Case Law

The applicant applied for a determination of the payability and reasonableness of his service charges. Unlike most LVT cases, the applicant occupied his flat under an assured tenancy agreement (Housing Act 1988), rather than a long lease.
At the beginning of each year, the Housing Association would calculate an amount for the service charges which it would require. The applicant would pay 1/52 each week, with a balancing process at the end of the year. However, the tenancy agreement specified that he would pay 1/24 of the costs.
The LVT made a number of very minor adjustments to the service charges, calculated to be mere pence per week.
Analysis
The significance of this case is not anything in the facts or the decision, but in the fact that a Housing Association has been brought before the LVT to justify service charges in an assured tenancy. Whilst secure tenants of Local Authorities are not allowed to challenge any service charges in the LVT, there is no such prohibition on tenants of Housing Associations. There are far fewer challenges of this nature than one feels (albeit instinctively) there ought to be.
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The applicant leaseholder was a resident of a retirement block. He, like most of the other leaseholders, was very pleased with the day-to-day management provided by the respondent and, in particular, with the resident manager and her staff.
However, the residents were concerned that the respondent’s head office was rather more slipshod, with poor audit control and inadequate provision made for the sinking funds. They were particularly aggrieved by the mistaken cancellation of a large painting contract and the legal costs charged to them in connection with the decision by the respondent to seek an anti-social behaviour order against the son of one of the residents.
The respondent accepted that there had been a number of errors and, at times, a lack of communication, but that these matters were being resolved. They offered to reduce some of the amounts claimed in the light of these admissions. A number of the errors had already been dealt with internally.
The LVT was disturbed by the poor record keeping of the respondent. It identified a number of service charge items which fell foul of the provisions of s20B and agreed that the reserve funds were set out in such a confusing manner that the LVT itself, let alone the residents, had difficulties understanding them.
The cancellation of the external decoration contract troubled the LVT, but it accepted an offer from the respondent to reduce the costs claimed by 50%.
The ASBO was more problematic. A son of one the tenants had been causing problems for the respondent and, faced with a refusal by the police to take action, the respondent turned to its solicitors. The LVT criticised the respondent for (a) instructing “City” solicitors and (b) not instructing criminal solicitors and barristers. Whilst the respondent is entitled to choose whoever it wants to do its legal work, it could not do so where the costs would, in effect, be met by the leaseholders via the service charge, in addition, the ASBO was sought in order to protect the respondent’s staff, not the tenants. The LVT reduced the amount payable to one third of the actual bill.
Analysis
In many respects, this is a strange decision. Given the excellent relationship that existed between the two parties, quite why this matter was not resolved through informal discussions is a mystery. However, the LVT’s analysis of the ASBO costs is plainly suspect. Whilst it is correct to say that regard must be had to the interests of the party who will ultimately pay the bill (i.e, the leaseholders) the LVT’s decision seems to go too far. Firstly, the solicitors chosen by the respondent were noted housing / property experts with whom they had a long standing relationship. It is certainly arguable that even if the tenants were paying the bill themselves, they would have chosen to use them. Secondly, the LVT is wrong to suggest that ASBO’s should be dealt with by criminal lawyers – as the House of Lords has made clear, ASBO’s are civil matters, not criminal matters and it is wrong to import criminal law ideas into the law of ASBO’s. See Clingham v Kensington & Chelsea LBC; R v (Manchester Crown Court) ex p McCann [2001] 1 AC 787.
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