LON/00BG/LSC/2019/0277 — service charge decision
In LON/00BG/LSC/2019/0277, decided 21 December 2022, the First-tier Tribunal considered 5 disputed service charge items at Canary Riverside Estate, Westferry Circus, London E14 and reached a mixed result: 1 item was reduced or disallowed. Full decision on GOV.UK below.
Property: Canary Riverside Estate, Westferry Circus, London E14
Decision date: 21 December 2022
Full decision: Read on GOV.UK
Managing agent named in the decision: Westminster Management Services Limited (WMS).
What was challenged and what the tribunal decided
| Item | Demanded | Allowed | Outcome | Grounds |
|---|---|---|---|---|
| Buildings insurance (2010/11-2019/20) | — | — | Reduced | Not payable under the lease, Landlord could not evidence the cost |
| Buildings insurance (2010/11-2019/20) | £483,182 | £483,182 | Allowed in full | — |
| Other charges (2011/12-2016/17) | — | — | Allowed in full | — |
| Buildings insurance (2010/11-2019/20) | — | — | Allowed in full | — |
| Buildings insurance (2010/11-2019/20) | — | — | Allowed in full | — |
Section 20C order: conditional.
Key passages (verbatim)
“The Applicants are not liable to contribute towards payment of the sums of: (a) £1,517,372, being fees paid to Westminster Management Services Limited; and (b) Insurance Premium Tax of £121,338.58 on that sum.”
“The Applicants are liable to contribute towards payment of the sums (a) totalling £483,182, being fees in the form of commission payable to brokers Reich; and (b) Insurance Premium Tax of £38,696.42 on that sum.”
“Financing charges included in the insurance premiums for the years 2011/12 – 2016/17 were not unreasonably incurred and are payable by the Applicants.”
“The Applicants' case that the reinstatement value of the Estate had been overstated for the years 2010/11 - 2019/20, resulting in inflated premiums, fails.”
“The Applicants' case that a flawed apportionment methodology had been used when allocating insurance costs to the leaseholders of car parking spaces serving the Estate also fails.”
“In our view, the Respondents' complete lack of transparency with leaseholders regarding these commission payments, paid since 2010, has been lamentable. The sums involved are large and constitute a very substantial percentage of the premium towards which leaseholders were asked to contribute, without any notification to them as to the nature and amount of the commissions involved. It was only through these proceedings that the full extent of these commissions became apparent.”
“the service charge accounts are silent on the question of commissions and fees; the amount of commission said to have been retained by Reich in the Respondents' 28 August 2020 statement was woefully inaccurate, as was the figure specified in the schedule provide three months later, in November 2020, which stated that Reich had estimated that from 2013 - 2019 they earned total revenues across all of the CREM policies (inclusive of broker fees) of an average of £28,725.38 per year.”
“This narrow reading of the Order was criticised by Judge Powell in a letter from the tribunal dated 23 November 2021 [388]”
This summary is assembled from the structured record of the published decision; amounts appear only where the tribunal stated them. Always rely on the full decision itself.