Tribunal Appoints New Manager Over Landlord Breach

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference HMCTS Code : CAM/38UF/LAM/2021/0002 V: CVP REMOTE Property : [NAME], 51 Woodgreen, Witney, Oxon [POSTCODE]

Applicants :

[redacted] 2. [NAME] [RESPONDENT] – flat 12 3.Mr [RESPONDENT] – flat 2 Respondent: [redacted] [NAME] [RESPONDENT]) Type of [NAME] : Appointment of Manager Tribunal member(s) : Judge Wayte Mr [NAME] [NAME] of decision : 14 April 2022

DECISION

Covid-19 pandemic: description of hearing This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was V: CVP REMOTE. A face-to-face hearing was not held due to the pandemic. The tribunal was referred to a hearing bundle prepared by the applicants’ representative Mr [COUNSEL]. References to the page numbers in the bundles are contained in square brackets.

The tribunal has decided that:

(1) In accordance with section 24(1) of the Landlord and Tenant Act 1987, [APPELLANT] of [NAME], Sandford Gate, [ADDRESS], Oxon [POSTCODE] (‘the Manager’) is appointed as manager of the property at [NAME], 51 Woodgreen, Witney, [POSTCODE],

2 freehold title number ON207483 ("the Property’) from Friday 22 April 2022. (2) The order shall continue to 30 September 2024. [NAME] for an extension must be made prior to the expiry of that period. If such an [NAME] is made in time, then the appointment will continue until that [NAME] has been finally determined. (3) The Manager shall manage the Property in accordance with: (a) The Management Order attached to this decision; (b) The respective obligations of the landlord and the leases by which the flats at the Property are demised by the Respondent and in particular with regard to repair, decoration, provision of services and insurance of the Property; and (c) The duties of a manager set out in the Service Charge Residential Management Code (‘the Code’) or such other replacement code published by the Royal Institution of Chartered Surveyors and approved by the Secretary of State pursuant to section 87 Leasehold Reform Housing and Urban Development Act 1993. (4) The Manager shall register the order against the landlord’s registered title as a restriction under the Land Registration Act 2002, or any subsequent Act. (5) An order shall be made under section 20C Landlord and Tenant Act 1985 that the Respondent’s costs before the Tribunal shall not be added to the service charges.

The [NAME] and hearing 1. On 31 August 2021 the applicants and leasehold owners of flats 2,3 and 12 of the property made an [NAME] for an order appointing [APPELLANT] as manager under section 24 of the Landlord and Tenant Act 1987 (“the Act”). The applicants sought the order due to the alleged failure of the freeholder to comply with the terms of its leases and relevant landlord and tenant legislation.

2. The respondent is an [NAME] who is said to reside in India. Copies of the [NAME] form were sent to her son, who has confirmed that he acts as her attorney, although the power of attorney has not been produced.

3 3. Directions were given on 2 November 2021. The following issues were identified for determination: • Did the contents of the section 22 notice comply with the statutory requirements? • Has the applicant satisfied the tribunal of any grounds for [NAME] an order as specified in section 24(2) of the Act? • Would the proposed manager be a suitable appointee and, if so, on what terms and for how long should the appointment be made? • Is it just and convenient to make a management order? • Should the Tribunal make an order under section 20C of the Landlord and Tenant Act 1985, to limit the respondents’ costs that may be recoverable through the service charge? 4. The respondent did not produce a statement in response or indeed any documentation in accordance with the directions. It appeared that he also failed to serve a copy of the [NAME] on the other leaseholders as required by the directions, as he did not reply to the request for confirmation from the tribunal. Mr [NAME] made his own attempts to serve them using the contact information at his disposal. No other leaseholders contacted the tribunal to confirm that they wished to be joined to the [NAME].

5. The [NAME] was heard by Cloud Video Platform (CVP) on 22 March 2022. Mr [NAME] represented the applicants and appeared as a witness, together with [NAME] [NAME]. Mr [NAME] also attended as required by the directions. Mr [RESPONDENT] attended the hearing as his mother’s attorney and was permitted to take part despite the fact that he had failed to comply with the directions.

6. The applicants had also issued an [NAME] under section 27A of the Landlord and Tenant Act 1985 in respect of service charges from 2015 – 2021. This [NAME] was heard on the same day as the hearing for the Appointment of Manager and is considered in a separate decision under reference number CAM/38UF/LIS/2021/0034. Background 7. As the name suggests, the property is a period industrial building, which has been converted into 17 flats. Mr [RESPONDENT] confirmed that his mother purchased the freehold in about 1996, although the entries of the freehold title show that she was registered as the proprietor on 24

4 September 1998. The majority of the leases pre-date her ownership, although two of the flats were sold in 2017, including flat 12. The lease for that flat is in a slightly different format to the earlier leases issued in respect of the leases for flats 2 and 3. All of the leases except one (flat 17) are for a term of 125 years from 29 September 1984. In addition to the main building, there appears to be at least one garage (flat 15), together with parking spaces and communal gardens. There is no tenants’ association and many of the leaseholders let out their property to tenants.

