© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : LON/00AG/LSC/2021/0215

HMCTS code (paper, video, audio)

: V: CVPREMOTE

Property : Flats 1,4,6,7,8, 11 Grafton Mews, London W1T 5HL

Applicant :

Mr P Sadowski & Dr G Dixon (flat 1)(A1) Mrs T and Mr K Lim (flat 4)(A2) Mr N Emerson (flat 6)(A3) Mr LC Chang (flat 7)(A4) L Spoorenberg & L Valadao (flat 8)(A5)

Representative : Mr B Martin & Ms F Docherty of James Andrew Residential

Respondent : Pegasus Executive Properties Ltd.

Representative : Adam Swirsky, Counsel

Type of application :

Liability to pay service charges under section 27A of the Landlord and Tenant Act 1985

Dispensation from the consultation requirements of s.20 Landlord and Tenant Act 1985

Tribunal members : Judge D Brandler Ms J Mann MCIEH

Venue : 10 Alfred Place, London WC1E 7LR (remotely)

Date of hearing : 8 and 9 June 2022

Date of decision : 6 July 2022

DECISION and further Direction

Covid-19 pandemic: description of hearing This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was V: CVPREMOTE. A face-to-face hearing was not held because it was not practicable and no-one requested the same. The documents that we were referred to are in a bundle of 1123 pages, the contents of which we have noted. The order made is described at the end of these reasons.

Decision of the Tribunal

(1) The Tribunal grants the respondent landlord dispensation from the statutory consultation requirements in respect of remedial works to the lift at 11 Grafton Mews, London W1T 5HL. (“The building”)

(2) The Tribunal determines that the sum of £42,148.48 is payable by the applicants in respect of the service charges for the years 2017, 2018 and 2019. The Tribunal makes the determinations as set out under the various headings in this Decision

DIRECTION

1. By 26 July 2022, the parties may, if so advised, make submissions in relation to s.20C of the 1985 Act and Rule 13 of the Tribunal Procedure (First-Tier Tribunal)(Property Chamber) Rules 2013

The applications

1. The applicants seek a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) and Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) as to the amount of service charges payable by the applicants in respect of the service charge years 2017, 2018 and 2019.

2. By a separate application, the respondent seeks a determination for dispensation of the requirements of s.20 Landlord and Tenant act 1985 (“The 1985 Act”) in relation remedial works to reinstate hot water in 2017, and remedial works to the lift in 2017 and 2019.

The hearings

3. The hearing was listed to be heard on 21 February 2022. On that date, the applicants sought an adjournment on the basis of further evidence submitted by the respondent. The respondent did not oppose this application as they sought to make an application for dispensation of the requirements of s.20 of the 1985 Act. In the circumstances, it was not in the interests of justice to proceed. The matter was adjourned for a two-

day hearing on further directions so that if the respondent did make an application for dispensation, this could be considered by the Tribunal prior to considering the application under s.27A for liability of service charges.

4. The applicants were represented by Mr Martin, a director of James Andrew Residential who was accompanied by Ms Docherty, also a director of that company, who provided the only witness statement for the applicants. Mr Emerson (A3) joined by telephone. Although he had not provided a written statement, he was able to clarify some points in relation to the bins.

5. The respondent was represented by Mr Swirsky and was accompanied by Mr Levy. Mr Levy is a director of FHI Real Estate Limited, the managing agents. He is also a director of English Rose Estates Limited who own one of the flats in the block. English Rose Estates Limited own BP Business Services Limited. BP Business Services Limited own Pegasus Executive Properties Limited (“the Respondent”) who purchased the freehold interest from the developer Fizrovia Properties Limited on 18/6/2018. Mr Levy provided 3 witness statements.

6. Immediately prior to the hearing the respondent forwarded to the Tribunal documents that they sought to rely upon but had been omitted from the bundle. These had previously been served on the applicants and they did not oppose the inclusion of that evidence. There was a slight delay at the start of the hearing as Ms Docherty was unwell, but despite this managed to join the hearing and confirmed she was feeling well enough to continue.

The background

7. The property which is the subject of this application is a purpose-built six storey block of eight flats constructed in 2016. The ‘basement and part ground floor flat’ is separated from the rest of the building. The owners of that flat have taken no part in these proceedings. The terms of the lease of that flat differ from the rest of the flats in that the basement part ground floor flat is not responsible to pay service charges for the communal parts of the building, to which it has no access. It has a responsibility for a proportion of the external communal works.

8. Neither party requested an inspection, and the tribunal did not consider that one was necessary, nor would it have been proportionate to the issues in dispute.

9. The applicants each hold a long lease of their individual flats contained within the property which requires the landlord to provide services and the tenant to contribute towards their costs by way of a variable service

charge. The specific provisions of the lease will be referred to below, where appropriate.

