Tenant Wins Service Charge Cost Challenge in First-tier Tribunal

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BJ/LSC/2024/0332 Property : [ADDRESS] [POSTCODE] Applicant : [redacted] : In person Respondents : [redacted] (2) [COMPANY_17] : [NAME_4], counsel Type of application : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985 Tribunal members : Judge Tagliavini Venue : 10 [ADDRESS] [POSTCODE] Date of hearing Date of decision : 17 July 2025 15 August 2025

DECISION

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Decisions of the tribunal (1) The tribunal makes the determinations as set out under the various

headings in this Decision. (2) The tribunal determines that it is just and equitable in the circumstances

for an order to be made under section 20C of the 1985 Act, so that the

respondent may not pass more than 50% of its costs incurred in

connection with the proceedings before the tribunal through the service

charge. _____________________________________________________ The application 1. The applicant seeks a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) and Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”)] as to the amount of service charges and (where applicable) administration charges] payable by the applicant in respect of the service charge years 2023 to date. There have been two previous decisions of the tribunal in LON/00BJ/LSC/2021/0319 and LON/00BJ/LSC/2022/0383 concerning the same parties and challenges to service charges.

The property 2. The property which is the subject of this application is a 3 bedroom flat in a purpose built block built circa 2016. The first respondent is the landlord. on 4th July 2022, the landlord commenced development works to create 11 new apartments on top of the existing building. The second respondent is the management company and is a not for profit undertaking. In view of its limited power to charge for its own services, the second respondent has engaged and has been heavily reliant upon its managing agents [NAME_6] to provide services to the applicant and other [NAME_7]. The Lease 3. The applicant holds an interest held under a lease dated 27 October 2016

for a term of 252 years (less 10 days) from 13 December 2013 made

between [COMPANY_3] (1), [COMPANY_17] (2) and [NAME_1] (3). 4. [NAME_1]’s proportion of service charge liability is defined as

follows:

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1.93% of the Estate Costs as set out in Part A of Schedule 11

1.93% of the Block Costs as set out in Part B of Schedule 11

11 1.72% of the Parking Costs as set out in Part C of Schedule 11

2.76% of the Lift and Staff Costs as set out in Part D of Schedule

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1.93% insurance contribution.

5. The scope of each of the categories listed above are as follows:

Part A – maintenance of estate communal areas including gardening,

roads, kerbs and footpaths. Fence maintenance, cleaning of the estate

communal areas, repair and replacement of any refuse storage bins,

maintenance of service installations, lighting, party walls, public liability

insurance, repairing fire alarms and security equipment within the

estate, the cost of a reserve fund and incidental costs.

Part B – maintenance repair, renewal, replacement of the main

structure of the block including the main structural parts of the

balconies, communal doors, all service installations, fire alarms, security

equipment, exterior decoration, common part decoration, cleaning and

furnishings of common parts, cost of building insurance, window

cleaning, television/satellite aerial provision, gate maintenance,

provision of a reserve fund and incidental costs. Part C – maintenance, replace and to keep in good repair and condition the car park, including repair and replacement of pipes, wires, cables and all other types of service installation and apparatus for the support of services to the car park, lighting that the management company thinks fit, the cost of a reserve fund and incidental costs. Part D – maintenance, replacement and repair of lifts, emergency telephones connected to lifts, staff and concierge costs and provision of a reserve fund. Part E – the cost of keeping accounts in relation to Parts A to D and serving the service charge certificate, compliance with statutory requirements, professional fees, enforcement costs, other services, or functions that the Management Company thinks fit for the benefit of the Dwellings, provision of a reserve fund, all other reasonable and proper expenses incurred by the Management Company in the convenient running of the Property including repair of inherent structural defects.

