Residential
Property Tribunal Service
Leasehold
Valuation Service
Landlord and Tenant Act 1985 – section 27A,
20C & 20ZA
LON/OOAC/LSC/2009/0361
______________________________________________________________
Premises: Crest Court, The Crest, London NW4 2HL
Applicant: Crest Court (Hendon) Ltd.
Represented by: Mr. Fain, Counsel, instructed by Pritchard Englefield
Respondents: The Lessees of Crest Court
Represented by: Mr. Fattal for Norstown Properties (sub-lease of Flats 10 & Flat 14)
Ms. Irving (Flat 1)
Mr. Marks for Pine Investments Ltd (Flats 2, 10 & 16),
Mr. Pittalis, Solicitor for Ms. Belman (sub lease of Flat 16) & Ms. Ebbles (Flat 18)
Mr. Steinhaus (Flat 4 & Flat 12A) & for Mr. Zucker (Flat 7)
Tribunal: Ms. LM Tagliavini, LLM, DipLaw, BA Hons
Mr. P Casey, MRICS
Mr. L Packer
Hearing Dates: 9th, 10th, 11th November & 14th January
CORRECTION NOTICE ISSUED PURSUANT TO REGULATION 18 OF THE LEASEHOLD
VALUATION TRIBUNAL (PROCEDURE) (ENGLAND) REGS 2003
1. HEADING: “Mr Marks for Pine Investments Ltd (Flats 2, 10 & 16)” is replaced with “Mr. Marks (Flat 12)”.
2. Para 16 Line 5 is corrected to read: “He asserted that the managing agents had not done a good job.”
3. Para 36(ii) Lines 4 & 5 are corrected to read ”Therefore the Tribunal allows that sum of £4,191.44.”
Chairman: LM
Tagliavini
Dated: 13/5/10
Residential
Property Tribunal Service
Leasehold
Valuation Service
Landlord and Tenant Act 1985 – section 27A,
20C & 20ZA
LON/OOAC/LSC/2009/0361
______________________________________________________________
Premises: Crest Court, The Crest, London NW4 2HL
Applicant: Crest Court (Hendon) Ltd.
Represented by: Mr. Fain, Counsel instructed by Pritchard Englefield
Respondents: The Lessees of Crest Court
Represented by: Mr. Fattal for Norstown Properties (sub-lease of Flats 10 & Flat 14)
Ms. Irving (Flat 1)
Mr. Marks for Pine Investments Ltd (Flats 2, 10 & 16),
Mr. Pittalis, Solicitor for Ms. Belman (sub lease of Flat 16) & Ms. Ebbles (Flat 18)
Mr. Steinhaus (Flat 4 & Flat 12A) & for Mr. Zucker (Flat 7)
Tribunal: Ms. LM Tagliavini, LLM, DipLaw, BA Hons
Mr. P Casey, MRICS
Mr. L Packer
Hearing Dates: 9th, 10th, 11th November & 14th January
1. The Tribunal has before it applications made by the landlord, Crest Court (Hendon) Ltd, pursuant to section 27A, 20ZA and 20C of the Landlord and Tenant Act 1985. The Applicant seeks the Tribunal’s determination of (i) the reasonableness of service charges incurred in the period 31/3/05 to 31/30/9 inclusive; (ii) the reasonableness of a proposed demand for an interim charge in respect of major works to be carried out to the exterior and common parts of the building, estimated to be in the region of £284,469.90 (iii) a dispensation from the section 20ZA in respect of those major works if the Tribunal decides the consultation procedures have not been complied with; and (iv) an application under section 20C in respect of costs.
2. The premises comprise a three storey 1930’s purpose built block of 18 flats, divided into two wings, each with its own main entrance, with front garden and a parking area yard at the rear. The freehold of this property was acquired by the Applicant, in 1997. This acquisition has of itself caused a great deal of friction between the Applicant ‘s directors and shareholders, Mr. and Mrs. Schupper and a number of lessees, although none took legal action in respect of the alleged wrongful acquisition of the freehold. The Tribunal has made it clear that the manner and method by which the freehold is alleged to have been acquired does not form any part of the applications currently before this Tribunal. Therefore, it will make no further comment on that point, except to state that this issue appears to have significantly coloured the attitude of some of the lessees to the Schuppers and the Applicant’s claims for service charges. An issue was also raised as to the Applicant’s sale by way of a new long lease of the airspace above the property with the potential for the new leaseholder to build additional flats (though to date planning permission has been refused). Again, this was not a matter before this Tribunal, but was a further issue that served to increase the degree of animosity between Mr. and Mrs. Schupper and a number of the leaseholders. Consequently, since 1997, significant arrears of service charge had built up, totaling in the region of £82,000, partly as an expression of the Respondents’ unwillingness to accept the new freeholder, and partly as an expression of their unwillingness to pay service charges considered to be excessive.
