Tenant Successfully Recovers Service Charges and Legal Costs from Landlord

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) &

IN THE COUNTY COURT at Clerkenwell & Shoreditch, sitting at 10 [ADDRESS] [POSTCODE]

Tribunal reference : LON/00BE/LSC/2021/0088 Court claim number : G1QZ4A4R Property : [ADDRESS] [POSTCODE] Applicant/Claimant : [redacted] : Mr [COUNSEL] (Solicitor agent) Respondent/ Defendant : [redacted] : In person Tribunal members : Judge Dutton & Mr R [NAME] (Hons) LMM Property Law MA FRICS In the county court : Judge Dutton, with [NAME] as assessor Date of decision : 6 October 2021

DECISION

This decision takes effect and is ‘handed down’ from the date it is sent to the parties by the tribunal office:

Summary of the decisions made by the Tribunal 1. The following sums are payable by the [NAME] by 19 November 2021: (i) Service charges: £4,910.16

2 Summary of the decisions made by the Court (ii) Legal costs under clause 2 of the Third Schedule of the lease: £4,677.21 are payable by the [NAME] by 19 November 2021 (iii) Interest at 5% calculated in the case of service charge demands from 1.7.20 to 27.9.21: £304.70. are payable by the respondent to the applicant by 19 November 2021 The proceedings 2. Proceedings were originally issued against the respondent on 19 November 2020 in the County Court under claim number G1QZ4A4R. The respondent filed a [NAME] and what purported to be a counterclaim dated 7 December 2020, in response to which the applicant filed and served a Response and [NAME] dated 11 January 2021. The proceedings were then transferred to this tribunal by the order of [NAME] Judge Jacobs on 3 March 2021.

3. Directions were issued in the tribunal on 24 March 2021 and initially listing the hearing for 16 July 2021, which had to be postponed the matter eventually came to hearing on 27 September 2021. The hearing 4. The applicant freeholder, [APPELLANT] was represented by Mr [COUNSEL] solicitor agent, instructed by [COMPANY] solicitors, who was accompanied by Mr [RESPONDENT] of [NAME]. The respondent leaseholder, Mr [RESPONDENT], appeared in person. The background 5. The subject property is a flat in one of 9 blocks containing 60 flats on a development which also included 13 houses.

6. Neither party requested an inspection of the property; nor did the tribunal consider that one was necessary, or that one would have been proportionate to the issues in dispute.

7. The respondent holds a long lease of the subject property, which requires the landlord to provide services and for the lessee to contribute towards their costs by way a variable service charge. The specific provisions of the lease will be referred to below, where appropriate. The issues

3 8. The sums claimed by the Applicant were as follows: (i) A service charge totalling £4,910.16 set out at page 102 of the bundle. These disclosed costs owed through previous managing agents ([NAME]) in the sum of £3,690.98 and an on account advance servicer charge dated 1 July 2020 in the sum of £869.18 together with a reminder fee of £150 and solicitors fee of £200 (ii) Interest of £487.52and legal costs to be assessed, if payable.

9. At the start of the hearing the parties identified the relevant issues for decision as follows: (i) Were the costs demanded reasonable, given the alleged lack of work as submitted by the respondent; (ii) What was the respondent’s entitlement in respect of charges paid by his [NAME] in years gone by, which appeared to form the basis of a counterclaim, to which we shall return. County court issues 10. After the proceedings were sent to the tribunal offices, the tribunal decided to administer the whole claim so that the Tribunal Judge at the final hearing performed the role of both Tribunal Judge and Judge of the County Court ([NAME] Judge). No party objected to this. Decisions and reasons 11. Documents in the hearing bundle are referred to by their page number.

12. The respondent’s complaint is essentially that the applicant has done nothing to warrant the level of service charges claimed. In his [NAME] of 7 December 2020, [page 23] he lists 4 specific matters. These are that there is no evidence that works have been undertaken by the applicants, that external window cleaning has not been carried out and that the cleaning of the common parts is limited, both in duration and content. When the respondent contacted the applicant’s solicitor, he was informed that works would be under taken in the next three months. He relied on an email from [COMPANY] dated 22 October 2020 which listed 7 bullet points showing the works to be undertaken in that three-month period which included attending to marks on the walls in the common parts of the respondent’s block, the cleaning of carpets and a new [NAME].

13. The [NAME] goes on to set out the impact the demand for monies has caused to him and his family and requests evidence of the services provided, not jus invoices. His [NAME] ends as follows “I have asked [NAME] to send me documents (Which I will send to the court once I receive them) detailing all payments they have made on my behalf to the claimant for “service charges” over the past several years as I intend to ask the claimant for compensation for those payments because I believe they have not been doing most of the work they have been claiming charges for”.