6. Pursuant to paragraph 19 of schedule 3 of the Lease, the tenant is to pay

the insurance contribution which was defined as 1.93% in the particulars

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the Lease and the Estate Service Charge Costs are defined as moneys

actually expended or reserved for periodical expenditure by or on behalf

of the management company in carrying out the obligations in Schedule

11. 7. The Maintained Property is defined as the estate communal areas

and gates to the estate, the car park, the main structure of the building,

including the roofs, gutters, rainwater pipes, foundations, floors and all

walls bounding individual dwellings therein and all external parts of the

building including all structural parts of the balconies of the buildings

together with all decorative parts and the structure and exterior of the

internal common parts of the buildings which is intended to be managed

by the management company for the benefit of the estate. 8. Service installations are defined as including services to and from the

dwellings and any other buildings on the estate and shall include any

equipment or apparatus installed for the purpose of such service or

supply. 9. Paragraph 3 of Schedule 1 provides that the Management Company

is a company formed with the object of maintaining the maintained

property and to provide certain services. By paragraph 6 of Schedule 1,

the landlord reserved the right to appoint a manager to act on behalf of

the Management Company The issues 10. The applicant set out the heads of service charge he challenged in an

extensive Scott Schedule for the following periods:

(i) 1 March 2022 to 28 February 2023

Portal fee

Accountancy fees

Gate maintenance

Engineering Insurance

Management fee

General Maintenance (internal)

CCTV Maintenance

Terrorism insurance

Car park electricity

Staff costs

Gate maintenance

Emergency light remedial works

Electrical vehicle maintenance

[NAME_8]

Legal fees

HIU maintenance

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Mechanical plant engineering

(ii) 1 March 2023 to 29 February 2024

Lift maintenance

Management fees

Staff costs

Accountant charges

Legal costs

Fire risk/fire door inspection

General maintenance (internal)

Sundry fees

Legal Pro fees

Electric bin vehicle maintenance

CCTV maintenance

Gate electronic maintenance

Fire system maintenance

Door entry system

[NAME_8] gas supply

Major works

HIU heating maintenance

Heating admin fees

Mechanical plant maintenance

Terrorism insurance

(iii) 1 March 204 to 28 February 2025

Window cleaning

Bin cleaning

Grounds maintenance

AOV (Fire windows) maintenance

Lightning conductor

Terrorism insurance

D&O insurance

Engineering insurance

Professional fees

Management fees

Concierge payroll costs

Concierge costs

Fire doors risk survey

External repairs

Internal repairs

Below ground pumping station

Rainwater

Fall arrest maintenance

Fire systems maintenance

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Standby generator

Flat roof maintenance

Solar panels

[NAME_8] float

Heating billing

HIU heating maintenance

Electronic gates

Door entry

Reserve fund

11. In [NAME_5]’s skeleton argument certain explanations and admissions

were made on behalf of the second respondent, the relevant parts of

which stated: (a) on 4th July 2022, the landlord commenced development works to create 11 new apartments on top of the existing building; (b) the contractors drew electricity from one of the building meters ([ADDRESS] supply) in connection with those works until 3rd September 2024; (c) in recognition of the disruption that the development work would cause, the landlord earlier offered to discharge the service charges for 2021 and to refresh the decor in the ground floor lobby and replace the bike store doors; (d) there were considerable difficulties in obtaining proper electricity invoices throughout the works and none were proffered from July 2022 which made it impossible to calculate how much electricity the contractors had used or even how much electricity the building had consumed in any of the three years in question; (e) the landlord could have argued that the development electricity comprised part of the disruption offer but has properly agreed to cover the cost of the electricity used in the course of the development; (f) the calculated credit of £20,057.24 has been applied to the 2025 service charge account in three tranches under the description ‘landlord’s supply - electricity’, and which now show a negative cost for the year to offset the higher costs in the previous two years;

7 (g) the manner by which the landlord calculated the development works usage is neatly illustrated by the graph at ‘GC2’ with the actual monthly figures being set out in the table at ‘GC3’. (h) [NAME_9] wrote providing a detailed explanation as to the £20,057.24 concession on 22nd May 2025 ; (i) it may be noted that between August 2022 and January 2023 the cost per kwh increased to nearly double (45 pence to 90/88 pence) but the outlook is happier because the cost has recently reduced to 23 pence per kwh:

(a) all but one of the apartments in the block are served

by heat interface units (HIUs) which, by 2021, were

proving costly to repair and maintain;

(b) corrective work was undertaken in 2022 but which

subsequently proved to have been conducted improperly;

(c) further corrective work was required in May 2023;

(d) it is presently unclear whether the Second Respondent

will be able to recoup any of the allegedly negligent first

works; …upon reviewing the true HIU expenditure (in light of the present challenges) it has been identified that some £18,856 was misallocated to HIU expenditure for 2024, which items have now been reallocated to the relevant service items:

(a) the £35,988 recorded in respect of HIU/Heating

Maintenance for 2024 should reduce to £17,467.51;

