Decision Nº LRX 62 2014. Upper Tribunal (Lands Chamber), 11-05-2015
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Date | 11 May 2015 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 62 2014 |
|
UPPER TRIBUNAL (LANDS CHAMBER)
|
|
|
UT Neutral citation number: [2015] UKUT 0103 (LC)
LT Case Number: LRX/62/2014
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – SERVICE CHARGES – evidence required to prove expenditure incurred – whether costs of previous tribunal proceedings recoverable as “any other costs and expenses reasonably and properly incurred” – appeal allowed in part
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL
(2) PAUL BLISS
Appellants
and
MRS MAUREEN SLAVIN
Respondent
Re: Flat 1, 10 South Parade,
Weston-Super-Mare,
North Somerset
BS23 1JN
Before: Martin Rodger QC, Deputy President
Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL
4 March 2015
Mr Matthew Brown, instructed by Powells, solicitors, for the appellants
The respondent, in person
© CROWN COPYRIGHT 2015
The following cases are referred to in this decision:
Arnold v Britton [2013] EWCA Civ 902
Francis v Philips [2014] EWCA Civ 1395
Assethold Ltd v Watts [2014] UKUT 0537
Iperion Investments Corporation v Broadwalk House Residents Ltd [1995] 2 EGLR 47
Conway v Jam Factory Freehold Ltd [2014] 1 EGLR 111
-
This is an appeal against a decision of the First-tier Tribunal (Property Chamber) (“the FTT”) given on 12 February 2014 in a service charge dispute. It raises two substantive issues. The first concerns the quality of the evidence required to prove that a landlord has incurred costs, where no contractor’s invoice is produced, while the second requires the Tribunal to decide whether the language of a particular lease permits legal costs incurred in tribunal proceedings to be recovered from leaseholders as part of a service charge.
-
In its decision the FTT disallowed a sum of £38,016.19 said to have been incurred by the appellants in connection with major works on the grounds that it was not supported by a proper invoice. It also disallowed a contribution towards legal costs of £6,374 incurred in connection with previous tribunal proceedings.
-
At the hearing of the appeal the appellants were represented by Mr Matthew Brown of counsel, while the respondent made oral and written submissions on her own behalf. I am grateful to them both for their assistance.
The facts
-
The parties agreed a short statement of facts and provided a bundle of documents. From that material and the decision of the FTT I take the following facts as the basis of my consideration of this appeal.
-
10 South Parade, Weston-super-Mare (“the Building”) is a four storey Victorian terraced building comprising a café on the ground floor and four long leasehold flats on the upper floors. The appellants, Union Pension Trustees Ltd and Mr Paul Bliss, hold the freehold as trustees. The respondent, Ms Maureen Slavin, is the registered proprietor of Flat 1, on the second floor (“the Flat”), which she has held since 2009 under a lease for a term of 999 years granted on 8 October 1981.
The lease
-
The lease of the Flat includes a covenant by the tenant at clause 4(4) to pay an interim charge and the Service Charge in the manner provided in the sixth schedule, both such charges “to be recoverable in default as rent in arrear.”
-
By clause 5(4) the landlord covenanted to undertake certain tasks including maintaining and keeping the main structure of the Building and the common parts in good and substantial repair and condition. At clause 5(4) the following ancillary powers were conferred on the landlord:
“(g)(i) to employ at the Landlord’s discretion a firm of Managing Agents to manage the Landlord’s property and discharge all proper fees, salaries, charges and expenses payable to such agents or such other person who may be managing the Landlord’s property.
(ii) to employ all such surveyors, builders, architects, engineers, tradesmen, accountants or other professional persons as may be necessary or desirable for the proper maintenance safety and administration of the Landlord’s Property.”
The expression “the Landlord’s Property” had been defined in clause 1(9) of the lease as meaning the Building.
-
The provisions for calculating the Service Charge are contained in the sixth schedule which is in conventional terms. By paragraph 1 the Service Charge for the Flat is 15% of the “Total Expenditure in any accountancy period” meaning the total expenditure incurred by the landlord in carrying out its obligations under clause 5(4), together with:
“… any other costs and expenses reasonably and properly incurred in connection with the Landlord’s Property including without prejudice to the generality of the forgoing (a) the cost of employing Managing Agents and (b) the cost of any Accountant or Surveyor employed to determine the Total Expenditure and the amount payable by the Tenant hereunder.”
The works
-
In March 2010 the appellants’ architect, Mr Williams, prepared a detailed photographic schedule showing the condition of the common and external parts of the Building, which demonstrated that significant work of repair was required. Tenders were invited for the programme of works, and two were received, the lower of which was submitted by Burnham Plastering and Dry Lining Ltd (“Burnham”). Burnham is a company owned by Mr Spence who is the leaseholder of Flat 4 in the Building.
-
In 2011 the appellants applied to a leasehold valuation tribunal (“the LVT”) for a determination that an interim service charge which they had asked the leaseholder to pay on account of the costs of carrying out the programme of works was reasonable. The respondent was one of three respondents to that application who disputed the interim charge.
-
After inspecting the Building the LVT issued a decision dated 17 October 2011 in which it considered and approved as reasonable an estimate of £52,278.90, based on Burnham’s tender plus a 5% contingency. The LVT was aware of the connection between Burnham and Mr Spence, to which the other leaseholders objected, but the LVT nonetheless considered that the appellants were entitled to appoint Burnham to carry out the work.
-
The respondent subsequently paid £9,000 as an interim service charge, including a contribution towards the cost of the proposed work.
-
The bulk of the work described in the schedule of condition was carried out by Burnham in 2011. There was no written contract, and no fixed price. The total cost is said to have been £40,491.65, of which £38,016.19 is said to have been paid to Burnham, with the remaining £1,395.46 being paid for materials and other incidental works.
-
On 12 September 2012 the appellants issued three service charge demands, being for the years ending on 31 December 2009 and 2010 and for the period of fifteen months ending on 31 March 2012.
-
For 2009 the service charge demanded of the respondent was £878.81, which included £172.50 as the respondent’s contribution to the architect’s fee for preparing the schedule of condition.
-
For 2010 the sum demanded was £1,220.80 which included a further contribution towards the architect’s fees.
-
The 2012 demand was for £9,916.67 which included £6,073.75 in respect of repairs and renewals. This represented the respondent’s 15% share of costs totalling £40,491.65 said to have been incurred in the 15 months to 31 March 2012, in carrying out the programme of remedial works.
-
The 2012 demand also included £2,124.67 in respect of legal expenses. This figure represented one third of a bill of £6,374 tendered by the appellants’ solicitors in respect of the application to the LVT in 2011 to obtain approval of the on-account service charge.
The proceedings before the First-tier Tribunal
-
On 7 May 2013 the appellants sought a determination under s.27A, Landlord and Tenant Act 1985 of the service charges payable by the respondent for the periods covered by the three demands. A second application in relation to the legal expenses was also made under Schedule 11 to the Commonhold and Leasehold Reform Act 2002, on the basis that they may be recoverable as administration charges (a contention which has not been pursued on appeal).
-
Evidence was provided in support of the application in a witness statement of Mr Bliss who referred to copies of a large number of invoices. The documents relied on in support of...
To continue reading
Request your trial