The issues

10. At the start of the hearing the parties identified the relevant issues for determination as follows:

(i) The dispensation application made by the landlord respondent

(ii) Whether the Tribunal has jurisdiction to consider the application because of s.27A(4)(a) of the 1985 Act

(iii) The validity of the service charge demands

(iv) The payability and/or reasonableness of service charges for 2017, 2018 and 2019 under various headings detailed below

(v) An application by the applicants under s.20C and an application for the re payment to them of tribunal fees.

11. Having heard evidence and submissions from the parties and considered all of the documents provided, the tribunal has made determinations on the various issues as follows.

The Respondent/landlord’s application for dispensation

Background to the application

12. The landlord seeks dispensation under section 20ZA of the 1985 Act from the consultation requirements imposed on the landlord by section 20 of the 1985 Act in respect of remedial works to reinstate hot water in 2017 and remedial works to the lift at the building in 2017 and 2019.

13. The application seeks dispensation for the following

(i) £3693.00 for works to remedy the lack of hot water to the flats in 2016

(ii) £2172.00 (inclusive of VAT) to install a new printed circuit board into the lift in the building in 2017 and

(iii) £6360.00 for remedial works to the lift in 2019

14. The respondent landlord failed to make a s.20 consultation in relation to any of those works. The application for dispensation has been made only since the last hearing on 21/02/2022. There is no evidence of any discussion with the tenants about these works. The application for

dispensation is based on the claim by the managing agents that the works were urgent and that they did not have time therefore to carry out a consultation. In oral evidence Mr Levy relies on what he says were ‘constant’ telephone calls from the leaseholders complaining of the lack of hot water in 2017, a non-functioning lift in 2017 and a slow running lift in 2019.

15. The applicants oppose the application on the basis that there must have been a warranty for these works because this was a new build in 2016. They further argue that all the failures for which the respondent landlord now seeks to obtain dispensation from consultation were never investigated. They argue that there must have been a reason for these failures and the respondent’s modus operandi is not to investigate. The managing agents deny categorically that there is any warranty on the new build. They also deny categorically that there is a warranty on the lift. The reason given by Mr Levy is that when the lift was installed in 2016 the contractor was not paid and as a consequence did not provide a warranty for the lift.

16. The hot water works: The sum claimed under this application is £3696. The only evidence before the Tribunal is contained in an invoice number ENI 0071 from Enigma Heating and mechanical Services dated 25/11/2016 for £3696 inclusive of VAT. The information given on that invoice states merely “Phase 1 Contract Value £8800.00. 35% Deposit. Materials £3080.00. Labour £-“ [244]

17. The applicants oppose dispensation. They argue that this should have been covered by a warranty. Further that the information on the invoice is unclear and that there was no consultation.

18. Mr Levy was adamant there was no warranty in existence. When asked what £8800 referred to, he didn’t know. His counsel argued that amount was not being charged to the leaseholders. Nevertheless, if an invoice is presented with such information, the Tribunal would have expected the managing agents to come prepared to explain the information.

19. No alternative quotations were produced by the applicants, which is understandable given the lack of information as to what works had actually been carried out. Nor were there any witness statements from the tenants to demonstrate prejudice.

20. All of this became academic because on the 2nd day of the hearing, when the Tribunal was considering the application under s.27A of the 1985 Act, Mr Levy discovered and disclosed that there had been a Premiere Guarantee from the company who had approved the building regulations requirements. This disclosure was given only after the Tribunal had asked for clarification about compliance with Building Regulations.

21. On the basis of that discovery, Mr Levy conceded that the application for dispensation for this item be withdrawn, and that this amount would not be charged as a service charge because it should have been covered under the terms of the Premiere Guarantee.

22. The lift: There are two amounts in relation to the lifts that are the subject of the dispensation application. Firstly, in 2017 the lift printed circuit board was found to be missing from the lift. This came to light when the lift was reported by the tenants as being out of order and the managing agents asked their contractors, Liftworks, to attend the property. They reported that the circuit board was missing and needed to be replaced. This work was carried out and an invoice dated 24/07/2017 from Liftworks Limited for £2172 (inclusive of VAT) was issued [248].

23. There was a suggestion that the circuit board had been stolen/taken. However, the managing agents did not investigate this nor was there any report to the police or any insurance claim. Mr Levy remains adamant that there is no lift warranty, that lift works were necessary, and the tenants must pay for these under the terms of the lease as a service charge.

24. In oral evidence Mr Levy for the managing agents explained that no s.20 consultation had been made at the time, and no application for dispensation had been considered until the last hearing. Indeed no s.20 consultation had ever been made for any works to this building.

25. The applicants oppose the application for dispensation for this item as they say this item should have been covered by a warranty, that no investigation was made as to how a circuit board could have been removed, and why no report to the police or insurers was made. However, the applicants have provided no evidence other that these statements to support their argument that there was prejudice to the tenants by the respondent’s failure to consult.

