Cases - Point West GR Limited v Rita Bassi and others
Record details
- Name
- Point West GR Limited v Rita Bassi and others
- Date
- [2019]
- Citation
- UKUT 137 (LC)
- Legislation
- Keywords
- Service charges – s.27A of the Landlord and Tenant Act 1985 – s.20B of the Landlord and Tenant Act 1985
- Summary
-
The leaseholders made an application under s.27A of the Landlord and Tenant Act 1985 (the 1985 Act) challenging the appellant landlord entitlement to charges totalling £557,557 inclusive of VAT. The sum claimed was for three invoices rendered by the former landlord (in liquidation) to the appellant. The costs were said to be costs incurred or services rendered during the period it was in administration.
The disputed invoices were paid by the appellant out of service charge funds it had collected or that it held in reserve. The appellant argued these costs were incurred by the former landlord while it was in administration, which were recoverable through the service charge. The respondent leaseholders contended that the administrators did not view the invoices as recoverable service charge items, but rather as expenses of the administration.
In a decision rendered in 2018, the First-tier Tribunal (FTT) concluded that the respondents had no contractual obligation to pay the sums comprised in the invoices rendered by the former landlord in administration. Consequently, the expenditure had not been reasonably incurred. The respondents cross-appealed. They argued that the FTT had omitted to reach a decision on their challenge to administrators’ fees, which they contended were not recoverable because the costs of the administration process had been dressed up as service charges and wrongly charged to the leaseholders. Further, the respondents contended that by virtue of s.20B of the 1985 Act the appellants were out of time for seeking payment of any sums that were recoverable.
On the issue of the payments made by the appellants to the administrators, the Upper Tribunal (Lands Chamber) (UT) found that the FTT had erred in focusing on the payments made by the appellants to the administrators, rather than on the costs said to have been incurred by the administrators when they were responsible for the affairs of the former landlord. The question the FTT should have asked was whether costs had been incurred by the former landlord in the amounts claimed. If so, it was immaterial that the identity of the landlord had changed between the incurring of those costs and the demand for payment.
In respect of the administrators’ fees there was no reason why in principle the costs of property management tasks performed by the administrators were not recoverable under the charging provisions of the lease.
Finally, the UT determined that some of the costs claimed were no longer recoverable by virtue of s.20B of the 1985 Act. Where a landlord had the right to include notional costs in a service charge for services it provided, such as in-house management or the provision of premises, the only date on which such a cost may be taken to have been incurred was the date on which the service was provided. Accordingly, the notional charges for management fees and office rent incurred before 3 January 2014 were not recoverable as the service charge demands for those items was served on the respondents more than 18 months after the services were provided.