We advise on all aspect of Leasehold Service Charge issues / disputes. We offer a free 20-minute consultation
Service charge dispute resolution system is unnecessarily complex and unpredictable, although it can appear otherwise on the surface. We help with all charge disputes issues, including how to deal with landlords, superior landlords and managing agents; negotiating disputes; and resolving disputes.
In a 2-hour consultation we will advice you on:
- Whether representation is essential or to act in person.
- The merits of your case
- How to prepare for the Tribunal and the case
- How to deal with lawyers
- What to expect from the opponents at the Tribunal
- The weight the Tribunal places on particular evidence
- An overview of past decisions
- Costs; Hidden relevant costs
At the First-Tier Property Tribunal (FTT)
If you wish to take the matter to the Tribunal, we recommend you do as much research as you can first. For in-depth information on how key leasehold dispute issues are dealt with by the Tribunal, and key issues the self-represented people (litigants in person) face in Tribunals and courts, see a recent paper: UNREPRESENTED LITIGANTS IN MODERN COURTS – ORDEAL BY COMBAT.
Tips for taking a matter / disputes to the Tribunals – First Tier Tribunal (Property Chamber) and the Upper Tribunal
Pay attention to the Tribunal’s misleading costs powers
The Tribunals have in almost all case, ABSOLUTE POWERS (as they consider just and equitable in the circumstances, on whether to grant a s20C Order under Landlord and Tenant Act 1985) against the TENANTS / LEASEHOLDERS, but SEVERELY LIMITED costs powers against the LANDLORDS (e.g. for ‘wasted costs’ and ‘for unreasonably bringing, defending or conducting proceedings’ (see Tribunal Procedure Rules 2013, r 13; and the Tribunals, Courts and Enforcement Act 2007, s29).
This is because, almost all leases (of large landlords) contain a clause covering legal costs. This means that, if the Tribunal does not grant a s20c order, tenants have to pay landlords’ costs arising from the disputes. The binding law (e.g. Nicholls LJ, Farquharson LJ and Lloyd LJ) states that, where no order as to costs has been made (e.g. granting to landlords, or tenants legal costs), allowing landlords to recover these costs through the service charge is ‘indeed a case of seeking to get through the back door what has been refused at the front’ (Holding and Management Ltd v Property Holding and Investment Trust 1990, at 948).
But the First Tier Tribunal can and has ignored this:
e.g in case between a group of leaseholders of a block of flats in central London (60% of leaseholders in that bloc) against Family Mosaic Housing (now Peabody) and AVIVA Ground Rent (part of AVIVA corporation), the Tribunal received significant amount of evidence in tenants favour, including:
- Family Mosaic / Peabody between 2008 and 2014, sold flats to the Tenants by misrepresenting the service charge figures by around 50%;
- Family Mosaic / Peabody for 4 years collected from the Tenants around half of the service charge monthly as required by the lease, and the reaming half annually as a balancing charge
- Tenants had protested every year, but Family Mosaic / Peabody had misrepresented that the balancing charge was a shortfall, AND had concealed for four years that that Estate service charges (over half of service charges) were never included in the annual estimates;
- the Tenants had been provided poor services at unreasonable costs. In one year alone, they had for instance been charged for over 170 separate engineer call-outs for the boiler maintenance on top of the annual maintenance agreement
- the Tenants were denied access to information on the service charge;
- Regular mistakes in accounts.
Furthermore, following the first day of the hearing, the Tribunal judge, Sonya O’Sullivan, stated about the manner on how service charges were invoiced “was somewhat confusing as the headings for the various components in the service charge accounts did not marry with the headings in the leases.” Judge O’Sullivan further recognised the non-transparency and complications with the charges stating that “after much discussion it emerged that Family Mosaic had not properly estimated the estimated on account payments for each year and had failed to include the estimated costs of the freeholder who provided the majority of the services. As a result the leaseholders were faced with a large balancing payment each year with little explanation.”
and that the Landlords’ accounts ‘were either wrong or misleading‘
DESPITE THIS, however:
Judge Sonya O’Sullivan allowed the Tenants to recover application costs from the Landlords (around £500). BUT denied the Tenants the s20C Order, allowing the Landlords to recover their legal costs (amounting to over £50,000) from the Tenants.
If the Tribunal could rule against the Tenants in this case (with enormous evidence was against the Landlords) – leading to them having to pay Landlords’ cost – it will be difficult to find a case when the Tribunal would not do that (if same Tribunal / judges).
A range of interpretations by tribunals on same issues e.g. when cost are incurred
This is common and is supported by the fact that there is not rule requiring the Tribunal (First Tier) to follow precedent. In the above case, the tribunal did not for example follow decision of the Court of Appeal or even principles well-established for centuries such as interpretation of contracts as to the natural meaning of the words. The lease stated that the Service Charge was to be collected monthly (clear wording) – the Tribunal held that Landlords could recover annually half it, even though they were concealing this from Tenants – telling them it was a one off issue due to unexpected costs.
Many tactics are often used by the lawyers of landlords
- This includes to increase your costs;
- To overload you on unnecessary documents,
- If you do not include all the documents landlords send you in the bundles (and print many copies – e.g. 4 for the Tribunal), it is likely the Tribunal will act against you on application from Landlords (as in the case above).
- Some judges will even penalise you for not having paginated the bundles (most people would not even know what this is) electronically – hand paginated was criticised even when Tenants had no means of paginating numerous bundles of (mostly unnecessary) paper work
- It is likely landlords will forcefully make false claims – this happened in the case above, where the Tenants / Leaseholders submitted that there were no lights in the courtyard, and the landlord and the managing agents (Rendall and Rittner) insisted that the tenants are lying, and the Tribunal believed the landlords, until the tenants brought in fresh evidence from that evening (what if they could not, e.g. due to no time, or it was a matter of previous poor service?!)
Such tactics can cause real damage to your case, especially if you do not know the law well, and many other factors (e.g. biases, accent etc).