8. The [NAME] was supported by witness statements from Mr [NAME] and [RESPONDENT], with their evidence unchallenged by Mr [RESPONDENT]. [NAME] bought their flat on 1 December 2014 and rent it out. Mr [NAME] is a retired accountant and raised a number of concerns about the way the former managing [NAME] [COMPANY] levied service charges. These are dealt with in more detail in the separate decision in relation to the section 27A [NAME] but in summary; the demands failed to comply with section 47 of the Landlord and Tenant Act 1987 and the service charge provisions in the lease were ignored, with no estimates provided to support the claim for interim charges and no end of year accounting. Accounts were eventually produced by [NAME] in 2021 but were defective for a number of reasons, again set out in the separate decision. Importantly, Mr [NAME] submitted that the accounts were never prepared as service charge accounts and the accountant who drew them up has conceded that they are not in an appropriate format to be used as such.

9. In addition to his concerns about the service charges, Mr [NAME] has become increasingly concerned about the condition of the property. In particular: urgent repairs are required to the replacement windows and original cills, guttering, downpipes and brickwork; the gardens and bicycle shed are poorly maintained and the internal communal areas are seriously overdue for decoration. Recent work to replace front door locks was of a poor quality. His flat was suffering from damp which he felt was due to the landlord’s failure to keep the property in repair. The [NAME] had failed to engage with him in respect of the problems with the property and he proposed a 5 year appointment as it would be sensible to spread the works over a longer period to avoid excessively high service charges for any one year. In due course he hoped to form a Right to Manage company but had suffered from a lack of buy in from other leaseholders.

10. Mr [NAME] and his wife live in their flat and had raised concerns about the state of the property with the [NAME] soon after their purchase in 2017. A meeting was arranged by the [NAME] on 19th December 2019, with only 4 properties represented. Some of the repairing issues were discussed at the meeting but the note produced by the [NAME] sought to record, incorrectly, that there was agreement to postpone any works due to lack of funds. He had subsequently arranged for [NAME] to visit the property and produce their report dated 26

5 February 2020. The report was sent to Mr [RESPONDENT] who passed it onto the [NAME]. They admitted the majority of the findings but again stated that there was a shortage of funds. He also had concerns about the defective service charges demanded by Gatehouse and the fact that they were not members of an approved redress scheme, despite claiming membership of the [NAME] (this was rectified in March 2021).

11. Mr [RESPONDENT] confirmed that [NAME] had resigned as managing [NAME] from 31 December 2021, since which date he had taken on the management himself. He wished to appoint professional management as soon as possible and had identified another company but they wanted to await the outcome of this [NAME]. He conceded that [NAME] had been unsatisfactory and that the property required attention but was concerned about the state of the service charge account. He was also concerned that only a minority of leaseholders were behind the [NAME] and that Mr [NAME] had refused to talk to him in advance of the hearing. Statutory Framework 12. Under section 24(2) of the Act, the tribunal may appoint a manager under section 24 in various circumstances. These include where the tribunal is satisfied: • that any relevant person either is in breach of any obligation owed by him to the tenant under his tenancy and relating to the management of the premises in question or any part of them; or • that unreasonable service charges have been made, or are proposed or likely to be made; and • that it is just and convenient to make the order in all the circumstances of the case exist which make it just and convenient for the order to be made. Section 22 notice 13. Before an [NAME] for an order under section 24 is made, section 22 of the Act requires the service of a notice which must, amongst other requirements, set out steps for remedying any matters relied upon which are capable of remedy and give a reasonable period for those steps to be taken.

14. There have actually been two section 22 notices served in this case: the first by Mr [NAME] on 13 March 2021 and the second on 23 July 2021 by all three applicants, which is the notice relied on for this [NAME]. The notice claimed that the respondent was in breach of her obligations

6 under the lease: in particular, repairing obligations and service charge provisions and relating to management of the premises: accounting requirements, health and safety legislation, service charge demands and other legislative protection for leaseholders. The notice also stated that unreasonable service charges had been made and that the [NAME] had failed to comply with the RICS code. Although the applicants lacked confidence that the [NAME] were capable of remedying matters to a satisfactory extent the notice stated that the vast majority of matters were capable of remedy within 30 days, with the exception of repair works which it was acknowledged would take longer. However, the notice submitted that an inspection could be carried out within that period to identify the works that were required.

15. Mr [RESPONDENT] had responded to the notice served by Mr [RESPONDENT] stating that he had no objection to [NAME] being replaced but any arrears would have to be settled first, he also wanted evidence that the other leaseholders were in support of any [NAME] to appoint a manager. [NAME] offered a meeting which the applicants declined until they could inspect the service charge books and records and there was a written proposal from the freeholder. No progress was made and the [NAME] was issued on 31 August 2021.

