Landlord and tenant – Service charges – Appellant freeholder appealing against decision of First-tier Tribunal (FTT) that respondent not required to pay service charges for specified periods – Whether demands validly served – Whether FTT applying correct standard of proof – Appeal allowed
The appellant was the freeholder of 39 and 41 Craven Hill Gardens, London W2. The respondent held a long lease of Flat 5, 41 Craven Hill Gardens. The lease was for a term of 99 years from 26 September 2017. It contained the usual arrangement for the lessee to pay service charges in advance, on the basis of a budget, and for an account to be furnished after 31 March each year and a balancing payment or credit to be made.
Clause 6(4) of the lease incorporated section 196 of the Law of Property Act 1925 and provided that any service charge demand would be deemed “sufficiently served” if it was sent to her by post in a registered letter, left at her last known place of abode in the United Kingdom or affixed or left on the land or any house or building comprised in her lease.
The First-tier Tribunal (FTT) was asked to determine the reasonableness of service charges for the two years ending 31 March 2015 and 31 March 2016, and their payability by the long leaseholders of flats in the building, including the respondent. The FTT found that the respondent had not received the demands and therefore was not liable to pay the service charges claimed for the relevant periods.
The appellant appealed. It was not in dispute that if demands for service charges were delivered either by putting them through the letter box of 41 Craven Hill Gardens addressed to the respondent or by pushing them under the door of her flat, or by their being addressed to the respondent and sent to her by ordinary post, the requirements of section 196 of the 1925 Act regarding service had been met.
Held: The appeal was allowed.
(1) The FTT had answered the wrong question, namely whether the demands had been received rather than whether they had been delivered. It also applied the wrong standard of proof, appearing to require certainty. The FTT’s references to certainty were troubling: the mere use of those words did not necessarily mean that the FTT was applying a stricter standard of proof than the balance of probabilities. But in context, the two references to certainty were consistent with what the FTT was actually doing.
The correct standard of proof was whether, on the balance of probabilities, the demands had been delivered on the dates in question. The FTT appeared to be looking for proof of receipt at a level higher than the balance of probabilities. The FTT had before it evidence which weighted the balance of probabilities heavily in the appellant’s favour and yet failed to make a finding in accordance with that. Accordingly, the FTT applied the wrong standard of proof, as a result of which it failed to find that the demands had been received. On that basis the decision had to be set aside.
(2) Furthermore, the FTT had failed to take proper account of the evidence before it to an extent that amounted to an error of law. On the evidence, it had acted irrationally in concluding that the demands had not been delivered. The evidence was perfectly clear, sufficient to tip the balance of probabilities and more, that the appellant had delivered to the respondent’s place of abode, as section 196 of the 1925 Act required, a demand for the outstanding service charges: Kinch v Bullard [1998] 3 EGLR 112 and Henry Smith’s Charity Trustees v Kyriakou [1989] 2 EGLR 110 followed.
Accordingly, the FTT’s assessment of the evidence about the delivery of the service charge demands for the two years in issue was irrational because it was not open to the FTT to make that finding on the evidence before it. The only conclusion that the tribunal could reach was that the service charges for the two years in issue were validly demanded of the respondent. Rather than remitting the matter to the FTT, the Upper Tribunal would substitute its own finding that the service charges that the FTT found were payable by the respondent for the years ended 31 March 2015 and 31 March 2016 were validly demanded of her.
Alexander Bastin (instructed by Dale and Dale Solicitors Ltd) appeared for the appellant; Dirk van Heck (instructed by Direct Access) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of 38/41 CHG Residents Co Ltd v Hyslop