4 14. In addition to his [NAME], he relied upon two statements made by Mr [NAME], a neighbour and owner and resident of flat 1, 11 Tower Mill. These are dated 28 January and 14 February 2021. It is noted neither contain a statement of truth and nor did Mr [NAME] attend the hearing.

15. The statements address the problems occasioned since [NAME] took over the management of the development from [NAME] in 2020. It is alleged that windows are not cleaned, that the bin room is “always a total mess and is full of large pieces of furniture”. The presence of a lot of rubbish in the hedges and communal grounds, the lack of the provision of CCTV and lack of response to these concerns. His second statement concentrated on window cleaning. We have noted the content of these statements and will given them such weight as we can.

16. For the applicant we received a witness statement from Mr [APPELLANT] dated 14 July 2021 of 7 pages, with exhibits running to some 105 pages.

17. The statement confirmed that Mr [NAME] was the property manager, employed by [NAME] acting for the applicant. Reference is made to the lease of the property dated 30 January 2004 made between the respondent and [RESPONDENT]. We shall refer to the terms as and when necessary. [67 onwards]

18. The statement tells us that [NAME] only took over the management of the development in February 2020 and they made the demand for on account payments in July 2020 in the sum of £869.18, up from the £785.51 demanded by [NAME] in April 2020 for the earlier period.

19. His statement goes on to deal the planned works as set out in the email from [COMPANY] in October 2020 and confirmed at paragraph 20 of his statement the works that had been undertaken and at paragraph 21 the planned works. We noted all that was said.

20. The statement addresses the County Court proceedings and alleges that reference to previous claims for arrears would indicate that the respondent is “a repeat non-payer”. As to the counterclaim Mr [NAME] refers to the Reply and [NAME] filed by the solicitors for the applicant in which full details are requested, but which he suggests have not been supplied.

21. The statement then goes on to address issues of 24 hour contact, communal cleaning, carpet cleaning and window cleaning. It is said that there is a 24 hour emergency telephone line, which works and details are readily available. As to cleaning we were told that there were 9 blocks and that the cleaners undertook cleaning to 3 blocks a day with one hour per block They also removed rubbish in the blocks and communal areas. As to carpet cleaning this related to a deep clean that started at the end of January 2021 and began at 1 Tower Mill and they are working their way round each block. On the question of window cleaning, it was pointed out that the [NAME]

5 are responsible for their own windows, the common parts windows being the only responsibility of the applicant.

22. On the state of the [NAME], we were told that residents had been sent emails to ensure that bulky items were not left in there. It would seem that further recycling bins may be made available. Mr [NAME] said he had spoken with the gardeners who had confirmed their attendances. Works were underway to attend to the front doors of the blocks and the question of CCTV is with the directors of the applicant for consideration. Reference had been made to [NAME], but this was something of a red herring as the respondent has no parking facility on the development but has arranged a permit with the local authority.

23. Confirmation of the outstanding sums was supplied and an assertion that the sums claimed are both reasonable and payable was made.

24. In oral evidence to us Mr [NAME] expanded on some of the points. We were directed to invoices to support the costs claimed, [156 – 175] where items had been carried out. These included, for example the communal cleaning at £1050 per month and a one off for cleaning walls, and communal areas, including door and window frames of £85 for each block. Invoices for gardening were included and for bulk rubbish removal.

25. We were told that decorative works were planned and that s20 notices were sent in September to deal with the replacement doors to the blocks.

26. The respondent read out a short statement he had made. He was concerned that the challenge to the service charges had been met with threats. He did not think it was fair. He thought his [NAME] had paid over £30,ooo but would only do so once proceedings were commenced. It appeared that he dealt with the payment of service charges by way of increasing his mortgage debt. He said he did not know the names of the directors of the applicant and that he had never met with Mr [APPELLANT].

27. The respondent was asked some questions by Mr [RESPONDENT]. He confirmed that he had never been able to speak to the managing agents on the telephone. That during lockdown he did not think there had been any cleaning. There was also confusion on what works were done and he disputed the cleaning, although did accept that there had been a deep wet clean some 2/3 months ago. On the question of windows, he did think that the applicant was responsible for cleaning the flat windows and that it was [NAME]’s responsibility to keep the [NAME] clean. It appeared that the challenge to earlier years was as a result of the legal fees being claimed. He said he could not afford legal representation. He did accept the position with regard to car parking and confirmed that he had recently seen s20 notices for the door works.