3. The 18 flats are currently held under two types of leases; (i) Type 1 lease are for a term of 99 years (Flats 4 6 11 12 12a 14 15 and 18). Type 2 lease are dated 20/11/97 and grant a term of 150 years (Flats 3 5 7 8 9 10 16 and 17). Flats 2, 10, 16 and 17 were granted the right of use of a parking space. Flats 8 and 9 each had two parking spaces allocated. Flats 3 and 5 each four parking spaces allotted. Both types of leases provided for the collection of service charges on an interim basis based on estimated expenditure. None of the lessees challenged the Applicant’s right to collect service charges or to make interim demands based on estimated costs. Similarly, no challenges were made to the percentage of service charge each lessee was liable to pay which ranged from 4.865% to 5.889%. The Individual lessees did however, seek to challenge the reasonableness of both the annual service charge costs and the interim charge for the proposed major works.
4. It was agreed by all parties, that it has been apparent for some time that major works to the exterior and common parts is required, and to this end various attempts have been made to bring those about. The latest section 20 consultation procedure was started in end 2007 and involved the drawing up of a specification of works and going through the tender process. However, since the specification was drawn up the London Borough of Barnet (LBB) in September 2007, served an improvement notice (the “Notice”) requiring the Applicant to carry out extensive work, including the replacement of the pitched and flat roofs, which had not been included on the applicant’s specification. No appeal was made against that Notice but a caution accepted by Mr. Schupper, as director of the Applicant company. As at the date of the hearing no works had been carried out to comply with that Notice.
The Applicant’s Case:
5. The Tribunal was presented with four lever arch files from the Applicant on which it relied, and dealt with the reasonableness of service charge years 2005-2009 inclusive. The Applicant conceded that certain reductions made by an LVT in an earlier decision (in 2006 on the application of a Mr Jayererajah in respect of Flat 6) should be applied to all the lessees of this block until the new management agent took over in early 2007. Consequently, it was accepted that for 2005/06 and 2006/07, there should be a 25% deduction for cleaning and gardening and a 25% deduction for the fees of the former managing agent, Mr. Stone of Grangeview Management. No concession was made in respect of the new managing agent who had taken over in March 2007.
6. The Applicant relied on its Statement of Case as well as the witness statement of Mrs. Leah Schupper dated 3/11/09; Mr. Nigel Cross, of TPS and current managing agent, dated 3/11/09 and the expert report of Mr. Harry True as well as their oral evidence to the Tribunal. It was not accepted that the services provided were either unreasonable in standard or unreasonable in cost. Copies of invoices for all the service charge years were provided to the Tribunal together with the certified service charge accounts.
The Respondents’ Case:
7. The Respondents were not unified in their opposition to the Applicant’s claims for service charges, and did not appoint a representative to speak on behalf of them all. The individual lessees raised the following issues, with some placing more importance on some areas than others.
(i) The property had been left to deteriorate and the works now planned were more extensive and costly than if regular works of maintenance had been carried out over the years.
(ii) Section 20 consultation procedures were not followed correctly.
(iii) Insurance premiums are too high.
(iv) Cost of cleaning, gardening and rubbish removal unreasonable.
(v) Cost to parking area and installation of bollards are unreasonable, and not payable in any event by lessees who have no interest granted to them in their lease to this area.
(vi) Managing agents fees are excessive.
(vii) Accountancy fees are excessive.
(viii) Financing costs are excessive and are not liable to be paid by the lessees.
(ix) Repairs to the portico entrance inadequate and unreasonable in cost.
(x) Cost of repairs and replacement of the communal water tanks unreasonable and a duplication of works carried out.
(xi) Failure to pass on insurance monies after a successful claim.
(xii) The major works proposed were not acceptable; too extensive or not extensive enough; the estimates and notice procedures are flawed. The freeholder and managing agent have been incompetent in the past, and that more lessee involvement is required. The works as specified should not go ahead as they do not incorporate the works included in the Notice served by the London Borough of Barnet. The major works should go ahead as specified but in stages.
The Applicant’s Evidence:
8. Mrs. Leah Schupper, the secretary of the Applicant company, and herself a lessee of four flats in the building (with another acquired since the application was made), gave evidence on behalf of the Applicant. It was said that throughout, the Applicant had employed professional managing agents to manage this property but had been let down by them in the past. This resulted in the replacement of Mr. Stone and Graingeview Management with the current managing agents, TPS. Since then, matters had improved. Mrs. Schupper stated that she had for a period been unable to continue her close involvement with this property and the planned major works due to family matters and bereavement.
