The Community Energy Savings Programme was part of the government’s Home Energy Saving Programme from 1 October 2009 to 31 December 2012. As part of their obligations under the energy saving scheme, energy companies were required to fund a variety of energy-saving and fuel efficiency measures in deprived areas. One method by which energy companies could achieve their targets was by partnerships with local authorities or housing providers engaged on major works to improve the quality of social housing.
Oliver v Sheffield City Council [2015] UKUT 229 (LC); [2015] PLSCS 171 concerned a programme of major work to properties in Sheffield, the cost of which was to be shared between the council, as landlord, and its tenants. It transpired that some of the work was eligible for funding under the energy saving scheme, for which the council received £1.574m. However, some properties were ineligible, or did not qualify for funding because the work was not completed in time.
The council considered that it would be unfair to make some leaseholders an allowance against their service charge contributions, but not others, and chose instead to reduce its own spending on the properties by a sum that was equivalent to the money received from the energy company and to re-allocate that money to other city-wide housing projects. The question for the tribunal was whether the tenant’s service charge contributions should have been reduced to take account of the energy company’s payment, or whether the council was entitled to use the money received to reduce its own contribution to the cost of the work.
The tribunal did not consider that the council had “incurred” the costs funded by the energy company for the purposes of the service charge provisions in the tenant’s lease, since the energy company was bound to reimburse the council for the cost of the work. The funding did not form part of the council’s general revenue account and the council would be recovering the money twice if it were to retain the money paid by the energy company and charge its tenants for the work as well.
The council’s decision was taken in good faith and with a view to limiting the cost for all leaseholders. It had not pocketed the funding for its own benefit and the tribunal accepted that the costs that the council had chosen to pay itself might well exceed the amount paid by the energy company. However, the provisions in the tenant’s lease did not require her to contribute to the cost of work elsewhere in the city and it was not open to the council to spread the benefit of the reduction in costs obtained through the energy saving scheme without the agreement of its tenants. Therefore, the tenant was entitled to be credited with the sum paid by the energy company in respect of the work on her flat, to the extent that the cost of such work was included in the service charge costs that the council was seeking to charge.
Allyson Colby is a property law consultant
