Tribunal Rules Service Charges Unreasonable Post 1 Jan 2023

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/00MF/LSC/2023/0068 CAM/00MF/LSC/2023/0079 Property : [NAME], [ADDRESS] [POSTCODE] Applicant: [redacted]

[NAME] [COUNSEL] : [COUNSEL] Respondents :

[redacted] :

[COMPANY] of application : Application for a determination of liability to pay and reasonableness of service charges Tribunal :

Judge A. [NAME] [NAME] of hearing : 29 April 2025 Date of decision : 9 October 2025

DECISION AND REASONS

2 Decisions of the Tribunal (1) The Tribunal determines that, for the purposes of section 27A of the Landlord and Tenant Act 1985, there are no service charges payable for [NAME] postdating 1 January 2023. (2) The Tribunal determines that, for the purposes of section 27A of the Landlord and Tenant Act 1985, the service charges payable for [NAME] and [NAME] of [NAME] in respect of the 2021 and 2022 service charge years are as set out in this decision. (3) The application for an order under section 20C of the Landlord and Tenant Act 1985 is granted. (4) The application for an order under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 is granted. (5) The Tribunal makes an order requiring the Respondent to reimburse the Applicants in respect of the Tribunal fees paid by them which are £320 for [NAME] (application fee plus hearing fee) and £100 for [NAME] (application fee only).

REASONS The Applications 1. By applications dated 29 October 2023 (for [NAME]) and 1 December 2023 (for [NAME]), the Applicants seek a determination under section 27A of the Landlord and Tenant Act 1985 (“the Act”) as to the liability to pay and reasonableness of service charges for [NAME] [NAME], [ADDRESS] [POSTCODE] (“[NAME]”). The relevant part of the application before the Tribunal at the hearing related to the service charge years 2021, 2022 and 2023. There is also an application for an order under section 20C of the Act/paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) preventing or limiting the Respondent’s ability to seek the costs of these proceedings via a service charge.

2. On 18 February 2025, the Tribunal gave Directions in this matter. The issues before the Tribunal at that time included a challenge to service charge year 2021 and 2022 (but which transpired to involve charges for services estimated for 2023) and involved several flats within [NAME].

3. The Directions contained the usual warnings in the following form:

3 If the applicant fails to comply with these directions the tribunal may strike out all or part of its case pursuant to rule 9(3)(a) of the 2013 Rules. If the respondent fails to comply with these directions the tribunal may bar it from taking any further part in all or part of these proceedings and may determine all issues against it pursuant to rules 9(7) and (8) of the 2013 Rules. Non-compliance could also result in the tribunal making a determination on costs pursuant to rule 13 of the 2013 Rules.

4. The critical dates in the Directions were for the Applicants to send to the Respondent service charge information, any alternative quotes, a summary of grounds of dispute and any witness statements by 11 March 2025 and for the Respondent to send to the Applicants a counter schedule, summary of its responses, copy invoices and any witness statements by 1 April 2025. The Applicants could then, if they wished, send a brief supplemental reply by 15 April 2025. The Applicants were to prepare a bundle for use at the hearing by 15 April 2025.

5. It is of note that there was some procedural history prior to the Directions and the listing of the present hearing. It is not necessary to rehearse this history at length, however it can be summarised as follows: (i) There were originally five applications, being from Flats 4, 6, 8, 9 and 12. They were all similar insofar as they were challenges to service charges for 2020, 2021, 2022 and/or 2023. (ii) There were directions given by a Procedural Judge on 27 August 2024 in respect of some of the applications. (iii) The applications for all flats were deemed to be withdrawn on 3 December 2024 under rule 11(3) of the Tribunal’s Procedural Rules following a failure by the respective applicants to pay the relevant fees. (iv) The applications were reinstated following directions given by a Procedural Judge on 18 December 2024 and subsequent payment of the relevant fees (nonpayment having arisen due to misunderstanding or genuine oversight). The Respondent had objected to reinstatement however it was considered more equitable and convenient to re-start the applications rather than insist on new application fees. (v) The applications for Flats 9 and 12 were listed for hearing on 15 and 16 January 2025 alongside applications made by Flats 4, 6 and 8. (vi) The hearing listed for 15 and 16 January 2025 was vacated and the matter was instead listed for hearing on 25 and 26 March 2025.