(b) (c) (d) (e) (4) certain sums have been allocated to the

particular tenants in question; £937.41 has been charged

to the landlord as relating to the development work; but

the balance of the misallocated charges should simply

surcharge the relevant other items in the accounts; [NAME_9] wrote providing a detailed

explanation on 22nd May 2025; … (a) the lift maintenance costs were exacerbated by the flood to the basement caused by an external burst water main on 5th January 2024 and it is presently uncertain whether any of that cost will be recouped from [NAME_10]; (b) in the course of reviewing the lift expenditure £5,742.54 was identified as pertaining to the development works and has been removed from the 2025 account; (c) [NAME_9]

8 wrote providing a detailed explanation as to the £5,742.54 concession on 22nd May 2025 under the heading ‘Managing Agent’, whatever view may be taken as to the performance of [NAME_6], the Respondents are obliged to retain their services presently due to their close association with the substantial recladding project commenced in 2021, and which itself represented an unforeseen expense inflating the anticipated service charge costs The hearing 12. The applicant appeared in person at the hearing and the second

respondent was represented by [NAME_5] of counsel. The first

respondent did not appear and was not represented, as the parties

agreed it had no substantive role to play in providing services under the

terms of the lease. 13. A digital bundle of 1987 pages was provided to the tribunal. The tribunal

received witness statements and heard oral evidence from the applicant.

The applicant also sought to rely upon a report by [NAME_11] dated October 2023 on Parkside St Peters. The tribunal

also received written and oral evidence from [NAME_13],

Director of the first and second respondents and [NAME_15] from

the [COMPANY_17]. The tribunal’s decisions and reasons 14. Having heard evidence and submissions from the parties and considered

all of the documents provided, the tribunal has made the following

determinations. 15. The tribunal finds that the applicant challenged the items of service

charge listed above as not being reasonable in amount, although he did

not challenge his obligation to contribute to them. The applicant’s

variously challenged to the various heads of service as:

(i) not reasonably incurred and not payable at all;

(ii) charge not explained and not payable at all. 16. It became clear at the hearing that there had been a breakdown in the

relationship between the applicant and the second respondent and its

managing agent. The acrimony between the parties was also made clear

in the intemperate language used by the applicant in some of his

communications to second respondent and its managing agents. This

had led to employees of the managing agent being instructed not to have

direct contact with the applicant and to refer matters to senior staff or

a legal representative. Consequently, the numerous requests made by the

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applicant for information either went unanswered or were answered

after a delay caused by the requests being passed on to others who were

able to deal with them. 17. At the hearing, the supplicant challenged the totality of the figures for

items of service charge rather than his own individual percentage that is

payable under the lease. As no other lessee had applied to be joined to

the application as a party this decision relates only to the charges payable

by the applicant. 18. The tribunal accepts the written and oral evidence of [NAME_13]

and [NAME_15] which was extremely detailed and supported by

documentation and substantially addressed the numerous items of

service charge challenged by the applicant. [NAME_8] - 2022-2025 19. The tribunal finds the applicant’s concerns over the unreasonableness of

[NAME_8] charges have been evidenced by the concessions

made by [NAME_13] and the credits made in respect of this item. [NAME_18] - 2022-2025 20. The tribunal finds these costs are reasonable and payable. The tribunal

finds the HIU system and the maintenance of it has experienced

problems due to previous contactor’s failing to maintain the system

adequately leading to breakdowns and necessary corrective and

maintenance measures being required throughout 2022/2023/2024

The tribunal is satisfied that these costs were reasonably incurred.

However, the second respondent accepted that the sum of £18,856 that

had been attributed to these costs had been misallocated and that the

correct sum was £17,476.51 and not £35,988 originally claimed. 21. The tribunal finds the second respondent was able to account for

£12,838 of the misallocated £18,856. However, [NAME_15] in her oral

evidence was unable to explain the remainder of the misallocated sum.

Therefore, the tribunal finds that £6,018 has been unreasonably

incurred and should be credited (pro rata to the applicant. Lift maintenance – 2022-2025 22. The tribunal accepts the evidence of [NAME_13] that costs of the lift

were increased by a flooding in the basement caused by an external

mains water pipe. Although, the second respondent is seeking damages

from [NAME_10] these have not yet been realised. Consequently, the

tribunal finds the costs of lift maintenance have been reasonably

incurred and are payable.