9. Mr. Schupper also gave oral evidence to the Tribunal. He stated that as a director of the Applicant company, he was involved with the financial side. He told the Tribunal that he had had to borrow sums in order to finance the insurance costs, which had rocketed due to a large number of claims having been made. He was unable to explain how the financing costs of £1,980.45 were made up in 2006,but stated it was possible they were connected to interest costs incurred in respect of the insurance premiums. There was an overdraft on the Barclays business account, which had been incurred because of the lack of service charges being paid and the need to keep the insurance premiums up to date. Mr. Schuper stated that he was not involved at all with the major works programme.
10. Mr. Cross, the current managing agent, told the Tribunal that there was missing documentation in respect of the service charge years ending 31/3/05 to 3/3/07 and the documentation provided by Grangeview was incomplete. Management fees for the year ended 31/3/07 included the amounts charges by Grangeview of £2,937,50 plus an apportionment of TPS management fee amounting to £566.35. International Maintenance were responsible for the clearing of rubbish although did not always bill consistently and the Tribunal noted the escalating costs of rubbish removal from what appeared to be a one man operation. He told the Tribunal that he did not deal with the insurance on a day to day basis and was not privy to details of the insurance claims made.
11. Mr. Cross had to rely on what he had been told by Mr. Stone in relation to the service of notices under the section 20 consultation procedures served in 2002 and 2003 as these had been sent before TPS’ involvement.
12. Since taking over the management of this property, on the recommendation by Mr. True, a Notice of Intention had been served on 1/5/07 and a tender report from Mr. True of True Associates dated 25/9/07 was provided in respect of the tenders received.. Mr. True had also been the surveyor responsible for the drawing up of the 2002 specification, which he used as the basis for the 2007 document. Mr. True subsequently recommended the acceptance of the lowest tender put forward by London Building and Decorating limited in the sum of £217,210. On 1/10/07 a Notice of works was served on the lessees and by a letter dated 30/11/07, the lessees were informed to the decision to use the suggested contractor at a total cost of £284.469.90. However, these works were not then implemented and remain in abeyance. Mr. Cross told the Tribunal that although a mail merge system was used to send out the relevant notices he was absolutely sure they had all been sent out appropriately to each lessee. Mr. Cross told the Tribunal that this property was not without its problems but as they arose they were addressed promptly and included rubbish removal, clearing of drains and restriction of car parking and dumping.
13. The Tribunal also heard from Mr. True, BSC, MRICS, FBEng of True Associates. The Tribunal were provided with a copy of the specification of works and the tender documents. He told the Tribunal that he had recommended both Parkgate Aspen Management Limited and True Associates to the Applicant. He stated he had first drawn up a specification of works in 2002 and had reviewed this in 2007 and brought it up to date. He had not incorporated the works required by LBB but had met with Mr. Gray, EHO from LBB on site. He did not accept that all the works in the LBB notice were necessary.
14. Mr. True stated he will try and persuade Mr. Gray that not all the works included in the Improvement Notice are necessary although aware that no appeal against it had been made. He stated that the tenders were now some 21/2 years out of date but hoped he could go back to the lowest tenderer. He was unaware if this contractor would be available and accepted that there could be extra costs on top. He stated that he did not think that going through the tendering process again would benefit the parties.
15. Mr. True accepted that there were problems with the timber ceiling joist in Flat 18 which had principally been caused by the water tank housing. Mr. True was unable to remember details as to what work was carried and when to the water tanks although was aware that some work had been carried out.
The Respondents’ Evidence:
Mr. Fattal:
2005
16. Mr. Fattal told the Tribunal that he agreed that the major works should Include the replacement of the roof as specified in the Notice served by LBB. He stated that he was not paying service charges because he did not like the way the Schuppers are dealing with this property. He asserted that the managing agents had noted one a good job and that the cleaning costs were excessive. Lots of rubbish was left lying around the building. He agreed that £1,000 was a reasonable charge for cleaning.
17. Mr. Fattal asserted that insurance in the region of £3,000 - £4,000 was reasonable, but did not provide any alternative quotes on alike for like basis to support this assertion. He stated that bank charges should not be payable at all. If the building had been managed properly and lessees taken to court for arrears sooner, then bank charges would not have arisen.
