IN THE RESIDENTIAL PROPERTY TRIBUNAL SERVICE
LEASEHOLD VALUATION TRIBUNAL
LANDLORD AND TENANT ACT 1985 – SECTION 27A
Premises:
REF: PJ/LON/OOAK/LSEC/2010/0265
Applicant:
Represented by: Mr. Williamson of Williamson & Dace, Managing Agents
Respondent: Mr. B. E, Kelland
Represented
by: No appearance
Tribunal: Ms. LM Tagliavini, Barrister & Attorney-at-Law (NY)
Mr. I Thompson, BSc FRICS
Mrs. R Turner, JP, BA.
Hearing date: 9th September 2010
1. This is an application made pursuant to section 27A of the Landlord and Tenant
Act 1985 seeking the tribunal’s determination of the payability and
reasonableness of alleged arrears of service charges for the period 1994 to 31
December 2010. The subject lease is dated 27th November 1970 made between
(1) Cromberdale Properties Limited (Lessor) and (2) Mr. B.E. Kelland (lessee)
(2) and
(3) a term of 99 years from 24th March 1970 and included use of Garage No .14.
(4) The subject premises comprise a block of 1930’s flats comprising 39 self-
contained flats in three separate blocks. There are communal gardens and seven communal entrance halls. The copy of the relevant lease provided to the
Tribunal was faint and difficult to read in parts. The Applicant provided a copy of
a “new” lease for a different flat in the block, although this was of little assistance
to the Tribunal as the terms incorporated into the new lease varied significantly
from the terms included in the Respondent’s lease. On 31st July 2007 a notice
was served informing the Respondent that Chandos Management (
Limited had gone into liquidation and that
became the lessor on 11 August 1995, the lessees having exercised their right to
purchase the freehold. In 1985 the Respondent sold his interest in the garage
and the ground rent due was adjusted accordingly.
The Applicant’s Case:
2. Mr. Williamson of Williamson and Dace, managing agents for the Applicant,
told the Tribunal that £9,722.80 of the arrears of £24,613.42 were “inherited”
from the previous managing agent when the current managing agent took
over in 2004. These figures however included a sum for ground rent, although
this had been taken into account. A revised sum of £9,801.50 was calculated
to be the arrears due from 29th September 1994 to 24th March 2004. Mr.
Williamson apologised for the poor copy of the lease and stated that no better
copy had been made available.
3. It was asserted that because the service charges are not in this long lease
reserved as rent, they are payable for a 12 year period i.e. from 1998 at the
very least. The services provided for under the terms of the lease included
cleaning and gardening although no long-term contacts had been entered.
Cleaners came in once a week to sweep, wipe down and vacuum the
common parts. Gardeners attended the property once a week throughout the
year to prune, sweep leaves, mow lawns and trim shrubs. The gardeners
also collect rubbish left outside flats by the elderly residents and put bags in
the paladin bins provided and which are collected on a weekly basis by the
local authority. A local builder will when required, come and remove larger
items of rubbish for disposal. On occasion greater costs for rubbish removal
were incurred due to the large amount of rubbish left.
4. Insurance was on a standard block basis as part of a larger property portfolio
and with the use of a broker and placed with the most competitive. The
managing agent received a commission of 20%. A management fee of £165
per flat plus VAT is charged to the lessee with accountancy fees being
charged as an addition. Consultancy fees were incurred on an “as and when”
basis and charged accordingly. Legal fees were said to recoverable for the
Respondent pursuant to clause 2(xxii) of the lease and were not a service
charge. The Tribunal were also provided with a number of photographs of the
subject property as well as breakdowns and accounts for the relevant service
charge years.
The
Respondent’s Case:
5. The Respondent did not appear and did not serve a Response in accordance
with the directions given by the Tribunal on 30 June 2010 and therefore the
Respondent’s case was not clearly identified. However, the Tribunal had the
benefit of a number of letters written by the Respondent in correspondence
with the managing agents over the years and a number of these were was
included in the Applicant’s bundle. From these it could be seen that the
Respondent challenged some items of service charge, discussed the grant of
a new 999 year lease a well as a stated intention to clear all the arrears (letter
dated 3rd January 2001).