16. The tribunal is satisfied that the notice met the requirements of the Act. Grounds under the Act 17. As stated above, the applicants relied on a number of grounds. First, breach of the lease. The bundle contained a copy of the lease for Flat 3 and Flat 12. The lease for Flat 3 is dated 16 December 1986. It contains covenants on the part of the lessor to keep the common parts and the Estate in good condition and to repaint the ironwork gutters and pipes so often as reasonably necessary and in any case every 7 years. The covenant is stated as being subject to receipt of service charges but Mr [RESPONDENT] accepted works were necessary and did not raise any claim that service charges had been withheld. The lease for flat 12 was granted on 8 December 2017 and is more extensive, with a covenant to maintain and keep in good and substantial repair and condition the external walls, conduits and common parts. Again, this is subject to payment of the lessee’s contribution but no claim was made by Mr [RESPONDENT] that this was an issue. Given the undisputed evidence that the property is in a poor state of repair and that there has been no external or internal decoration for well over 7 years, the tribunal considers that this ground has been proven by the applicants.

18. The applicants also claimed that the terms of the lease were broken in respect of the service charge machinery. This is considered in more detail in the separate decision dealing with the s27A [NAME] but in summary, [NAME] had failed to provide an estimate at the outset of each service charge year or a certificate or report at the end of the year

7 or carry out any reconciliation process. Again, this was not challenged by Mr [RESPONDENT] and no evidence was provided from [NAME] other than the accounts which appeared to have been drafted for the benefit of the agent rather than as service charge accounts. The tribunal also considers that this ground has been proven and that the failure of the [NAME] to demand appropriate service charges in accordance with the leases has clearly led to the failure to properly maintain the property.

19. The second ground claimed was in relation to allegedly unreasonable service charges – ground 24(2)(ab)(i). Whereas deductions have been made from the [NAME]’ fees due to their failure of performance and the accounts as not fit for purpose, the tribunal is not convinced that the service charges are unreasonable in the sense of supporting an [NAME] for the appointment of a manager. If anything, insufficient service charges have been demanded. On balance, this ground is not proven.

20. The third ground claimed was under section 24(2)(ac)(i), the failure to comply with the RICS Service Charge Residential Management Code. Examples included the failure of [NAME] to comply with various statutory provisions protecting leaseholders, including serving compliant demands; failure to account for the leaseholders’ funds properly by not carrying out any year end reconciliations and keeping insufficient records; failure to consider Health & Safety and failure to consider necessary repairs. [NAME] took no part in the proceedings, apparently on legal advice. On the evidence provided by the applicants, the tribunal considers that this ground is proven.

21. In the circumstances, the tribunal determines that there are grounds for appointing a manager. The proposed manager

22. The applicants had proposed [NAME], the Managing Director of [NAME], a property management company. He had prepared a letter with Mr [NAME] dated 24 November 2021 which purported to set out his experience and the basis of his instructions. Mr [NAME] had also produced the report dated 26 February 2020 following his inspection on that date. Mr [NAME] attended the hearing as required by the directions.

23. Mr [NAME] is a professionally qualified property manager who founded his company in 2008. Although his letter stated that [NAME] “have held and current (sic) hold other FTT appointments” this was apparently a misunderstanding due to the dual authorship of the letter. He had agreed to provide his services at an annual fee of £3,672 plus VAT, with an additional fee of £1,200 plus VAT assuming a “hostile” takeover. He indicated that day to day management would be by

8 another member of the team, the company had four property managers at present.

24. Mr [NAME] was able to provide good answers to the questions by [NAME], the expert member of the panel. In particular, he explained his portal system for keeping leaseholders (and tenants where appropriate) informed, confirmed his experience in running formal consultations in accordance with section 20 of the Landlord and Tenant Act 1985 and provided further details of the company’s staff and offices based in Oxford, London and Henley – although the team largely worked at home as a result of the pandemic and current preferences for remote working.

25. [NAME], the lay member of the panel, asked for details of [NAME]’s approach to planning, his insurance cover and the length of the term if appointed. Mr [NAME] stated that his preference would be 5 years but 2-3 would be sufficient to get the property back into effective management and deal with urgent works. Again, his answers were satisfactory.

26. Mr [RESPONDENT] challenged Mr [RESPONDENT] on the basis that he had refused to return his calls and indicated that he did not wish to work with him. There appeared to be a potential issue around proposed development of the property by building an extension on the roof, although planning permission had not been sought. Mr [NAME] also pointed out that he had arranged a site visit with Mr [RESPONDENT] which he failed to attend.

27. The tribunal was concerned that Mr [RESPONDENT] stated his plan was for Mr [RESPONDENT] to have as little involvement as possible in the property, describing [NAME] as a “leaseholder led” company. Although a tribunal appointed manager has the authority to act without instruction from the freeholder, a constructive relationship with them is likely to be in the best interests of everyone. It was also a concern that the letter dated 24 November 2021 was inaccurate in respect of prior appointments. That said, his condition survey was thorough and his evidence to the tribunal at the hearing indicated he would be an effective manager of the property, particularly given his undoubted ability to understand the leaseholder perspective.

28. In the circumstances the tribunal considered that Mr [NAME] would be a suitable appointee as manager.

Just and convenient

29. In addition to proving grounds under section 24, the tribunal has to be satisfied that it is just and convenient to make an order appointing a manager in all the circumstances of the case.

30. Mr [NAME] summarised his [NAME] by saying that he and Mr [NAME] had been trying to persuade the [NAME] and the freeholder to carry out the necessary works to the property since 2019. There was

9 clear evidence of long term neglect and [NAME] had been incompetent in terms of their service and administration of service charges. His preference was for a 5 year appointment as he submitted that there could be no confidence in the freeholder taking responsibility given previous failures.

