Collingwood Court
- The building
- A block of 16 flats forming part of an estate that also includes an 11-flat block. Before the right to manage was acquired the estate was managed as one entity, with the service charge split between the two blocks.
- What was applied for
- A determination of the accrued uncommitted service charges the former landlord had to hand over, under section 94(3) of the Commonhold and Leasehold Reform Act 2002.
- The figures
- 16 flats in this block, 11 in the other, split 58.77 and 41.23 per cent. Reserve fund £39,965.14. Determined sum £23,487.51. Disputed items £76,513.23.
- Costs
- A costs application against the freeholder was refused. Its failure to produce the accounts was objectively unreasonable and unexplained, but applying Willow Court the tribunal held this is not the clearest of cases, both sides having breached directions.
What Happened
The RTM company acquired the right to manage in December 2024 but said the freeholder had not produced accounts for 2022 to 2024, so it could not tell what should have transferred. The accounts were produced almost a year later and ran to three days before the acquisition date. The RTM company then sought to challenge more than £76,000 of underlying service charge items.
What the Tribunal Held
£23,487.51 payable, being the block's 58.77 per cent share of the reserve fund shown in those accounts. The tribunal refused to reopen the underlying charges, holding that it cannot adjust the accrued uncommitted service charge to what it should be, following the Upper Tribunal in OM Ltd v New River Head, and that the RTM company cannot bring or take over a tenant's claim. On a disputed £9,000 it said this is a matter the parties need to address between them.
What it means for a block here. A section 94 handover claim recovers only the uncommitted money the outgoing landlord actually held on the acquisition date. Historic overcharging is a separate section 27A claim and it belongs to the leaseholders, not to the RTM company.