6 28. We asked Mr [NAME] how he had calculated the advance charge. He said this was by reference to the previous actuals. There were service charge accounts for 11 months to December 2020 in the papers before us [106 onwards]. Compliant demands were also produced. He explained the increase from the previous advance payment from [NAME] by the fact that he had introduced a reserve fund payment, which he said had been lacking previously. Decision 29. We have read all that has been put to us and considered the oral evidence. Mr [NAME] has provided nothing in the way of concrete challenges to the cost incurred during the period of [NAME], nor to challenge the earlier demands made through [NAME]. It does appear that he adopts a somewhat unhelpful practise of waiting for his [NAME] to step in to settle service charge costs. We did raise with him and Mr [NAME] the possibility of regular monthly standing orders to prevent this. We were told by Mr [NAME] that [NAME] would be happy to accept such a system and Mr [NAME] is recommended to explore that route going forward.

30. The sum being claimed is for on account payments and the lease provides that the Lessor provides services on the provision that the Lessee has made service charge payments. Accordingly. the argument by the respondent that works had not been done fails to take into account that £785.51 and £869.18 are on account payments, not evidence of costs actually incurred. In respect of the earlier sums claimed these appear to represent sums paid, but no challenge was put to us by Mr [NAME]. Indeed, this was flagged up in the County Court when the order was made on 12 January 2021 in which is stated that if the Defendant wanted to challenge service charges he must list them with reasons for the dispute, if not the matter would proceed on the basis that the item was not challenged. Further in the directions from the tribunal at direction 6 it is made quite clear that the service charges disputed must be clearly set out with reasons and, if possible, alternative costings, general allegations would not be sufficient. In respect of the counterclaim it is recorded that no such claim has been filed nor any fee paid.

31. In those circumstances we cannot consider the counterclaim, which would seem to relate to the costs incurred by [NAME] and make up the bulk of the present service charges claimed. These have, in the past, been settled by the respondent’s [NAME] but we have no direct evidence to consider these expenses either within the sums before us or for an earlier period of time.

32. The remainder, £869.18 is in respect of anticipated expenditure, based we were told on actual costs and not far removed from the anticipated costs claimed by [NAME] for the earlier period, and administration charges. The basis of the costs is set out in the Statement at page 104 of the bundle, and it is against this that the respondent should have aimed his fire. However, he did not and this lack of specific challenges makes it impossible for us to allow his claim to stand.

7 33. We find therefore that the respondent is liable to the applicant in the sum of £4,910.16. Costs 34. Much had been made of the provisions of the lease allowing costs to be recovered in respect of forfeiture and the steps relating thereto. However, the position appears to be covered by The Third Schedule paragraph 2 which says as follows “To pay to the Lessor on a full indemnity basis all costs and expenses incurred by the Lessor or its solicitors in enforcing the payment of any Rent or Service Charge or Service Charge Adjustment or Additional Contribution or other moneys payable by the Lessee under the terms of the Lease.” 35. This case was allocated to the Small Claims Track. However, the lease provides that costs can be recovered but it seems to us that the provisions of para 5A Schedule 11 of the Commonhold and Leasehold Reform Act 2002 would apply. However, the costs would need to be assessed on an indemnity basis. In our finding there is still an element of reasonableness but not proportionality.

36. We turn now to the amount of the landlord’s costs. The respondent has been unsuccessful in his [NAME], and we consider that the applicant is entitled to its costs, to be assessed. Amount of costs Submissions by the lessee 37. These rested with his perceived need to bring the proceedings to get answers. It was, he said the applicant’s actions which had led to these proceedings and that he was justified in challenging same. Submissions by the landlord 38. There are two statements of costs, one for the County Court action and one for the tribunal claim. The County Court claim is set out in a form N260. This shows two fee earners, [NAME] grade B at £180 per hour and [NAME] and [NAME] grade D at £125 per hour each. These seem perfectly reasonable and indeed within the somewhat dated Solicitors Guidelines.

39. We have reviewed the claim for costs in the Court. This is of course a Small Claims track case where costs would not ordinarily be recoverable. Certainly, any litigant would be aware of the limited costs entitlement under the Rules. We do consider that some of the time on outgoing emails and letters would be with the Court, which would not ordinarily be payable by the losing party. The costs set out on the schedule show two fixed fees. By

8 this we assume fixed with the applicant. [ADDRESS] would allow £100 for issuing the claim. The costs of a letter before action, which we do not see in the bundle, seems high. We propose to reduce the scheduled costs by £600, leaving the sum of £789.84 payable for that element. The costs associated with the correspondence to the client and the respondent are reasonable at £230. We would reduce the costs of correspondence with others, presumably mainly the Court by half, leaving £88. This gives solicitors costs of £1,107.84. The advocacy fees of £135 and the disbursements of £425 are allowed, although no fee note is included for the LPC Advocate, but presumably VAT is payable. This gives a total VAT on the legal fees, including LPC and Land Registry fees of £251.57, making the total of the County Court costs £1,919.41.

