The Garden Quarter (Caversfield) Management v Vincent Ortet [2025] UKUT 133 (LC)

[2025] UKUT 133 (LC)Case No LC-2024-587
IN THE UPPER TRIBUNAL (LANDS CHAMBER)
Between
THE GARDEN QUARTER (CAVERSFIELD) MANAGEMENTAppellantCOMPANY LIMITEDAppellantVINCENT ORTETRespondent
AN APPEAL AGAINST A DECISION OF THE FIRST-TIER TRIBUNAL (PROPRETY CHAMBER)
Ref: CAM/38UB/LSC/2023/0020
By video link
23 April 2025
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – SERVICE CHARGES – section 19 Landlord and Tenant Act 1985 – provisions in relation to service charges demanded before and after costs incurred – adequacy of reasons
Flat 7, The Officers Mess, Orchard Lane,Caversfield, Bicester, OX27 8AHUpper Tribunal Judge Elizabeth Cooke16 April 2025Ms Kerry Poulter of Encore Estate Management Limited for appellantThe respondent presented his own case.© CROWN COPYRIGHT 2025Date 2025-04-23

Introduction

[1]This appeal is brought by The Garden Quarter (Caversfield) Management Company Limited, a resident-owned company responsible for the management of an estate of some 200 freehold houses and leasehold flats. The appeal is against a determination made by the First-tier Tribunal (“the FTT”) in response to an application by the respondent, Mr Ortet, about a service charge demanded of him in relation to work done to the exterior of the building in which he has a leasehold flat: Flat 7, The Officers Mess, Caversfield. The FTT decided that of the £3,392.16 demanded, £1,000 was payable. Permission to appeal has been granted by this Tribunal on the basis that the FTT did not properly explain its decision.[2]The appellant was represented in the appeal by Ms Kerry Poulter of Encore Estate Management Limited, the appellant’s managing agents; Mr Ortet presented his own case. I am grateful to them both for their very helpful engagement with my questions and with my suggestions for the way forward.