6. The Respondent disputed his liability to pay into a reserve fund, as this was a
payment sought “on advance” whereas his lease only provided for
contribution of 1/39 of the service charge as per the audited accounts that
were to be served. It was said by the Respondent that there had been a
deliberate withholding of accounts although this was refuted by the Applicant
in its letter dated 23/5/07 in which copies of audited accounts said to have
previously been sent were included from 2000 to 2006 inclusive. The
Respondent raised some issues as to the level of the gardening service
provided.
The
Tribunal’s Decision:
7. The relevant clauses of the Respondent’s lease states:
1. …………….such rent to be paid by equally half yearly installments clear
of deductions on the Twenty fifth day of March and Twenty ninth day of
September in each year in advance a proportionate part of the first
payment of the first of such payments to be made on the date of the
grant of these premises AND ALSO paying a proportionate part as
hereinbefore specified of the premiums from time to time paid by the
Company for insurance and all other outgoings of the Company as
hereinafter provided
“2(iv)(a) To pay to the Company 1/39th of all the sums expended by it as more particularly set out in the Third Schedule hereto within fourteen days after being required so to do.”
5(iii) if during the term hereby granted the Company shall go into
liquidation the lessor shall be entitled upon giving notice to the Lessee to
undertake the obligations hereby undertaken by the Company and if the
Lessor elect to do so the Lessor shall be entitled to recover from the
Lessee all moneys hereby agreed to be paid by the Lessee to the
Company.”
And under The Third Schedule:
“The Lessee is to contribute 1/39th of the sums expended by the Company
in performance of it covenants herein contained and of the sums
expended by the Company for the proper or reasonable performance of its
express or implied obligations for the benefit of the Lessee in common not
covered under any specified clause in this Lease.
8. The Tribunal finds the following:
- Service charges are not reserved as rent and are therefore payable for a period of 12 years – i.e. from 16th April 1998 (the date of the application made being 16/4/2010) to date.
- Service charges are payable in advance at half yearly intervals namely 25th
March and 29th September of each year. Such sums are payable within 14
days of the demand for payment.
- The Respondent is not liable to contribute to the Reserve Fund, as there is no provision in his lease for such a sum to be collected. These sums should be removed from the demands for payment and the calculation of arrears.
- Any claim for legal fees should be removed from the demands for payment of service charges. These are more likely to fall within the definition of administration charges and are not subject to the appropriate application for the Tribunal’s determination.
- Subject to the removal of all charges for the reserve fund, the service charges
for the years 1999 to 2009 are due and payable.
- Subject to the deductions being made above, the service charges for the years 1999 to 2009 are reasonable and are payable by the Respondent. The Tribunal notes that the premises are well maintained.
- The Tribunal notes that the managing agents have “lumped together” its annual fees together with the fees for the major work project (2008). The Tribunal does not regard this as good practice and the fees for each part should be open and transparent.
- The annual management and accountancy fees are payable and within the range of what the Tribunal considers reasonable for this sort of block and level of service.
- These service charges have been certified in audited accounts and sent to the Respondent.
- The service charges for 2010 are due on 25th March and 29th September 2010 from the Respondent. Such charges should not include a contribution to the Reserve Fund or legal costs.
- The legal costs sought do not form part of the service charges and do not therefore fall within the ambit of this application. Such charges may fall within the definition of administration charges but there is no application before the Tribunal and therefore it does not have jurisdiction to determine this issue.
- Arrears in the sum of £15,587.99 (exclusive of reserve fund and legal fees) are due for the period 1/1/99 to 31/12/2009. This sum may be subject to adjustment to reflect the period 16/4/98 to 1/4/99.
9. In conclusion, the Tribunal determines that service charges are payable by the Respondent for the period 16th April 1998 to date. The sums claimed require adjustment to remove sums claimed for the Reserve Fund and legal costs from the service charge. In the absence of any Application by the Respondent pursuant to section 20C of the 1985 Act, the Tribunal is not required to consider exercising its discretion pursuant to this section. In any event, had such an application been made, the Tribunal having regard to all the circumstances including the protected and deliberate refusal to pay any part of the service charges for a very lengthy period by the Respondent, even where such sums have not been contested, would dismiss such an application. The Tribunal, therefore, would not seek to prevent the Applicant from adding the relevant costs of these proceedings before the Tribunal to the service charge.
Chairman: LM Tagliavini
Dated: 24 October 2010