4 (vii) There was a case management hearing on 18 February 2025 following various communications with the Tribunal office indicating that some applications were not, or might not, be proceeding. It was noted that the Respondent had not complied with earlier directions. Mr [RESPONDENT] and Ms [NAME] attended that hearing, but no one attended for the Respondent. (viii) The hearing listed for 25 and 26 March 2025 was vacated and relisted for 29 April 2025. It was to proceed only in respect of [NAME] and [NAME] (as to the withdrawal of the others, see below). The Hearing 6. The hearing took place remotely using the CVP platform. 7. [NAME] attended on behalf of his mother, [NAME], who is the leaseholder of [NAME]. Mr [NAME] had been communicating with the Tribunal throughout these proceedings. His wife, [NAME], attended part of the hearing to assist her husband with some of the financial calculations and paperwork supporting them. 8. [NAME] (also and/or now known as [NAME]) attended on behalf of her father, [NAME], who is the leaseholder of [NAME]. Ms [NAME] had been communicating with the Tribunal throughout these proceedings. Mr [NAME] was present at the hearing but did not switch his camera on (which the Tribunal had no objection to).

9. There was no appearance by the Respondent or its former managing agents, [RESPONDENT]. There had been no prior indication that they would not attend, nor any application for an adjournment. The Tribunal noted that, aside from some very early email communication objecting to the above mentioned reinstatement of the applications, there had been no contract from, or on behalf of, the Respondents throughout these proceedings.

10. The Tribunal summarised the position regarding other leaseholders who had from time to time been involved in these proceedings as follows: (i) Flat 4 – an application by [NAME] under case reference CAM/00MF/LSC/2023/0072. This case was no longer proceeding due to proceedings before Slough County Court having concluded matters in issue between Ms [RESPONDENT] and the Respondent. Ms [RESPONDENT] had confirmed withdrawal to the Tribunal. She had indicated in correspondence with the Tribunal office a desire to still attend (presumably as a witness or observer only) but Ms [NAME] confirmed to us that Ms [NAME] was not present at the hearing and was at work. (ii) Flat 6 – an application by [NAME] under case reference CAM/00MF/LSC/2023/0051. This case was no longer proceeding because Mr [NAME] had sold his flat in the period since filing his

5 application and his request to withdraw was accepted by a Procedural Judge. (iii) Flat 8 – an application by [NAME] and [NAME] under case reference CAM/00MF/LSC/2023/0067. This case was no longer proceeding as it had apparently been withdrawn. We did not have sight of a formal withdrawal but has seen correspondence with the Tribunal office and, in any event, they were not in attendance or represented at the hearing.

11. Mr [NAME] and Ms [NAME] confirmed the above summary, the consequence of which was that the hearing was to proceed only in respect of [NAME] and [NAME].

12. The documents before the Tribunal comprised both applications, a copy of both leases, an overview document (for Flats 9, [NAME], and Flat 4) and additional documents numbered 1 to 12. The overview documents included the Scott Schedule that the parties were directed to complete, although with just the Aplicant’s column completed. It covered service charge items for the period 1 January 2023 to 31 December 2023. It became clear that a number of other documents had been submitted in advance of the previously listed hearing (which had later been converted to a case management hearing). Those documents had not found their way to the Tribunal panel and there was therefore a short adjournment to facilitate this and provide additional time for us to read them. These additional documents comprised, from Mr [NAME], a bundle divided into 9 sections together with summary submissions and, from Ms [NAME], a bundle divided into 6 sections together with summary submissions. We were told that both sets of documents had been filed and served some time ago.