40. We now turn to the tribunal proceedings. The form N260 dated 21 September 2021 totals £4,200. The first thing we notice is that it includes the costs of the hearing in July 2021. This first hearing was subject to an adjournment due to the unavailability of the witness for the applicant, Mr [APPELLANT]. It cannot be denied that it was convenient for the respondent as he was, at the time in Lebanon. However, he would have proceeded. We do not think that costs directly associated with that hearing should be payable by the respondent.

41. Turning now to the specifics. The hourly rates for the solicitors seem reasonable. However, we do not understand the need for a Grade a solicitor at £220 per hour, when previously the matter had been dealt with by [COUNSEL], a Grade B solicitor.

42. The attendances on the client are acceptable at £216. The letters to the respondent also seem reasonable at £181.50. The attendances on other are unknown. This will presumably include the Tribunal and it is unclear whether the agents fall into this category. Be that as it may we do not consider that more time spent on attendances with others than the parties is reasonable. It is unclear how nearly 2 ¾ hours are spent on this element. Some we suspect will have been in respect of the July hearing. We would propose to allow half which would include 4 units at £125 and 11 at £180, giving a total for this element of £248.

43. As to the schedule showing some £1,583 in costs, we accept the rates used. Taking a broad-brush approach, it seems to us and we find that just short of 8 hours for a claim of this value seems high. For example, reference if made to 1.5 hours being spent on the statement of case, which is 5 pages. The skeleton argument is, to a degree, a repeat of the statement of case. We find that 6 hours should be sufficient for this element of which 8 units are at £125 per hour and the remainder at £180 per hour, giving a total of £1,036. This also reflects any duplication that may have occurred by reason of the postponement of the July hearing. This gives solicitors costs of £1,681.50. The LPC fee for the hearing in July is disallowed but the fee for Mr [NAME] stands at £450 plus VAT. There is an additional disbursement of £200 for

9 the hearing fee before the tribunal, which is recoverable. The total sum liable to VAT is £2,131.50, giving a VAT figure of £426.30.

44. In summary for the Court claim the amount allowed is as follows: (a) Solicitors fees £1,107.84 (b) Disbursements including LPC fee of £135, Court fee of £410 and land registry fee of £15 (c) VAT £251.57 (d) Total £1,919.41 45. In summary for the Tribunal claim the amount allowed is as follows: (a) Solicitors costs £1,681.50 (b) LPC fee £450 (c)Disbursements Tribunal fee of £200 (d) VAT £426.30 (e) Total £2,757.80. Rate of interest 46. With the regard to interest, the landlord sought this at the statutory rate of 8%. It was accepted that this was the matter for our discretion. In our view, the statutory rate, in an era of longstanding low interest rates is too high. The lease provides for interest at 4% above the base rate of [COMPANY] but compounded. We conclude that a rate of interest at 5% would be sufficient. The sum payable is £4,910.16 from 1.7.20 until 27.9.21, which Mr [NAME] said was 453 days, which seems to us to be correct. This gives a daily rate of 0.67p x 453 = £304.70 Conclusion 47. By way of conclusion, we make the following awards in favour of the landlord: (i) Service charges: £4,910.16 (ii) Legal costs under clause 2 Third Schedule of the lease: £4,677.21 (iii) Interest at 8% calculated in the case of service charge demands from 1.7.20 to 27.9.21: £304.70.

10 48. The landlord has asked for the order to be made as an order of the county court so that it can be directly enforceable without further application having to be made to the court. I will accede to this request and have drawn a form of judgment that will be submitted with these reasons to the County Court sitting at Clerkenwell & Shoreditch, to be entered in the court’s records. All payments are to be made by 19 November 2021

Name: Judge Dutton Date: 6 October 2021

ANNEX - RIGHTS OF APPEAL

Appealing against the tribunal’s decisions

1. A written application for permission must be made to the First-tier Tribunal at the Regional tribunal office which has been dealing with the case.

2. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

3. If the application is not made within the 28-day time limit, such application 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 application for permission to appeal to proceed despite not being within the time limit.

4. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers

5. Any application to stay the effect of the decision must be made at the same time as the application for permission to appeal.

Appealing against the County Court decision

1. A written application for permission must be made to the court at the Regional tribunal office which has been dealing with the case.

2. The date that the judgment is sent to the parties is the hand-down date.

3. From the date when the judgment is sent to the parties (the hand-down date), the consideration of any application for permission to appeal is hereby adjourned for 28 days.

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4. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

5. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers.

6. If an application is made for permission to appeal and that application is refused, and a party wants to pursue an appeal, then the time to do so will be extended and that party must file an Appellant’s Notice at the appropriate County Court (not Tribunal) office within 14 days after the date the refusal of permission decision is sent to the parties.

7. Any application to stay the effect of the order must be made at the same time as the application for permission to appeal.

Appealing against the decisions of the tribunal and the County Court

In this case, both the above routes should be followed.