Landlord and tenant – Service charges – Tenancy agreement – Appellant appealing against decision of First-tier Tribunal (FTT) striking out application by respondent tenant for determination of reasonableness and payability of charges demanded pursuant to tenancy agreement – Whether scheme-based support charge was variable service charge –Whether charge payable – Whether costs reasonably incurred – Appeal dismissed
The appellant was the freeholder of Rosalind Court, Brunel Way, Stratford Upon Avon, a housing development for the over-55s where the respondent held a fully assured tenancy of a flat. He was categorised as a sheltered housing tenant and did not receive personalised care in his home. The property was a block of 102 apartments in a five-storey complex. It was a mixed tenure scheme consisting of sheltered and extra care tenants, the extra care tenants having additional personal case and support needs.
The respondent argued that no services were provided to him in return for the charge. He applied to the FTT for a determination of the reasonableness and payability of charges described in his tenancy agreement as a scheme-based support charge (SBSC), in its jurisdiction under section 27A of the Landlord and Tenant Act 1985. That section enabled the FTT to determine whether a charge was payable, provided that it was a variable service charge within the meaning of section 18 of the 1985 Act.
On the evidence, the FTT concluded that the SBSC was not a service charge within the meaning of section 18(1)(a) of the 1985 Act: it was not the type of charge that fell within its jurisdiction under section 27A, which meant that the respondent could not have the determination he sought as to whether the SBSC was payable under the lease or was reasonable within the meaning of section 19 of the 1985 Act. The appellant appealed.
Held: The appeal was dismissed.
(1) The appellant’s application to adduce further evidence, in the form of copies of agreements made with third parties for the provision of services to the residents to support its case would be refused. The evidential value of the material was low; there was no witness evidence to explain how it related to the issues on appeal. Even if the appellant had contracts with third parties, that would not have any impact upon findings of fact made by the FTT about the availability of certain services to the respondent. No good reason had been put forward why it had not been produced to the FTT and it was unlikely to assist the UT.
(2) The calculation of the total weekly payment in the opening pages of the agreement listed its components as rent, “variable service charge” and the SBSC. There was nothing at that point in the agreement to say what, if anything, the SBSC was a payment for except its name. The agreement was not specific about the services provided, but it seems clear that the charge was a payment to the landlord for costs it had incurred or would incur in the provision of services.
That being the case, the SBSC was “an amount payable by the tenant of a dwelling… in addition to the rent, which is payable… for services… the whole or part of which varies or may vary according to the relevant costs” and the SBSC was a variable service charge within the meaning of section 18 of the 1985 Act. The FTT therefore had jurisdiction under section 27A to decide whether it was payable both under the contract and pursuant to statutory requirements, in particular section 19 of the 1985 Act.
The obligation to pay the SBSC at £18 per week was clearly and unambiguously stated in the definition of the total weekly payment. The obligation to pay was not expressed to be conditional upon those services being provided. Therefore, the charge was payable under the tenancy agreement.
(3) It was not entirely clear whether the SBSC fell to be assessed under section 19(1) or 19(2), since it appeared to be calculated both by reference to costs incurred and by reference to estimated future costs. In view of the requirement to pay the total weekly payment in advance it might be better to regard it as a charge for costs not yet incurred, in which case the statute required that the charge be reasonable; if that was not right then the question was whether the relevant costs were reasonably incurred.
The appellant was challenging the FTT’s finding of fact that none of the services that the SBSC was supposed to represent were in fact available to, or provided for, the respondent. The UT would only rarely interfere with findings of fact made by the FTT, and only where the FTT made an error of law or the finding was in some way irrational.
The appellant did not provide any witness statements for the FTT. The UT had the landlord’s statement of case in the FTT which said that the SBSC was a charge for answering emergency “lifeline” calls, checking security and reporting emergency repairs. It had the FTT’s record of the unchallenged evidence that the respondent had opted out of the “lifeline” call service; and the FTT’s finding that there was no evidence of the night staff making calls about repairs.
(4) What the FTT drew from the evidence was that the SBSC was a charge for the provision of overnight personalised care for those residents who had a separate support agreement in place. It was not a service provided for the benefit of all residents.
Without written evidence, it was impossible to say that the FTT drew an irrational or impossible conclusion from the evidence of the appellant’s officer. When her evidence was taken together with the respondent’s evidence it was clear that the FTT reached a conclusion that was open to it on the evidence. The FTT’s decision that the SBSC was not a reasonable charge was upheld (whether taken as a finding under section 19(1) or section 19(2)).
Accordingly, the SBSC was a variable service charge within the meaning of section 18 of the 1985 Act. It was payable by the tenant under the terms of the tenancy. However, it did not meet the requirements of section 19 of the 1985 Act because, as a matter of fact, in the years in question no services were provided to the respondent in return for the payment of the SBSC. Therefore, the decision of the FTT that the SBSC was not a reasonable charge would be upheld.
David Nuttall (instructed by Shakespeare Martineau LLP) appeared for the appellant; Justin Bates and Harley Ronan (acting pro bono) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Orbit Housing Association Ltd v Vernon