Service charges: lack of clarity in application

A party making an application for a determination as to the reasonableness and payability of service charges should define the issues in their case with precision and provide the necessary evidence in support of their case. In Middleton and another v Karbon Homes Ltd [2023] UKUT 206 (LC), the appellants were the assured tenants of Magdalene Court, a purpose-built block of retirement apartments situated in Consett, County Durham. The respondent was their landlord. The relevant service charge provisions in the appellants’ tenancy agreements provided that from the April following the commencement of their agreements, full details of the service charges would be included in a service charge schedule. Under clause 57 of the tenancy agreements, the landlord, after consultation with the affected tenants and upon serving notice on them, could “increase, add, alter, vary, reduce or remove any services” for which the tenants were required to pay a service charge. Before the First-tier Tribunal, the appellants challenged their liability to pay service charges for the years 2017 to 2021. The charges were for the provision of a number of services that their landlord alleged were provided in accordance with the provisions of the tenants’ tenancy agreements. The FTT had approved the charges because it had not received any evidence from the appellants that the same were unreasonable. The main ground for which the tenants were given permission to appeal concerned the landlord’s entitlement to add charges that had not originally been included in the service charge schedule when the tenancies were granted. The Upper Tribunal (Lands Chamber) found that by virtue of clause 57, the service charge schedule could only be added to when a genuinely “new service” was being provided. The UT had initially understood the appellants’ complaint to be that new services were being added without consultation, which would be a breach of clause 57. However, after clarification, the appellants’ complaint was that new charges were being added for old services. The UT found that the FTT did not specifically deal with this issue, but it could not be criticised in light of the general nature in which the appellants had set out their case. The issue, however, did fall within the scope of their application because it related to the amount of service charge they were required to pay for the disputed years. Owing to the paucity of the appellants’ evidence in support of their case, the UT found it difficult to determine whether existing services were being added to the service charge schedule. There was no evidence before the FTT as to what services were originally on the schedule when the tenants’ tenancy agreements began. The UT determined that it could only interfere with the FTT’s decision if it was wrong. As the tenants had not clearly defined the issues in their application and had failed to provide the evidence in support of their case, it could not be demonstrated, even at the appeal, that charges had been improperly added to the schedule. The appeal was dismissed. Elizabeth Dwomoh is a barrister at Lamb Chambers