13. In the course of the hearing it became apparent to the Tribunal that there was very limited information by which we could understand what service charges had been demanded and what had been paid. In the absence of information from the Respondent, contrary to the Directions, or its attendance to clarify matters, we requested that Mr [NAME] and Ms [NAME] email into the Tribunal office any service charge demands received for the two years in question and/or evidence of payment. Ms [NAME] emailed some bank transaction summaries for 2020 to 2023. Mr [NAME] emailed a set of bank statements for 2022, an email exchange confirming an instalment arrangement and what appeared to be part of a service charge summary for 2022. We deal with the content of these documents below.

14. No inspection of [NAME] was requested, and the Tribunal did not consider that one was necessary to determine the issues. The Issues 15. The primary issues to be determined in this case were:

6 (i) A determination under section 27A of the Act in respect of the service charges payable for the years 2021 and 2022 (and 2023 insofar as demanded), in particular whether the relevant charges are payable under the lease(s) and are reasonable; and (ii) Whether an order under section 20C of the Act and/or paragraph 5A of Schedule 11 to the 2002 Act should be made i.e., an order to reduce or extinguish the tenant’s liability to pay an administration charge in respect of litigation costs. (iii) Whether the fees paid by the Applicants should be reimbursed by the Respondent. [NAME]

16. The Respondent is the registered freehold proprietor of [NAME] and [COMPANY] were managing agents for the relevant service charge periods 2021 and 2022. 17. [NAME] comprises a block of 12 residential flats. 18. [COMPANY] (company number 13849570) was incorporated on 14 January 2022. By a decision dated 17 August 2022 under case reference CAM/00MF/LRM/2022/0004 the Tribunal granted the leaseholders a right to manage [NAME]. Notice was given on 15 November 2025 for this to take effect from 1 January 2023.

19. We were provided with a copy of the lease for [NAME] which was unsigned but dated 2014. This lease is between [COMPANY] and [NAME] and provides for a term of 125 years from 29 September 2014.

20. We were provided with a copy of the lease for [NAME] which was signed and dated 15 November 2014. This lease is between [COMPANY] and [NAME] and provides for a term of 125 years from 29 September 2014.

21. It was common ground that these leases contained similar provisions to each other and to the other flats but with differing service charge percentages payable.

22. The key provisions of the leases were as follows:

23. In the Particulars section: (i) Paragraph 3 defines each Demised Premises; (ii) Paragraph 4 defines the Building as being the ground floor, first floor and second floor of [NAME] edged blue on Plan No 1 and excluding the Demised Premises itself;

7 (iii) Paragraph 4 defines the Estate as being the area edged blue on Plan No 2 except the Building; (iv) Paragraph 7 defines the Rent as £250 per annum for increasing to £500 after 25 years, to £750 after 50 years, to £1000 after 75 years and £1,250 for the final period; (v) We did not have colour plans but that was not material for present purposes.

24. Clause 8.2 of the leases define the relevant service charge percentages as follows: (i) [NAME] - 10.10% service charge and 14.99% lift service charge; (ii) [NAME] - 10.78% service charge and 16.00% lift service charge.

