Flat 6, Grosvenor Apartments, 8a Grosvenor Road
- The building
- A three-storey block of 12 self-contained flats built in 1977, all let on 99-year leases in 1985.
- What was applied for
- A determination under section 27A of the Landlord and Tenant Act 1985 of service charges over three years, with section 20C and paragraph 5A applications.
- The figures
- 12 flats. Total in dispute 1,593.15 pounds, of which 258.83 pounds determined payable immediately. The undifferentiated charges equated to less than 6.50 pounds a week per flat.
- Costs
- Both granted. In light of the breaches, no administration charges nor costs of the proceedings are recoverable from the tenants.
What Happened
The landlord issued annual demands with a single undifferentiated service charge figure, no breakdown, no audited accounts and no supporting documentation, and collected a contingency fund contribution for which the lease made no provision. When the leaseholder asked for the statutory information the landlord's solicitors instead demanded 907 pounds in arrears against a correct figure of 506.60 within 14 days and threatened proceedings.
What the Tribunal Held
The charges were reasonable in amount, but the landlord was in breach of his statutory and contractual obligations, so only the sums supported by documentation now produced were payable at once. The tribunal held that no service charge becomes payable until the statutory requirements have been complied with, but rejected the idea that breach cancels the debt: now that the information has been provided, albeit belatedly, the contributions are payable, and the landlord's failure to provide information does not expunge the duty to pay altogether. There was no authority in the lease for a contingency fund, which would have needed agreement, a variation and money held on trust. The accounts should have been audited and certified annually. The tribunal found the landlord had acted in good faith and noted the intention of the statutes is to prevent a tenant being confronted unexpectedly and unfairly by a substantial bill without justification, explanation or supporting documentation.
What it means for a block here. Failing to serve compliant, documented demands suspends payability and costs you your legal costs, but it does not cancel the underlying liability, which revives once compliant demands are served.