Landlord and tenant – Service charge – Reasonableness – Determination of leasehold valuation tribunal as to reasonableness of service charge levied by appellant landlord – LVT finding cleaning and estate charge unreasonable and reducing it based on own knowledge and experience – Whether giving adequate reasons for decision – Whether proceeding unfairly by relying on knowledge and experience without giving parties opportunity to comment – Appeal allowed
The respondent held a long lease of a flat in a 1970s block development that the appellant landlord managed as a not-for-profit registered provider of social housing. The block contained 41 flats in all, eight of which were held on long leases and the rest of which were let on periodic assured tenancies. It had originally been owned by the district council but had been transferred to the appellant in late 2011 as part of a large-scale voluntary stock transfer.
In October 1012, the respondent applied to the leasehold valuation tribunal (LVT) for a determination of the service charge payable for several years between 2007 and 2013. The LVT found that all the service charges for that period were reasonable and payable, with the exception of “cleaning/estate charges” for the years from 2011 onwards, after the appellant took over the management of the block, which it reduced from £321.14 pa to £225.00 pa. In that regard, it found that the costs of estate management had increased dramatically since the appellant took over, there was insufficient evidence to show that the district council had previously been undercharging, and that the service provided by the appellant was not to a reasonable standard for the costs charged. In reaching its own figure for the reasonable costs, the LVT stated that it was relying on its finding of reasonableness for the period 2007 to 2011 and on its own knowledge and experience as an expert tribunal.
The appellant appealed. It contended that the LVT had not adequately explained its conclusion that the service provided by the appellant was not to a reasonable standard for the costs charged, in circumstances where the appellant had provided it with a large amount of supporting documentation detailing the full range of services covered by the charges. It submitted that the LVT had placed too much reliance on its own knowledge and experience of cleaning costs, without explaining whether that knowledge was general or specific, and, so far as it had relied on specific examples of cleaning costs, without providing details of the evidence to enable the appellant to comment or adduce evidence of its own in rebuttal.
Held: The appeal was allowed.
The LVT, and now the First-Tier Tribunal (Property Chamber), was an expert tribunal, whose knowledge and experience informed and enhanced its decision making. The scope of an expert tribunal’s ability to rely on its own knowledge and experience would vary from case to case and, given the numerous possible variations of circumstance, it was not possible to say exactly how such a tribunal should approach every type of case. However, if a tribunal was making a decision on the basis of either factual or expert evidence, it should proceed on the basis of the evidence given by the parties. If it was aware of other specific evidence that conflicted with what the parties had put to it, then it should tell the parties about that evidence and ask for their comments. That was a different matter from the application of the tribunal’s knowledge and experience to the task of weighing the evidence before it.
Where the tribunal received evidence but decided to reject it because, in its knowledge and experience, the evidence was out of line from the norm, then it had to decide whether, as a matter of fairness and natural justice, the parties were entitled to be informed of its view and given an opportunity to comment or to provide further evidence. That was so regardless of whether the tribunal had evidence from just one or both of the parties, and whether or not the parties were represented. In considering how to achieve fairness, and whether or not to seek comments from the parties before proceeding to apply its knowledge and experience, the tribunal should take into account various factors including: (i) the quality of the evidence before it, in that, where comprehensive and cogent evidence was provided, it would be more difficult for a tribunal to depart from that evidence without first airing its concerns with the parties; (ii) the extent of the difference between the evidence presented and the tribunal’s view; (iii) whether both parties had produced evidence and/or made representations, with the tribunal able to be more confident in applying its general knowledge and experience where there was evenness between the parties, provided it did not make a significant departure from the ambit of the evidence received without first giving the parties an opportunity to comment; and (iv) the overriding objective, now set out in the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, of dealing with cases fairly and justly, which required it to make proportionate decisions on the conduct of a case, having regard to cost and the resources of the parties and the tribunal itself. In many cases, where a tribunal sought to rely on its own knowledge and experience, the need to seek the parties’ views might be quickly and easily satisfied at the hearing itself by simple questions and answers. In other cases, it might be necessary for the tribunal to adjourn a hearing and/or seek further representations: Arrowdell Ltd v Coniston Court (North) Hove Ltd [2007] RVR 39; [2013] PLSCS 278 and Bristol City Council v Aldford Two LLP [2011] UKUT 130 (LC) applied.
In the instant case, the LVT had determined that, despite receiving comprehensive evidence from the appellant, it was not satisfied that the estate costs had been reasonably incurred. Since no comparable evidence had been produced by the respondent, the LVT appeared to have relied on a comparison with the charges levied by the district council and on its own knowledge and experience. It had not, before reaching its conclusion, indicated that it intended to rely on either specific evidence within its knowledge and experience or on its general knowledge and experience. Although, in some cases, such an indication would not have been necessary to fulfil the requirement of dealing with the case fairly, it was necessary in the instant case, where the issue was of particular importance to the appellant as setting a possible precedent for estate charges for the future management of the block and, potentially, other blocks within its management. Having regard to that matter and to the comprehensive evidence produced, the LVT had erred in failing to afford the parties an opportunity to comment on its view of the estate charge based on its knowledge and experience. Further, the reasons that the LVT gave for its decision did not deal adequately with the evidence presented by the appellant, such that the appellant was left not knowing whether the service provided was inadequate, or adequate but too expensive. It would have been helpful if the LVT had been clear about the extent of the lease obligations to which it had regard in deciding that the costs were not reasonable. It should also have articulated its view of the evidence produced by the appellant and explained its reasons for rejecting that evidence, if indeed it did so.
Ben Maltz (instructed by Trowers & Hamlins LLP) appeared for the appellant; the respondent did not appear and was not represented.
Sally Dobson, barrister
