UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2010] UKUT 271 (LC)

LT Case Number: LRX/112/2009

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

LANDLORD AND TENANT – service charges – appeal by way of review – LVT determined the reasonableness of various service charge items – whether LVT failed to give adequate reasons to the prejudice of the landlord – whether LVT failed to take account of relevant evidence – whether LVT misunderstood certain evidence – appeal allowed in part – Landlord and Tenant Act 1985, s27A

 

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE LEASEHOLD VALUATION TRIBUNAL FOR THE LONDON RENT ASSESSMENT PANEL

 

 

BETWEEN PEVEREL OM LIMITED Appellant

 

and

 

(1) ANDREW STEPHEN WERNICK

(2) JENNY ISABELLA WERNICK Respondents

 

Re: The Heights

Gerry Raffles Square

London

E15 1BQ

 

 

Before: N J Rose FRICS

 

Sitting at 43-45 Bedford Square, London, WC1B 3AS

on 9 July 2010

 

 

Adrian Carr, instructed by Claire Banwell Spencer, in-house solicitor, for the appellant

Mr Wernick in person for himself and Mrs Wernick

 

 

The following case is referred to in this decision:

 

Arrowdell Ltd v Coniston Court (North) Hove Ltd [2007] RVR 39

 

DECISION

Introduction

1.           This is an appeal by Peverel OM Limited (the appellant) against the decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel (the LVT), determining the amount of service charges payable for the years ending 31 August 2006 and 31 August 2007 under section 27A of the Landlord and Tenant Act 1985 (the Act).  The charges relate to The Heights, Gerry Raffles Square, London, E15 1BQ (the appeal property), a block of 139 residential flats, all of which are held on long leases, together with two restaurants on the ground floor.  The premises were converted and extended by Barratt Homes Limited who, on completion of the development, sold leases of the individual flats.  Under these leases the appellant was appointed the manager for the whole of the premises.  The respondents, Mr Andrew Wernick and Mrs Jenny Wernick, jointly own three flats in the block, Nos. 98, 124 and 139.  Each flat is sub-let under an assured shorthold tenancy.

2.           The appeal property contains common parts such as stairwells, entrances and lifts.  In addition there is a surface car park and an underground car park.  To the side of the appeal property is a small garden area.  It was agreed before the LVT that the determination would apply to each of the respondents’ flats, except for the element of the service charge relating to car parking, which was not the subject of the application. 

3.           It is clear from the LVT’s decision that they were confronted with a formidable task in having to consider a very large number of disputed items during the two day hearing.  That task was made more complicated by the parties’ inadequate preparation for the hearing.  Some papers were submitted at a very late stage, so that they could not be considered by the LVT in advance.  There was considerable duplication of documents.  The LVT, understandably, suggested that the parties should attempt to narrow some of the factual issues or attempt to resolve their differences by mediation.  The parties were, however, unable to agree anything, apart from two items which were conceded by the appellant as not having been reasonably incurred.

4.           The dispute extended to 21 heads of claim for the year to 31 August 2006 and 22 for the following year.  The total sums claimed, and the totals determined by the LVT, were as follows:

Year	Claim	Determination
2005/6	£184,455.96	£158,305.77
2006/7	£293,109.70	£261,617.74

 

5.           On 3 February 2010 the President granted the appellant permission to appeal, to be conducted by way of review, limited to the following matters:

“(a) In relation to the concierge and on-costs, the window-cleaning and gardening costs and the miscellaneous items for 2005-6, whether the LVT failed to give reasons that were adequate to the prejudice of the applicant.

(b) In relation to the window-cleaning costs for both years, whether the LVT erred in taking into account as a matter relevant to those years than at the time of inspection in 2009 the quality of cleaning was poor and failing to take account of the applicant’s explanation for this.

(c) In relation to the redecoration costs in 2006-7 whether the LVT misunderstood the make-up and reasons for Saxon Building Services charges.”

6.           At the appeal hearing Mr Adrian Carr of counsel appeared for the appellant and Mr Andrew Wernick appeared for himself and his wife.  Mr Wernick expressed surprised that the appeal had been listed for an oral hearing.  He said that he had thought that the reference to an appeal by way of review meant that the Tribunal would deal with the appeal on the papers only.  I explained that an appeal by way of review of the LVT’s decision meant that I was required to consider whether, on the material before them, the LVT were entitled to reach the conclusions that they did.  No new evidence would be considered at the review stage.  I now consider each permitted item of appeal in turn.

