This is a very short note (come on its a Friday afternoon) on the recent Upper Tribunal case Oliver v Sheffield City Council  UKUT 229 (LC), 21 May 2015. This was a case concerning a dispute about the payment of a service charge that arose from works carried out by Sheffield City Council on one of its estates. The dispute concerned a number of challenges, most of which I will not go into because they turn on their own facts. One point taken is, however, of wider importance, i.e. the extent to which a landlord can recover the cost of works that have been in part funded by a grant.
Ms Oliver was the long leaseholder in a block of flats on the Lansdowne Estate, which was owned by the Council. The Council carried out city wide major works, which included works on the Lansdown Estate. Some of the works were eligible for a contribution from a commercial energy company as part of the Community Energy Savings Programme (“CESP”). In total 15 of the 25 blocks on the Lansdowne Estate were eligible to receive CESP funding. The contribution to Ms Oliver’s block was £43,570.44. The Council decided not to pass the CESP directly to the leaseholders as a set off against their service charge contributions. Rather, the Council decided to attribute the money to the funding of works to its city-wide housing stock. The effect of this was that every leaseholder’s service charge was reduced irrespective of whether their block had been entitled to CESP funding.
The Upper Tribunal allowed Ms Oliver’s appeal. Where funding has been provided from a third party and the purpose of the funding is specifically intended to meet the cost of certain works, it is impermissible to calculate the amount a leaseholder must pay under a service charge without reference to the receipt of that money. This is, wherever such funding is provided the landlord cannot be said to have incurred, in full, the costs of the works. The Council could not therefore treat the money as general revenue, which it could apply to the cost of works on other estates or blocks.
Obviously, this case is of wider application to wherever a landlord receives grant money for works to an estate. It must set-off that grant money before billing the leaseholders.