31. Mr [RESPONDENT] stated that he had previously arranged for works to be undertaken to the property – for example the replacement of the original crittal windows. He is a Chartered Architect and therefore has expert knowledge of the works required to the property but did not have the time to deal with the extensive correspondence generated by the [NAME]. He would like to appoint a managing agent that would work with everybody and [NAME] had promised him there would be an orderly handover.

32.

In all the circumstances of the case the tribunal considers that it is just and convenient to make an order appointing Mr [NAME] of [NAME] as the manager of the property. Although Mr [RESPONDENT] attended the hearing, he has been slow to accept the problems with [NAME] and has failed to take responsibility on behalf of the freeholder to ensure the property is maintained in a good state of repair. As stated above, it is imperative that Mr [NAME] works with both the freeholder and the leaseholders to get the urgent works completed as soon as practicable, in particular in relation to any penetrating damp. As this will be Mr [NAME] first appointment, the tribunal considers that a period of just over 2 years is appropriate, to terminate at the service charge year end in 2024. As stated in the summary of the decision, an [NAME] may be made by the manager to extend that period or otherwise vary the order, for example by substituting a different manager.

33. The tribunal has taken into account the draft Management Order submitted by the applicant and Mr [APPELLANT], which was not challenged by Mr [RESPONDENT]. This draft contains some ambitious provisions which would have affected the respondent’s proprietary rights – for example powers to vary leases or borrow money secured against the property, which the tribunal does not consider reasonable in all the circumstances. The Management Order is therefore based on the tribunal’s template which has recently been approved by the Chamber President.

Section 20C

34. The applicants included an [NAME] for an order under section 20C, restricting the ability of the respondent to include his costs as part of a service charge. It is not clear whether the respondent has in fact incurred any costs and he indicated that he would not charge for his attendance at the hearing but given the circumstances of the case and for the avoidance of doubt, the tribunal considers that it is just and equitable for an order to be made in favour of the applicants.

10

Name: Judge Wayte

Date: 14 April 2022

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 [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/38UF/LIS/2021/0034 HMCTS code (paper, video, audio) : V: CVPREMOTE Property : [NAME], 51 Woodgreen, Witney [POSTCODE]

Applicants

: [redacted] 2.[NAME] [COUNSEL] – flat 12 3.Mr [COUNSEL] – flat 2 Representative : Mr [COUNSEL] Respondent : [redacted] : [NAME] [RESPONDENT] of [NAME] : For the determination of the liability to pay service charges under section 27A of the Landlord and Tenant Act 1985 Tribunal members : Judge Ruth [NAME] of decision : 14 April 2022

DECISION

Covid-19 pandemic: description of hearing This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was V: CVPREMOTE. A face-to-face hearing was not held due to the pandemic. The documents are in the third of three lever arch files provided by the applicants. The order made is described below.

2 Decisions of the tribunal (1) No service charges are payable pending service of a notice stating the landlord’s name and address, together with an address for service in England and Wales as required by section 47 of the Landlord and Tenant Act 1987; (2) The tribunal has otherwise made determinations of reasonableness in respect of certain disputed charges from 2014/15 to 2021/22 summarised in the table annexed to this decision; (3) The tribunal makes an order under section 20C of the Landlord and Tenant Act 1985, preventing the respondent from passing on the costs of the proceedings through the service charge. The [NAME]

1. The applicants seek a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to the amount of service charges payable by them in respect of the service charge years 2014/15 to 2021/22. This [NAME] is linked to the [NAME] for an appointment of a manager case reference CAM/38UF/LAM/2021/002. The applications were heard on the same day but decisions issued separately for ease of reference.

2. Directions were ordered on 15 December 2021. As with the [NAME] in respect of the Appointment of a Manager, the respondent’s representative did not comply with the directions but did attend the hearing and was permitted to take part. The hearing 3. The applicants were represented by [RESPONDENT], supported by [NAME] [RESPONDENT]. The respondent was represented by her son [NAME] [RESPONDENT] who stated he holds a power of attorney to act on her behalf. The hearing bundle had been prepared by Mr [NAME] in accordance with the directions.

4. As a result of a query by the tribunal, the applicants were asked to provide a schedule of payments made by them in respect of the years in dispute and the respondent to provide the same information from his [NAME], together with a Statement of Account in respect of each applicant, all by 1 April 2022. Mr [APPELLANT] provided his information by the due date but the respondent failed to respond and therefore the tribunal only has the applicants’ evidence on this issue which maintains that they are all up to date with their service charges.

3 The background 5. The subject property is a converted period warehouse, divided into 17 flats. There are communal gardens, parking spaces and at least one garage. Neither party requested an inspection and the tribunal did not consider that one was necessary, nor would it have been proportionate to the issues in dispute.

6. The applicants bought their flats at different times: Mr [NAME] has been resident the longest, since November 1995, then [NAME] [NAME] in December 2014 and finally [NAME] [NAME] in December 2017. [NAME] [NAME] lease is a more modern document that the lease for flats 2 and 3. The specific provisions of the lease will be referred to below, where appropriate.