Concierge and on-costs 2005/6

The amount charged to the lessees through the service charge for this item of expenditure was £43,035.75.  The LVT’s conclusions, set out in paras 43 and 44 of their decision, were these:

“The respondents expressed concern that many sundry petty cash items did not have receipts or invoices.  They were also concerned at the large number of cartridges that were purchased for a printer used in the concierge’s office in relation to the amount of paper used.  The applicant’s case is that such expenditure is fully warranted and that they have internal systems for reviewing the use of petty cash.  This tribunal determines that the sum of £30,904.16 is a reasonable sum for this item bearing in mind the applicant’s inability to prove exactly what all the items were used for.”

7.           Mr Carr noted that the main figures criticised by the LVT were the petty cash items which totalled £695.90.  Against that background the LVT’s decision to reduce the amount claimed by £12,131.59 was arbitrary and not supported by any findings of fact or any proper reasons.  The LVT also criticised the amount of printer cartridges used.  The cartridges were, however, purchased for both the printer and the fax machine used by the concierge for printing letters, notices and documents for all 139 flats in the block.  Moreover, many of the printer cartridges were purchased out of petty cash, so that any suggestion that the LVT’s criticism would justify a further reduction in the sum recoverable under this head would mean that the appellant was penalised twice.  Finally, even if the LVT had disallowed all the petty cash items and all the cartridges, the maximum reduction from the amount claimed should have been £786.76.

8.           In reply Mr Wernick submitted that the LVT’s reasons were adequate having regard to the principle of proportionality.  He said that many of the invoices submitted by the appellant at the LVT had been dubious, missing or illegible.  Supporting invoices had been provided for less than half the petty cash claimed.  The Scott Schedule which was before the LVT highlighted the disparity between the amount of ink and the amount of paper purchased.  The respondents had asked the LVT to disallow £15,571 expenditure under this heading and approximately 75% of that figure had been accepted by the LVT.  The total sum it allowed of £12,131.59 did not relate simply to petty cash, but to all costs included under the heading “1220 concierge and on costs” in the audit trail.  Mr Wernick said that it would not have been proportionate for the LVT to give reasons for every single item deducted.  The total sum disallowed because of the appellant’s inability to prove exactly what all the items were used for related to all the items under 1220 for 2005/06 which had been queried by the respondents in the Scott Schedule.  In addition to petty cash and cartridges, these covered agency staffing, staff training, employer’s liability cover, concierge sickness and accident cover and “on-costs additional expenses”. 

9.           I am satisfied that Mr Carr’s criticisms of this aspect of the LVT’s decision are justified.  It may be that, as Mr Wernick suggested, the LVT accepted many of his criticisms of other items claimed as well as the petty cash and cartridges.  If so, whilst the LVT did not need to deal with every argument presented in respect of each disallowed item, their duty was to make it apparent to the parties in each case why one party had won and the other had lost.  By limiting their comments to two items which accounted for only a small proportion of the amount claimed under item 1220, the LVT failed to make plain the reasons which had led them to reduce the total claim by more than £12,000.  In doing so, they caused prejudice to the appellant.

Window cleaning and gardening costs 2005/6

10.        It will be convenient to deal with this ground of appeal (permitted ground (a)) later in this decision, together with the window cleaning costs for both service charge years (permitted ground (b)).

Miscellaneous items 2005/6

11.        The LVT’s conclusions on this issue were contained in para 60 of their decision.  They said

“The applicants accepted that certain charges made on 19 September 2005 for repairs to a particular flat are not recoverable as a general service charge and various other charges during this period.  We determine that the cost of employing a company called Smiths to deal with blocked drains was reasonable.  We determine that the costs of maintaining the closed circuit television and security service are reasonable as are the costs of dealing with pest control.  These come to a total of £13,052.41.”

