A “proportionate part” or a “fair proportion” of an annual service charge may not be an equal fraction of the charge’s component parts, so held the Court of Appeal in Accent Housing Ltd v Howe Properties (NE) Ltd [2024] EWCA Civ 297.
Accent as landlord of many estates charged management fees determined by type of long lease property: a tiered system. Howe had long leases of four flats on one of the estates. Its long leases set out service charges, which included the management fees, as part of a total sum to be divided among properties on the estate. The long leases were inconsistent in how they described the apportionment of that sum: one said 1/137th, but others said that the charge should be “a proportionate part” or “a fair proportion”.
Whereas the First-tier Tribunal (“FTT”) allowed Accent its tiered management fees, the Upper Tribunal (“UT”) treated management as a component cost like any other and subject to a uniform fraction of the whole (1/138th, as the caretakers property was now being let). It also remitted the reasonableness of the management fees to be considered by the FTT.
Accent appealed to the Court of Appeal (save for the lease that specified 1/137th) and the UT was overturned: a “proportionate part” or a “fair proportion” did not require a single proportion of the whole and each part of the annual service charges.
Success for Accent, then? Not entirely. The uniform application of management fees across all estates, albeit tiered by property type, was still impermissible because the long leases required the charges to relate to the actual expenditure on the particular estate.
Back then to the FTT to determine what management fees were properly recoverable in respect of all four leases. Anthony Verduyn acted for Howe Properties (NE) Ltd in the UT and Court of Appeal, see the judgment here: https://www.bailii.org/ew/cases/EWCA/Civ/2024/297.html
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