26. In response, Mr Levy remains adamant that there is no lift warranty. He was asked where the circuit board was located in the lift, and how it had been removed. He could not answer these questions and had no report to explain the disappearance. He confirmed that no report to the police or the insurers was made but could not expand on the reasons. He could not provide further information on this point as he could not remember and appeared to have no notes or records of this issue to assist him at the hearing.

27. The second issue subject to the dispensation application in relation to the lift relates to works in 2019. Specifically, the works that amount to £6360 in an invoice dated 23/08/2019 from Liftworks [390]. Mr Levy in oral evidence stated that in June 2019 the lift was not working properly. He said that he and his colleagues had received ‘constant’ complaints by

telephone from the tenants complaining that the lift was ascending slowly. No records of those calls were produced. The managing agents asked Liftworks to attend and inspect. Liftworks provided a quotation as to the works required [391-393] and were instructed to carry out the works. The invoice provides a reasonable amount of detail as to the works carried out and Mr Levy in oral evidence confirmed that the works were urgent as the tenants needed the lift to be working. He confirmed that no consultation was carried out.

28. The applicants oppose dispensation. They say, again, that there must have been a lift warranty that should have covered this issue. Further they pointed to the evidence of the lift needing oil in January, February, May and June 2019 [394,397-8]. This evidence is contained in Liftworks invoices in relation to topping up oil and in relation to failed attempts to remedy issues because they could not gain access to the pit [397-399]. In his submission, Mr Martin stated that the problem should have been investigated at the time, and the fact that the managing agents never investigate anything leaves an undiagnosed fault. This he says is not good management. He goes on to argue that when major lift works were carried out around August 2019, as evidenced by the date of the Liftworks invoice, there was still no explanation as to why oil was required. Mr Swirsky disputes this. He says there is ample evidence in the invoice to demonstrate the works, and that there is no evidence to demonstrate that the works were not successful.

29. The applicants have provided no evidence of prejudice. There are no alternative quotation for works, nor have they produced any evidence that the lift works were not successful. In cross examination in relation to the lack of alternative quotations, Ms Docherty said she couldn’t have obtained a quote as she did not know what the specification of the lift was. It was put to her that an alternative quotation could have been obtained by a lift contractor in any event, as they would have been able to ascertain that detail. In short there is no evidence produced to establish prejudice.

30. In submissions, Counsel for the respondents asserts that the contract with Liftworks is not a qualifying long term agreement in accordance with Corvan Properties Ltd v Abdel Mahmoud [2018] EWCA Civ 1102. That was not opposed by the applicants.

The Decision and Reasons 31. The only issue for the Tribunal to decide is whether or not it is reasonable

to dispense with the statutory consultation requirements. This application does not concern the issue of whether or not service charges will be reasonable or payable.

32. Having heard the evidence and submissions from the landlord and noted the leaseholders’ objections, the Tribunal determines the dispensation issues as follows.

33. Section 20 of the Landlord and Tenant Act 1985 (as amended) and the Service Charges (Consultation Requirements) (England) Regulations 2003 require a landlord planning to undertake major works, where a leaseholder will be required to contribute over £250 towards those works, to consult the leaseholders in a specified form. Given there were 8 flats liable to pay for internal communal works the trigger for consultations is for internal communal works of £2000.

34. Should a landlord not comply with the correct consultation procedure, it is possible to obtain dispensation from compliance with these requirements by an application as this one before the Tribunal.

35. The leading authority in relation to s.20ZA dispensation requests is Daejan Investments Ltd v Benson [2013] 1 WLR 854 (“Benson”) in which the Supreme Court set out guidance as to the approach to be taken by a tribunal when considering such applications. This was to focus on the extent, if any, to which the lessees were prejudiced in either paying for inappropriate works or paying more than would be appropriate, because of the failure of the landlord to comply with the consultation requirements. In his judgment, Lord Neuberger said as follows;

Paragraph 44. Given that the purpose of the Requirements is to ensure that the tenants are protected from (i) paying for inappropriate works or (ii) paying more than would be appropriate, it seems to me that the issue on which the LVT should focus when entertaining an application by a landlord under section 20ZA(1) must be the extent, if any, to which the tenants were prejudiced in either respect by the failure of the landlord to comply with the Requirements. Paragraph 45. Thus, in a case where it was common ground that the extent, quality and cost of the works were in no way affected by the landlord’s failure to comply with the Requirements, I find it hard to see why the dispensation should not be granted (at least in the absence of some very good reason): in such a case the tenants would be in precisely the position that the legislation intended them to be – ie as if the Requirements had been complied with.

36. Accordingly, the Tribunal had to consider whether there was any prejudice that may have arisen out of the conduct of the landlord and whether it was reasonable for the Tribunal to grant dispensation following the guidance set out above. In assessing prejudice, the tenant’s arguments should be treated sympathetically, but there has to be a credible case of prejudice and the focus is the prejudice that they would

not have suffered had the consultation requirements been fully complied with.

