Service charges containing composite charge – Composite charge relating to other properties – Tenant only shown accounts relating to his own property – Whether tenant only entitled to see accounts relating to own property – Whether landlord had reasonable excuse – Landlord and Tenant Act 1985 – Magistrates dismissing action – Appeal dismissed
The appellant was the tenant of 21 Peaches Close, Epsom, Surrey, under the terms of a lease dated November 18 1955. The lease was assigned to the second respondent on July 5 1990 and to the appellant on September 18 1990. The lease contained a clause whereby a tenant could dispute any service charge by arbitration. The second respondent was a company of which the first respondent was a director. The second respondent gave the appellant three months’ notice, as required under the lease, that the quarterly charge was to be increased by £41 per quarter to cover composite labour costs. The appellant requested that the accounts relating to Peaches Close be audited. As a result an accountant certified the accounts as a fair summary of all the relevant costs and transactions of the Peaches Close Estate Management Fund (the fund). In January 1997 the appellant wrote to the second respondent giving notice that he wished to inspect the certified audited accounts, receipts and vouchers in relation to the fund for the years ending March 31 1992 to March 31 1996.
In February 1997 the appellant was shown all documentation relating specifically to Peaches Close. The documentation consisted of all the invoices and vouchers relevant to the items specifically referred to in the accounts of the fund. The first respondent did not produce the accounting records of the second respondent because it owned numerous other properties and did not wish to make available documentation and records of the second respondent, which did not relate directly to Peaches Close. The applicant contended that the respondents were in breach of section 21 of the Landlord and Tenant Act 1985 since not all the receipts and documents, as set out in the summary of costs supplied to him, which had included a composite charge for costs incurred by the second respondent, had been shown. The magistrates’ court held that the respondents had afforded the appellant reasonable facilities for inspecting accounts, receipts and other documentation in existence relating directly to Peaches Close and on that basis dismissed the appellant’s application.
Held The appeal was dismissed.
1. The magistrates had been wrong to conclude that the respondents were only required to supply a summary of relevant costs and supporting documentation relating specifically to charges incurred in respect of Peaches Close. A landlord was obliged to show all the documents which had been shown to the qualified accountant for certification and the appellant had not seen all the documentation on which the certification had been based, which had included the records on which the composite charge had been based.
2. However, an offence was only committed under section 21 of the 1985 Act if the landlord had acted without an excuse. The appellant could have challenged the composite charge by going to arbitration, which he was entitled to do under the terms of the lease, and therefore, since he had not availed himself of that remedy, the respondents did have a reasonable excuse.
The appellant appeared in person; the first respondent appeared in person and on behalf of the second respondent.