2006-2009
18. Mr. Fattal stated he believed there had been a lot of claims on the insurance because of the poor property management. Again insurance should be in the region of £3-£4K per annum, and maintenance of the garden in the region of £1,200 per annum. Rubbish removal should be no more than £150 as he had cleared away a lot of the rubbish himself and £1,000 allowed for repairs and maintenance. He asserted that the cleaner has no access to water or electricity and therefore the cleaning that can be done is limited. He complained that bushes had been cut down to make space for the rubbish bins.
19. Repairs to the portico were badly done and left the structure in a dangerous state. Recurring leaks which affected his flats were not being properly dealt with and the water tanks had been changed twice in recent years. He had made various insurance claims which although successful, had not received the payout as the Schuppers had not released them to him.
20. Mr. Fattal and other lessees, sought to rely on an expert report prepared by Mr. Rudy Fattal, but who was not available to give oral evidence. He stated he agreed that major works should be carried out; that interim service charges could be demanded but works would have cost far less if carried out in 2000. He stated there should be a new specification drawn up in order to incorporate the works required by LBB. In cross-examination Mr. Fattal denied having received the section 20 consultation notices at the time they were sent and asserted he had received them only in 2008. He accepted he had not sent any response to the notices at any time.
21. Mr. Steinhaus asserted that repairs should have been carried out sooner. Although the Applicant had complained of having no money to do works, the Schuppers owned five flats and therefore there should have been some money available. He asserted that the Applicant should have served notice on the lessees about the sale of the air space but did not explain to the Tribunal on what legal basis he made that assertion.
22. Mr. Fattal complained that the management had been poor and the Applicant was unwilling to allow the lessees to have a say in the running of the building. Rubbish was left lying around and light bulbs not changed. The financing costs were excessive and he queried the necessity of doing more than one asbestos survey. He also queried the costs of the tarmac works, asserting they were works of improvement; the fencing around the sides, and the fencing in of the bins. He queried also the cost of the replacement of windows in the communal area and the convector heaters; the entry phone system, the erection of traffic bollards and steel railings. He stated that, as most lessees were not entitled to use the parking area they should not be required to pay towards the costs of maintaining it or the traffic bollards; the costs of strengthening the boundary walls were unreasonable, as the trees causing the difficulties had not been properly looked after.
23. Mr. Steinhaus disputed the major works specification as being reasonable as it does not contain the works specified by LBB. He also asserted that he had not received in a timely manner certain of the consultation notices. On cross-examination he accepted he was an experienced landlord himself and owned 40-50 properties, including some small blocks.
24. The other individual lessees did not give oral evidence but relied on written statements, which were accepted by the Tribunal. Ms. Irving complained about the rubbish dumped around the property; the infestation of ants which had not been properly dealt with; the cost of the major works and the inadequate consultation process.
25. Ms. Belman and Ms. Ebbles stated through their representative, that they accepted the proposed reductions to the service charges as indicated in the LVT decision and conceded by the Applicant. However, an increase in the management charges had been shown in the final accounts from the estimated £2,400 to £3701.25, £881.25 claiming to be for a balance of management fees for the year to 31 March 2006. It was said that this extra charge should be disallowed and the remaining sum be reduced by 25%. The charges for the repair to the portico were accepted and a reduction to the insurances from £913.40 to £8511.69 was requested, as that was what the evidence showed had been paid for 2006.
26. For the year ended 31 March 2007, it was said the estimated management fee was £2,500 to which was added VAT for 12/2/07 to 31/3/07. It was asserted that it was unreasonable to pay TPS for a whole year as Graingeview had already charged managing agents fees for that same year period. A reduction should be made to reflect the actual position and 25% reduction thereafter to reflect the reasonable costs incurred.
27. In respect of the major works, the lessees contended that there was currently no offer from any contractor to do the works, as the whole process was out of date and overtaken by events. It was said that there was no evidence that prices would be the same or similar to those obtained in 2007, or that even the nominated contractors are willing and able to do the works either for the quoted sum or at all. It was submitted that all works including those specified in the Notice served by LBB should be done at the same time.
28. Ms. Belman also queried the s.20 consultation process and did not accept that letters had been sent to her as alleged by the Applicant. Mr. Steinhaus asserted that the management provided for this building was non-existent and fell far below the standard of what was expected. He asserted that at the most only 50% of what was claimed should be allowed as reasonable and requested that the Tribunal consider whether a claim for damages for negligence against the freeholder should be reflected in the service charge accounts.