37. While the Tribunal questioned the absence of documentary evidence to support the urgency of the works from the landlord, the applicants provided no evidence to support their claim of prejudice, other than an oral assertion from their representative that the works should have been covered by a warranty. The applicants’ representatives are very experienced property managers. Ms Docherty confirmed she has 30 years of experience and manages many properties. It was suggested to her in questioning that she could have provided alternative quotations to support the claim that the works were either not necessary or not reasonable. Although her response was that she did not have the specification of the works, this is the one detailed documentary evidence the Tribunal did have in the form of the quotation and the invoice for the lift works carried out in August 2019. It was also put to her that the lift works had resolved the issues with the lift. In response she stated that there had been problems with the lift but had no evidence to support that assertion.

38. The Tribunal found no evidence of prejudice to support the tenants’ opposition to the application for dispensation, other than their assertion that there ‘must have been’ a warranty on a new building and a new lift. There was no suggestion that if they had been involved in a consultation, that they would have commissioned alternative quotations to that provided by Liftworks.

39. The only issue for the Tribunal to decide is whether or not it is reasonable to dispense with the statutory consultation requirements in relation to the lift works. This application does not concern the issue of whether or not service charges will be reasonable or payable. Those issues are dealt with below in the application to determine liability and reasonableness of service charges.

40. Having been provided with no evidence of prejudice to the tenants, the Tribunal grants the landlord dispensation from the statutory consultation requirements in respect of remedial works required to the lift at 11 Grafton Mews, London W1 ("The building").

41. In accordance with the Direction made above, upon receipt of any submissions in relation to s.20C of the 1985 Act, the Tribunal will consider whether the costs incurred by the landlord in relation to this application for dispensation are subject to such an order.

Application for determination of payability of service charges

Jurisdiction

42. Counsel for the respondent submits that the Tribunal has no jurisdiction to determine this matter because by s.27A(4)(a) of the 1985 Act, the service charges have been admitted by the tenant and relies on an email dated 10/07/2019 [1115] from Dr Dixon in which it states “There was a significant leak from one of the flats upstairs about 2 months ago – the paintwork around our front door was damaged – some attempt to redecorate has been made, however, this is substandard and needs reviewing and doing properly to bring the door and surrounds up to the standard shown before the leak damage. I presume this work was carried out through an insurance claim and would not expect this to come out of the service charge. Once this has been done I will settle the remaining service charge to the end of this year…”. Counsel relies on the Cain v Islington [2017] EWCA Civ 76. He argues that the contents of the above paragraph equates to an agreement by the tenant in accordance with s.27A(4)(a) of the 1985 Act.

43. The difficulty with the issue of the leak damage is that it now transpires that no insurance claims were made for any leaks throughout the period. This is at odds therefore with the tenant’s understanding of how this matter was being financed as he states that he “would not expect this to come out of the service charge”. Indeed, the email continues to complain in the ultimate paragraph “…the bins have not been emptied for some time and the rubbish is overflowing. The front door has also been damaged for several months and there have been no attempts to repair this – this is a security issue and I will have to let the local police know of my concerns unless this is also dealt with in the near future.”

44. In submissions Counsel argues that there has been no complaint by the tenants until this application was made to the Tribunal and that it is indeed their representatives who are the driving force for this application.

45. Mr Martin for the tenants submits that the applicants have instructed his company because they have not been happy with the service, and have not agreed or admitted any of the issues raised in this application.

The Tribunal’s determination

46. There is clearly a difficult relationship between the tenants and the managing agent which appears to have resulted in the tenants feeling that it was necessary to employ an intermediary managing agent. That in itself is difficult to reconcile with the submission that there are no complaints and the tenants are happy with the service provided such that s.27A(4)(a) precludes an application under s.27A(1) and (3). It is difficult to understand why tenants in a 2016 built block would feel the need to ask for help from an intermediary. Unfortunately, none of the tenants provided a witness statement to explain their position and the Tribunal had to determine the issue on the documents available

47. Having considered the email that Counsel seeks to rely upon, the Tribunal does not agree that this is an acceptance in accordance with s.27A(4)(a). As stated above, the tenant believed that the leak damage would not be a service charge, so it cannot therefore be an acceptance of such a charge. In addition, there are clear complaints in the same email about other issues.

48. The Tribunal were satisfied on the limited evidence available that the tenants did have complaints that were evidenced by emails and some meeting notes. Further the Tribunal were satisfied that busy tenants would not instruct an intermediary to negotiate with the managing agents/respondents unless they were unhappy with the service received. The Tribunal does therefore have jurisdiction.

Validity of Service Charge Demands

49. The application asks the Tribunal to determine whether the service charge demands are valid. In the 3rd witness statement of Scott Levy dated 04/04/2022 he conceded that the demands for 2019 were not valid because they had been issued in the name of the previous freeholder Fizrovia Properties Ltd. The respondent had purchased the freehold on 22/06/2018. Exhibited to that witness statement were the corrected and re-issued correct service charge demands for 2019.

