402 Ashmore House North, 40 Violet Road, London E3 3QQ (Leasehold disputes (management) - Service charges) -[2019] UKFTT RP_ON_00BG_LSC_2018_0057- (3 April 2019)

Key Facts

Issues

• The tribunal assessed whether R&R's management fees for the years 2015/16 and 2016/17, as charged to the second respondent for managing the Estate, are payable, considering the absence of a written agreement and potential breaches of QLTA regulations.
• The tribunal evaluated the payability of R&R's management fees for 2015/16 and 2016/17, as charged to the first respondent for managing internal communal areas, and capped them at £100 per annum due to QLTA consultation breaches.
• The tribunal ruled that service charges for the Building and Estate contributions must be apportioned between all 44 flats in the Building based on floor areas, rejecting the respondents' 'core' apportionment method.
• The tribunal addressed whether the 2015 Decision, which excluded concierge costs and mandated apportionment of lift costs across all 44 flats, was properly implemented for 2015/16 and 2016/17 service charges.
• The tribunal determined that the 2017/18 budgeted service charge expenditure must be apportioned across all 44 flats in the Building based on floor areas, consistent with the 2015 Decision and lease provisions.
• The tribunal determined that the QLTA cap of £100 per annum applies only to R&R's management fees for the internal common-ways and not to other service charges or administration fees.

Holdings

• The applicant is liable to pay R&R's management fees for 2015/16 (£100) and 2016/17 (£100) for managing the internal common-ways in the Building, subject to the QLTA cap.
• The applicant's liability for R1's management and administration fees is limited to £130 (2015/16) and £185 (2016/17), with the administration fees excluded from the total due.
• Building costs and Estate contributions for 2015/16 and 2016/17 must be apportioned between all 44 flats in the Building based on floor areas.
• The applicant is not liable to pay R1's costs of these proceedings, and R1 must reimburse £300 in Tribunal fees.
• The 2017/18 budgeted service charge expenditure must be apportioned between all 44 flats in the Building based on floor areas.
• The applicant is liable to pay R&R's management fees for 2015/16 (£94.11) and 2016/17 (£92.31) as charged to R2 for managing the Estate.
• The applicant's contributions to staffing costs for 2015/16 and 2016/17 are payable in full, subject to apportionment adjustments under the 2015 Decision.

Remedies

• The Tribunal made an order under section 20C of the Landlord and Tenant Act 1985 to ensure none of the respondents' costs from these proceedings are passed to the applicant through service charges.
• The first respondent (Clarion Housing Association Limited) must pay £300 to the applicant by 24 April 2019 to reimburse tribunal fees, due to its failure to fully implement the 2015 Decision.
• The Tribunal issued an order under paragraph 5A of schedule 11 to the Commonhold and Leasehold Reform Act 2002, extinguishing the applicant's liability to pay the respondents' costs from these proceedings.
• The 2017/18 service charge budget must be apportioned between all 44 flats in the Building based on floor areas. The applicant's proportion is estimated at 1.69%, but final agreement is required by 24 April 2019.
• The applicant is liable to pay R&R's management fees for 2015/16 (£94.11) and 2016/17 (£92.31) as charged to R2 and passed on to R1. These fees were determined to be reasonable and fully payable.
• The Tribunal ruled that Building costs and Estate contributions for 2015/16 and 2016/17 must be apportioned between all 44 flats in the Building based on floor areas. The 1.69% proportion for the applicant's Flat is suggested but requires final agreement by 24 April 2019.
• The applicant is liable to pay R1's combined management and administration fees of £130 for 2015/16 and £185 for 2016/17. The Tribunal capped these fees to the management fee amounts as the administration fee was deemed unreasonable.

Monetary Damages

Legal Principles

• The Tribunal applied the statutory cap of £100 per annum for management fees under the Service Charges (Consultation etc) (England) Regulations 2003, due to a breach of consultation requirements for a Qualifying Long Term Agreement (QLTA). This cap limited the applicant's liability for R&R's management fees for the internal common-ways.
• The Tribunal made an order under section 20C of the Landlord and Tenant Act 1985 to prevent the respondents' costs of proceedings from being passed to the applicant through service charges. It also made an order under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 to extinguish the applicant's liability to pay the respondents' costs of these proceedings.

Precedent Name

Cited Statute

• Service Charges (Consultation etc) (England) Regulations 2003
• Landlord and Tenant Act 1985 (as amended)
• Commonhold and Leasehold Reform Act 2002

Judge Name

• Jeremy Donegan
• Clifford Piarroux JP CQSW
• Luis Jarero BSc FRICS

Passage Text

• The applicant is liable to pay the following combined sums for R1's management and administration fees: 2015/16 £130; 2016/17 £185.
• The first respondent ('R1') shall pay the sum of £300 to the applicant by 24 April 2019, in reimbursement of the Tribunal fees.
• The Building costs and Estate contribution must be apportioned between all 44 flats in the Building, based on floor areas.