[2025] UKUT 173 (LC)

The lease required the landlord to provide heating and lighting to the common parts of the building and the car park, which Mr Webber did. He included a charge for this service in the service charge demand for each year. The early years were poorly documented.

Ms Syed had not suggested that the charges for heating or lighting were unreasonable. The only challenge concerning either heating or lighting in her statements of case was to the style of lights installed in the car park. The FTT dismissed that challenge but embarked instead on a comparison of the invoices produced by Mr Webber with the costs claimed. On the basis of that exercise it decided to reduce the charge for each year to what it referred to as “the costs demonstrably incurred”, saying that Mr Webber had been unable to provide a coherent explanation of “discrepancies” between the figures claimed and the invoices. Since there had been no challenge to the amount claimed other than on aesthetic grounds that was not a proper course for the FTT to take.

The FTT reduced the charge for 2016/17 by half saying that it did so in part to reflect costs incurred before 16 August 2016 which were said to be irrecoverable under section 20B, Landlord and Tenant Act 1985, and in part due to Mr Webber’s failure adequately to document the costs. The first explanation was mistaken. The 18 month period before the demand served on 16 February 2017 began in August 2015, not August 2016. The second reason was unfair, because there was no challenge to the amount of the invoices and no reason why Mr Webber should have produced them.

For 2017/18 the FTT reduced the charge claimed from £1,924.75 to £1,012.38. Mr Webber had not produced any invoices for that year and the sum allowed was based on a schedule prepared by Ms Syed comparing invoices she had seen with the demands made. Since Ms Syed had not challenged the total claimed the reduction was again unfair.

The FTT allowed the electricity charges in full for 2018/19 (when the building was managed by Winkworths).

For 2019/20 the FTT reduced the sum claimed from £1,074.25 to £389.18 which was the figure shown in Ms Syed’s schedule. It is not clear what that figure was based on. The electricity supplier had changed in the course of the year from EDF to Octopus, which had produced a saving. Mr Webber had provided bank statements showing debits from his account during the year to 30 April 2020. Monthly payments to Octopus Energy were made by direct debit for each of two meters each month. Mr Webber had listed all of these charges in a statement he sent to leaseholders and explained that, after an end of year credit from Octopus, the total paid out during the year had been £1,097.40. One charge of £23.15 was not supported either by an invoice from the previous supplier or a direct debit to Octopus, and when that is removed from the sum referred to by Mr Webber the resulting total is the figure of £1,074.25 which had been included in the service charge demand for 2019/20. The FTT gave no reason for reducing the charge to £389.18 other than that the general explanation that it allowed “the costs demonstrably incurred”. The FTT took its figure from Ms Syed’s schedule rather than considering what was demonstrated by the bank statements and invoices, but Ms Syed was unable to explain what the lower figure represented. I am satisfied on the basis of the material which was provided to the FTT that the cost demonstrably incurred for electricity in 2019/20 was the sum of £1,074.25 claimed by Mr Webber.

For 2020/21 the FTT reduced the sum claimed from £1,044.94 to £657.16. The total sum paid to Octopus during the year was £1164.77, but Mr Webber explained that he had deducted the sum by which the account was in credit at the end of the service charge year to arrive at the figure of £1,044.94 he had claimed. Had the FTT taken account of the bank statements showing a monthly pattern of direct debits to Octopus it would have been satisfied that that sum had demonstrably been incurred.

The charges incurred for 2021/22 and 2022/23 were reduced by the FTT in the same way from £1,048.15 to £981.69 and from £632.21 to £149.69 respectively. The supporting material for the year 2021/22 comprises invoices from Octopus totalling £1,025.96. The bank statements provided by Mr Webber for the following year show that payments of £1070.41 were made to Octopus in 2022/23, although only £632.21 was included in the service charge (Mr Webber explained that this had been his mistake). The only discrepancies between the invoices and bank statements and the sums charged were in favour of the paying parties, the leaseholders, in that more was paid out by Mr Webber to Octopus than he reclaimed. He explained that the small differences were because generally he deducted the sum by which the account was in credit before passing on the charge, and the larger discrepancy in 2022/23 was because he had not included charges for half the year. The FTT gave no reason for not accepting the evidence of the invoices and bank statements other than that they did not reconcile with the total claimed and Mr Webber could not explain the discrepancies. Given that Ms Syed’s statement of case had not warned Mr Webber that a detailed accounting exercise would be required and given that the invoices were entirely consistent with his evidence, there was no reason for the FTT to prefer the alternative figures put forward by Ms Syed.

Returning to the earliest years, 2016/17 and 2017/18, having found that the FTT was not justified in reducing the charges for those years for the reasons it gave, and having regard to the consistency of the charges for later years with the evidence of payments, there is no reason not to allow the charges for the earlier years in full.

For these reasons I allow the appeal on ground 3. The revised sums payable by Ms Syed in respect of electricity are: