The questions of the reasonableness of the service charges and, if applicable, the construction of the arrangement previously made between the parties concerning the management.
Poynders Court Limited v GLS Property Management Ltd [2012] UKUT 339 (LC)
Summary
The case of Poynders Court Limited v GLS Property Management Ltd [2012] UKUT 339 (LC) intends to resolve the issue between Poynders Court Limited, a company for residential management, and GLS Property Management Ltd, their managing agent over service charges owing. It was for the Upper Tribunal, sitting in the Lands Chamber, to determine the questions of the reasonableness of the service charges and, if applicable, the construction of the arrangement previously made between the parties concerning the management.
Facts
Poynders Court Limited is an elected residential management company for the maintenance and management of the residential block known as Poynders Court. The day-to-day management had been placed with GLS Property Management Ltd in order to ensure the maintenance of the property to at least a satisfactory standard.
With time, arguments cropped up over the service charges that GLS was asking for. PCL has argued that the said service charge was exorbitant compared with the services it was offering. They have further argued that GLS have, not only overcharged but also for works, which were not necessary or of low standard.
The original claim was heard by the First–tier Tribunal (Property Chamber) who were required to determine if the service charge and management of the property by GLS was reasonable.
Issues
The more basic issues emanating from this case were the following:
1. Whether the amount of service charges which was payable to GLS was reasonable
2. Whether such works included in the service charge were indeed necessary and of good quality.
3. What construction and application had been given to the management agreement between PCL and GLS .
First Instance
PCL challenged the service charges levied by GLS on a number of grounds at the First-tier Tribunal. Evidence was provided to the effect that some of the charges were unreasonable and too high, some works wholly unnecessary, and others executed to a poor standard. PCL also submitted that there had been a failure to comply with the terms of the management agreement by GLS, resulting in inflated service charges.
The First-tier Tribunal considered the evidence before them which consisted of documents for invoices, work reports, and expert testimonies. It decided that the case for PCL was holding out in several sectors where many charges were found to be unfair, many of which works were not necessary, or below the par. The Tribunal, in real terms, reduced the former service charges substantially and held out what in its view should be fair and actual.
Decision on Appeal
From here, GLS made an appeal to the Upper Tribunal, Lands Chamber, and sought to recover the amount initially charged for the service charge. GLS argued that in this case, the First-tier Tribunal had committed some errors in the decision since it had failed to correctly assess the evidence that had been admissible before it.
It is in this regard that the Upper Tribunal reviewed the findings of the First-tier Tribunal regarding newly presented material. It was open to consideration, therefore, whether the First-tier Tribunal had done a full justification for the deductions that they made, or were the service charges that were originally demanded in accordance with the reasoning that followed on by the First-tier Tribunal. It having taken all matters in careful consideration, dismissed the appeal and held the decision of the First-tier Tribunal to be correct. It accepted the case of the appellants that the original service charges were excessive and not fully justified by work done.
The principle of reasonableness in setting service charges and the requirement for the managing agent to provide clear and cogent evidence to support charges which they seek to impose upon the lessees were further underlined by the Upper Tribunal. In doing so, it reiterated yet again that service charges should only be allowed on actual expenditure incurred that are necessary and proportionate to any services, works, or benefits administered to the residents.
Comments
The decision in Poynders Court Limited v GLS Property Management Ltd of the Upper Tribunal is important for a variety of reasons, offering some valuable guidance to managing agents and residential management companies alike.
1. Service Charges: It is evident from this case that managing agents are to ensure at all times charges levied on lessees are reasonable and justified. The charges should reflect what is to be provided in services and be necessary and of benefit to the lessees.
2. Quality and Necessity of Works: The judgment heretofore sets out the need for quality and necessity for the works that the charges are levied for. A managing agent has to be in a position to ensure essential works and that the same works are carried out to a high standard. Works that have been inadequately carried out or that are unnecessary cannot justify high service charges.
3. Transparency and Documentation: There must be more documentation and transparency when calculating and apportioning through service charges. There should be full records of expenditure by managing agents; a detailed account of charges made should be given.
4. Compliance with the Management Agreement: This case raises awareness of the fact that managing agents should comply with the terms of their management agreements. Otherwise, there are disputes and reductions of the service charge that are deemed unreasonable.
5. Role of Tribunals: The First-tier Tribunal and the Upper Tribunal play an important role in determining disputes concerning service charges. These decisions bring out the principles of fairness, reasonableness, and transparency that should imbue the management of residential property.
6. Precedent for Future Disputes: This case provides a precedent for all future disputes related to service charges by laying down a clear framework to assess service charges in terms of their reasonableness and the kind of evidence that would be required in order to justify the same.
Generally speaking, the Poynders Court Limited v GLS Property Management Ltd case invokes a delicate balance between the managing agents' rights to recover the costs that are reasonably incurred and their due protection from the claims for charges, which are not justified and reasonable in nature, at the cost of the lessee. At stake is a judgment that would guarantee fairness, transparency, and accountability in the administration of service charges under residential leases.