29. Mr. Steinhaus queried the legitimacy of the section 20 consultation procedure and dispute, he stated that the specification was out of date and omits items required by LBB and includes improvements to the property. Works associated to the rear car parking should be charged only to those who had use of it and the lessees of the air space above the block should be asked to contribute a fair proportion of the charges. He also asserted that as a large proportion of works required emanated for the Applicant’s historic neglect, the freeholder should now be required to bear a significant proportion of the costs.
The Tribunal’s Findings:
30. The relevant law which the Tribunal must apply is set out in section 27A (1)(2) and (3) and applies to both charges that have been incurred, and are to be incurred.
31. The Tribunal found that a noticeable feature of this case was the degree of animosity held by individual lessees towards the Schuppers. It was noticeable that many appeared to be unable to distinguish between the Schuppers as shareholders/directors of the Applicant company and Mrs. Schupper’s individual status as the lessee of four flats within this block. This, the Tribunal felt contributed to the evident breakdown in the relationship between the parties, which did little to facilitate the progress of the planned major work.
32. In light of the Applicant’s concessions, the Tribunal finds that the management service provided for the service charge years commencing 2005 to early 2007, was poor, and a 25% reduction in the cleaning, gardening and management fees is appropriate in respect of those years whilst Grangeview’s further invoice of 08/12/05 for £881.25 for which no explanation or justification was offered is disallowed in full as being an unreasonable cost. The Tribunal finds that works of repair and maintenance were reasonably required, and that the charges for these, including the work to the portico are reasonable. Similarly, the Tribunal is satisfied that the works of repair and later replacement to the water tanks was both necessary and reasonable.
33. In respect of the insurance, the Tribunal found the premiums in 2005/6 were extremely high, but accepted as did the previous Tribunal for 2004/5 the Schupper’s explanation that a high number of claims had raised the premium dramatically, with the result that insurance was made increasingly difficult to put on cover. However, the lessees have to some extent contributed to this situation by their refusal to pay any service charges or only those they considered reasonable. Had the lessees genuinely sought to challenge these service charges, the Tribunal might have expected to see applications to the LVT, made by at least some of the lessees who hold themselves out to be knowledgeable and experienced landlords, in the way the lessee of Flat 6 had done; an application for a right to manage or even an application for enfranchisement. None of these applications were made.
Air Space:
34. The Tribunal is not concerned with this matter and is not required to comment further.
Car Parking Area:
35. It is the Tribunal’s opinion that where the lease of any particular flat does not included a car parking space within its demise or a right of use of such granted to it in the lease, the lessee should not be required to contribute towards these costs.
Management Fees:
36. The Tribunal is of the opinion that management to this block was historically poor until the change of managing agents to TPS in early 2007. Since then, there has been some consensus that the general management of this building has improved. Consequently, for the periods that TPS have bend appointed the Tribunal regards their costs as reasonable and payable.
The Tribunal’s Determination:
2004/05:
(i) Insurance: £20,593.39. Although this sum is considerably more than previous premiums the Tribunal accepts the Applicant’s explanation that due to the non-payment of services charges by lessees the insurance lapsed. This, together with a significant claims history led to the increased costs of insuring this property. The Tribunal finds that although the sum is markedly on the high side, it is in the circumstances reasonable and payable by the lessees. The Tribunal found that the Respondents failed to put forward any persuasive argument as to why these insurance costs are unreasonable.
(ii) Repairs and maintenance: £4,191.44. The Tribunal finds that the costs of these works was properly incurred and that there was no persuasive evidence to the contrary present by the Respondents. Therefore the Tribunal allows that sum of £491.46.
(iii) Accountants Fees: £352.50 The Tribunal finds these have been properly incurred and are reasonable.
(iv) Bank charges: £809.25. These apparently related to charges incurred on the landlord’s bank account in relation to going overdrawn to pay insurance premiums. The premiums were not paid from the service charge account but did include additional costs for the facility to pay by instalments. On the evidence the amounts claimed as service chargeable could not be shown to arise as a consequence of any debit in the service charge account or be related to the premiums paid. The Tribunal is of the view that these sums are not provided for in the lease and in any event are not reasonable and therefore disallows the sum of £809.25.
2005/06:
(v) Conceded that 25% reduction on cleaning and gardening fees be given to all lessees.
(vi) Insurance of £8581.69 (agreed figure) is allowed as reasonable.
(vii) Bank charges of £1,980.45 disallowed for the reasons stated aboe.
(viii) Rubbish Removal: The sum of £587.25 is allowed.
(ix) Repairs and maintenance: The sum of £2,488.90 is allowed.
(x) Accountant’s fees: The sum of £370.12 is reasonable.
(xi) Management fees of £2,400 plus VAT less 25% are reasonable.