The background

[3]The FTT set out the background to Mr Ortet’s application as follows:
“1. The Applicant in this case is the leaseholder of premises at 7 The Officers Mess, Orchard Lane, Caversfield Bicester, OX278AH (“The premises”). The freeholders are Adriatic Land 7 Limited and the managing agents are The Garden Quarter (Caversfield) Management Co Ltd (“The Respondents”). … 2. In the application the Applicant challenged a demand for major works relating to external decoration which principally involve the painting of window frames. The cost of the work was £3,392.16. The work was carried out in 2023 and attempted remedial works were carried out recently. At the first hearing on 15th February 2024 the Tribunal were told that contractors were to carry out works remedying perceived defects. At the hearing on 10th May 2024 the Tribunal received a report about the quality of these works. 3. The Applicant challenged the consultation process and the quality of the major works.”
[4]From the material in the appeal bundle and the parties’ explanations at the hearing I can fill in the background as follows.[5]The Officers Mess is a small part of the estate, being a block of four leasehold flats; Mr Ortet holds a 175-year lease of number 7, granted in 2012, which makes provision for payment of a service charge in the usual way. There has been no dispute in the proceedings about the terms of the lease. Although the appellant is a party to the lease as the management company, it employs Encore Estate Management Limited to manage the estate; in February 2023 Encore Estate wrote to the four leaseholders on behalf of the appellant explaining that the exterior of the building was going to be redecorated, and that a consultation was going to be conducted pursuant to section 20C of the Landlord and Tenant Act 1985. On 3 March 2023 Encore sent a service charge demand for £3,392.16, being Mr Ortet’s one-quarter share of the estimated cost of the work, which was £13,568.62. The charge was payable on 1 April 2023.[6]On 28 April 2023 Mr Ortet made an application to the First-tier Tribunal seeking a determination as to whether the charge was payable; the issues he raised in his application were about the consultation process, which he said had not been properly conducted, and about the necessity for the works. The work began in May 2023 and was finished in July 2023. It was not until October 2023 that Mr Ortet’s application was served on the appellant together with the FTT’s directions.[7]The FTT inspected the building in February 2024 and conducted a hearing, but adjourned the proceedings to a further hearing in May 2024. At that hearing the issues appear to have been whether the consultation had been properly conducted (the FTT decided that it had, and whilst Mr Ortet disagrees he does not have permission to appeal on that point) and whether the charge of £3,392.16 was a reasonable charge in view of the quality of the work done. The FTT’s decision on the latter point was as follows:
“11. The Tribunal’s impression was that the works were of poor quality. Sealant had not been replaced, there were drip marks and windows were painted shut. These are all elementary mistakes by a decorating contractor. The Applicant had pointed out the defects but the work was not improved. The hearing was adjourned to give the contractors the opportunity of remedying the poor works. We saw photographs at the adjourned hearing which showed little had changed. Some windows still could not be opened, there were paint smudges evidence and there was some red paint on the walls. 12. We remain unimpressed by the works. The Respondents should have got another contractor involved instead of using the original contractor Bagnells who had clearly failed. We allow £1000 for the work.”
[8]The appellant (the respondent in the FTT) sought permission to appeal on the basis that it did not understand how that £1,000 had been calculated, and on the basis that it could not have selected a different contractor to put the work right because to do so would have been a breach of its contract with Bagnalls, which made provision for remedial works and for a retention pending the completion of the snagging process (which was still in progress at the date of the FTT hearing). To involve another contractor would have been a pointless additional expense.[9]Permission to appeal was granted by this Tribunal on the basis that the decision was not properly explained.[10]Following the grant of permission to appeal Mr Ortet suggested that the FTT be asked to provide further reasons for its decision, and the Tribunal asked the FTT judge and member to do so in exercise of its power under rule 5(3)(n) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010. In response the judge gave further reasons as follows:
“This was a straightforward assessment of the quality of works. The works involved painting of the window frames and other external works. We were surprised that the quality of the decorating work was so poor particularly as the Respondents had been given a further opportunity to rectify the situation. I personally had never seen work as poor as this in all of the time that I have sat as a Tribunal judge. 3. In detail we inspected on 15th February 2024. The quality of the paint work on the Applicant’s flat was generally poor quality with areas missed, no use of masking tape on the window frames and putty missing. We then looked at photos on 10th May 2024 after the Respondent had been given the opportunity to rectify the matter and overall the quality was still very poor in addition there was red paint on the sill. We considered that the work had to be redone from scratch. 4. As the work did involve other aspects of the external area including the soffits etc we awarded £1000. If the work had solely been the decoration we would not have allowed anything. We consider that £1000 was a fair reflection of the work involved.” involved painting of the window frames and other external works. We were surprised that the quality of the decorating work was so poor particularly as the Respondents had been given a further opportunity to rectify the situation. I the Applicant’s flat was generally poor quality with areas missed, no use of masking tape on the window frames and putty missing. We then looked at photos on 10th May 2024 after the Respondent had been given the opportunity to rectify the matter and overall the quality was still very poor in addition there etc we awarded £1000. If the work had solely been the decoration we would not have allowed anything. We consider that £1000 was a fair reflection of the work involved.”

The legal background

[11]Section 27A of the Landlord and Tenant Act 1985 gives the FTT jurisdiction to decide whether a service charge under a lease is payable and, if so, in what amount. Section 19 of the 1985 Act says this:
“1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period— (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly. (2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.”
[12]Sub-sections (1) and (2) thus differentiate between a charge payable in respect of costs incurred, and a charge payable before the costs are incurred. The service charge demand challenged in these proceedings fell into the latter category, and therefore the question before the FTT was whether the amount payable was reasonable.