7. The respondent is a woman in her 90s who resides in India. Her son [NAME] [RESPONDENT] states he holds power of attorney and until their resignation on 31 December 2021, [COMPANY] were the managing [NAME]. Unfortunately, [NAME] declined to attend the hearing or provide Mr [RESPONDENT] with any assistance, apparently on legal advice. The tribunal has appointed [NAME] of [NAME] as the new Manager of the property, effective from 22 April 2022. The issues 8. At the start of the hearing the parties identified the relevant issues for determination as follows: (i) The payability and/or reasonableness of service charges for the service charge years ending 30 September 2015 through to 30 September 2022. It became clear during the evidence considered as part of the Appointment of Manager [NAME] that all service charges had been claimed on account of costs as no reconciliation had been carried out under the terms of the leases. Mr [NAME] primary argument was that nothing was payable due to the failure of the demands to comply with section 47 of the Landlord and Tenant Act 1987 (landlord’s name and address), however a number of specific items were also challenged for each year as detailed below. (ii) Whether the tribunal should make an order under section 20C of the Landlord and Tenant Act 1985, preventing the landlord from claiming any costs of the [NAME] as part of the service charge.

9. Having heard evidence and submissions from the parties and considered all of the documents provided, the tribunal has made determinations on the various issues as follows.

4 Service charge year 2014/15 10. Under the lease the service charge year runs from 1 October to 30 September. Only Mr [NAME] was the leaseholder for the full year, with [NAME] [NAME] completing their purchase on or about 1 December 2014. Mr [NAME] argued that nothing was payable due to the failure to provide correct details of the landlord under section 47 of the Landlord and Tenant Act 1987. He also challenged the management fee of £3,445, accountancy fees of £690, repairs of £1,920 and gardening costs of £780. His schedule of items in dispute also raised the ground rent, he understood that the FTT has no jurisdiction in respect of ground rent but wanted confirmation that it should play no part in the calculation of the service charge as the accounts produced by [NAME] appeared to indicate it was included in the expenditure for the property which was to be recovered via the service charge.

11. Mr [NAME] had kept copies of his service charge demands which prior to 2021 indicated that his “superior landlord” was [RESPONDENT] or [NAME], with an address care of the [NAME]. It was agreed that the Landlord was in fact [NAME] [RESPONDENT] who resided in India. He maintained that unless and until a notice was served giving that information, service charges were not payable pursuant to section 47 of the Landlord and Tenant Act 1987. Notices had been served more recently stating that the Landlord was Mrs S.[RESPONDENT] but the address was either care of the [NAME] or an out of date business address for her son [NAME]. Mr [NAME] relied on the Upper Tribunal case of [COMPANY] v Elliston Bentley Martin [2011] UKUT 133 (LC) which states that a care of address is insufficient for these purposes. He submitted that it was now too late to correct this error for the older service charges, given the statutory limitation in section 20B of the 1985 Act, which only allows demands to be backdated 18 months from the date the costs were incurred.

12. He submitted that no payment was due to the [NAME] for their fees given their extensive failings to produce compliant demands, budget properly for service charges, failure to comply with the RICS Management Code or carry out works in accordance with the lease. From the accounts it appeared that £3,445 was charged for this year.

13. He also challenged the payment of the accountancy fees in their entirety. After persistent enquiries, he had been sent what purported to be service charge accounts by [NAME]. However, they were clearly not service charge accounts and were not used by [NAME] to carry out an annual reconciliation of the service charge due at the end of the year as required by his older form of lease. Again, he assumed £690 was charged as that was indicated by the accounts for that year.

14. He also challenged repairs of £1,920 on the basis that although it was accepted some repairs were carried out, until the applicants had sight of

5 the invoices, they were unable to ascertain whether the full amount was due.

15. Finally, gardening costs of £780 should be reduced by 50% due to the poor quality service. Photographs in the bundle showed that the lawn was patchy and the borders were full of weeds.

16. Mr [RESPONDENT] submitted that it was not fair that his mother might incur a debt due to the failings of her agent. He had been assured by them that a care of address was sufficient. The tribunal’s decision 17. Section 47 of the 1987 Act provides that any written demand to a tenant must contain the name and address of the Landlord and if that address is not in England and Wales, an address in England and Wales at which notices (including notices in proceedings) may be served on the landlord by the tenant. If the demand does not contain the information required, any service charge contained in the demand shall be treated as not being due from the tenant to the landlord at any time before that information is furnished by the landlord by notice given to the tenant.

18. Mr [APPELLANT] is correct to quote [APPELLANT] as authority for the proposition that the agent’s address is insufficient to meet section 47. In Paragraph 11 of his judgment The President of the Lands Chamber stated that “The address of the landlord for the purpose of section 47(1) thus seems to me to be the place where the landlord is to be found. In the case of an individual this would be his place of residence or the place from which he carries on business.” 19. There is no dispute that as yet that information has not been provided, although [NAME] eventually confirmed the landlord’s name. As the section states, this omission is capable of retrospective remedy and the President in [NAME] v [COMPANY] [2012] UKUT 457 (LC) has also confirmed that a service charge demand which does not comply with section 47(1) is still a valid demand for the purposes of section 20B(1).