50. Various questions arose for the Tribunal:

(i) Are the demands for 2017 and 2018 validly demanded

(ii) Are the respondents caught by s.20B of the Landlord and Tenant Act 1985

51. Documentary evidence confirms that the freehold interest was purchased by the respondents on 22/06/2018. It follows from that date all demands should be in the name of the respondent.

52. As a sample, the demand dated 18/12/2018 [486], is for an estimated service charge from 01/01/2019 to 31/12/2019 and claims a total of £2,720.93 for that period with a due date for payment of 21/01/2019. The address for the purposes of section 47 of the Landlord and Tenant Act 1987 is given as Fitzrovia Properties Ltd and the address given as 70 Charlotte Street, London W1T 4QG.

53. As Counsel for the Respondent correctly pointed out there are two issues; statutory requirements and contractual requirements.

Thus, in Johnson v County Bideford [2012] UKUT 457 (Lands Chamber), the landlord had failed to comply with the requirement in section 47(1) of the 1985 Act to provide his name

and address. The Upper Tribunal held that, by serving fresh demands, the landlord had provided the information required by section 47(2) to validate the original demands. Section 47(2) allows for this possibility. Ms Gourlay submits that Johnson v County is about statutory validity not contractual validity. I agree.

Skelton v DBS Homes [2017] EWCA Civ 1139

54. Counsel for the respondent acknowledges that only the demands for 2019 have been amended and reissued to comply with section 47(1), and that by s.47(2) Landlord and Tenant Act 1987 the sums claimed in the un-amended demands are treated as not due from the tenant until remedied. Unlike in section 20B of the Landlord and Tenant Act 1987, there is no 18 month time limit within which to comply with section 47 Landlord and Tenant Act 1987.

55. There is however a 18 month time limit for making contractually valid demands:

20B Limitation of service charges: time limit on making demands (1) If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2)), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred. (2) Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.

56. The lease at clause 3.1 [553] so far as is material states

3.1 pay to the Lessor such sums per annum as may be notified to the Lessee by the Lessor from time to time as presenting a fair and proper proportion of its management charges to cover the cost and expense incurred or to be incurred by the Lessor in carrying out the obligations contained in Clause 4 of this Lease and such sum (whether estimated or not) to be payable quarterly in advance on the dates specified for the payment of rent in clause 1 hereof

57. Clause 1 provides for the payment of rent “by two equal payments on the 25th December and 25th June in every year…”

58. There is a clear contradiction between sums being paid quarterly according to Clause 3.1 and the payment of rent at half yearly dates.

59. Clause 3.2 then deals with balancing payments

3.2 pay to the Lessor on demand

(a) such sum by which the estimated sum paid by the Lessor to the Lessor under sub-clause 3.1 of this clause in respect of management charges is less than the due proportion of the total money properly and reasonably expended or retained by the Lessor as shown by the Account and Particulars produced by the Lessor under clause 3.1(c) hereof calculated according to proper financial systems prepared by the Lessor due allowance as credit being given to the Lessee for any non-payment in a similar manner

60. Having considered the demands dated 02/10/2017 for service charges for 01/01/2017 to 31/12/2017 [269-276]; the demands dated 3/12/2018 for actual expenditure from 01/01/2017 to 31/12/2017 [277-281]; the demands dated variously in May 2019 for service charges for 01/01/2018 to 31/12/2018 [252-367], the Tribunal finds that the demands for estimated service charges are not contractually valid. This is because they provide for payment effectively on demand without any reference to the payment conditions in Clause 3.1 of the lease requiring payment to be quarterly in advance. The demand dated 18/12/2018 is such an example.

61. However, in respect of the period 01/01/2018 to 31/01/2018 the demands issued in May 2019 are within the 18 month period of the expenditure being incurred and are capable of being paid on demand because of the provisions of Clause 3.2.

62. The estimated demands for 2017 were clearly issued in the final quarter of 2017 so it was not possible to provide for quarterly payment in advance. As such it is difficult to see how payment could have been other than on demand by that stage of the year as the fourth quarterly payment had become due.

63. The Tribunal finds that the service charge demands for 2017 and 2018 were contractually valid but the sums therein do not become due until section 47(1) of the Landlord and Tenant Act 1987 is complied with.

Service charge for Mechanical/Engineering/Plumbing. Amounts claimed: (2017: £4,386)(2018: £9035.02); Service charge for Compliance 2019: £7150.56

2017

64. The sum of £3,696 claimed for remedying hot water has been conceded by the respondent as non-payable by the tenants as it should have been covered by the warranty.

65. The remaining invoice from Enigma Heating and Mechanical Services for £690 by invoice number 104 [260] states merely “Supply and fix gas solenoid and knock off button. Interlink with fire alarm system, wiring correction”. The applicants argue that as this refers to a correction to new wiring, this should have been covered under the building warranty/defects period. However, until the disclosure on Day 2 of the hearing in relation to the Premiere Guarantee, Mr Levy had been adamant that there was no warranty.