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Managing agent fees – 2022-2025 23. The tribunal finds the fees of [NAME_6] are reasonable and payable by

the applicant. The tribunal finds the managing agent is having to deal

with a number of issues including the re-cladding of the building as well

as the usual day to day matters. Reserve fund – 2022-2025 24. The tribunal finds the collection of a reserve fund is reasonable and

payable by the applicant under the terms of the lease. The tribunal

accepts that a number of major works projects are anticipated as part of

the cyclical maintenance of the subject building as well as providing for

contingencies. Portal fee – 2022-2025 25. The tribunal finds these costs are reasonable and payable. The tribunal

finds the use of an online system that allows [NAME_7] to report problems

and receive communications is a cost-effective and reliable method now

commonly used by managing agents. Accountancy fees – 2022-2025 26. The tribunal finds these costs are reasonable and payable. The tribunal

finds it is both reasonable and necessary for the second respondent to

use external accountants due to the level of complexity that is evident in

the expenditure of sums and collection of service charges. Other professional fees/legal fees – 2022-2025 27. The tribunal finds these sums are reasonable and payable. The tribunal

finds some of these legal costs were incurred as a result of the two

previous application in which the respondent’s costs were permitted to

be added to the service charges to be paid by all [NAME_7]. Office expenses – 2022-2025 28. The tribunal finds these costs have been reasonably incurred as they

relate to the efficient running of the building, including the provision of

temporary accommodation and are payable.

11 Gate maintenance – 2022-2025 29. The tribunal finds these costs have been reasonably incurred and are

payable. The tribunal finds the contractors carrying out works have

frequently misidentified the building in their invoices thereby

unnecessarily causing confusion. The tribunal accepts the evidence

provided by the second respondent that numerous callouts were

necessary for the maintenance of these three motorised gates due to

frequent use and occasional vandalism. Insurance cover including terrorism, engineering and directors and officers - 2022-2025 30. The tribunal finds the landlord is entitled to choose the level of cover it

requires and that the inclusion of terrorism and engineering cover is

reasonable and the cost reasonably incurred. Similarly, the tribunal

finds the cover for D&O’s is also reasonably incurred due to the

increasing obligations placed on them in respect of the subject

building. General Maintenance (internal) - 2022-2025 31. The tribunal accepts the detailed evidence provided by the second

respondent as to how these costs have been incurred and the supporting

evidence that has been included in the hearing bundle. The tribunal

finds there were numerous issue of repair and maintenance that

reasonably required the attention of the second respondent, including

essential repairs to and replacement of the concierge’s w.c. The tribunal

finds that the cause of damage to specific items was unattributable to

individuals but nevertheless had to be remediated. The tribunal

finds these costs have been reasonably incurred and are payable General Maintenance (external) – 2022-2025 32. The tribunal finds these costs have been reasonably incurred and are

payable. The tribunal accepts the detailed evidence provided by the

second respondent as to how these costs have been incurred and the

supporting evidence that has been included in the hearing bundle. The

tribunal finds the second respondent gave a detailed account of the costs

incurred in respect of routine and non-routine items of external

maintenance. CCTV Maintenance – 2022-2025 33. The second respondent confirmed that one item of electrical works had

been incorrectly allocated to the costs of CCTV. The tribunal finds the

remainder of these costs have been reasonable incurred and are

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supporting evidence that has been included in the hearing bundle. Concierge Fees (Staff Costs) – 2022-2025 34. The tribunal finds these costs have been reasonably incurred and are

second respondent as to how these costs have been incurred including

the hours/cost of relief staff and the supporting evidence that has been

included in the hearing bundle. Door Entry System – 2022-2025 35. The tribunal finds these costs of the electronic door entry system have

been reasonable incurred and are payable. The tribunal accepts the

detailed evidence provided by the second respondent as to how these

costs have been incurred including the repairs necessitated by apparent

acts of vandalism and the supporting evidence that has been included

in the hearing bundle. Emergency Light Remedial Works – 2022-2025 36. The tribunal finds these costs, including a full schedule of corrective

maintenance, have been reasonably incurred and are payable. The

tribunal accepts the detailed evidence provided by the second

evidence that has been included in the hearing bundle. [NAME_19] 37. The tribunal finds these are not a duplication of costs as alleged by the

applicant and accepts the evidence of the second respondent that these

charges are not included elsewhere in the service charges. The tribunal

finds these costs have been reasonable incurred and are payable. The

evidence that has been included in the hearing bundle. Mechanical Plant Maintenance – 2022- 2025 38. The tribunal finds these charges relate to ‘The Energy Centre’ i.e. the

boiler and related apparatus. The tribunal finds these costs have been

reasonable incurred and are payable. The tribunal accepts the detailed

evidence provided by the second respondent as to how these costs have

been incurred and the supporting evidence that has been included in

the hearing bundle.