(xii) Bank charges: £1,980.45. It is accepted by the Tribunal that the non-payment of service charges, may result in the non-payment of insurance premiums, thereby entailing an element of borrowing on the part of the Applicant. However, the Tribunal finds the bank charges relating to the borrowing to pay insurance premiums to be excessive, and were not proved to relate to borrowing to pay premiums, and such payments were not provided for in the lease.
2006/07:
(xiii) Management Fees – TPS: £3,503.85. The Tribunal finds it is reasonable to allow the sum c of £2,500 less 25% to reflect the period 2006 to early 2007 when Grangeview were appointed.
(xiv) Insurance: £6,132.29: The Tribunal finds this sum is reasonable as it is significantly lower than that previously claimed and allowed as reasonable.
(xv) Cleaning & rubbish: £2,620.50. Sum allowed less 25% for the cleaning only,
(xvi) Repairs & Maintenance: £779.68. This sum is allowed as claimed.
(xvii) Accountancy: Allowed in the sum of £940.00.
(xviii) Sundry: £28.89. Sum allowed as reasonable.
(xix) Bank charges & financing costs: £1,146.47: These are said to relate to financing charges incurred for previous years insurance premium, but for the reasons already given by the Tribunal this sum is disallowed.
(xx) Asbestos costs: £273.13: This sum is not reasonably as an earlier asbestos survey had been carried out and was allowed for in 2005. The Tribunal found there was no justification for a second survey so recently after the previous one carried out at a time when little had changed in the building. Further, the failure to provide copies of these reports (3 in 5 years), raised questions as to whether or not they had all been carried out.
2007/08:
(xxi) Insurance: £3,307.50. The Tribunal allows this sum, as once again it is a significant improvement on the previous premiums.
(xxii) Financing costs: £1,146.47: These costs are disallowed as being unreasonable for the reasons given earlier.
(xxiii) Window replacement: £806.87. This sum is reasonable.
(xxiv) Drains works: £699.13: Allowed as reasonable.
(xxv) Parking Bollards costs: £443.85. These sums are not reasonable and are not payable by the lessees, as they do not form part of the demised premises and do not benefit the lessees except for those with parking spaces let to them.
(xxvi) Asbestos survey: £293.75: Unreasonable sum as no justification for a third survey.
(xxvii) Emergency stopcock repairs: £235.00 allowed as both necessary and a reasonable repair to undertake.
(xxviii) Management Fees: £4,230.00. This sum is allowed as it is the Tribunals’ view that the level of management has improved and the sums claimed are reasonable. It can be seen that once Mr. Cross takes charge of this building there is a clear separation of the charges incurred, including the financing costs in the service charge accounts.
(xxix) Accountant’s Fees: £705.00. Allowed as reasonable.
2008/09:
(xxx) Insurance: £3,856 is reasonable and allowed.
(xxxi) Finance costs. £237. Disallowed as above.
(xxxii) Cleaning and rubbish removal: £5,092. The Tribunal considers that the cost of the rubbish removal is excessive and limits this part to £1,000 of the sums claimed. Costs relating cleaning are allowed as reasonable. The Tribunal finds that the escalation of the rubbish removal costs was not satisfactorily explained, and therefore limits these costs accordingly.
(xxxiii) Pest Control: £2,160. The Tribunal considers this is a reasonable charge.
(xxxiv) Replacement of water tanks. £4,439: The Tribunal is satisfied that these were necessary works to replace the existing end of life tanks. Allowed in full.
(xxxv) Water tanks and housing works: £920. Allowed in full.
(xxxvi) Management Fee: £4,230. Allowed as reasonable.
(xxxvii) Accountancy fees: £1,093. Allowed in full as reasonable.
(xxxviii) Others: £1,730. Allowed as reasonable.
Major Works:
37. In deciding whether the interim sums demanded for these proposed major works re reasonable, the Tribunal is entitled to consider whether they have been properly consulted upon and properly specified and properly tendered for. The Tribunal is not satisfied on the last two of those points. Most significant is the delay between the receipt of tenders and this application to the Tribunal during which period a Notice served by LBB has cast doubt on the adequacy of the proposed works, and which omit among other matters, replacement of the very badly corroded metal service/fire escape staircases and renewal of all the roof. It is the Tribunal’s view that were these works to go ahead as currently specified a duplication of costs would occur in order to comply with the Notice. As the Applicant did not seek to appeal this Notice but accepted a caution in respect of it, the time has long passed since the applicant could argue that the works contained in the Notice are not necessary and are unreasonable. Mr. True’s notion that he would be able to negotiate a lesser scale of works seemed naive in the extreme.
