Flat 8 Quayside House, High Street East, Sunderland, SR1 2AY MAN/00CM/BSC/2025/0001-AND-MAN/00CM/LSC/2025/0710
DECISION
[51]The Applicants applied to the Tribunal for a determination as to the reasonableness and payability of the service charges and administration charges for the years 2018 to 2024, for the Property.[52]The Tribunal was provided a few days before the hearing with 10,000 pages of random, badly presented documents by both parties.[53]The Applicants were acting in person, with no legal representation. Despite that, the directions were not properly followed, and it was hard to follow the precise arguments they made about the service charges they objected to, or what service charges they had actually paid when it came down to assessing the reasonableness of the administration charges.[54]The Respondent is a professional managing agent, managing properties on a nationwide basis. Whether by accident or design, their bundle was extremely poorly put together. It was not hyperlinked, and there was seemingly no pagination system, so that the index bore little resemblance to the contents. There was duplication, missing invoices from 2020 onwards and spreadsheets printed out and split up over several pages, so it was impossible to glean from them what headings should be attached to columns, and how they should be read.[55]When the Tribunal adjourned for lunch, the Respondent was asked if he might put together a summary of the service charges sought over the years to make matters easier to follow. The Respondent within a half hour break was able to produce a set of accounts for each year under review, with an accompanying pack of invoices behind each year, set out in logical and easy to read format. If the bundle had been presented like this in the first instance, or indeed the Applicant had been provided with this information several years ago, the matter would have progressed in a different way.[56]The Tribunal had to consider whether to accept this late evidence. There seemed no reason for it to be provided so late, and no explanation was given. The Tribunal determined that as the Applicant had not been provided with it previously, it should be disregarded. SERVICE CHARGES[57]The main concerns that the Applicant had stated, prior to the application, and during it, was over the condition of the Property, which was not being maintained or cleaned properly, the quality of the management and the lack of transparency of the Respondent including their longstanding failure to provide invoices.[58]The Tribunal was satisfied that overall there was evidence to support charges for insurance, various works including electrical works, the supply of electricity to communal parts, banking charges, accountancy charges and health and safety charges. These charges were considered, on the evidence before the Tribunal, to be reasonable.[59]The Tribunal was not however satisfied that the service charges for cleaning and gardening, and management, were reasonable.[60]The Respondent only produced invoices (at the very last opportunity) in the original bundle going up to 9th September 2020, the last dated invoice in bundle being from "Crissu Building Projects Ltd, 23 Newcourt Street London Nw8 7AA"so the Tribunal had very little evidence that costs had been charged for, had been incurred.[61]During the adjournment for the lunch recess, Mr. Freilich produced the required documents, being the accounts, and supporting invoices, presented in an organised fashion, in less than an hour. The Tribunal was concerned that the Applicant was able to provide these documents on the day of the hearing (presumably having always been readily available) but had never been provided to the Applicants despite repeated requests for several years; and they were not disclosed in accordance with the directions of the Tribunal. The Respondent offered no explanation for this.[62]The invoices in the original bundle for cleaning and gardening, were for a company named Marylebone Property Maintenance Limited, who were charging £625 per month during 2018.[63]The invoices were all identical format to the invoices produced by the Respondent for its management charges. Marylebone Property Maintenance Limited operated from an address in London, to provide services in Sunderland. They charged no VAT for their services. Records at Companies House show that Marylebone Property Maintenance Limited was incorporated on 14 March 2018, and dissolved on 4 June 2019. A further invoice was produced for 12 months cleaning the car park, 2018 for £750, on 25th September 2019; nearly four months after the company had been dissolved. The Respondent could not offer a plausible explanation for this, other than to agree that they were not registered for VAT. He said that the Respondent had "people in Sunderland" who carried out the work. He did not explain what Marylebone Property Maintenance Limited had to do with the services, or why they were dissolved so quickly.[64]The Respondent told the Tribunal that no cleaning had been carried out over the last six months because they had not been recovering any money for service charges. The Tribunal was not satisfied on the evidence before it that cleaning had been done at the levels the Respondent suggested to justify the charges raised.[65]The invoices provided after the break for lunch had remarkably similar attributes; boiler plate invoices in identical format, for companies that were incorporated, and dissolved in less than two years, with addresses in London and the southeast, apparently delivering services in Sunderland, and charging no VAT.[66]The Applicants were concerned that the Respondent showed no transparency. The Tribunal could understand the Applicants' concerns. The invoices gave the hallmarks of being a sham, perhaps to avoid VAT on the services, for southeast based companies supposedly carrying out works in Sunderland.[67]The Tribunal accepted the Applicant's evidence that cleaning and gardening had not been carried out adequately, and the supporting invoices were delivered late, and raised more questions than they answered. There was no documentary evidence that the services were being checked, or information as to who the people doing this work in Sunderland were or who they were employed by. There has clearly been some cleaning over the time, (as detritus from photographs had been removed; but it was hard to accept that three hours per week had been carried out over the years under review.[68]The Tribunal determines that the cleaning and gardening charges should be reduced by 50% for the years in question.[69]In relation to window cleaning, handwritten invoices for window cleaning at £50 per quarter were produced. The Tribunal accepted these as reasonable.