12.        By reference to Appendix A of the decision, Mr Wernick concluded that the total figure allowed by the LVT was made up of the following items: general repairs £7,846.53 (amount claimed £10,159.37);  CCTV maintenance £1,796.00 (the full amount claimed);  pest control £3,409.88 (the full amount claimed).  He submitted that the LVT could not reasonably be criticised for reaching that conclusion.

13.        Mr Carr pointed out that the appellant had claimed £514.95 for maintenance of landscaped areas and £688.49 for plant and machinery maintenance.  Since neither of these items was specifically mentioned elsewhere in the decision, the LVT had presumably considered them as miscellaneous items and decided to disallow them.  No reasons were given for that decision.

14.        Mr Carr accepted that the appellant had conceded the sum of £235.02 in respect of general repairs for 2005/6, but it had asked the LVT to determine the remainder of the general repairs items for that year in the sum of £9,924.35.  The LVT failed to explain why they had decided to reduce the amount allowed for general repairs by £2,312.84.

15.        Mr Wernick did not agree that the maintenance of landscaped areas had been dealt with by the LVT as a miscellaneous item.  He pointed out that, in para 51 of their decision, dealing with window cleaning and gardening costs, the LVT had said:

“We also noted a claim for certain gardening services and noted that there is a very small area which might be described as a garden next to the two car parks.  It is such as to require minimal care.  But these charges are not recoverable except in relation to car park costs and we therefore determine them as nil.”

16.        Mr Wernick also disagreed with the suggestion that plant and machinery maintenance costs were relevant to miscellaneous items.  He referred in this connection to the Scott Schedule, which included plant and machinery maintenance as a discrete item of claim.  He pointed out that the amount disallowed for general repairs was almost identical to the total sum he had queried in the Scott Schedule, apart from the bill for unblocking drains which the LVT found was reasonable.  He said that the LVT had referred in terms to charges made on 19 September 2005.  That related to an invoice for £763.75 from a company called Canam.  He said that it was sufficient for the LVT to have specified the largest invoice which they had disallowed for general repairs, as it “was disproportionate to list the numerous other relevant deductions, all of which would have been for lesser amounts.” 

17.        I accept Mr Carr’s submissions on this issue.  The LVT disallowed the sum of £688.49 claimed for plant and machinery maintenance, but no reason was given for that decision, under the miscellaneous items heading or elsewhere.  The treatment of the claim for maintaining landscaped areas was similarly defective.  The LVT accepted Mr Wernick’s claim that the small patch of land next to the car parks required minimal maintenance and disallowed the total sum which had been claimed for maintaining landscaped areas.  However, the Scott Schedule produced at the LVT hearing included five items under the heading “landscaping”.  One item was described by Mr Wernick as relating to “a small sliver of land to the rear of the car park which is overgrown with slow growing shrubs and has not seen any ‘garden maintenance’ for many years.”  It appears from Mr Wernick’s letter to the LVT dated 4 June 2009 (the day following the LVT’s decision) that the appellant may have conceded that item, in the sum of £63.78 charged by Greenoaks Ltd on 1 October 2005.  But the LVT did not explain why they had disallowed the other items claimed for landscaping.  In my judgment they should have provided such an explanation, at least in general terms. 

18.        I also consider that the LVT’s treatment of the claim for general repairs was inadequate.  As I have said, Mr Wernick pointed out that the amount disallowed by the LVT was virtually identical to the amount for which he had argued.  That is no doubt true, but it does not explain, as the LVT should have explained, why they preferred Mr Wernick’s case on this issue to that of the appellant.

Window cleaning and gardening costs – 2005/6 and 2006/7

19.        The sum claimed for this item in the year 2005/6 was £18,076.06.  The LVT’s conclusions were as follows:

“51. In premises of this type, the cleaning of the external windows is a challenging task.  It is the applicant’s practice to employ specialist cleaners and they use the firm of Mara Services whose employees abseil on the outside of the building in order to carry out the cleaning of the windows and other panels.  On the basis of the respondent’s complaints and the results of the observations we made when we inspected the premises, three matters became apparent: first, that the provision of these cleaning services to the exterior of the building is a hazardous and time-consuming activity, second, that in certain cases the quality of the cleaning was poor and thirdly that it is evident that some of the window cleaning was done to the windows of individual flats which are almost certainly the responsibility of the owners of those flats.