20. In the circumstances, the tribunal determines that no service charges are payable until a valid notice is provided. This should be a simple matter to correct once and for all and the respondent is urged to seek legal advice at the earliest opportunity to ensure it is done properly.

21. In respect of the other challenges, as stated above, these items are all payments on account as no reconciliation has been carried out at the year end as contemplated by the lease. In the circumstances section 19(2) of the Landlord and Tenant Act 1985 states that no greater amount than is reasonable is payable. However, for the historic charges, it seems to the

6 tribunal that it is right to take into account the service actually delivered when determining reasonableness.

22. There is no doubt that the standard of management by [NAME] has been poor. Their fee of £3,445 is approximately £200 per flat (divided by 17) which is a reasonable amount for a reasonably competent agent in 2014/15. However, the service has been minimal and therefore the tribunal considers that a 50% reduction is due.

23. The tribunal agrees with Mr [NAME] that nothing should be paid in respect of the accounts. They are not service charge accounts and seem if anything to be prepared for the [NAME], stating the income and expenditure for the property, with a balance sheet. If the accounts were used to calculate service charge liability it has been overstated due to the inclusion of the ground rent as “expenditure”.

24. The challenge in respect of repairs is purely on the basis that no invoices have been produced to support the cost. £1,920 for a substantial period property is a modest amount which is supported by the accounts. In circumstances where the applicants accept work was carried out, the tribunal considers this to be a reasonable amount as an interim payment.

25. Finally, gardening costs of £780 were charged in 2014/15. This amounts to just £65 per month. Mr [NAME] states that the gardens have deteriorated and a 50% deduction is merited. Given the minimal cost for 2014/15 and that the photographic evidence is current rather than historic, the tribunal also considers £780 to be a reasonable amount on account of costs. Service charge year 2015/16 26. Mr [NAME] raised the same arguments in respect of the year ending 30 September 2016: challenging all service charges until a valid s47 notice was served; the management fees of £3,445, accountancy fees of £720, repairs of £1,934, gardening of £1,920 and [NAME] the same point about the apparent inclusion of the ground rent as an item of “expenditure”. The tribunal’s decision 27. For the same reasons as indicated above, the tribunal considers that the management fees should be reduced by 50%, the accountancy fees disallowed in their entirety and the repairs item upheld as reasonable. In the absence of any explanation for the increase in gardening costs, this figure is reduced to £780. Ground rent is not an item of expenditure for calculation of the service charge. Service charge year 2016/17

7 28. Again, Mr [NAME] repeated his challenge in respect of section 47 of the 1987 Act, the management fee of £3,603, accountancy fees of £732, repairs of £829, gardening costs of £1,440 and the apparent use of ground rent to inflate the service charges. The tribunal’s decision 29. For the same reasons as indicated above, the tribunal determines that the management fee should be reduced to £1,722.50, the same amount as upheld for the previous year given that there was no improvement in the service offered; the accountancy fees disallowed in their entirety; repairs upheld in the amount claimed and gardening costs reduced to £780. Again, ground rent should not be used as an item of service charge expenditure. Service charge year 2017/18 30. The challenges were as before: section 47, management fees of £3,879, accountancy fees of £756, repairs of £3,820, garden repairs of £1,920 and the apparent use of ground rent as an item of expenditure. The tribunal’s decision 31. For the same reasons as before the section 47 challenge is upheld, management fees capped at £1,722.50, accountancy fees disallowed altogether and the gardening costs reduced to £780. Although the repairs item has increased for this year, it was unusually low in both the preceding and following year. As the three years average out to the amount previously allowed, this is upheld as a reasonable interim payment. As before, the applicants are correct about ground rent, if it has been used to inflate the service charges sought. Service charge year 2018/19 32. The challenges were as before: section 47, management fees of £4,238, accountancy fees of 780, repairs of £876, gardening of £1,200 and the apparent use of ground rent to inflate expenditure. The tribunal’s decision 33. For the same reasons as before, the section 47 challenge is upheld. In the absence of any justification for the increased cost, the management fee is capped at £1,722.50 and the accountancy fee disallowed. Both the repairs and gardening costs are upheld as a reasonable amount to pay on account, even though the latter have increased. As before, the ground rent should not be used to inflate expenditure for the purposes of calculating the service charge.

8 Service charge year 2019/20 34. Again, the applicants maintained their challenge to the whole service charge due to the failure to include the landlord’s name and address in the demands. Management fees of £3,916, accountancy fees of £810, repairs of £1,541 and gardening costs of £1,427 were also challenged as before.

