Determining whether the cost of an item of service charge has been reasonably incurred under section 19(1) of the Landlord and Tenant Act 1985 ought not, in general, be determined by the application of rigid rules, but must be assessed in light of the specific facts of each case.
Radcliff Investment Properties Ltd v Meeson and others [2023] UKUT 209 (LC), [2023] PLSCS 147 concerned the liability of the respondent long leaseholders to pay for the waking watch for their building from May 2019 to September 2019, in the total sum of £57,894.
The building was a former office block in Manchester. It was converted into residential flats between 2017 and 2018. In January 2018, a fire risk assessment was undertaken on behalf of the developer in accordance with the Regulatory Reform (Fire Safety) Order 2005 (the “Fire Safety Order”). The report recommended that a further risk assessment be carried out in January 2019 and at regular intervals not exceeding 12 months.
The appellant landlord acquired the freehold in August 2018. By that stage most of the flats in the building had been let on long leases. There was no evidence that the landlord had carried out any subsequent risk assessment following its acquisition of the freehold.
A malfunction in the fire alarm control panel of the building in May 2019 triggered a warning to the Fire Service. An inspection ensued. Multiple fire safety failings were identified. The Fire Service ordered the implementation of an immediate waking watch. The landlord complied on 3 June 2019. Subsequently, the Fire Service served an enforcement notice on the landlord. The notice highlighted breaches of article 9 of the Fire Safety Order. In particular, the risk of internal fire spread and failures in fire risk assessment.
A service charge demand including the costs of the waking watch was given to the lessees in 2021. They applied to the First-tier Tribunal under section 27A for a determination as to whether those costs were payable. The FTT found that the lessees were only liable to pay £5,859 towards the costs of the waking watch. It found the balance was unreasonably incurred as it arose from the failure of the landlord to undertake adequate fire risk assessments.
On appeal, the landlord argued that the FTT had erroneously focused on why the costs of the waking watch needed to be incurred rather than whether it was reasonable for the landlord to incur the same. The Upper Tribunal (Lands Chamber) disagreed.
In dismissing the appeal, it observed that when considering questions of reasonableness, it was rarely appropriate to begin with an inflexible rule. Whether a cost was reasonably incurred should be determined in light of all the circumstances of the case. In determining the amount the leaseholders were required to pay, the FTT first had to consider the contractual question of whether the provision of the service, namely a waking watch, was one which the lessees were required to contribute to and for which the costs were reasonably and properly incurred. The next step was to consider whether the statutory cap under section 19(1)(a) applied. On the evidence, the FTT was entitled to reach the conclusions it did. The cost of the waking watch increased the costs of the remedial work to make the building safe. That increase was wholly avoidable if the landlord had complied with its duties under the Fire Safety Order.
Elizabeth Dwomoh is a barrister at Lamb Chambers