38. Further, the Tribunal is concerned to note that the tenders are now out of date and there has been no evidence that the successful contractor is either willing or able to carry out the works, either at all or at what cost. While it is not contested that the Applicant is entitled to seek payment of interim service charges, the Tribunal is of the view that these must be based on reliable estimates of properly specified work incorporating the requirements of LBB. Not to do so and to simply proceed with Mr. True’s specified works as stage 1 and then as a stage 2 to carry out the remaining works in LBB’s notice would involve the unnecessary increase in expenditure of incurring certain costs twice; e.g. preliminaries and scaffolding. In the circumstances the Tribunal is not satisfied that if the proposed works were carried out they would be done to a reasonable standard and at a reasonable cost.
Section 20ZA
39. In light of the above decision, the Tribunal is not required to determine this matter. However, for the sake of completeness, the Tribunal is of the view that the section 20 procedure was properly followed by Mr. Cross, and the lessees provided with all the relevant notices or an opportunity to inspect the specification and tenders. The consultation process will however need to be gone through again in respect of a new specification of the total works required and any tenders received for such works.
Section 20C
40. The parties are, within 14 days of the date of this decision to send to the Tribunal, written submissions as to questions of costs to be added, or not added to the service charges.
Chairman: LM Tagliavini
Dated: 27/3/10
Residential
Property Tribunal Service
Leasehold
Valuation Service
Landlord and Tenant Act 1985 – section 27A,
20C & 20ZA
LON/OOAC/LSC/2009/0361
______________________________________________________________
Premises: Crest Court, The Crest, London NW4 2HL
Applicant: Crest Court (Hendon) Ltd.
Represented by: Mr. Fain, Counsel, instructed by Pritchard Englefield
Respondents: The Lessees of Crest Court
Represented by: Mr. Fattal for Norstown Properties (sub-lease of Flats 10 & Flat 14)
Ms. Irving (Flat 1)
Mr. Marks for Pine Investments Ltd (Flats 2, 10 & 16),
Mr. Pittalis, Solicitor for Ms. Belman (sub lease of Flat 16) & Ms. Ebbles (Flat 18)
Mr. Steinhaus (Flat 4 & Flat 12A) & for Mr. Zucker (Flat 7)
Tribunal: Ms. LM Tagliavini, LLM, DipLaw, BA Hons
Mr. P Casey, MRICS
Mr. L Packer
Hearing Dates: 9th, 10th, 11th November & 14th January
Addendum
Section 20C of the Landlord and Tenant Act 1985
1. At the end of the hearing, the Tribunal invited the parties to make written submissions as to costs,pursuant to the provisions of section 20C, on receipt of the written LVT decision. Accordingly, the Tribunal received written submissions from Ms. Irving, Mr. Steinhaus, Mr. Marks, Mr. Pittalis on behalf of Ms. Belman & Ms. Ebbles and from Mr. Fain on behalf of the Applicant. It was submitted by Mr. Fain that both Type 1 and Type 2 leases provided for the recovery of costs through the service charge or as administration charges.
The
Applicant’s Case:
2. In respect of Type 1 leases, Mr. Fain asserted that the LVT decision in respect of Flat 6 in an earlier decided case was wrong in finding that costs of litigation could not be recovered through the service charge. He asserted that Type 1 leases allowed for costs that could be properly categorised as a precursor to a forfeiture claim, or as variable administration charges pursuant to para 1(1)(c) and or (d) of Schedule 11 of the Commonhold and Leasehold Reform Act 2002 to which section 20C does not apply.
3. Further or alternatively, Mr. Fain asserted that clause 2(xix) provided for the recovery of costs where they are incurred by the Lessor in carrying out the obligations incurred by the Lessor under this lease.
4. In respect of Type 2 leases, Mr. Fain submitted that paragraphs 7 and 8 of Part II of the Fourth Schedule in these leases provided for the recovery of costs through the service charge.
5. Mr. Fain further submitted that it was just and equitable to allow costs to be collected through the service charge having regard to all the circumstances of the case. In this instance the bulk of the application had been taken up with argument about individual service charge costs, which several of the lessees either refused to pay at all or paid what they wanted despite some being professional landlords, and who could have made their own applications to the LVT in a timely manner, if they genuinely disputed the level of service charges being billed.
