A management company has successfully appealed against a service charge determination that resulted in a leaseholder’s service charge demand being substantially reduced, on the basis that the First-tier Tribunal (FTT) had not properly explained its decision.
The leaseholder lived in a block of four flats. In February 2023 the leaseholders were informed that the exterior of the block was going to be redecorated, and that a consultation under Section 20C of the Landlord and Tenant Act 1985 would be conducted. After receiving a service charge demand for his share of the costs of the works, the leaseholder applied to the FTT for a determination as to whether the charge was payable. He said that the consultation process had not been properly conducted and disputed that the works were necessary.
The FTT decided that the consultation had been properly conducted. However, it took the view that the works were of poor quality, even after the hearing had been adjourned to give the contractors the opportunity to remedy them. The FTT allowed £1,000 for the works.
The Upper Tribunal (UT) granted the management company permission to appeal on the basis that the FTT’s decision was not properly explained. After being asked to provide further reasons for its decision, the FTT described it as a ‘straightforward assessment of the quality of works’. It stated that it had awarded £1,000 as the works involved other aspects of the external area, adding that if the works had been solely redecoration it would not have allowed anything.
The UT noted that the FTT had said nothing about the extent of the works except that they were principally the painting of window frames. It was not possible to understand the nature of all the work charged for, nor the extent of the work done other than paintwork. It was impossible for the management company to understand how the figure of £1,000 had been arrived at. The decision had not been properly explained and was set aside.
The FTT had also omitted to address the fact that the service charge had been demanded before the work was done. The FTT had made a decision about the quality of the works, but the charge should have been assessed in terms of whether it was a reasonable charge to impose at the time it was demanded, in accordance with Section 19(2) of the Act. There had been no determination of the challenge to the charge on the basis that the works were unnecessary.
The UT suggested, and the parties agreed, that as the final service charge demand for the works would be made relatively soon, there was no point in the FTT redetermining the reasonableness of the interim demand. It was agreed that the matter would be remitted to the FTT on the basis that the leaseholder’s application would be stayed pending issue of the final demand.