Service Charge Disputes in the First Tier Tribunal

This article was first published in Property Investor News

Top tips

Over many years of representing landlords (usually by their appointed property management company) in leasehold service charge disputes before the Tribunals, various themes have developed. One of them is my frustration, in the majority of cases, at the quality of evidence with which I must present my client’s case. It actually isn’t that difficult to get your best evidence before the Tribunals and secure the best possible recovery. Especially with the benefit of hindsight!

Set out below are my "top tips" to help you collate and then present your best evidence and thus have the best of chance of recovering your service charges in full. If you instruct a property management company to fully manage your property, this can instead be taken as a list of things you should expect them to have done in the event of a dispute arising – worth raising with them before a dispute arises.

Years before the hearing

• Keep good records (in a manner that enables them to be retrieved) – keep invoices filed in a logical manner, generally by block and by date.
• Ensure that where invoices are apportioned between different properties or blocks (in accordance with the lease), you mark clearly on them how this has been done, and why (if not obvious).
• Number 1 Tip! Take photos before any major works or significant  other works and, ideally, record pre-works inspections / surveys as carefully as possible.
• Understand the lease – what is recoverable.
• Be aware when staff change / move around / leave, you need to fully debrief them / ensure their files are in good order. Someone else may well have to pick up major works many years later. Make sure this is possible.

Months and weeks before the hearing

• Identify, with help of legal team, at an early stage who is best placed to give evidence and understand then committed to case – irrespective of department / patch moves and even job moves!
• Read your witness statement very carefully BEFORE you sign it. It significantly weakens your case if you have to amend it later.
• Understand at an early stage what the issues (particularly the legal issues and, at least in outline, the legal tests) are.
• If property is new to you, ensure you are familiar with the development, historic issues and any particular issues raised by the leaseholder(s)
• In most instances, make sure you have visited the property!
• Dig out all the information relevant to the case as soon as possible, deadlines come up very quickly and last minute panic best avoided.
• Understand the consultation process where relevant.
• Diarise the hearing and emphasise to colleagues the importance of those dates.
• If, unavoidably, you cannot attend, inform legal team at the earliest possible stage.
• Deal with any minor / silly issues at early stage – easy points.
• In days leading up to hearing, refresh memory of statement / facts. Make sure you can explain documents.

Day of the hearing

• Know where you are going. Have details of site visits etc. written down.
• Get there early (at least 30 minutes before) to meet legal representative and assist with any negotiations.
• Be ready to provide information (potentially quickly!)
• Often the tribunal will ask for further information during the hearing. Be ready to go out / make phone calls to assist.
• Do not be fooled by informality of hearing. This is still a judicial process.
• If no one is present from the accounts department, ensure you understand accounts / bills and basis for billing.
• If unsure of legal issues in case, ask.
• Ensure you have authority to negotiate / settle or ensure someone who does will be contactable easily during the hearing.

Giving evidence

• Whilst there is no reason to be, people are often nervous. This is normal.
• All that is expected of you is that you answer honestly and accurately.
• If you don’t know the answer, it is very dangerous to guess.
• Speak slowly and clearly as others will be writing down what you say.
• Remember to answer the question. Don’t ramble or go off topic.
• The other side is entitled to cross examine you. This should mean that they put their case to you and pick you up on particular aspects of your evidence.
• If the other side is not legally represented (this is common), they will struggle to properly cross examine you. They are more likely just to make statements / set out what they want to say. They should be asking questions. Be patient. If they don’t ask you a question, there is no need to respond (at least, there isn’t if you are represented at the hearing).
• Don’t get into an argument when being cross examined!
• When dealing with figures, be very careful.
• It is simply not good enough to say "I don’t know, it isn’t my patch / it isn’t my property / this case was handed to me yesterday / I’ve not been there." – see above!
• Don’t talk over people!
• If you have followed the tips above, there is NOTHING to worry about at all.

Finally

• Remember the tribunal can (should) ONLY determine the case on the basis of the evidence before it. Generally, that will be evidence that has been put in in advance in statements etc. It’s no use saying on the day "I’ve got the document back in the office" – Too late!