Service Charge Dispute Case Law – Service Charge Certificates

In the case between  JOHN CRAMPTON and others v PARK PLACE 96 LIMITED the issue of validity of service charge certificates – the subject of a service charge dispute- was considered.

In this case the leasehold owners submitted that the recoverability of service charge payments rests upon the terms of the lease and not upon the content of resolutions passed by the landlord company at general meetings (whether annual or extraordinary). There was a concern on behalf of the leaseholders that the landlord was minded to seek to recover monies otherwise than strictly in accordance of the lease and that the Respondent took the view that if a resolution was passed at a general meeting then all of the tenants should be taken to be bound thereby so far as recoverability of service charge is concerned. The landlord accepted that the recoverability of service charge must rest upon the terms of the lease. The Tribunal held that this is plainly correct.

The leasehold owners advanced the following submissions: 1. There were no certificates at all issued for the service charge years 2001 and 2002 with the result that no service charge whatever is payable in respect of either of those years. The leasehold owners drew attention to an order of the Harrogate County Court in proceedings to which he was a party dated 2 April 2004 which ordered (inter alia):
“The Claimant shall . . . . repay to the Defendants £2823. 00 being the sums paid on an interim basis in respect of service charges for 2001, 2002, no certificate having been produced in relation to those years in accordance with Clause 4(22) of the lease”.

The leasehold owners accepted that perhaps some service charge certificates were issued by the landlord’s  Surveyor for the years 2003 and  it was suggested that the landlord may have produced some backdated certificates for several years. However the leasehold owners submitted that these certificates were not proper certificates because they were not the product of the landlord’s surveyor applying his expert mind not merely to question of whether as a matter of fact certain sums of money had been spent but also to the question of whether the amounts spent were reasonable and in accordance with the provisions of the lease. The leasehold owners submitted that the landlord’s surveyor  had effectively merely rubber stamped the expenditure without himself thinking properly about it.

Accordingly the leasehold owners submitted that, once again, nothing was payable by the leasehold owners in respect of any of the service charge years because there was no proper landlord’s Surveyor’s certificate, which was a condition precedent to anything being payable under the service charge provisions.

The Tribunal noted “It is remarkable that neither side has placed before the Tribunal such certificates as were issued by the Lessor’s Surveyor Mr Campkin. The question of whether certificates had been issued and, if so, the adequacy of such certificates was clearly a central issue having regard to the terms in which permission to appeal was granted. It is however necessary for me to decide this appeal upon the material which has been placed before the Lands Tribunal and upon the submissions (which were not in the form of sworn evidence) from the parties. I note that it was not expressly raised as a point for consideration by the LVT that there had been a total omission to issue any certificates at all for any particular service charge year. Certainly the LVT has not made any finding that no certificates at all were issued for any such year. Having regard to the documents before me and to the submissions of the parties I reach the following conclusions:

(1) I accept Mr Renton’s argument that there must have been certificates issued by the Lessor’s Surveyor for the service charge years 2001 and 2002, see the clear implication regarding the existence of such certificates from the documents at pages 151, 153 and 158 of the bundle.
(2) Bearing in mind Mr Crampton’s acceptance that certificates were issued for the years 2003 and following and bearing also in mind that nothing has been drawn to my attention in the bundle indicating that there was an omission to issue any such certificates I conclude that certificates were issued by the Lessor’s Surveyor for the service charge years 2003, 2004, 2005 and 2006.
As regards the judgement dated 2 April 2004 obtained by Mr Crampton for the repayment of £2, 823, I notice that the Court Order refers to this sum as being paid “on an interim basis in respect of service charge for 2001-2002” and the reason given for the Court Order was “no certificate having been produced in relation to those years in accordance with Clause 4(22) of the lease”.

Accordingly this Court Order may only be directly relevant to the question of whether certificates were provided by the Lessor’s Surveyor in respect of the amount claimed by way of interim service charge, rather than being relevant to the question of whether any final certificate was prepared by the Lessor’s Surveyor after end of the relevant service charge year. Also this court order was made in proceedings which concerned only Mr Crampton and flat 69 and was only relevant to Mr Crampton’s service charge for the years 2001 and 2002 (which are not before me for decision so far as concerns flat 69). Accordingly the conclusion which I reach regarding the existence of certificates (i.e. certificates issued after the end of the relevant service charge year) is not inconsistent with the terms of this Court Order.

I note the comparatively small amount charged by Mr Campkin for the work performed and the brief description of that work, including little reference to the preparation of certificates. However the manner in which Mr Campkin chose to charge for his work and the way he described the work done in his fee notes is insufficient to justify a conclusion that, despite the matters noted above, no certificates at all were issued by Mr Campkin. “

The Tribunal rejected the argument that nothing whatever is payable by way of service charges for any of the service charge years by reason of there being a total absence of any certificate having been issued by the Lessor’s Surveyor.

The next question was whether such service charge certificates were issued by the leasehold owners were adequate to satisfy the requirement in Clause 4(22) of the lease that a Lessor’s Surveyor’s certificate should be issued, or whether on the other hand the service charge certificates were sufficiently defective to require them to be treated as effectively no service charge certificates at all, with the result that the condition precedent in Clause 4(22) for payment of service charge has not been satisfied. The tribunal concluded that the certificates must be treated as having been adequate to satisfy the condition precedent.

The Tribunal rejected the leasehold owners argument that nothing is payable by way of service charge for the relevant service charge years by reason of some alleged absence of adequate certificates from the Lessor’s Surveyor.