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The questions of the reasonableness of the service charges and, if applicable, the construction of the arrangement previously made between the parties concerning the management.
Poynders Court Limited v GLS Property Management Ltd [2012] UKUT 339 (LC)
Summary
The case of Poynders Court Limited v GLS Property Management Ltd [2012] UKUT 339 (LC) intends to resolve the issue between Poynders Court Limited, a company for residential management, and GLS Property Management Ltd, their managing agent over service charges owing. It was for the Upper Tribunal, sitting in the Lands Chamber, to determine the questions of the reasonableness of the service charges and, if applicable, the construction of the arrangement previously made between the parties concerning the management.
Facts
Poynders Court Limited is an elected residential management company for the maintenance and management of the residential block known as Poynders Court. The day-to-day management had been placed with GLS Property Management Ltd in order to ensure the maintenance of the property to at least a satisfactory standard.
With time, arguments cropped up over the service charges that GLS was asking for. PCL has argued that the said service charge was exorbitant compared with the services it was offering. They have further argued that GLS have, not only overcharged but also for works, which were not necessary or of low standard.
The original claim was heard by the First–tier Tribunal (Property Chamber) who were required to determine if the service charge and management of the property by GLS was reasonable.
Issues
The more basic issues emanating from this case were the following:
1. Whether the amount of service charges which was payable to GLS was reasonable
2. Whether such works included in the service charge were indeed necessary and of good quality.
3. What construction and application had been given to the management agreement between PCL and GLS .
First Instance
PCL challenged the service charges levied by GLS on a number of grounds at the First-tier Tribunal. Evidence was provided to the effect that some of the charges were unreasonable and too high, some works wholly unnecessary, and others executed to a poor standard. PCL also submitted that there had been a failure to comply with the terms of the management agreement by GLS, resulting in inflated service charges.
The First-tier Tribunal considered the evidence before them which consisted of documents for invoices, work reports, and expert testimonies. It decided that the case for PCL was holding out in several sectors where many charges were found to be unfair, many of which works were not necessary, or below the par. The Tribunal, in real terms, reduced the former service charges substantially and held out what in its view should be fair and actual.
Decision on Appeal
From here, GLS made an appeal to the Upper Tribunal, Lands Chamber, and sought to recover the amount initially charged for the service charge. GLS argued that in this case, the First-tier Tribunal had committed some errors in the decision since it had failed to correctly assess the evidence that had been admissible before it.
It is in this regard that the Upper Tribunal reviewed the findings of the First-tier Tribunal regarding newly presented material. It was open to consideration, therefore, whether the First-tier Tribunal had done a full justification for the deductions that they made, or were the service charges that were originally demanded in accordance with the reasoning that followed on by the First-tier Tribunal. It having taken all matters in careful consideration, dismissed the appeal and held the decision of the First-tier Tribunal to be correct. It accepted the case of the appellants that the original service charges were excessive and not fully justified by work done.
The principle of reasonableness in setting service charges and the requirement for the managing agent to provide clear and cogent evidence to support charges which they seek to impose upon the lessees were further underlined by the Upper Tribunal. In doing so, it reiterated yet again that service charges should only be allowed on actual expenditure incurred that are necessary and proportionate to any services, works, or benefits administered to the residents.
Comments
The decision in Poynders Court Limited v GLS Property Management Ltd of the Upper Tribunal is important for a variety of reasons, offering some valuable guidance to managing agents and residential management companies alike.
1. Service Charges: It is evident from this case that managing agents are to ensure at all times charges levied on lessees are reasonable and justified. The charges should reflect what is to be provided in services and be necessary and of benefit to the lessees.
2. Quality and Necessity of Works: The judgment heretofore sets out the need for quality and necessity for the works that the charges are levied for. A managing agent has to be in a position to ensure essential works and that the same works are carried out to a high standard. Works that have been inadequately carried out or that are unnecessary cannot justify high service charges.
3. Transparency and Documentation: There must be more documentation and transparency when calculating and apportioning through service charges. There should be full records of expenditure by managing agents; a detailed account of charges made should be given.
4. Compliance with the Management Agreement: This case raises awareness of the fact that managing agents should comply with the terms of their management agreements. Otherwise, there are disputes and reductions of the service charge that are deemed unreasonable.
5. Role of Tribunals: The First-tier Tribunal and the Upper Tribunal play an important role in determining disputes concerning service charges. These decisions bring out the principles of fairness, reasonableness, and transparency that should imbue the management of residential property.
6. Precedent for Future Disputes: This case provides a precedent for all future disputes related to service charges by laying down a clear framework to assess service charges in terms of their reasonableness and the kind of evidence that would be required in order to justify the same.
Generally speaking, the Poynders Court Limited v GLS Property Management Ltd case invokes a delicate balance between the managing agents' rights to recover the costs that are reasonably incurred and their due protection from the claims for charges, which are not justified and reasonable in nature, at the cost of the lessee. At stake is a judgment that would guarantee fairness, transparency, and accountability in the administration of service charges under residential leases.
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