25. Clause 3 provides the covenant by [NAME] to observe and perform the obligations in the Fifth Schedule.

26. Clause 4 provides the covenant by the [NAME] to observe and perform the obligations in the Sixth Schedule.

27. The First Schedule contains definitions. (i) “Maintenance Year’ means “1st day of January in each year and ending on 31st December in that year” (ii) “the Service Charge” and “the Lift Service Charge” means the “amount or amounts from time to time payable under Clause (2) of Part I of the Fifth Schedule and shall include any Added Tax payable thereon but the “Lift Service Charge” shall relate solely to the expense of maintaining and keeping in repair the Lift.” 28. The Fifth Schedule, at Paragraph 2 of part I contains [NAME]’s obligations to pay the Service Charge and the Lift Service Charge and the reconciliation of payments on account as follows: “To pay to the [NAME] a Service Charge and if applicable a Lift Service Charge being that share specified in Paragraph 8.2 of the Particulars of the expenses which the [NAME] shall in relation to the Estate and Building (including the Lift) and insurance reasonably and properly incur in each Maintenance Year and which are authorised by the Eighth Schedule hereto (including the provision for future expenditure therein mentioned) the amount of such Service Charge and Lift Service Charge to be determined by the [NAME] or its Managing Agent and audited by its Accountant acting as an expert and not as an arbitrator and a copy sent to [NAME] as soon as conveniently possible after the expiry of each Maintenance Year and FURTHER on the 1st day of January in each Maintenance Year (“the payment date”) to pay in advance on account of [NAME]’s liability under this Clause the Interim

8 Service Charge PROVIDED THAT upon the Service Charge and the Lift Service Charge being determined as aforesaid there shall be paid by [NAME] to the [NAME] any shortfall between the Interim Service Charge and the Service Charge and the Lift Service Charge so determined and in the event that the Interim Service Charge paid by [NAME] exceeds the Service Charge and the Lift Service Charge so determined the [NAME] shall have the discretion either to refund all or any part of the excess to [NAME] or to give credit to [NAME] for the excess (or any part not returned to [NAME]) in respect of [NAME]’s liability for Interim Service Charge in the next Maintenance Year the Interim Service Charge and the Service Charge and the Lift Service Charge to be recoverable as rent in arrear …” 29. The Sixth Schedule contains the [NAME]’s obligations to: “… keep in good repair and condition and to maintain renew and improve as and when the [NAME] may from time to time in its absolute discretion (acting reasonably) consider necessary …’ the structure of the Building, the Common Parts and the Lift amongst others. There is also an obligation to maintain insurance for the Building.

30. The hearing was concerned with service charges said to be due from [NAME] and [NAME]. The Respondent sought respective service charge percentages of the total sum of £16,491.88 for 2022, said to be to in respect of ‘handover’. There was undated breakdown of this sum headed ‘December 2022 – handover’ and which formed the basis of the Scott Schedule which the Applicants had been completed. On the basis of the service charge percentages noted above, [NAME] was being asked to pay £1,777.82 and [NAME] was being asked to pay £1,665.68. It was said in the statements issued to each Applicant that [NAME] had paid £1,845.49 for that service charge year and [NAME] had paid £3,479.17 for that service charge year (2022). These sums had formed part of a balance being claimed via debt collectors, for example [NAME] had paid £6,507.03 which included debt collection costs.

31. It is appropriate to note that the service charge year is the Maintenance Year under the respective leases. This is a calendar year but there was some confusion in the way that the Respondent had approached this because most documents which it issued to leaseholders from time to time referred to a cross over of years, for example to ‘2021-2022’.

32. We were shown a service charge estimate at December 2021 for the year 2022. This was for £24,033.18 and £1,200 for the Lift.

33. We were shown a service charge estimate at December 2022 for the year 2023. This was for £27,941.87 and £1,962 including insurance for the Lift.

34. We were shown a document dated 5 December 2022 stating it was an ‘accurate service charge account January – December 2022’. The listed items totalled £42,970.14 plus £4,853.90 for Lift items.

9 35. These estimates and the ‘accurate account would apply at the respective percentages for each lease.

36. The above summarises the central features of the leases and sums in issue which had given rise to these proceedings. A further analysis is set out below with our findings and reasons. The Law 37. The law applicable in the present case is as follows:

38. Section 19 of the Act states: 19.— Limitation of service charges: reasonableness.

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

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

39. The Tribunal’s jurisdiction to address the issues in section 19 is contained in section 27A of the Act, which states the following: 27A Liability to pay service charges: jurisdiction (1) An application may be made to [the appropriate tribunal] for a determination whether a service charge is payable and, if it is, as to— (a) the person by whom it is payable, (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable.