52.        We also noted that the location of the subject premises, in the middle of a busy shopping centre in Stratford, East London surrounded by major construction works associated with the forthcoming Olympic Games lead to a lot of dirt in the atmosphere which, itself, must accentuate the cost of the cleaning. 

53.        With these issues in mind we determine that a figure of £9,546.42 is reasonable.

54.        We also noted a claim for certain gardening services and noted that there is a very small area which might be described as a garden next to the two car parks.  It is such as to require minimal care.  But these charges are not recoverable except in relation to car park costs and we therefore determine them as nil.”

20.        The sum claimed for the year 2006/7 was £18,122.83.  The LVT concluded as follows:

“77. We repeat the points we made in relation to the determination of this item for the previous financial year, namely the huge scale of the operation in undertaking cleaning of windows and other external parts of premises of this type.  The following remarks are based on consideration of the evidence and on the basis of our own inspection of the premises on the 12 May 2009.  We repeat the point that the subject premises is in the middle of a very busy area surrounded by very significant developments associated with the forthcoming Olympic Games.  Significant pollution of buildings is to be expected.  We also repeat the point that undertaking cleaning of external areas in a building of this size and construction is a very significant and challenging task.

78.        Having made these points we have reached the conclusion that the costs of the window cleaning are too high.  First, we have concluded that the cleaning to the external areas of the top three floors to the building has not been done satisfactorily (indeed we doubt whether the cleaning of some of these areas has been done for several years).  As to the cleaning of the exterior glass panels to the 1^st - 6^th floors, we accept that these works were of an acceptable standard but we know that, in the course of undertaking these works, the contractors employed by the applicants appear to have cleaned windows of individual flats which are the responsibility of the individual leaseholders (see the Lease, Eighth Schedule, paragraph 12). 

79.        We have reached the conclusion that a significant part of the costs is not recoverable as a service charge although the applicants may in future wish to seek reimbursement by the individual leaseholders who benefit from this and that the applicants should take additional steps to see how the difficult tasks in the cleaning of the glass panels to the upper three floors can be properly undertaken.

80.        It is for these reasons that we have reached the conclusion that the reasonable costs recoverable as service charges for the window cleaning should be one half of that claimed, that is £9,061.42”

21.        In its Statement of Case the appellant criticised the LVT for concluding that in certain cases the quality of cleaning was poor in the year 2005/6, insofar as this was based on a site inspection on 12 May 2009.  Firstly, the appellant said that the inspection was irrelevant to a consideration of the standard of window cleaning in a period long before the inspection.  Secondly, the LVT failed to take into account the appellant’s evidence that no window cleaning had been undertaken at the scheme since October 2008 at the request of the Residents Association, as a result of an accident at the development.  Finally, having noted that the appeal property was in the middle of a busy shopping area, surrounded by major construction projects, and that the cleaning of the exterior was hazardous and time-consuming, the LVT failed to explain why they nevertheless decided to reduce the cost of the window cleaning by nearly half.

22.        As for the year 2006/7, the appellant referred again to the LVT’s failure to take into account that no window cleaning had been undertaken since October 2008.  The appellant also submitted that the LVT was at fault in finding that part of the cost of cleaning windows on the first to six floors was irrecoverable, but failing to specify the number of windows which the appellant was obliged to clean under the leases as a proportion of the total number of windows it actually cleaned.

23.        At the hearing before me Mr Carr said that the Residents Association’s request that the window cleaning operations be stopped was not made because of an accident but because of damage caused to pigeon spikes.  He added that the LVT had referred to the fact that part of the costs claimed related to the costs of cleaning the external panels on the 7^th, 8^th and 9^th floors, which were the appellant’s responsibility under the leases and should properly be included in the service charge.

24.        Mr Wernick submitted that the appellant was wrong to refer, in connection with window cleaning, to gardening costs as this item was dealt with in para 54 of the decision, after the LVT had determined the amount recoverable for window cleaning.  He pointed out that the maintenance of landscaped areas was included as a separate item in Appendix 8 of the decision.  Mr Wernick also suggested that the appellant was not entitled to rely, in respect of the appeal on the window cleaning issue referred to in paragraph (a) of the President’s permission to appeal, on the appellant’s evidence to the LVT.  The permitted appeal related solely to the adequacy of the reasons given in the decision.