2018

66. Various invoices for varying items appear under this heading:

(i) A leak charged at £546.60 by C&K Group [322] stating only that the area has been damaged by a water leak.

(ii) A lock change to the plant room charged at £120 which is now accepted by the applicant

(iii) Emergency lights interlinked to fire alarm system at £287.88

(iv) Works to flat 3 in the sum of £155.98. Now conceded by Mr Levy not to be payable. The charge will be removed from the service charge

(v) Annual gas testing certificate for boilers in the sum of £300. Mr Levy now concedes that this is a duplicate charge which is covered under the compliance charges

(vi) Invoice from C&K group for £474 for works to replace external lights, after “it looks like a van has knocked 1 off and broke another” [317].

(vii) Compliance in the sum of £7150.56. No detail is provided in the invoice as to what was carried out. Mr Levy argues that the detail is in the schedule. Mr Levy further stated that there is a typographical error in the invoice which states that it is for 3 months from September to December, but he contends that this was actually for 12 months. Mr Levy also states that despite the invoice stating that this was for cleaning, this was another typographical error and should state

that this is compliance linked to the PPM schedule. Mr Martin agreed that the sums quoted are not excessive.

The tribunal’s decision

67. The tribunal determines that the amount payable in respect of Mechanical/engineering/plumbing in 2017 for remedial heating works is £0.

68. In relation to the items under this heading for 2018:

(i) For the leak £250 (ii) Lock change £120 (iii) Emergency lights £287.88 (iv) Works to flat 3 £0 (v) Annual gas testing £0 (vi) Accidental damage £250 (vii) Compliance £7150.56

69. Compliance for 2019 was charged partially by G. Cook (£4686.25) and partially by C&K Group (£2703.28)

70. The invoice from G. Cook was conceded in oral evidence by Mr Levy to be a duplicate, and he agreed that the charge should be £2310.10. This amount as well as the amount of £2703.28 charged by C&K Group was agreed by Mr Martin.

Reasons for the tribunal’s decision

71. Given the disclosure of the Premiere Guarantee, and concession by Mr Levy that the amount of £3696 in 2017 was not payable as a service charge, the Tribunal were of the view that it followed that the charge for £690 in 2017 should also have been covered and was not payable as a service charge.

72. Although no concession was made in relation to the sum of £690 in 2017, it seemed to the Tribunal that this should have been approached in the same manner, and should, had the warranty been acknowledged earlier, have been covered under that policy. The Tribunal therefore found that the sum of £690 was not payable.

73. In relation to the charges in 2018:

(i) The limited information provided on the invoices makes it difficult to see how the tenants could understand the charges. It was hard enough for the

Tribunal to obtain much clarification from Mr Levy. He was unable to provide any detail about works charged in relation to leaks and where they occurred. The Tribunal concluded that there should have been an insurance claim. That would leave only an excess that the tenants would have been required to pay. Mr Levy had been unable to tell the Tribunal at what point he considered it was worth claiming from the policy. He was asked to clarify this point both by the Tribunal and his own Counsel. There seems to be no plan of how or when an insurance claim should be made and on that basis the Tribunal found that the charge was unreasonable and only £250 is payable.

(ii) Once the detail of the lock change was explained to Mr Martin, he conceded this charge.

(iii) Emergency lights linked to the fire system are reasonable. Although Mr Levy was not able to explain the process and why so much was charged. It is accepted that to repair lights linked to the fire system, testing would be required to ensure that they pass the three hour drain down test as well as possible further tests.

(iv) Works to flat 3. Mr Levy conceded that this should not have been a service charge

(v) Mr Levy agreed that the gas safety charge of £300 was a duplication and would not be charged.

(vi) Accidental damage £474. An item described as accidental damage indicates a potential insurance claim. No reasonable explanation was given by Mr Levy as to why it was not. The Tribunal considered that this was therefore unreasonable and allow £250 which represents the excess figure in an insurance claim.

(vii) Compliance. This sum is less than the sum quoted by Mr Martin’s company. Although it is extremely confusing for anyone trying to establish what the invoice covers because of the ‘typographical errors’ that Mr Levy now says are included on the invoice. The months claimed are apparently wrong, only 3 months were claimed yet Mr Levy stated that the invoice covered a period of 12 months. A further error in the invoice Mr Levy pointed out was a mention of cleaning. The presentation of the information does not provide the tenants with sufficient information to explain the charge. Nevertheless, the charge itself for compliance linked to the PPM schedule is reasonable and payable in full.

Remedial lift works. Amounts claimed: (2017: £2172)(2108: £260)(2019: £7872)

74. In 2017 a claim was made in the service charge account for the sum of £2172 (inclusive of VAT) to replace the lift’s circuit board. There was no documentary evidence to clarify the disappearance of this item from a previously functioning lift. The only document available was an invoice from the Respondents’ lift contractors Liftworks. That invoice states merely “to supply and fit new Macpuarsa PCB Microbasic MB4 BV194(MkP046-0004N) £1,810.00” plus VAT [248]. Mr Levy was unable to explain where the circuit board was located. He denied ever having investigated its disappearance and confirmed that he had not reported it to the police. He could not explain why this had not been claimed under the insurance policy.

