholds an administration charge under this paragraph any provisions of the lease relating to non-payment or late payment of administration charges do not have effect in relation to the period for which he so withholds it.

Paragraph 5 (1) An application may be made to [the appropriate tribunal] for a determination whether an administration charge is payable and, if it is, as to— (a) the person by whom it is payable, (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable.

(2) Sub-paragraph (1) applies whether or not any payment has been made.

(3) The jurisdiction conferred on [the appropriate tribunal] in respect of any matter by virtue of sub-paragraph (1) is in addition to any jurisdiction of a court in respect of the matter.

(4) No application under sub-paragraph (1) may be made in respect of a matter which— (a) has been agreed or admitted by the tenant, (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party, (c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post- dispute arbitration agreement.

(6) An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination— (a) in a particular manner, or (b) on particular evidence, of any question which may be the subject matter of an application under sub-paragraph (1).

Paragraph 5A (1) A tenant of a dwelling in England may apply to the relevant court or tribunal for an order reducing or extinguishing the tenant's liability to pay a particular administration charge in respect of litigation costs.

(2) The relevant court or tribunal may make whatever order on the application it considers to be just and equitable.

(3) In this paragraph—

(a) “litigation costs” means costs incurred, or to be incurred, by the landlord in connection with proceedings of a kind mentioned in the table, and (b) “the relevant court or tribunal” means the court or tribunal mentioned in the table in relation to those proceedings.