There are those who say that service charges are a dry subject. To them I say, welcome to Wallace-Jarvis v (1) Optima (Cambridge) Ltd (2) Khazai [2013] UKUT 328 (LC).
The leaseholders at a development were concerned that their service charges were too high and, in particular, their communal water costs. They couldn’t really put their fingers on what was wrong with the charges, but they just seemed too high. Perhaps there was a leak. Perhaps a commerical unit was using the residential supply.
The LVT hadn’t been impressed. It agreed that the charges looked high (over £20K p.a.) but the demands were before the LVT and, in the absence of any particular problem, the LVT found them to be payable.
The leaseholders appealed to the Upper Tribunal. The (former) President (George Bartlett QC) felt that the LVT may have erred. If the charges looked high, then the onus was surely on the landlord to justify them. He granted permission to appeal and, it seems, by way of re-hearing.
On the re-hearing, HHJ Huskinson noted that the total water use appeared to be between 10,000 and 11,000 cubic meters p.a. Or, to put it in context, around 11,500 showers per year for each flat at the development. Those figures made absolutely no sense. Something must have gone wrong. The Consumer Council for Water indicated that average residential use was between 100 and 175 cubic meters p.a., depending on the size of the household.
There was therefore prima facie evidence that the water charges were unreasonably incurred. The billed useage was out of all proportion to what would be expected. The landlord needed to justify those charges. That had not been done. The recoverable amount was reduced to just over £200.
Comment
An amusing little case, but useful as well I think. The LVT erred (I think) in treating reasonableness as some sort of burden of proof exercise. It isn’t (or, at least, not initially). It is an “in the round” assessment and you only fall back on the burden of proof if it is unclear (Yorkbrook, Daejan in the CA, etc). In the present case, the evidence screamed out that something had gone wrong and so the landlord should have been required to justify himself. Justice done in the UT.
In fairness to the LVT, it doesn’t seem that the case was presented to them on quite the same basis as in the UT, so you can’t blame them for not taking the approach the UT did.