35. In addition, the applicants raised an unexplained change in the reserve funds, with £2,177 effectively disappearing from the amount held in reserves. The tribunal’s decision 36. As before, the section 47 challenge is upheld. Management fees capped at £1,722.50 and the accountancy fees disallowed altogether. Repairs and gardening costs are upheld as reasonable amounts on account. The tribunal is unable to make a determination about the unexplained change in the reserve funds: this is not a service charge per se and there is no evidence to explain how, if at all, the service charges payable by the leaseholders have been affected. However, [NAME] should certainly provide an explanation to both the applicants and respondent. Service charge years 2020/21 and 2021/22 37. No accounts were produced for these years and no estimate was provided to the applicants, although Mr [RESPONDENT] produced an estimate from [NAME] for the current service charge year and it would be helpful if other estimates could be provided to support the accounts. The tribunal considers that the management fee should remain capped at £1,722.50 until the end of [NAME]’s contract due to their minimal and poor service. Likewise, no accountancy fees are payable in the absence of proper service charge accounts, used to provide a reconciliation as required by the lease held by [NAME] [NAME]. Given that nothing is payable pending a valid section 47 notice the tribunal makes no other determination in respect of these last periods. It is hoped that the parties can reach an agreement in respect of past service charges pending the handover to the new manager.

38. For ease of reference, the tribunal’s determinations in respect of the service charge years in dispute are set out in a table annexed to this decision. [NAME] under s.20C and paragraph 5A 39. In the [NAME] form, the applicants applied for an order under section 20C of the 1985 Act, limiting any costs of the proceedings.

9 40. Having heard the submissions from the parties and taking into account the determinations above, the tribunal determines that it is just and equitable for an order to be made under section 20C of the 1985 Act so that none of the costs incurred by the respondent in connection with the proceedings can be passed through the service charge. This [NAME] has been caused by the respondent’s failure to ensure that the property was properly managed throughout the period in dispute and by taking no active part in the proceedings, both the respondent and [NAME] have added to the costs incurred by the applicants in proving their case. Name: Judge Wayte

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 [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

10 Annex: Summary of determinations in respect of service charges 2014-2021 Year Item Determination All No landlord’s address or address for service Nothing is payable until a compliant s47 notice is served 2014/15 Management - £3,445 Accountancy - £690 Repairs - £1,920 Gardening - £780 Reduced to £1,722.50 Nothing payable Reasonable as interim Reasonable as interim 2015/16 Management - £3,445 Accountancy - £720 Repairs - £1,934 Gardening - £1,920 Reduced to £1,722.50 Nothing payable Reasonable as interim Reduced to £780 2016/17 Management - £3,603 Accountancy - £732 Repairs - £829 Gardening - £1,440 Reduced to £1,722.50 Nothing payable Reasonable as interim Reduced to £780 2017/18 Management - £3,879 Accountancy - £756 Repairs - £3,820 Gardening - £1,920 Reduced to £1,722.50 Nothing payable Reasonable as interim Reduced to £780 2018/19 Management - £4,238 Accountancy - £780 Repairs - £876 Gardening - £1,200 Reduced to £1,722.50 Nothing payable Reasonable as interim Reasonable as interim 2019/20 Management - £3,916 Accountancy - £810 Repairs - £1,541 Reduced to £1,722.50 Nothing payable Reasonable as interim

11 Year Item Determination

Gardening - £1,457 Reasonable as interim 2020/21 No breakdown available Cap management to £1,722.50, nothing for accountancy in the absence of proper service charge accounts, insufficient information to make further determinations 2021/22 As above As above

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case references

HMCTS Code : CAM/38UF/LAM/2021/0002 CAM/38UF/LIS/2021/0034 P: PAPER REMOTE

Property : [NAME], 51 Woodgreen, Witney, Oxon [POSTCODE]

Applicants : [redacted] 2. [NAME] [RESPONDENT] – flat 12 3.Mr [RESPONDENT] – flat 2 Respondent: [redacted] [NAME] [RESPONDENT]) Type of [NAME] : Rule 13 costs Tribunal member(s) : Judge Wayte

Date of decision : 20 June 2022

DECISION

Covid-19 pandemic: description of hearing This has been a remote paper hearing which has not been objected to by the parties. The form of remote hearing was P: PAPER REMOTE. A face-to-face hearing was not held as the directions proposed that the [NAME] be determined on the papers in accordance with usual practice for costs claims. I have had regard to the decisions in both substantive applications, Mr [RESPONDENT] [NAME] dated 11 May 2022 and Mr [RESPONDENT]’s response dated 31 May 2022. The tribunal has decided that:

(1) The respondent must reimburse Mr [RESPONDENT] the tribunal fees of £400 within 28 days of the date of this decision. (2)The respondent must also pay Mr [RESPONDENT] an additional sum of £1,020 within 28 days of the date of this decision, being half of the costs claimed in respect of both applications.

2 Background 1. Mr [NAME] had applied on behalf of three leaseholders, including himself, for an order appointing a manager of the property under section 24 of the Landlord and Tenant Act 1987 and for a determination in respect of service charges payable under section 27A of the Landlord and Tenant Act 1985. Both applications were heard together on 22 March 2022 and the decisions were sent to the parties on 14 April 2022. [NAME] was appointed the manager from 22 April 2022 and various decisions were made in respect of the service charges, including that none were payable pending service of a valid section 47 notice.

2. On 11 May 2022 Mr [NAME] applied for an award of costs in his favour, having acted as the applicants’ representative throughout. He claimed the court fees of £400, being two [NAME] fees and one hearing fee and costs and disbursements of £2,040.66.

3. On 17 May 2022 I issued directions in respect of that [NAME], the [NAME] to stand as the applicant’s case and any representations made by the respondent to be received by 31 May 2022.

4. The respondent made his representations by email on 31 May 2022, albeit after hours. I have taken those representations into account despite the fact that they were late. The Law 5. Under Rule 13(1) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal may make an order for costs only under section 29(4) of the Tribunal Courts and Enforcement Act 2007 (wasted costs) or if a person has acted unreasonably in bringing, defending or conducting proceedings (unreasonable costs).

6. The leading decision on Rule 13(1) unreasonable costs is [ADDRESS] Company 1985 [COMPANY] v Alexander [2016] UKUT 0290. In paragraph 43 the Upper Tribunal made it clear that such applications should be determined summarily and the decision need not be lengthy, with the underlying dispute taken as read. There are three steps: I must first decide if the respondent acted unreasonably. If so, whether an award of costs should be made and, finally, what amount.

7. In deciding whether a party’s behaviour is unreasonable the Upper Tribunal in [ADDRESS] cites with approval the judgment of Sir [NAME] MR in Ridehalgh v Horsefield [1994] Ch 2005. It does so at paragraph 24 of its decision in these terms: ““Unreasonable” conduct includes conduct which is vexatious, and designed to harass the other side rather than advance the resolution of the case. It is not enough that the conduct leads in the event to an

3 unsuccessful outcome. The test may be expressed in different ways. Would a reasonable person in the position of the party have conducted themselves in the manner complained of? Or Sir [NAME] “acid test”: is there a reasonable explanation for the conduct complained of?”.

8. Under Rule 13(2) the tribunal may also make an order requiring a party to reimburse any other party the whole or part of the tribunal fees. Unlike an order under rule 13(1), the tribunal has a discretion to make the order in all the circumstances of the case. It is not necessary to make any finding as to unreasonable behaviour.

9. An [NAME] for costs must be made within 28 days after the date the tribunal sends out the decision. The applicant’s case 10. In his [NAME] Mr [APPELLANT] relies on the unreasonable behaviour of the respondent throughout the disputes, which he submitted had led to the matters being protracted and therefore significantly more costs being incurred than was necessary. He referred in particular to the respondent ignoring the section 22 notice in respect of the appointment of manager, failing to comply with any of the directions, including service of the [NAME] for appointment of manager on the other leaseholders or provision of their contact details and failing to agree the appointment of manager prior to the hearing where he raised no objections.

11. Mr [NAME] said that as a result he had incurred additional costs trying to contact the other leaseholders and preparing for the hearing in relation to both applications.

12. In addition to the claim for reimbursement of the court fees, he claimed disbursements of £838.91 in respect of the hearing bundles and 63.25 hours preparation at the rate for litigants in person of £19 per hour, amounting to £1,201.75. He provided evidence of his disbursements and a breakdown of the time spent with his [NAME]. The respondent’s case 13. The respondent submitted that Mr [RESPONDENT] case was “overblown” and neither he nor his mother were equipped to deal with the matter. He said his own time and costs were about £6,500 plus VAT and asked that the tribunal dismiss the [NAME]. He stated that he never opposed the change of regime but was concerned about the service charge shortfall. He did not address the [NAME] as such in terms of Mr [NAME] arguments as to the unreasonable conduct or the amount of costs claimed.

4

The tribunal’s decision

14. The [NAME] was clearly made in time.

15. Dealing firstly with the [NAME] in respect of the tribunal fees, I consider that this is an appropriate case to exercise the tribunal’s discretion in favour of the applicant. Both applications were wholly or substantially successful and the respondent made no attempt to defend them, having taken no active part in the proceedings until he appeared at the hearing. There was also a history of neglect of the property, ignoring the responsibilities of the freeholder under the leases. I therefore order the respondent to reimburse Mr [RESPONDENT] £400 in respect of the fees within 28 days.

16. Turning to the [NAME] for costs, I first need to establish whether the respondent behaved unreasonably. Importantly, it is only behaviour defending the proceedings that counts. This means that conduct in respect of the section 22 notice is irrelevant. That said, the respondent ignored the directions ordered in respect of both applications and failed to provide the evidence required in respect of the service charge case. Her son is a professional man with knowledge of property and has represented his mother for some time. I do consider his behaviour unreasonable in the circumstances. A reasonable person would have complied with the directions and, in particular, made a greater effort to try and agree matters or at least narrow the issues. His silence meant that Mr [NAME] had to try and cover all bases and undoubtedly increased the costs and time spent by him. His lack of respect for the tribunal and the applicants fell within the Ridehalgh test for unreasonable conduct.

17. In those circumstances I agree that an order for costs should be made but I have some sympathy with the argument that the case could have been presented more economically with less paper and a more focussed approach, particularly in relation to the service charge [NAME]. I acknowledge that Mr [NAME] is an accountant rather than a property professional and that the costs sought are modest but in the circumstances, I consider that the respondent should pay half of the costs and disbursements sought or £1,020, again within 28 days.

Name: Judge Wayte

Date: 20 June 2022

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.

5 If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).