25.        Mr Wernick said that the LVT had listed all the factors which it had taken into account in reaching its conclusion and these reasons were adequate.  Moreover, the sum of £9,546.42 determined for 2005/6 exceeded the budget estimate for that year of £6,800.  Ground (a) of the appeal related to the adequacy of the reasons for the accounting year 2005/06 only.  Since permission was not granted to appeal in respect of the adequacy of the reasons for 2006/07, it followed that the 2006/07 reasons were deemed adequate.  The factors and reasoning regarding window cleaning were common to both years.  The reasons given for one year therefore applied equally to the other. 

26.        As to ground (b), Mr Wernick said that the appellant had not given evidence to the LVT as to the date when window cleaning last took place.  He added that, in October 2008, the Leaseholders Association, of which he was secretary, had asked that the window cleaning be terminated, not because of an accident or damage to pigeon spikes, but because of the high cost and the requirements in the leases that this work be performed by the lessees of the individual flats.  Although the windows had not been cleaned recently, the LVT were entitled to compare the cleanliness at the time of their inspection of those areas which the appellant’s contractors had supposedly cleaned before October 2008 with those which he had contended had not been cleaned for many years.  In this connection Mr Wernick referred to the minutes of a meeting on 12 February 2008 between the appellant (represented by Mr Wentworth) and the Leaseholders Association.  The minutes recorded that the:

“meeting was reconvened with a site inspection of cleaning to the seventh floor communal deck access balcony attended by [Mr Wentworth] and [Mr Wernick].  It was agreed that these windows had not been cleaned for at least one year and probably not for several years.”

27.        Mr Wernick said that he had a clear recollection that, while standing by flat 139, the members of the LVT had concluded that the areas which he had cleaned years earlier were cleaner than the adjacent areas which had allegedly been cleaned more recently.

28.        Mr Wernick said that during their site visit, he had pointed out to members of the LVT the difference between cleaned and other immediately adjacent areas.  He had cleaned the windows to flat 139 in September 2006 and those to flat 124 in March 2007.  If those areas had really been cleaned subsequently, as the appellant claimed, it would not have been possible in May 2009 for the LVT to see any difference in cleanliness between the areas which Mr Wernick had cleaned and the other areas. 

29.        Mr Wernick referred to invoices for window cleaning in 2006 which had been produced for the LVT hearing.  These showed that only some 10% of the total charged related to communal windows.  The balance was for window cleaning “to all external panels and apartment windows”.  Since the appellant had no entitlement to recoup the cost of window cleaning under the terms of the leases, he suggested that the sum determined by the LVT for the year 2005/06 was far too high and should be reduced to £1,525.16.

30.        Although Mr Wernick accepted that window cleaning stopped in October 2008, he suggested that no evidence to that effect had been presented to the LVT.  He also pointed out that the amount charged for window cleaning in 2006/07 was well in excess of the budget figure for that year.

31.        I deal firstly with Mr Wernick’s suggestion that the cost of window cleaning as determined by the LVT for 2005/06, namely £9,546.42, should be further reduced to £1,525.16.  That suggestion was based on invoices submitted monthly between February and August 2006, which showed that only a small proportion of the total charge related to communal windows.  I am unable to accept that submission.  The major item charged in each invoice did not relate solely to the windows of individual flats, but to “all external panels and apartment windows”.  This was recognised in para 51 of the LVT’s decision, which referred to “the cleaning of windows and other panels.”  Before me, Mr Wernick suggested that there was no material difference between windows and panels; cleaning of both was the responsibility of the individual tenants and not the appellant.  That suggestion is inconsistent with Mr Wernick’s comment in the 2005/06 Scott Schedule that he had “washed the external panels (which are curtain walling containing windows).”  Mr Wernick’s attempt to argue for the vast majority of window cleaning costs in 2005/6 to be disallowed is also inconsistent with his suggestion in the Scott Schedule that he should “pay half the costs” of window cleaning. 