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

(3) An application may also be made to [the appropriate tribunal] for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to— (a) the person by whom it would be payable, (b) the person to whom it would be payable, (c) the amount which would be payable, (d) the date at or by which it would be payable, and (e) the manner in which it would be payable. (4) No application under subsection (1) or (3) may be made in respect of a matter which— (a) has been agreed or admitted by the tenant, (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party, (c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement. (5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.

40. In construing the meaning of words used in the leases, the Tribunal is concerned to identify: “What a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”. In making this determination the Tribunal must focus: “on the meaning of the relevant words…in their documentary, factual and commercial context.” (Lord [NAME] in the case of Arnold v Britton [2015] UKSC 36 at [15]). The Applicants’ case 41. The Applicants explained the position regarding the right to manage company. There had been dissatisfaction with the management of [NAME], a right to manage company was formed. Following permission from the Tribunal being granted on 17 August 2022, notice to terminate the management arrangement was given to the Respondent and its agents on 15 November 2022 expiring on 31 December 2022. We were

11 shown a copy of the email giving notice. The [COMPANY] then appointed [COMPANY] on 1 January 2023 for the ongoing management of [NAME].

42. The leaseholders paid the service charge by monthly instalments which was on account and at the end of each year then would be asked to make an adjusting paying.

43. The leaseholders paid the ground rent separately. Mrs [NAME] was paying £250 per annum. Mr [NAME] was paying £500 per annum. The Tribunal observed during the hearing that this appeared to be a different sum to the lease for [NAME].

44. The Applicants’ position was that any service charges should relate to the period to 31 December 2022. They confirmed there was no formal handover. The Scott Schedule challenged service charge items from 1 January 2023.

45. The Applicants clarified that, in relation to the claim for £16,491.88 for the service charge period ‘December 2022 – handover’, the breakdown sheet was received but no other documents. It was received as an invoice/bill. The demand dated 26 October 2023 for £6,507.03 sent to [NAME] had no cover letter or other documents either. Mr [NAME] provided historical service charge statements from 2021 which did seem to have generic notices attached and he confirmed these were sometimes stapled together. The Applicants understood that there were estimated service charges, then at the end of the year they would settle any difference between estimated and actual costs.

46. Ms [NAME] summarised the position for her father as follows: (i) 2020. We were shown a bank transaction extract which showed £2,155.98 paid on 12 December 2020. Ms [NAME] believed this cleared the service charge balance for 2020. (ii) 2021. The estimated service charge at the start of the year was £1,637.68. Her father paid toward this in 12 monthly instalments. The actual charges at the close of the year were £5,276.58. We were shown a bank transaction extract which showed £3,638.90 paid on 22 December 2021. Ms [NAME] believed this cleared the service charge balance for 2021. (iii) 2022. The estimated service charge at the start of the year was £2,427.35. Her father had paid 12 monthly instalments of £439.28 during 2022 (£5,271.36). In her application she had mentioned 10 instalments but at the hearing she stated 12. We were shown bank transaction extracts for about seven of these payments and Ms [NAME] confirmed that the others were paid but she was not able to locate the entries as her banking ‘app’ had changed. The actual charges at the close of the year were £5,777.98. Ms [NAME] believed that they did not owe anything for 2022. She suspected that she had paid toward charges for a period when [COMPANY] were no longer manager and she would have stopped payments had she known. (iv) 2023. We were shown a bank transaction extract for a payment of paid £6,507.03 which Ms [NAME] said her father paid on 31 October 2023 under pressure of debt collection. (v) Ms [NAME] confirmed that she was not challenging the previous charges, only the demand for £6,507.03. In other words, the suggestion that her father owes more money. (vi) Ms [NAME] said that they have not had a working lift since 2021. Her father is disabled and is struggling to walk up the stairs. The building has required a lot of expenditure since [COMPANY] left. There has never been a window cleaner. They are now having to fix the roof. She feels they have paid for things which have not been done correctly. They were never able to reach [COMPANY]. There is a lot of documentation missing which is hindering the new management agents.

