Challenging service charges that aren’t yours, and views on housing in the courts

I’m not going to go into detail on Gateway Holdings (NWB) Ltd v McKenzie & Anor (LANDLORD AND TENANT – SERVICE CHARGES) [2018] UKUT 371 (LC) but it does set out a point of principle. Ms McKenzie, the current leaseholder, sought to challenge service charges which had been demanded from (and paid by) her late father, the previous leaseholder.

The Upper Tribunal, via Oakfern Properties v Ruddy [2006] EWCA Civ 1389, found that she could. Section 27A Landlord and Tenant Act 1985 did not restrict the class of people who could bring a challenge to the tenant at the time of the demand.

However, in this case

the outcome of the FTT’s determination in relation to the years before she acquired her father’s lease can be of no practical benefit to Mrs McKenzie.  The service charges she has challenged were paid by her father, and neither she nor her father’s estate have any continuing liability concerning them.  The lease in this case provides for half yearly payments on account with a balancing charge or credit if the sum paid during the year exceeds the service charge finally shown to be due (see paragraph 4.5, of the Sixth Schedule to the lease).  The lease requires that “the landlord shall give credit for such overpayment” which presumably means the sum overpaid must be credited to the account of the tenant who paid it.  In respect of the sum found by the FTT to have been overpaid, that tenant was not Mrs McKenzie and I do not see how she could now claim to be entitled to receive the overpayment.  Her father’s executors may have a claim to recover it, but Mrs McKenzie herself is not an executor and she would have to await the recovery and distribution of the funds by them. 

So, Ms McKenzie’s argument that any surplus from those years should have gone to the sinking fund and be set against the major works charge that she faced in 2016 did not succeed.

Alongside the Housing Court ‘call for evidence’, MHLCG also published the snappily titled:

A qualitative research investigation of the factors influencing the progress, timescales and outcomes of housing cases in county courts

This was the ‘pre consultation consultation’ on issues with housing matters in the courts. (Full disclosure, I was one of the interviewees, not by invitation of MHCLG). 

It is a genuinely interesting document, addressing perceptions of the court process (particularly on possession claims) and what might be factors leading to perceived delays.

The key delay on possession claims – and something I think I’ve mentioned before – is the period after the possession order. For example, an accelerated procedure possession claim takes, on average 5.3 weeks from issue to order. However, it then takes a further 10 weeks (and 6.8 weeks after issue of a warrant of possession) to eviction.

A number of causes are suggested for this:

The reasons for these delays include some non-professional landlords being slow to understand that they need to apply for a warrant, and a lack of court resources, specifically a lack of bailiffs to handle the workload. It also appears that some Local Authorities (LAs) have been advising tenants to stay in the property until the bailiffs arrive. This encourages tenants to ignore the proceedings and forces landlords to take enforcement action.

Well yes, although it appears that the authors haven’t quite grasped why local authorities (and indeed in consequence, tenant advisors) tell tenants to stay put, which is a whole other kettle of fish. And permit me a dark laugh on the report’s conclusions on the Homelessness Reduction Act

However, the Homelessness Reduction Act, which came into force in April 2018, will to some extent address this issue: Local Authorities should be able to intervene earlier to support tenants threatened with homelessness. This should mean that, in future, Local Authorities will no longer advise tenants to stay as long as possible

Oh they will, they will. And it was MHCLG who changed the draft Homelessness Reduction Bill as was to ensure that a tenant with a s.21 notice would only be treated as ‘threatened with homelessness’ up until the point of a possession order having been made.

Still, landlords’ perception was that even accelerated claims take too long to get to possession order:

Nevertheless, some landlords perceive it to take too long to get to possession order stage because even if landlords use a S.21 notice, there is often an underlying reason for wanting possession (such as rent arrears, damage, or anti- social behaviour (ASB)). Landlords may have taken legal action only after a period of trying to sort the problem out informally.

Ah yes, the old days of ‘instant justice’…

18 century service of a writ with menances

However, the paper goes on to find a number of reasons for such delays

landlords also make errors in the application, leading to cases being delayed. Mistakes have become more common because of the need to demonstrate compliance with tenant protection regulations (e.g. regarding deposit protection and gas safety).

“The main reason for bouncing Section 21 applications is that they are not signed by a solicitor or landlord” (Legal professional stakeholder).

(That is, the landlord hasn’t got it right reasons)

Another perceived ‘delay’ factor was the advice and involvement of tenant support services. Most claims proceed without a response from tenants. However, if tenants receive advice at an early enough stage, the complexity of the application gives more scope for tenants and advisors to challenge the facts of a claim. If issues are raised regarding the application, this prompts judges to list cases for a hearing rather than making decisions based on the paperwork.

(That is, the tenant has a prospective defence because the landlord hasn’t got it right reasons), and

Finally, our research found some backlogs and bottlenecks in court administrative procedures. Some stakeholders believed that the pressure on court resources caused by lack of staff, closure of courts, a high workload and outdated IT led to delays in processing paperwork.

Well yes, yes indeed.

On cases brought by tenants:

There are considerable barriers to tenants taking legal action against landlords. These include lack of knowledge and understanding about the legal options available, fear of having to attend court, limited access to legal advice and support, fears of the costs of taking legal action, the limited availability of Legal Aid or pro bono providers, and the reluctance of Legal Aid firms to take on cases if they are not confident of recovering costs. Tenants can also be inhibited by fears of the landlord’s reaction, especially if they want to continue living in the property. There was some evidence of retaliatory eviction in the sample for this study. Current protection against retaliatory eviction does not seem to be effective because it relies on action by the Local Authority.

This all rings true.

