Service charges decision overturned in Westlake Estates Ltd v Yinusa

The appellant, Westlake Estates Ltd, was the freeholder of Snowshill Place, a purpose-built block of 17 flats.

It acquired the freehold in 2008 from Linkhaven Estates Ltd. The respondent, Mr Yinusa, was the tenant of flat 6. He held it under a 125-year lease granted by Linkhaven Estates Ltd in 2006.

The lease contained obligations on the part of the tenant to pay service charges and ground rent. The respondent had not paid the sums demanded for the years 2012 to 2017, and the appellant had applied to the First-tier Tribunal (FTT) seeking a determination as to whether the service charges were payable pursuant to section 27A of the Landlord and Tenant Act 1985.

The FTT concluded that the service charges for those six years were not payable by the tenant because, although they were properly served on the respondent, they neither complied with section 47 of the Landlord and Tenant Act 1987, nor contained the information prescribed by section 21B of the Landlord and Tenant Act 1985 – this was the main point appealed to the Upper Tribunal (UT).

The FTT also found that the property was not insured in the appellant landlord’s name and that, therefore, sums charged for insurance were not payable in any event; that the sums charged for management of the building were to be reduced, because of poor management, to £200 per annum (from the sums of just over £300 demanded in each year); that section 20C of the 1985 Act applied (appealed); and that costs of £1,300 were payable by the appellant to the respondent pursuant to rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 because the appellant should have made itself aware of the “fundamental flaws” in its application in relation to section 47 of the 1987 Act and to the insurance problem (also appealed).

The Upper Tribunal (UT) found that the FTT’s finding on section 47 of the 1987 Act was not open to it and could not reasonably have been made on the evidence before it. The appeal was upheld on this point. It also said that, in the presence of evidence – in the form of the disclosed documents – that the summary information had been provided to the respondent, and in the absence of any evidence to the contrary, it took the view that the FTT could not reasonably have made its finding about section 21B.

In the light of these findings, the UT said that it was difficult to see any justification for the FTT’s order that section 20C should apply, and it determined that it did not. Nor could there be any justification for the award of costs against the landlord; the reason given for that award was that the appellant should have been aware of the weakness of its case under section 47 and in connection with the insurance policies (which the FTT disallowed from the service charge because the policy had not been in the appellant’s name). The point about section 47 fell away, and the appellant’s mistake about the insurance policy did not justify a finding that it behaved improperly, unreasonably or negligently, as would be required before a costs order could be made under rule 13. Accordingly, the FTT’s order that section 20C applied, and its costs order, were set aside.