47. Mr [NAME] summarised the position for his mother as follows: (i) In the past they had paid the service charge as a lump sum but last year they paid monthly. We were shown an email exchange dated 13 and 18 January 2022 in which an instalment arrangement of £624.27 for 21 January 2022 to 21 June 2022 was proposed with a £60 administration fee applying. Hence, Mr [NAME] said that he had paid on his mother’s behalf £634.27 for six months and we were shown bank statements which evidenced this. (ii) In relation to the £1,849.45 ‘debt’ recorded on documents received from [COMPANY], he had never been given a reconciliation for 2022. He had received one previously, for example for 2021. He had not been given a clear answer on whether this alleged balance was paid or rolled over. (iii) In relation to the administration charges, they had been threatened with debt collection but did not feel they owed any further money. They had not made any payments since the last instalment on 21 June 2022. The Respondent’s case 48. The Respondent had not filed or served a response, statement or any evidence. It had not populated the Scott Schedule.

49. We therefore had limited information by which to understand its position. The Tribunal’s determination

13 50. The Tribunal is required to determine the question of what a fair sum for service charges for each Flat should be for the 2021 and 2022 service charge year. In the course of the hearing, and from the Scott Schedule, what was clear was that the actual challenge was to service charges for the period from 1 January 2023 when [COMPANY] were no longer managing [NAME].

51. We find that there are no service charges payable for any period after 1 January 2023. We were satisfied that a right to manage company had been properly constituted and adequate notice had been given to terminate the involvement of [COMPANY] from 31 December 2022. If anything, we consider that, upon reconciliation of the 2022 accounts, an insurance credit may apply because this appears to have been effected from August to August and thus a prepayment would usually apply for the following service charge year.

52. We did not make findings in relation to specific items in the 2021 and 2022 service charge accounts. This is principally because the Scott Schedule only challenged service charge items from 2023 so earlier items were not placed in issue. In any event, the limited information given to the leaseholders by the Respondent or its managing agents was of poor quality, incomplete and not reconciled, as required of the Respondent under the leases. There was also confusion due to the demands and statements referring to two years when the Maintenance Year was the calendar year.

53. The statement headed ‘December 2022 – handover’ with a breakdown totalling £16,491.88 was undated and did not state the precise period covered. It was plainly not the entirety of 2022, but the Respondent/[RESPONDENT] had made no attempt to reconcile it with the estimated charges for 2022 i.e., the original budget. It was also not clear how, if at all, it correlated with the document entitled ‘accurate service charge at 5 December 2022’ which had a total of £42,970.14 for the service charge and £4,853.90 for the lift service charge.

54. Our findings relating to [NAME] are summarised as follows: (i) The 2021 budget was £1,637.68 and actuals were £5,276.58. The net difference was £3,638.90. We were satisfied that a one-off payment in this sum was made on 22 December 2021 leaving a zero balance at end 2021/start 2022. (ii) The 2022 budget was £2,427.35 and actuals were £5,067.58 (based on the ‘accurate service charge at 5 December 2022’ document with 10.10% of £42,970.14 for the service charge and 14.99% of £4,853.90 for the lift service charge). The net difference was £2,640.23. We were satisfied that 12 x £439.28 totalling £5,271.36 had been paid throughout 2022. This means a credit overpayment by Mr [NAME] of £203.78. (iii) We were satisfied that £6,507.03 had been demanded and paid on 31 October 2023. There was no basis for this demand. We also

