Flat leaseholders win potentially pyrrhic victory against council

Martin Rodger KC, deputy president of the Upper Tribunal (Lands Chamber), told John and Adenike Williams they would be liable for a higher share of a smaller charge after finding they must pay only for repairs and services concerning the block in which they live, rather than a lower share of services to an entire estate.

Mr Rodger heard the couple’s appeal against a decision of the First-Tier Tribunal (Property Chamber), which found for the council on two issues related to interpretation of the lease.

Mr and Ms Williams live in Hensley Point, one of four blocks of flats known locally as The Points, which share a communal heating system and are part of a much larger area named the Gascoyne Estate,

Under their lease the couple must pay management charges two the council including services to areas referred to as ‘the reserved property' and ‘the estate'.

Mr Rodger said he had to decide the extent of the estate and whether the council correctly interpreted the lease when calculating the service charges.

The proceedings began in the County Court in July 2023 with a claim by Hackney for £6,115.02 for service charges, ground rent and administration charges.

This was transferred to the FTT, when schedules were produced to provide the required breakdown of items.

The couple disputed charges relating to works in flats occupied by council tenants; and charges for works beyond the boundary identified as ‘the estate’ on the plan attached to their lease.

Mr Williams said Hackney had told the couple they were responsible for the heating installations in their flat, and so should therefore not be liable for the cost of repairs to installations in the council's own flats.

The two issues before Mr Rodger were whether ‘the estate’, consisted only of The Points, or the whole Gascoyne Estate, and whether Mr Williams was obliged to contribute to the cost of heating in other flats.

To determine the extent of Mr Williams' liability, it was necessary for the FTT to pay close attention to the meaning of ‘the block’ and the ‘reserved property’, and to ask whether each disputed item of expenditure covered an activity in the lease.

But “the FTT instead proceeded on the assumption that if, as defined in the lease, ‘the estate’ included the whole of the Gascoyne Estate, then all the estate charge items would be properly payable by Mr Williams,” Mr Rodger said.

Although only the area around The Points was highlighted in green on the map the FTT decided it preferred the council’s contention “that what is known as Gascoyne Estate should be given more weight than the plan shown for the purpose of identification only”.

Mr Rodger said: “The FTT treated the case as one involving an inconsistency between the verbal description of the estate and the area depicted on the plan and decided that the description of the estate as the area 'known as Gascoyne Estate’ should be taken to describe the whole of a much larger area than was shown on the plan.

“I find that approach difficult to reconcile with the conventional approach to construction of formal documents, which requires that the document be read and understood as a whole.”

He said the plan clearly identified The Point alone which meant the contribution obligation related to it, and not the wider Gascoyne Estate.

Mr Rodger said he disagreed with the FTT's conclusion that 'the estate’ in the lease included the whole of the Gascoyne Estate but should instead be limited to The Points and their immediate curtilage.

Turning to the heating issue he found Mr Williams was “mistaken both in thinking that he is required to repair the heating system in his own flat…and in believing that he is exempt from contributing to the cost of repairs to heating installations in other flats occupied by the council's tenants”.

He explained: “It is irrelevant whether the flat is let on a long lease or subject to a short term council tenancy.

“What matters is whether it is in the same block and whether it makes use of the communal heating system. If both of those conditions are satisfied in relation to any flat, the council is required by paragraph 1(ii) of the Ninth Schedule to repair its installations for the supply of heating and hot water, and Mr Williams is required to make a contribution to the cost of the council complying with that obligation.”

He concluded the Williamses were not required to contribute to the cost of works other than at The Points.

Mr Rodger concluded: “The management charges…were wrongly calculated and before the FTT can proceed with the application they will have to be recalculated…the proportion payable by Mr and Mrs Williams will no doubt be adjusted upwards to reflect the smaller number of contributors (so that they pay a higher proportion of the cost of a smaller number of items).

“Whether the result is a net benefit to them or results in them paying more is not possible to tell without detailed calculations which cannot be undertaken until the council states what it considers to be the proper apportionment of the different categories of costs.”