[2023] UKUT 152 (LC)

The service charge in dispute is Ms Yambasu’s share of a very substantial sum, and as we observed above the lease obliges her to pay “a fair proportion” of the landlord’s costs. Her quarrel with the apportionment of the charge in dispute in these proceedings was, according to her statement of case, twofold: that the leaseholders were paying for heating for the respondent’s non-residential tenants, and that the charge was apportioned on a unit basis rather than being weighted in accordance with the size of the property.

The FTT dealt with apportionment as follows:

“21.

The Defendant makes a number arguments under this heading. Firstly she argues that the method of apportionment of the relevant charges chosen by the Claimant is unfair and therefore unreasonable.

22.

This point in relation has been determined as between the parties before. In Tribunal cases LON/00BE/LSC/2014/059 & 0583. That case concerned the same lease provisions and also related to service charges incurred for repairs to the communal heating system. In that case the tribunal decided that it was unfair to apportion the charges on a unit basis when other charges were on the bed-weighting system.

23.

Mr Cremin’s initial position was that this decision was not binding on this differently constituted tribunal considering a different application. He was asked by the tribunal to consider whether the decision whilst not binding on the tribunal, was binding between the parties in that it created an issue estoppel. He conceded that it did.

It is far from clear whether on this application we would have reached the same finding, but given Mr. Cremin’s concession that the decision created an issue estoppel as between the parties, we consider that total figure for the charges should be the alternative figure given at paragraph 14 of the Claimant’s statement of case: £4375.96.”

So the FTT found that the correct way to apportion the charge was by the “bed-weighting” method, as Ms Yambasu had argued.

However, there is no sign that the FTT decided Ms Yambasu’s other argument that the heating system serves other properties belonging to the respondent and are not being charged for it, so that the residential lessees are subsidising other properties.

In the light of observations made about this point by both parties, I turn to the earlier decision of the FTT, referred to in its paragraph 22 quoted above. That decision, dated 17 July 2015, was about the reasonableness and payability of service charges for the years ended 31 March 2009 to 2014 in respect of heating and hot water, including the cost of major works to the boiler and the heating system.

According to both parties, between 2013 and 2015 the respondent had work done on the heating system, after taking advice from consulting engineers. The cost of that work was the subject of the earlier proceedings. After that work was finished it became clear that more work was needed to the underground pipe system, and the costs of that later work are the subject of the present proceedings.

To go back to the 2017 decision, the FTT found, first, that the bed-weighting method was a fair method of apportionment (and that charging per unit was not). Whether that did create an issue estoppel between the parties as regards a different service charge, levied at a different date, I do not need to decide because the FTT’s decision on the bed-weighting method was what Ms Yambasu wanted and I do not understand her to challenge it now.

The second point the FTT decided in 2017 was that while some of the buildings Ms Yambasu said were connected to the heating system were not connected, a Tenant Management Organisation office and a school were connected. Eight units were added to the denominator of the apportionment fraction to reflect the TMO office, and 29 to reflect the school.

It is evident from her statement of case in the FTT in the present proceedings that Ms Yambasu asserts that more properties are in fact connected. However, she was not able to show me any evidence for this that she had produced to the FTT, other than her own assertion. She produced a notice about road closures which suggested that more properties were going to be connected to the heating system in 2020; if that is what happened then one would expect to see it reflected in the apportionment of charges thereafter, but it has no relevance to the charge in issue in the present appeal.

That leaves the school and the TMO office, which the FTT has held are connected to the system, and there does not appear to have been any evidence before the FTT on this occasion that they were no longer connected. And that takes us to two difficulties with the FTT’s figure of £4,375.96 at its paragraph 24.

One is that the figure is, as Mr Evans explained, a typographical error. The respondent in its statement of case at paragraph 14 said that if the method approved by the FTT in 2017 was used then Ms Yambasu’s share was £4,205.26, and that is the figure the FTT should have used in its paragraph 24. However, in the summary of its decision at paragraph 1, and in its conclusion at paragraph 35, the FTT said that the amount now payable by Ms Yambasu was £3,628.78. That figure is calculated by subtracting what Ms Yambasu had already paid (£576.48) from £4,205.26; so it is correct if the £4,205.26 was correct.

The other difficulty is that the FTT did not deal with Ms Yambasu’s assertion that more properties were connected to the system and that they were not paying. The FTT had itself decided in 2017 that the TMO office and the school were connected, and it had no evidence in 2022 that that had changed. So the question arises whether the sum of £4,205.26 is calculated on the basis that the school pays for 29 units and the TMO for 8. The respondent did not have that information to hand at the hearing but it has since produced a calculation which indicates that the total units in the bed-weighting calculation was 4,589. Ms Yambasu’s flat pays 6/4,589 since flats are regarded as four units plus one for each bedroom. The denominator of 4,589 was the figure used by the FTT in 2017 to produce a calculation that included the extra units for the TMO and the school, and I am satisfied that they were correctly included this time too.

It would have been helpful if the FTT had spelled this out. But in light of the additional information now to hand this ground of appeal fails; the apportionment approved by the FTT did not fail to include the other buildings connected to the system.