[70]The management charges fluctuated over the years but were in the region of £2,000 for the block, which was in the region of £250 per unit. Mr Freilich in his oral evidence said that his company's usual rates started at a base rate of £175 plus VAT per unit. However as with the invoices for cleaning and gardening, no VAT was charged on the management fees. The invoices were in exactly the same style as those produced by Marylebone Property Service Limited, in terms of layout, and narrative "issued on behalf of…"[71]The Tribunal determined that the management of the Property was sub optimal. The Property was in poor condition, with little evidence of proactive management or repairs, no sinking fund, and with extremely opaque charging methods for services.[72]The Tribunal found that the Respondent was not managing in accordance with the RICS service charge residential code; the core function of looking after the Property, attending to repairs promptly and keeping it clean and tidy were clearly not being carried out. Leaseholders were not being provided with answers to their queries. The Respondent were proactive with producing arrears letters, and chasing debt, but not so keen to provide leaseholders with evidence of what they were liable to pay for.[73]The Tribunal found substantial issues with transparency on the part of the Respondent, which fall short of the mandatory standards set out in the RICS Residential Service Charge Management Code. The companies which appear to have been wound up in short order ahead of becoming liable to register for VAT; others registered in London and the Southeast are not VAT registered despite being represented as providing cleaning, gardening and maintenance services nationwide, extending as far as Sunderland.[74]The invoices issued by these companies follow a small number of similar templates, raising concerns about authenticity and compliance with the Code’s requirement that all communications should be accurate, clear, concise and courteous.[75]When questioned on these matters, the Respondent avoided providing a clear answer, and the Respondent's bundle itself was presented in a manner that was neither coherent nor easy to navigate, contrary to the Code’s requirement that information should be transparent. Notably, however, during the hearing the respondent was able, over a short lunch break, to produce a clear and orderly set of invoices spanning several years, which underscored in stark contrast the earlier failure to comply with the Code on transparency and accountability; and the Tribunal's directions.[76]The RICS Residential Service Charge Management Code is approved by the Secretary of State and is often treated as a benchmark of good practice across the residential property management sector. Accordingly, the Respondent’s conduct is measured not only against professional obligations but also against the accepted industry standard of transparency in service charge documentation.[77]The Tribunal determined in the circumstances that the management charges should be reduced by 25% for the years in question. ADMINISTRATION CHARGES[78]The Tribunal was asked to consider the administration charges imposed on the leaseholder by the Respondent. The Applicant stated in their bundle relating to Finance that part of their action against the Respondent concerned their "cavalier attitude to accounting", saying that "it is clear that he has no idea of how much we have paid". Mr. Higham went on to say that he had kept records, and in his file he presented them. He said that the Respondent's in house solicitor had confirmed that she had destroyed cheques for no apparent reason.[79]Mr. Higham said that he was "in credit "and had paid over £9,000.[80]Mr. Higham produced bank statements in which he had marked entries for cheques that he said had been sent to pay his service charges, and receipts to show he had paid. The bundle stated that the bank statements were from 2017 to "present". In actual fact the bank statements ended on the 20 April 2023, and some pages were missing.[81]Mr. Higham had marked the bank statements by annotations and coloured stickers. They were very difficult to follow but showed that payments had been sporadic.[82]Mr Higham's evidence of payments made were not at all clear. He had referred to cheques being destroyed, but some cheques had gone through on his bank statements. There was no evidence from the bank or otherwise as to who these cheques had been paid to. Mr. Higham had made no attempt to list the payments he asserted he had paid since 2018, seemingly expecting the Tribunal to make the calculations from the sporadic payments showing on his bank statements.[83]The bundle at page 165 showed payments as being up to date until the 1st of January 2018 but after that date the account had clearly gone into arrears.[84]The correspondence in the bundle between the parties showed that the Applicants had been in financial difficulty in 2019 and had asked the Respondent for time to pay.[85]The Tribunal finds that the Respondent was in arrears at various times since 2018.[86]The Tribunal finds that the level of administration fee was reasonable at £75 per letter.[87]However there had been very little effort to respond to the Applicant's concerns about services, or about what he had paid in and what the Respondent had received and the state of the Respondent's accounting systems. It is extremely difficult for the Tribunal to be precise owing to the record keeping of both parties.[88]For example, payments of £150 were made by standing order on 21 January , 19 February 20 May 19 June and 19 July 2019, but on each occasion, only £50 allocated to the ledger, despite it being supposedly for 8 Quayside, 16 Bodlewell, and Parking Space K. And a standing order paid to Moreland Estate for £200 on 19 September 2019 had only £100 allocated on that date.[89]The Respondent had provided their spreadsheet ledger over several pages in the bundle (pages 160 – 191) making it extremely difficult to decipher because the headings did not transfer. The Respondent does not appear to have recorded clearly on their accounts what has been paid by the Applicants and how payments have been allocated. Similarly, the Applicant has not provided a schedule of what they have paid over.[90]Given the overall state of the evidence presented by both parties, and in accordance with the overriding objective, we find ourselves having to once again adopt a broad-brush approach, to make a determination.[91]The Tribunal finds that the Applicants were in arrears; we also find that the Respondent's accounting systems were far from transparent, and that it was unfortunate that the enthusiasm demonstrated in their pursuit of arrears was not matched by their enthusiasm for providing a service with clarity and transparency.[92]The Tribunal in all the circumstances reduces the administration charges overall by 25%. Tribunal Judge John Murray 22 December 2025