32.        Although Mr Wernick did not apply for permission to appeal against the LVT’s decision, this Tribunal has a discretion to allow him to contend for a determination which is more favourable to him than the LVT’s decision, provided it is fair to do so (see Arrowdell v Coniston Court (North) Hove Limited [2007] RVR 39).  I do not consider that it would be fair to permit Mr Wernick to argue for a charge for window cleaning of only £1,525.16, given that he asked the LVT to determine a price in excess of £7,500 for that item, at a time when the invoices upon which he is now seeking to argue for the lower figure were available to him and the LVT.

33.        I agree with Mr Wernick that para 54 of the LVT’s decision does not relate to window cleaning but gardening.  I have previously considered the cost of caring for the small area adjoining the car park as part of the overall cost of landscaping (see para 17 above).

34.        I turn to permitted ground of appeal (a), namely whether the LVT prejudiced the applicant by failing to give adequate reasons for their decision on window cleaning for 2005/6.  Although the position is not entirely clear, I have concluded that Mr Wernick was right to suggest that in effect the same reasons in respect of window cleaning were given for 2005/6 and 2006/7.  The LVT’s conclusions in para 77, in respect of 2006/7, were said to be “based on consideration of the evidence and on the basis of our own inspection of the premises on 12 May 2009.”  Their conclusions on the year 2005/6, in para 51, were reached “on the basis of the respondents’ complaints and the results of the observations we made when we inspected the premises.”  In my opinion it is tolerably clear that the LVT had regard to its inspection in May 2009 when reaching its conclusions on the reasonable window cleaning charges for both years.  I do not consider that the appellant has been prejudiced by the LVT’s failure to spell this out more clearly in its decision.

35.        I must, however, also consider whether the LVT were in error in taking into account the quality of window cleaning at the time of their inspection and the appellant’s explanation for this (ground (b)).  As I have said, Mr Wernick suggested that the LVT did not receive evidence to the effect that no window cleaning took place after October 2008.  In his reply to the appellant’s statement of case, Mr Wernick said:

“it is to be noted … that the Statement of Case fails to state where the giving of such evidence can be found/verified.”

36.        Mr Carr did not remedy this omission in the course of the hearing.  Moreover, it is noteworthy that the explanation given by the appellant for the decision to terminate the window cleaning contract changed in the course of the proceedings.  The appellant’s Statement of Case suggested that it was due to an accident.  In his oral submissions Mr Carr said that it was to prevent damage to pigeon spikes.  Subsequently Mr Wernick said that the true reasons were that the charges were too high and much of the work was the responsibility of the individual tenants.  That statement was not challenged.  In the light of the appellant’s uncertainties as to the true position I am inclined to accept Mr Wernick’s statement that the matter was not raised at all before the LVT.  It follows that the appellant’s allegation that the LVT wrongly took into account the quality of cleaning in 2009 and failed to take into account the appellant’s evidence that no window cleaning had been undertaken at the appeal property since October 2008 is unfounded.  I also reject the appellant’s criticism that the LVT failed to specify the proportion of the total number of windows that the appellant was obliged to clean under the leases.  Given the enormous amount of detail with which the LVT had to grapple, and the fact that a substantial number of flat owners were responsible for their own window cleaning, it would in my view be disproportionate to require the LVT to spell out the precise calculations which led them to conclude that approximately 50% of those costs should be disallowed.  The appeal on the window cleaning costs fails.

Redecoration costs 2006/7

37.        Before the LVT the appellant claimed £41,335.21 for this item, made up as follows:

26 March 2007 Invoice from Saxon Building Services (London)

Ltd for “internal redecs as per our quote” £29,375.00

 

26 March 2007 Invoice from Saxon Building Services (London)

Ltd for “paint the stair walls, ceilings and

railings as per our quote” £ 7,614.00

 

31 August 2007 Management fee for redecorations £ 4,346.21

£41,335.21

The LVT dealt with this item of claim in these terms:

“93. Here a charge of £41,335.21 is claimed where there was no estimate but where we accept that there had been discussions between the applicant and leaseholders over a considerable period and, according to the evidence that the statutory consultation procedures required by section 20 of the Act and regulations made under the Act were applied.  

