This section of our Case Law Library looks at cases related to:
- Requirements and restrictions in respect of the Apportionment of Service Charges
- A Leaseholder’s right to challenge the way their Service Charge is Apportioned
Right to Challenge the Apportionment Method:
Decision by the Lands Tribunal that a Tribunal has the Jurisdiction under Section 27A of the Landlord and Tenant Act 1985 to decide whether the apportionment method adopted meets the requirements of a Lease, in this case that the individual liability of the Leaseholder is a ‘fair proportion’ of the total relevant cost. Furthermore, that this Jurisdiction applies even when a Lease states that a Landlord, or other third party (such as a Surveyor), has the sole discretion to decide what type of apportionment method meets the requirements of a Lease.
Case in which the applicants were ‘sub-leases’ whose landlord itself held a lease and in turn paid a service charge to the freeholder, the superior landlord. The Upper Tribunal decided that the sub-leases were entitled to challenge the apportionment method used by the superior landlord to calculate the service charge which was invoiced to their landlord, and in turn recharged to them.
What counts as a ‘Fair’ or ‘Reasonable’ Apportionment method:
In determining whether the apportionment method adopted resulted in a Leaseholder paying a ‘fair proportion’ of costs, as required by the Lease, the Lands Tribunal stated it was necessary to consider whether in practice the application of the apportionment method in question resulted in the actual charges being a fair proportion of the total costs in relation of the facts of the individual situation. The Lands Tribunal specifically stated that circumstances might change at a building or development over time, and that for this reason what might be a ‘fair proportion’ at one point in time may not necessarily be a ‘fair proportion’ at another point in time.
Case where the Lands Tribunal decided that a Landlord has the right to choose from a range of reasonable options if the Lease gives the Landlord the authority to determine, or change, the apportionment method.
Apportionment of Estate Costs:
Case where the Upper Tribunal decided that Service Charge costs not be recharged (at all) under the terms of a Lease because of the way they were calculated. The Lease in question only allowed for the Service Charge to include costs which related directly to the Estate upon which the Leasehold flat was located. Norwich City Council in this case were found to have apportioned costs to the property which had been incurred across the whole of its housing stock.