LB Hackney v Ms Zahra Akhondi [2012] UKUT 439 (LC)

Ms Akhondi was the only long lessee in a modern 3-storey block containing five flats. She acquired the flat under the right to buy scheme. The remaining occupants of the block were Hackney’s secure tenants.

Hackney consulted and carried out major works to the fabric of the building and to the doors. These resulted in invoices to Ms Akhondi of £19,743.44 and £5,001.57 respectively.

Ms Akhondi applied to the LVT. The normal directions were given, but she put in no evidence to support her contention that the amount she had been charged was excessive.

The LVT accepted that Hackney had complied with the relevant consultation requirements. Notwithstanding Ms Akhondi’s only having complained about the cost of the doors, it decided that the service charges were not reasonable in amount in relation to the cost of:

1)      the new doors;

2)      the administration charge;

3)      the replacing of the roof, and

4)      the preliminaries.

The LVT reduced the costs of the doors, administration fee and roof by 50%, and reduced the preliminaries from 34% of the total cost of the works to 15%, even though the latter costs were priced on an item by item basis rather than as a percentage of the total cost of the works.

Section 47, Landlord and Tenant Act 1987.

The Tribunal recorded that the LVT had evidently felt great sympathy for Ms Akhondi, but “in seeking to assist her it went, in our judgment, well beyond its powers.  There is no objection to a tribunal seeking to assist a landlord or a tenant in order to understand what their case is.  Indeed it may well be important that it should do this.  It is not, however, for a tribunal to create for a party a case that it has not advanced; and, to the extent that it sees fit to raise questions that may fairly be said to be within the ambit of the party’s case, it must follow the Arrowdell requirements to ensure that the other party has a fair opportunity of dealing with them.  Fundamentally, of course, it must only reach conclusions that are open to it on the evidence before it”.

The Lands Chamber then addressed each head of cost reduced by the LVT.

It was open to the LVT to consider the cost of the doors, but the reduction of 50% was arbitrary. There was no evidence before it as to the cost of alternative types of door, and, if the LVT had such information, it failed to put it to Hackney’s witnesses or otherwise enable Hackney to comment upon it.  In this respect the decision was based on no discernible evidence and was procedurally unfair.

This issue appeared to have been raised by the LVT at the hearing, but it failed to record Hackney’s evidence, and failed to give reasons for rejecting that evidence and for its conclusion that the 10% was excessive.

The reduction in roof costs was again held to be arbitrary. The LVT could not “use its knowledge and experience” to determine that a more appropriate sum would be half, where there was no evidence, where it appeared that the matter had not been put to Hackney for comment, and where the reasons for the reduction were “manifestly inadequate”.

The Lands Chamber determined that the reduction of these costs from 34% to 15% appeared, again, to have been wholly arbitrary. The only reason given by the LVT was that the cost of the preliminaries was “far too high”.

In relation to Ms Akhondi’s complaint that Hackney had charged an excessive amount for the works, the Lands Chamber said: “we do not think that it was appropriate for the LVT, on the basis only of the applicant’s assertion that the charges for the remaining work were ridiculous, to single out for reduction particular elements of the costs”.

Further, the question of whether the cost of the works was reasonably incurred was not affected by the LVT’s apparent view that Hackney should have ensured that the costs were lower because Ms Akhondi was a right to buy lessee, and possibly also because she was a single woman who suffered from dyslexia (about which she had not informed Hackney until after the works had been completed) and to whom Hackney should have explained the proposed works and their cost in addition to complying with statutory consultation.

I managed to resist the temptation to head this post “Me, me, me!” because this was my first appearance in the Lands Chamber.

Putting aside (for the time being) my personal excitement, I find this decision interesting as a contrast to Garside v RFYC Ltd & B R Maunder-Taylor [2011] UKUT 367 (LC). In Garside, HHJ Alice Robinson held that:

“14…the financial impact of major works on lessees through service charges and whether as a consequence works should be phased is capable of being a material consideration when considering whether the costs are reasonably incurred for the purpose of section 19(1)(a)…”, but

“20. It is important to make clear that liability to pay service charges cannot be avoided simply on the grounds of hardship, even if extreme. If repair work is reasonably required at a particular time, carried out at a reasonable cost and to a reasonable standard and the cost of it is recoverable pursuant to the relevant lease then the lessee cannot escape liability to pay by pleading poverty”.

This case shows that Garside cannot be expanded to allow the LVT to reduce items of service charge by reason of the general personal circumstances of a tenant. It seems to me however that it also underlines the delicate position of the LVT when faced with parties who stir its sympathies, but who have failed to detail their case and have failed to put in any supporting evidence.