14 observe that this figure included £5,190.03 plus debt collection costs. The statement headed ‘December 2022 – handover’ with a breakdown totalling £16,491.88 suggested £3,479.17 paid and £1,710.86 owed. The total numbers had been added together to arrive at £5,190.03. This was an obvious error, the two entries should have offset each other and then be reconciled with the remainder of the 2022 service charges. (iv) We were not satisfied that the sum of £6,507.03 had been properly demanded as there was no service charge narrative with it and there was an arithmetical error, as noted above. (v) We were not satisfied that the Respondent can claim debt collection costs as Mr [RESPONDENT] was in credit and, in any event, the lease does not provide for reclaiming of such fees. We find that such charges were not reasonably and properly incurred in any event. (vi) Until such time as a reconciliation is undertaken, we did not consider that any further sum was payable by Mr [NAME] in respect of service charge or lift service charge.

55. Our findings relating to [NAME] are summarised as follows: (i) The 2021 budget and actual figures applicable to [NAME] were not available to us although Mr [NAME] believed he had paid them in full leaving a zero balance at end 2021/start 2022. In 2022 there is a carried forward deficit of £962.89. We had insufficient information by which to determine the accuracy of this alleged deficit. Mr [NAME] told us that he believed he had paid in full prior to 2022. There was no evidence that this alleged deficit was payable or still owed. We were also mindful that there were errors in the statements for [NAME] and, in the instance identified at paragraph 54(iv) above, a basic arithmetical error. On this basis, as the Respondent was given every opportunity to respond but did not, we were persuaded by the Applicant that the service charge accounts for 2021 and prior were cleared with nil balances. (ii) The 2022 budget was £2,782.78 and actuals were £5,408.81 (based on the ‘accurate service charge at 5 December 2022’ document with 10.78% of £42,970.14 for the service charge and 16.00% of £4,853.90 for the lift service charge). The net difference was £2,626.03. We were satisfied that 6 x £634.27 totalling £3,805.62 had been paid throughout 2022. This means a potential underpayment for 2022 of £1,603.19; subject to other payments that might have been made on behalf of Mrs [NAME]. (iii) We were not satisfied that the sum of £5,175.50 had been properly demanded on 31 August 2023 as there was no service charge narrative with it. There was in any event no basis for the demand for 2023.

15 (iv) Mrs [NAME] may have underpaid overall by £1,603.19. We tried to reconcile this but cannot do so without further understanding how and why the ‘accurate service charge at 5 December 2022’ document suggests a deficit of £1,849.45 which we also could not reconcile. We certainly had no evidence to support a deficit of £4,295.51 as the Respondent appears to be demanding from Mrs [RESPONDENT].

56. As to the applications under section 20C of the Act and paragraph 5A of Schedule 11 to the 2002 Act, there were limited submissions on the point, and we do not have evidence of actual costs incurred or an indication of whether the Respondent in fact seeks to recover any such costs via the service charge. The Respondent has not participated in the proceedings so there may be no such costs. In any event, it has not complied with orders which, together with its non-participation, has made the work of the Applicants and the Tribunal more difficult. We cannot see that such costs would in any event be payable under the leases but, even if they were, legal costs relating to recovering 2023 service charges postdate [COMPANY] involvement. However, for the avoidance of any doubt, we find that it is just and equitable to make an order under section 20C in respect of any costs incurred in these proceedings preventing the Respondent reclaiming these via a service charge.

57. The Applicants sought reimbursement of the Tribunal fees paid. Mr [NAME] had incurred a £100 application fee and £220 hearing fee and wished to be reimbursed. Ms [NAME] had incurred a £100 application fee. She saw this as ‘water under the bridge’. Whether she chooses to enforce and decision in her favour is a matter for her. In principle, the Applicants have succeeded in their applications. As noted above, the Respondent has not participated and, had it done so, hearing time would have been saved as their paperwork was not clear. We direct that the fees should be reimbursed in full. £320 to [NAME] and £100 to [NAME], via their respective children representing them today. Name: Judge A. [NAME]: 9 October 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 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.

16 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, [NAME] and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).