75. Mr Martin argued that there should have been investigation. He says the lack of investigation is typical of the way the respondents manage the building demonstrating a lack of care, attention and detail. He argues that the lift works should have been carried out under a lift warranty. He made that point on many occasions despite Mr Levy’s insistence that there was no lift warranty because the original lift installer had not been paid for his work.

76. In the alternative to a lift warranty, Mr Martin argues that the loss of this circuit board should have been the subject of an insurance claim.

77. In relation the lift works in 2018 for £260, this was accepted by Mr Martin as payable.

78. In relation to lift works in 2019, Mr Levy says that the documents show that in January and February of that year the lift required oil. Then in May/June of that year the documents demonstrate a more serious problem when the lift ascended slowly. In oral evidence Mr Levy stated that he had received constant telephone complaints by the leaseholders asking him to resolve this issue. He had therefore asked Liftworks to inspect, provide a quote and then to carry out the works to remedy the issue. The specification of works is contained in the invoice dated 23/08/2019 [390]. Mr Levy stated that these works had been necessary and that the problems had been resolved and there were no further problems with the lift.

79. Mr Martin says that these works should have been covered by the warranty and further complains that no investigations were carried out to find the cause for the defect. No alternative quotation for the works was provided and no evidence has been provided by any of the tenants in relation to whether they did complain and whether there have been ongoing issues with the lift.

The tribunal’s decision

80. The tribunal determines that the amount payable in respect of remedial lift works in 2017 is £250; in 2018 is £260; and in 2019 is £7872.

Reasons for the tribunal’s decision

81. The disappearance of a circuit board from the lift should have been investigated by the managing agents, reported to the police and made the subject of an insurance claim. This would have meant that the tenants would have been subject only to the £250 excess charge. However, Mr Levy could not explain to the Tribunal why none of those tasks had been carried out. The Tribunal found it difficult to understand how such an integral part of a lift could have been removed without there having been some concern as to how and when this had occurred. If an insurance claim had been made and refused, that might have provided some explanation. The tribunal found the lack of action by the managing agents to be unreasonable and unprofessional and allow only £250 in relation to the circuit board replacement, which equates to the insurance excess.

82. In 2018 there were two Liftworks invoices for £130 each. These sums were agreed by Mr Martin.

83. The lift works in 2019 are payable in full in the sum of £7872. The Tribunal accepted that some works were required at the start of the year in relation to oil. Further investigation took place in the summer months and remedial works, said to have remedied the slow pace of the lift were carried out thereafter, probably in August 2019. Mr Levy could not clarify dates of works and he could not provide evidence of the tenants’ ‘constant’ phone calls. Despite having a hearing in February 2022 and this final hearing, he came ill prepared to answer most of the questions posed. Nevertheless, the applicants were similarly unprepared in that they had failed to provide alternative quotations for lift works, despite having had the specification and invoice from Liftworks. The Tribunal therefore found that the remedial works were required, and with no evidence to the contrary, that the charges were reasonable and payable.

Cleaning (2017: 3475.74)(2018:£3902.07)(2019:£3397.34)

Waste disposal amount claimed(2018: £2146)

84. This additional amount was claimed in 2018 for moving the bins from the bin store to the street. Previously and since 2018, Rifles were carrying out this work and there were no complaints. However, in 2018 Gordon Cook was employed to carry out this task. His invoices from 27/09/2019 to 28/11/2019 amount to £2146. Included in this sum is the congestion and ULEZ charge to travel into London from Kent. Mr Levy asserts that they had to employ Mr Cook to do this work as no one else was prepared

to do it, and had therefore to refund him with the congestion and ULEZ charges for him to enter London.

The tribunal’s decision

85. The amounts claimed for cleaning are payable in full for 2017: £3475.74; for 2018: £3902.07; and in 2019: £3397.34.

86. The amount claimed separately for waste disposal under the invoice of Gordon Cook for putting bins in and out of the bin store appeared to be excessive because additional charges had to be paid for him to enter London. The sum claimed is reduced by 25%. Sum payable is £1609.50.

Reasons for the tribunal’s decision

87. Mr Martin conceded the amounts claimed for cleaning by Rifles. He did not dispute that cleaning had been carried out, nor say that the amount was excessive. His only question was in relation to the relationship between Rifles and the management company.

88. The issue of waste disposal related to bringing the bins out of the bin store onto the street in order that the local authority would empty them. There was some discussion as to the size of the bins, and there had been some suggestion that these were large industrial bins. However, the leaseholder on the phone, Mr Emerson, confirmed that they were normal size bins.