The appeal

[13]The paragraphs quoted above, 1 to 3, 11 and 12 of the FTT’s decision, were the entirety of its decision about whether the charge for the major works was payable, aside from its decision about the consultation process (and further paragraphs setting out the statutory provisions). It can be seen that the FTT said nothing about the date of the demand or of the application, nor about the basis of the challenge as set out in the application, and nothing was said about the extent of the work except that it was principally the painting of window frames. It is not possible to understand from the decision the nature of the whole of the work charged for, nor the extent of the work done other than paintwork. I understand from the material in the appeal that the work involved maintaining 41 windows, 5 downpipes, 4 entrance doors, the whole two storey build fascia and soffits, and a cast iron staircase, but it is not possible to discern from the FTT’s decision said whether it was aware of that nor if it was, what it thought about the quality of the work other than paintwork.[14]The additional reasons given are of no assistance; they give the impression that what the FTT inspected was Mr Ortet’s flat rather than the whole block. The “award” of £1,000 is made in respect of other external work but that work is not specified beyond “including the soffits etc”. Whether that work was of a reasonable standard is not known and it remains impossible for the appellant to understand how the FTT arrived at the sum of £1,000.[15]The FTT’s comment that the appellant should have used a different contractor is also inexplicable; the terms of the contract were before the FTT, yet it did not explain why it took the view that the appellant should have put itself in breach of the terms of that contract by moving to a different contractor.[16]The FTT’s decision was not properly explained and is set aside.[17]Another major omission from the FTT’s decision was the fact that the service charge demand was demanded in March 2023 and payable before the work was done. Mr Ortet’s application was not about the quality of the work, but it appears that he raised his concerns about it with the FTT after the work was done in the summer of 2023. Mr Ortet explained to me at the hearing that he had raised this with the FTT; neither Mr Ortet nor the appellant has provided to the Tribunal their statements of case nor any witness statements made in the FTT so it is not possible for me to see what was said and when). The FTT made a decision about the quality of the work; yet the service charge was demanded before the work was done and should have been assessed in accordance with section 19(2) of the 1985 Act in terms of whether it was a reasonable charge to impose at that stage. There has been no determination of Mr Ortet’s challenge to the reasonableness of the charge on the basis that the work was unnecessary.[18]I was told by Ms Poulter that the final demand for the costs of the external decoration will be made in December 2025. It will be open to Mr Ortet to challenge that final charge if he still regards the work as sub-standard (the appellant explained that more remedial work was done after the FTT hearing in May 2024). I suggested to the parties at the hearing that in view of that there is no point in the FTT now re-determining the reasonableness of the interim demand because the final demand is going to be made relatively soon. A decision made now about whether the 2023 charge was reasonable would not affect whether the final demand is in due course going to be payable. Both parties agreed, and Ms Poulter confirmed that the appellant would not seek to enforce payment of the March 2023 invoice in the meantime.[19]Both parties agreed that in setting aside the FTT’s decision I should remit the matter to the FTT on the basis that Mr Ortet’s application of April 2023 is now stayed pending the issuing of the final demand in respect of these works in December 2023. If Mr Ortet makes an application to the FTT in respect of the final demand then it will be appropriate for his application of April 2023 to be re-determined at the same time, because the FTT has made no decision on his claim that the work was unnecessary. On the other hand if there is no dispute about the final charge then there will be no need for the 2023 application to be pursued and the FTT will be able to dismiss it. Either party may apply to the FTT for directions at any stage.[20]Mr Ortet asked at the hearing for a direction under section 20C of the Landlord and Tenant Act 1985 that the landlord should not be permitted to charge its costs in the appeal as a service charge; Ms Poulter made no objection to that application and I make the order requested.

Postscript

[21]The courts and tribunals are under pressure of time, and under pressure to be succinct, but brevity is problematic when important information is omitted. A decision about a service that sets out:a. the date of the demand,b. the amount payable,c. the date on which it was payable,d. what it was for,e. whether the demand was for an advance payment before the work was completed or was a final demand (and therefore whether the FTT is looking at section 19(1) or 19(2)) andf. the issues in the case as set out in the application or other pleadings cannot possibly be criticised for verbosity. These are the basics, and the process of setting them out does not merely inform the reader (who may be an appeal judge without the parties’ background knowledge); it is also an important step in the decision-making process itself, because it enables the decision-maker to think through the legal basis on which the decision is made. Had those steps been taken in this case an appeal might have been avoided. Upper Tribunal Judge Elizabeth Cooke 23 April 2025 Right of appeal Any party has a right of appeal to the Court of Appeal on any point of law arising from this decision. The right of appeal may be exercised only with permission. An application for permission to appeal to the Court of Appeal must be sent or delivered to the Tribunal so that it is received within 1 month after the date on which this decision is sent to the parties (unless an application for costs is made within 14 days of the decision being sent to the parties, in which case an application for permission to appeal must be made within 1 month of the date on which the Tribunal’s decision on costs is sent to the parties). An application for permission to appeal must identify the decision of the Tribunal to which it relates, identify the alleged error or errors of law in the decision, and state the result the party making the application is seeking. If the Tribunal refuses permission to appeal a further application may then be made to the Court of Appeal for permission.