94 These were costs incurred in relation to internal redecorative works where in a notice dated 11 August 2006 Mr Wentworth, on behalf of the applicants, advised the leaseholders that three estimates had been obtained and that the one from Saxon Building Services (£25,000) was far and away the most competitive.  Accordingly a contract was entered into with that company.  On the basis of the respondent’s submissions, our detailed consideration of the documentary evidence and our own internal inspection we conclude that the figure of £29,375 incl VAT is reasonable.  We disallowed the other elements which were separate charges made by the same company.  We reached this conclusion for two reasons: first, these two additional elements both relate to internal decorative costs which should have formed part of the original contract and second, we accept the respondent’s concern that certain outside doors to individual flats should have been varnished on account of their exposure to the elements.”

38.        Mr Carr submitted that the LVT had misconstrued the evidence that was presented.  He said that the works covered by the invoice of £29,375 did not include the redecoration of the stairwells, which were the subject of the second invoice.  The LVT failed to take into account the fact that the two alternative quotes for redecoration obtained by the appellant, which included the painting of the stairwells, were substantially higher than the total figure of £36,989 charged by Saxon.  Moreover, the charge of £4,346.21 was not made by Saxon, as stated by the LVT.  It was made by the appellant for managing the contract administration of the major works.  Even if the LVT had found that the appellant could not recover its management fee calculated on Saxon’s second invoice, they should not have disallowed the management fee on the first invoice.  The appellant accepted that the management fee claimed at the LVT was wrongly based on Saxon’s charges including VAT; the correct figure was £3,698.90.

39.        Mr Wernick’s case on Saxon’s invoice for painting the stairwells, put simply, was that it should not have been accepted by the appellant without query.  I agree.  The appellant asked Saxon and two other contractors to quote for internal and external redecoration at the appeal property.  The estimates were based upon a paint specification prepared by ICI Paints in March 2006.  Page 7 of that specification was headed “Internal walls to lobbies and corridors, previously painted”.  The building area was described as “General wall areas, staircase soffits, staircase stringers etc”.  Page 10 was headed “Internal trim, windows, doors etc previously painted”.  The building area was described as “Windows, surrounds, skirtings, screens, hatches, staircase elements, handrails etc”.  In its comments on Saxon’s second invoice in the Scott Schedule the appellant stated that “This cost was incurred as Saxon had not included the painting of the stairwells in their quote.”  That statement was wrong.  The LVT were therefore right to disallow the charge of £7,614.00 as not having been reasonably incurred.

40.        The LVT were clearly wrong to describe the appellant’s management fee of £4,346.21 as having been charged by Saxon.  In my view, however, this error did not prejudice the appellant because, on the evidence to the LVT, the charge was unreasonable.  The specification was not prepared by the appellant’s surveyor.  The tender process was conducted on the appellant’s behalf by a secretary, who merely forwarded to each contractor a specification prepared by a paint manufacturer.  The appellant’s wrongful agreement that Saxon were entitled to submit an additional invoice for painting the staircase is clear evidence of the absence of any proper management of the contract.  Although the LVT appear to have misunderstood the nature of this charge, and the company by whom it was made, their refusal to allow any part of the sum claimed of £4,346.21 was, in my judgment, clearly right.  The appeal on this issue therefore fails.

Summary

41.        The appeals on concierge and on-costs and miscellaneous items for 2005/6 are allowed.  The appeals on the remaining issues are dismissed.  I indicated at the hearing that, if the appeal were allowed the costs, which were already significant, were likely to be minimised if the issues were remitted to the LVT for reconsideration.  The appellant, however, submitted that it was preferable that I should proceed to consider them, and I have decided to follow this course.  I therefore invite the parties to file their submissions on concierge and on-costs and miscellaneous items for 2005/6 within 42 days of the date of this decision.  Since the appeal will now proceed by way of re-hearing, the parties are at liberty to adduce fresh evidence, although much if not all of their submissions will no doubt refer to the bundles which are already before me.  Copies of the submissions should be exchanged by the parties within the 42 day deadline.  I do not at present intend to hold a further hearing, unless I am requested to do so by either party.  Mr Wernick applied for an order under section 20C of the Act in respect of the costs of this appeal.  I will deal with that application when the remaining outstanding issues of the appeal have been determined.

Dated 12 August 2010

 

 

N J Rose FRICS