The whole thing is worth reading. It highlights a lack of knowledge of both landlords and tenants on legal requirements and legal process, and this is increasingly important as more and more tenants, and indeed landlords are or will be in person in proceedings. 

It also highlights a gap between the perceptions (and understandings) of legal professionals and landlords (in particular) on timescales for proceedings, which I sort of knew already, but are set out starkly here. While lawyers (and judges) think that, say, 5 weeks from issue to a possession order (including as it does time for service, and a fortnight for any defence) is pretty damn quick, landlords thought things would be even quicker

“We thought it would take about a month to get him out because he paid the rent on a monthly basis” (Landlord, North West).

“I’m not satisfied with a 4 to 5 week wait for a hearing because most tenants don’t turn up” (Landlord, South).

And then there is a general landlord objection to tenants raising a defence, let alone with representation.

“Their (the legal advice organisation’s) job is to prevent possessions” (Landlord representative stakeholder).

“They bring in obstacles. If they had their way, landlords couldn’t get possession” (Landlord, South).

“Advice Centres run anything. They should differentiate genuine cases” (Landlord, South).

(People don’t ‘run anything’, it has to have reasonable prospects. It might not be successful in the end, but that is a different matter. It is, of course, not for an opposing party to decide what is ‘genuine’,)

What the whole research report means for a ‘housing court’ is unclear. Most (though not all) of the landlords’ issues are to do with legal requirements for a possession claim, not the actual procedure – which is merely the implementation of those requirements. There are some practical suggestions (online applications or better ones, sorting out enforcement), and an acknowledgment of the general perception of the impact of funding cuts, under resourcing and over burdened courts on the administration of proceedings. But these are not ‘specialist court’ specific.

But as a snapshot of approaches, perceptions and concerns with the court process, it is fascinating and illuminating.

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, assured-tenancy, Disrepair, Housing law - All, Leasehold and shared ownership, Possession, secure-tenancy.

7 Comments

  1. ‘On cases brought by tenants: ….Current protection against retaliatory eviction does not seem to be effective because it relies on action by the Local Authority.’

    Notably so when the landlord IS the local authority.

    • Retaliatory eviction provisions only apply to Assured Shorthold tenancies and use of ‘no fault’ evictions. Neither are relevant to council landlords.

  2. The LA I had in mind lets its ‘affordable housing’ properties via ASTs to tenants of its wholly-owned and financed ‘social housing development company’. In that scenario, unless I am mistaken, there is a potential conflict in the manner originally described, irrespective of assurances regarding legal separation of the two organisations, which share the same officers/directors. Brgds.

  3. I have a concept for a radical change that could benefit both landlords and tenants. (The present system results in me as a landlord not being willing to rent to anyone who is not “middle class” in a good job where it is reasonably likely I could get an meaningful attachment of earning order. )

    What if the landlord had to PAY an independent body (for example the deposit protection company they use) to serve all notices on tenants rather than being able to serve themselves?

    This independent body would be responsible for checking that all the landlords’ paperwork is in order to allow enforcement of the notice before serving it. Some of the money that landlord pays for the above could be used to fund independent support for the tenant, hence taking the load away from the council homeless prevention unit.

    The tenant will then be required to respond with any evidence that the notice is not valid before the end of the notice period. (So 2 months for S21) And the tenant will not be allowed to provide any additional evidence on the day of a court case.

    Maybe the court should be able to rule on both a S8 and a S21 on the same day even if the 2 months notice for the S21 has not yet completed. (Clearly enforcement will not be able to start until after the 2 months notice.) This will result in landlords not having to choose between S8 and S21

    The complete cost of enforcement in the few cases when a tenant does not leave as order by the court should be covered by “combining” the payments all landlords made to serve the notices, hence giving individual landlords the confidence that they can afford the costs of sorting out a “bad tenant” in the unlikely event they have to. (This may give landlords confidence to restart renting to people on benefits.)

    It should also be made a criminal offence for anyone to encourage a tenant to remain in a property once a court has order then to leave, maybe even make it a criminal offence for the tenant if they don’t hand the property back to the landlord with vacant process on the date the court order.

    • Ian, in roughly reverse order.

      A tenancy continues to the date of eviction. This is settled case law. So you would have to change primary legislation. And even assuming that you made it trespass to continue to occupy after the date of expiry of a possession order, trespass is not a criminal offence. And there is no good reason that it should be.

      You mistake what a section 21 notice is. It is not a legal notice to leave. There can be no requirement that a tenant provide any evidence of the invalidity of the notice before the expiry of the (purported) notice, because the notice is no more than an expression of an intention by the landlord. What is more, it is entirely possible (though infrequent in practice) for a s.21 notice to be invalidated at any point right up to the making of a possession order – the retaliatory eviction provisions.

      As for the rest, landlords could easily arrange something like that for themselves. Indeed, the landlord bodies do advice services. Most landlords don’t sign up to those bodies, because it costs them a bit in the short term. And so of course, your proposal wouldn’t work unless it was made mandatory. Now, having to have and pay for a mandatory ‘check and service’ by a third party (let alone one that also funded independent support for tenants) is unlikely to be popular with many landlords. Nor would the way it looked like national licensing.

    • Tenant to say what is wrong with S21 before the case or not able to use the invalidity as a defence?
      I think not.

      A friend of mine was the target of retaliatory S21 notice; she had the temerity to notice mould on bedroom walls (which turned out to be due to a leaking roof).

      There appeared to be at least 6 arguments that the notice was invalid, some of which were likely to be repeated (e.g. handing it to someone not on the tenancy) and some that were unlikely to be repeated (serving it on a Saturday, so deemed service would be Monday and so insufficient notice).

      Why should someone in that position have to tell the LL up-front everything they have done wrong so that they can get it right the next time?

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