Priory Place, Hermitage and Chantry Close Abbey Wood London SE2 9NG LON/00AL/2019/0009 & ((Leasehold) disputes (management) - Service charges) -[2022] UKFTT LON_00AL_LSC_2020_0051- (22 November 2022)

Key Facts

Transaction Type

Issues

• Whether bin hire costs are payable under lease terms.
• Whether insurance charges comply with lease terms.
• Payability of legal and professional fees charged by managing agents.
• Whether RTM running costs are payable per lease provisions.
• Reasonableness of management and bin hire fees for the 2019-2020 service charge year.
• Payability of service charge demands under lease and statutory requirements.
• Reasonableness of surveyor's fees for managing major works.
• Payability of management fees and their reasonableness.
• Payability of accountancy fees for service charge computations.

Holdings

• The tribunal determines that the amount demanded in respect of insurance is payable by the lessees. The policy's structure as a general interest statement is sufficient under lease terms.
• The tribunal determines that the service charges for the years in dispute are payable under the lease. Posting demands on the online portal is sufficient notice, and late service does not invalidate demands.
• The tribunal determines that the costs demanded for the survey is reduced by £875 plus VAT. All other costs are payable by the applicants.
• The tribunal determines that the amounts demanded for the preparation of accounts are payable. Challenges to account preparation standards relate to reasonableness, which is not in dispute here.
• The tribunal determines that legal and professional fees are payable. There is no contractual or statutory bar to charging these fees, and they are standard practice.
• The tribunal determines that the management fees are payable and reasonable for the year 2019–20. The respondent is not obligated to accept the lowest market quote for services.
• The tribunal determines that the running costs of the RTM are payable. The lease allows for reasonable administrative expenses including profit, and the respondent has conceded partial reimbursement for setup fees.
• The tribunal determines that bin hire costs are payable and reasonable for the years 2019–2020. The respondent's duty to manage waste justifies these charges.
• The tribunal determines not to make an order under section 20C of the Landlord and Tenant Act 1985 for refund of fees. Applicants have not demonstrated grounds for such an order.

Remedies

• The tribunal determines that service charges demanded for the year 2019–2020 are reasonable.
• The tribunal determines that all other costs are payable by the applicants.
• The tribunal determines that the costs demanded for the survey is reduced by £875 plus VAT.
• The tribunal makes determinations as set out under the various headings in this Decision.
• The tribunal does not make an order under section 20C of the Landlord and Tenant Act 1985.

Legal Principles

• The tribunal addressed statutory compliance (e.g., s.21, s.47/48 of the LTA 1985) and case law (Beitov Properties Ltd v Martin [2012], Green v 180 Archway Road [2012]) to resolve disputes over service charge validity and notice service methods.
• The tribunal applied the literal rule of contract interpretation, emphasizing that the service charge payability hinges solely on the service of a written demand as per the lease terms. It rejected arguments that unmet lease obligations (e.g., reserve fund disclosure) invalidated prior payments.
• The tribunal used a purposive approach to interpret lease clauses, particularly regarding reserve funds and insurance. It concluded that the lease’s intent was to ensure lessees are covered under policies, even if not explicitly named, and that service charge demands need not itemize reserve funds separately.

Precedent Name

• Beitov Properties v Martin
• Atherton v M.B. Freeholds Ltd
• Green v 180 Archway Road Management Co Ltd

Key Disputed Contract Clauses

• 4th Schedule Part II para 2(ii) mandates inclusion of an 'appropriate amount' for reserve funds in service charge computations. Applicants claimed reserve funds were omitted from demands, while respondents argued this clause only applies to computations, not demands.
• 4th Schedule Part II para 4 states a certificate signed by the company showing service charge amounts is 'conclusive'. Applicants argued no valid certificate was provided, invalidating demands, while respondents disputed this as a positive obligation.
• 4th Schedule Part II para 1(a) mandates computation of total service charge by March preceding the maintenance year and written notification of lessees' proportion. Applicants argued this was not fulfilled, with demands sent late and without proper notification.
• 4th Schedule Part II para 1.7 specifies the maintenance year as a twelve-month period ending on 31 March. Applicants contended demands were sent after this date, violating the lease's timing requirements.

Cited Statute

• Landlord and Tenant Act 1985
• Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013
• Commonhold and Leasehold Reform Act 2002
• Law of Property Act 1925

Judge Name

• Judge H Carr
• Mr A Harris LLM FRICS FCIArb

Passage Text

• The tribunal determines that all other costs are payable by the applicants.
• The tribunal determines that the service charges for the years in dispute are payable under the lease.
• The tribunal determines that the costs demanded for the survey is reduced by £875 plus VAT.

Damages / Relief Type