Assethold Limited v Nelio Patricio Teixeira Franco
[2022] UKUT 285 (LC)
Russell Stewart Lacy v Homeselect Finance (No.3) Limited
19 September 2023
[2023] UKUT 231 (LC)
Upper Tribunal
A tenant fought his landlord over service charges. The judge agreed the landlord hadn't followed the rules properly about getting work done and had made some incorrect charges. The tenant didn't have to pay most of the extra charges, but he did have to pay a bit more than he initially wanted to because of an old agreement between him and the landlord.
Key Facts
- •Appeal against First-tier Tribunal (Property Chamber) decision on service charge liability and reasonableness of costs.
- •Dispute concerns service charges for Flat 8, 2-4 Thurlow Road, Torquay.
- •Lease requires quarterly £100 service charge payments, then year-end balancing payment.
- •Landlord (HomeSelect) demanded quarterly charges, deviating from lease terms.
- •Disputes over driveway/retaining wall works, including consultation process compliance.
- •Previous proceedings in 2013 and 2016 related to these issues.
- •Appellant (Lacy) argued non-compliance with lease and statutory consultation requirements.
- •Landlord argued estoppel by convention due to Lacy's past payments.
- •FTT initially found Lacy admitted liability for charges due to payment history (relying on Cain v Islington).
- •Various service charge components disputed: driveway/retaining wall work, legal fees, cleaning costs, management fees.
Legal Principles
Reasonableness of service charges
Landlord and Tenant Act 1985
Consultation requirements for major works
Landlord and Tenant Act 1985, section 20 and Service Charges (Consultation Requirements) (England) Regulations 1987
Estoppel by convention
Common law
Jurisdiction of FTT regarding admitted matters
Landlord and Tenant Act 1985, section 27A(4)(a) and (5)
Effect of payment on admission of liability
Cain v Islington LBC [2015] UKUT 542
Requirements for service charge demands
Landlord and Tenant Act 1985, section 21B and Landlord and Tenant Act 1987, section 48
Outcomes
Appeal largely successful.
FTT's reliance on Cain v Islington was inappropriate due to the lack of evidence and procedural unfairness. Estoppel by convention applied regarding quarterly payment discrepancies. Landlord failed to comply with statutory consultation requirements and some charges were unreasonable.
Lacy estopped from disputing exceeding £100 quarterly charges.
Estoppel by convention applies due to both parties' actions based on an incorrect interpretation of the lease, despite the landlord's actions.
Driveway/retaining wall charge reduced to £250.
Non-compliance with consultation requirements under section 20 of the 1985 Act and the regulations made thereunder.
Extra driveway/retaining wall cost conceded by respondent.
Respondent admitted this cost was not due.
Legal fees charge found to be incorrectly debited.
FTT's finding of fact overturned due to contradictory evidence.
Cleaning costs found to be partially unreasonable.
FTT failed to engage with the appellant's argument; a revised amount based on respondent's own figures was determined.
Management fees reduction ordered.
Landlord’s discount not passed on to leaseholders.