The
Respondents’ Case:
6. Ms. Irving asserted that as her lease was a Type 1 lease, she relied on the decision by the earlier Tribunal in respect of Flat 6 and asserted that costs were not recoverable through the service charge, as the lease did not allow for this. Further, she stated that the costs were not incurred in contemplation of forfeiture proceedings. Ms. Irving disagreed with the Applicant’s submission that they could be categorised as administration charges or that clause 2(xix) provided for the recovery of these costs. Ms. Irving also stated that it would not be just and equitable to allow the recovery of these costs as she had been paying service charges regularly and now believed her account to be in credit.
7. Ms. Irving stated that the Tribunal had made significant reductions to the service charges claimed by the Applicant, and that a substantive part of the application in respect of the proposed major works had failed in its entirety. Therefore, the Applicant should not be entitled to recover costs.
8. Mr. Steinhaus submitted that the Applicant had been shown to be unwilling to consult with the lessees and had drawn out proceedings unnecessarily. Costs therefore, should not be recoverable by the Applicant.
9. Mr. Marks asserted that the Applicant was not entitled to add costs of this litigation to the service charges for Type 1 leases. He also asserted that the Applicant’s management of the block had been far from satisfactory and the issue of major works poorly handled.
10. Mr. Pitallis submitted that this Tribunal should follow the decision reached in respect of Flat 6, a Type 1 lease. Further, he submitted that clause 2 (xix) was not sufficiently clear to allow for the recovery of these litigation costs. The lease made provision for the recovery of other costs, and had it been intended to allow for the recovery of these costs, the lease would have expressly stated the position. Further, it was submitted that the costs of this litigation should not be added to the service charges, given the long history, when little or little constructive action was taken by the Applicant leading to the build up of arrears, complaints, and the poor consultation and organisation of the proposed major works.
The Tribunal’s
Decision:
12. The Tribunal rejects the applicant’s arguments that these costs are recoverable under the terms of the Type 1 leases or as administration charges. The Tribunal determines that these legal costs have not been incurred as a precursor to forfeiture proceedings, as the application required for that should be made pursuant to section 168 of the Commonhold and Leasehold Reform Act 2002. Further, the Tribunal does not accept that these are administration costs within the definition of para. 4 of Schedule 11 as relied upon by the Applicant. It is the Tribunal’s view that clause 2(xix) cannot be relied upon as these are not costs or charges incurred by the Lessor in carrying out its obligations under the lease, as these applications to the Tribunal cannot be said to fall within the obligations referred to.
11. The Tribunal finds that the Type 2 leases do provide for the recovery of costs as these state:
“All reasonable legal and other costs properly
incurred by the Lessor other than those relating to the recovery of ground rent
(as distinct form Maintenance Contribution) (a) in the running and management
of the Building and in the enforcement of the covenants conditions and
regulation relating thereto contained in the leases granted of the flats in the
Building including the auditing of the accounts of the Maintenance Year and (b)
……………”
12. However, even if the Tribunal is wrong in respect of Type 1 leases, the Tribunal does in any event exercise its discretion in respect of all Type 1 and Type 2 leases. Having regard to all the circumstances of these applications, as has been addressed in detail in the Tribunal’s decision, both the Applicant and the majority of the Respondents have failed in their mutual obligations under the lease with the result that the subject building is in significant disrepair and badly in need of major works. The Tribunal has indicated in its decision that it was open to either the Applicant or all, or any of the Respondents to have sought to resolve this matter at a much earlier date through a timely application to the Tribunal but none, except the lessee of Flat 6, has chosen to do so. The Tribunal does not accept the Applicant’s argument that all Respondents should have ‘clubbed together’ to obtain legal representation. There is no requirement to do so, and may in any event be out of the financial reach of some Respondents. In terms of the length of the hearing, the Tribunal is of the opinion that the Applicant’s case which lasted 2 days, was of equal length to the case presented by the numerous Respondents, who cannot be said to have substantially lengthened matters. The Applicant had raised a number of detailed issues fir a large number of service charges year, all of which the Respondents were required and entitled to deal with.
13. Finally, the Tribunal is of the opinion that taken overall, the Applicant has achieved only partial success in respect of service charges, and has failed in its entirety to persuade the Tribunal of the reasonableness of the proposed major works, which formed a substantial part of the Applicant’s case. Therefore, the Tribunal finds that in all the circumstances it is just and equitable to make an order under section 20C to the effect that it does not allow the costs of this litigation to be added to the service charges.
14. In respect of making a costs order in favour of Ms. Belman and Ms. Ebbles the Tribunal finds that the behaviour of the Applicant does not merit such an award being made. The Applicant was entitled to seek clarification of the service charge costs and the approval of the Tribunal for the major works albeit at a late stage. The Tribunal dismisses these Respondents’ application for costs limited to £500.
Chairman: LM Tagliavini
Dated: 13/5/10