13 Fire Risk Assessment & Health and Safety 39. The tribunal finds these costs have been reasonably incurred and are

tribunal also accepts that these costs relate to compliance obligations

and are separate from the maintenance of fire safety equipment. Fire Systems and Equipment Maintenance- 2022-2025 40. The tribunal finds these costs have been reasonably incurred and are

tribunal also finds these maintenance works are essential to the safety of

the [NAME_7] and the building. Telecom Line – 2022-2025 41. The tribunal finds these costs have been reasonably incurred and are

payable. The tribunal accepts the detailed evidence provided by the s

tribunal finds these costs are essential to the maintenance of

communications used by the [NAME_7]. TV Aerial -2022-2025 42. The tribunal finds these costs have been reasonably incurred and are

tribunal also accepts that a significant sum in respect of these charges

was recredited to the [NAME_7] in 2024-2025 due to their relation to

construction activity of the additional flats. Bin cleaning – 2022-2025 43. The tribunal finds these costs have been reasonably incurred and are

tribunal accepts that a more regular bin cleaning service has been

introduced and that some of these costs relate to bulky waste removal. Communal Gas Supply – 2022-2025

14 44. The tribunal finds these costs have been reasonably incurred and are

tribunal accepts the second respondent has found it necessary to create

a ‘float’ to deal with a shortfall in contributions and continuation of a gas

supply to the building which does not duplicate metered charges. Car park maintenance – 2022-2025 45. The tribunal accepts the sum allocated under this heading of £2,232 was

misallocated and should have been recorded as the replacement of

communal lighting across various parts of the building. As such, the t

tribunal finds the amount has been reasonably incurred and payable. . Other miscellaneous items – 2022-2025 46. The tribunal finds these costs relate to items that were

included/budgeted as anticipated costs for items of service charge that

were not carried out e.g. window cleaning in 2024-2025. The tribunal

accepts the second respondent’s explanation that either no costs were

incurred for some of the items falling under this heading including the

standby generator, solar panel maintenance, painting of entrance to [ADDRESS] in2024-2025 and other items such as the rainwater

maintenance, flat roof, the fall arrest system and pump in basement

have been added as a precautionary measure although not costs have

been incurred for 2024-2025. 47. Overall, the tribunal preferred the detailed written and oral evidence of

the second respondent which it found well supported by the

documentary evidence. The tribunal found the assertions made by the

applicant of works not done or done badly were on the whole not made

out and the report of [NAME_11] of limited assistance in view of its

date and the lack of independence on his part. The tribunal also find the

applicant’s offer to pay a proportion of the whole sum due from all

[NAME_7] for items of service charge to be inappropriate and misleading

as the application was brough by the sole lessee, [NAME_1]. Conclusion 48. The tribunal finds the misallocation of funds by the second

respondent has not assisted the applicant in understanding how

service charges have been incurred. The tribunal also finds the

applicant’s insistence on challenging certain items has led to a

closer examination of the service charge accounts and a reallocation of

certain sums as well as a concession by the second respondent that

certain sums will be refunded to the [NAME_7] or be paid for by the

respondent(s) e.g. [NAME_8] charges

15 Application under s.20C and refund of fees 49. In the application form the applicant made an application under s.20C

so that none of the respondents’ costs of the application would be added

to the service charge. taking into account the determinations above, the

tribunal determines that it is just and equitable in the circumstances for

an order to be made under section 20C of the 1985 Act, so that the

charge.

Name: Judge Tagliavini Date: 15 August 2025

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the Tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First- tier Tribunal at the Regional Office which has been dealing with the case. The application should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-application-for- permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber The application for permission to appeal must arrive at the Regional Office within 28 days after the Tribunal sends written reasons for the decision to the person making the application. 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. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking.

16 If the Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).