89. From the evidence there were no complaints about this issue until 2018. Prior to that it appears that this task was being carried out. However, in 2018 when the contractor Gordon Cook took over the work of moving the bins out of the bin store, the cost increased dramatically because he was charging for congestion and ULEZ charges for driving from Kent into Central London. This seemed to the Tribunal to be an unreasonable arrangement and not cost effective, particularly because there were complaints about either the bins not having either been taken out to the Street, and/or the bins not having been returned to the bin store. These complaints were contained in emails from Mr Sadowski on 15/10/2019 [1112] and Mr Dixon on 10/07/2019 and 28/07/2019 [1113,1115].

90. When asked for clarification about the arrangement with Mr Cook, what day of the week the bins were emptied, how Mr Cook would know when to come back to put the bins back, Mr Levy was not able to assist with any of the detail.

91. The Tribunal found that cost in 2018 was not reasonable and there was evidence that work had not been carried out to an adequate standard. The service charge in that regard for 2018 was therefore reduced by 25% such that £1609.50 is payable.

Audit £750.00 2017 and book keeping £480.00 2017

Management fee £2400 (2017)

92. The applicants challenged the amount. The Tribunal asked whether bookkeeping carried out by the managing agents was not included in the management fee. Mr Levy explained that the audit was carried out by an independent company, and that the management fee doesn’t include book keeping. Mr Martin was satisfied with the explanation and conceded the amounts.

Service charge: Painting 2019 - amount claimed £1017.76 [454]

Service charge: leaks 2019 – amount claimed £561.00 [452]

93. By an invoice dated 07/11/2019 Gordon Cook demanded £1017.76. The invoice states only “Final Decoration Grafton GOR144 - … Painter 4 days £880… Materials £217.76”. for painting. Mr Levy said that this was for the redecoration of the communal hallway. Mr Martin argues that such a redecoration is far too soon in a building that was completed only in 2016. He queries whether this was from a water leak and whether this was a patch decoration further to leaks. Mr Levy denies this. He said that this was carried out at the request of the tenants because they asked that the internal areas be made to look nicer.

94. It was suggested that there had been water leaks in January and perhaps the tenants had asked for the area to be redecorated in November. Mr Martin also suggested that if this had been an insurance claim, the loss adjuster would usually agree that the whole wall be painted. He queries why this was not an insurance claim. Mr Levy is adamant that the two items were not connected but had no documentary evidence to assist on this point.

95. The invoice from C&K Group for £561 states “to remove water sodden plasterboard and replace with new where required. Make good, stainblock and paint to match existing decor. Invoice dated 31/01/2019.” Mr Levy was asked where the site of this repair was. His response was that he did not know. He was asked why he didn’t think it was worth claiming on the insurance, and why his answer on the scott schedule was that “we believed it was not worth making a claim at the risk of an increase in the annual premium. The excess was £250 per claim”. Mr Levy’s response was that the reason was a previous huge leak in the building leading to a claim for tens of thousands of pounds and they wanted to avoid further claims. No documentary evidence of that previous leak was provided. He was asked what the threshold would be for making a claim. He replied that he didn’t know and would not guess.

The tribunal’s decision

96. £250 is payable for painting; £250 is payable for leaks

Reasons for the tribunal’s decision

97. Mr Levy was unable throughout the proceedings to explain why no insurance claims had been made for accidental damages or leaks. Nor could he explain at what level of expense such a claim would be made. Nor had he apparently discussed any of this with the tenants. The tribunal found this approach to be unreasonable in light of the lack of planning or consideration. £250 is payable for each amount claimed, the equivalent of the excess of an insurance claim. It may well be that these should have been claimed together and only one excess awarded, however there is insufficient information in the documentation to establish this issue, and the Tribunal gave the respondent the benefit of the doubt that the items are not linked.

Service charge Leaks £1032

98. This item relates to an invoice from C&K Group dated 26/02/2019.

99. Mr Levy conceded that this amount should have been shared with the basement part ground floor flat as it was an external leak at the top of the building. Their contribution according to Mr Levy’s figures of apportionment is 16%, and therefore the amount is reduced by 16% to reflect that.

The tribunal’s decision

100. £250 is payable

Reasons for the tribunal’s decision

101. There is no explanation why an insurance claim was not made. The Tribunal found this unreasonable and award £250 to reflect the excess.

Service Charge : Pipe Leaks Invoice no. 3370 C&K Group £795.

102. This is a demand for a leak that “appeared that several screws had been breached a pipe which looked like it was done during construction” [455]. Mr Levy conceded that this should have been covered under the Premiere Guarantee and would be removed from the service charge. £0 payable.

Service charge: Insurance: amount claimed (2018:£2,055.28)(2019:£3,104.73)

103. Mr Martin confirmed that these items are no longer in dispute.

Application under s.20C and refund of fees

104. To be determined upon receipt of any submissions on these issues.

Name: Judge D Brandler Date: 6 July 2022

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have.

If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case.

The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application.

If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit.

The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking.

If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).