When a leaseholder disagrees with the charges sought from them by the landlord/management company, they have the ability to seek a determination in the FTT (LVT in Wales) pursuant to Section 27A Landlord and Tenant Act 1985 (“LTA85”).  Where the dispute is as to the reasonableness of a cost to which the leaseholder is being asked to contribute, the leaseholder can rely, in their application, on the provisions set out in s.19(1) LTA85:-

(1)    Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—

(a)               only to the extent that they are reasonably incurred, and

(b)               where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard;

and the amount payable shall be limited accordingly.

In Triplerose Limited -v- Bowles (2022) the landlord, Triplerose, was appealing in the Upper Tribunal (“UT”) a decision made in the FTT on the issue of reasonableness.  

Mrs Bowles, the leaseholder (in fact, 1 of the 16 who supported the application) sought to obtain in the FTT a determination as to the reasonableness of various charges, including cleaning charges and management fees for the block, for the period 2014 to 2019.  In preparing her claim, and in compliance with Directions issued by the FTT, Mrs Bowles and Triplerose had completed a Scott Schedule setting out what charges were disputed.  Importantly, what sum of each charge in each year was in dispute and providing comments in relation to those charges, as shown in the excerpt below.

Scott Schedule

On consideration of the evidence before it, the FTT was satisfied that the cleaning charges were unreasonable for the standard of service provided and awarded a discount of 50% in respect of those costs.  It did the same in relation to the management fees too, awarding a 50% reduction.

Triplerose appealed to the UT arguing that the FTT had erred in awarding a discount of 50% when, in the Scott Schedule, the leaseholders had in fact only disputed 33% of the cost.  The Landlord referred to section 27A(4) of LTA85 and argued that when the leaseholder set out in the Scott Schedule that only 33% of the cost was disputed, that amounted to an admission of the undisputed 66%. Accordingly, the FTT had no jurisdiction to look behind that ‘admission’ and award a higher percentage.

The UT agreed with this argument and so the award of a 50% discount applied by the FTT was reduced to the 33% disputed in the Scott Schedule. A considerable saving for the Triplerose given the sums involved and the number of years to which the disputes related.

Conclusion

Plainly, it is necessary to know what it is that is in dispute and importantly why, before pursuing any dispute.  This case also emphasises the need to think carefully before completing any claim or response to a claim.  Get it wrong and there can be a cost consequence to that.  For the landlord or management company dealing with a dispute, it is worth considering all correspondence prior to and during any litigation, as any admission made as to sums due will act to restrict any contrary finding above and beyond that admission.  

For more information, please feel free to contact a member of the team on 01435 897297 or info@kdllaw.com.

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