Service Charges: The burden of proof in demonstrating reasonableness of service charges in the First-tier Tribunal (Enterprise Home Developments LLP v Adam – 2020)

During a service charge dispute, the First-tier Tribunal was asked to determine the reasonableness of service charges paid. On appeal, the Upper Tribunal considered whether the FTT was correct in its approach to considering the burden of proof in relation to reasonableness.

The background

In Enterprise Home Developments LLP v Adam [2020], the landlord had claimed service charges totalling £17,209 from the tenant incurred over 4 service charge years. The tenant applied to the FTT for a determination as to the reasonableness of the charges demanded.

In reducing the amounts to £6,411.46, the FTT concluded that the landlord had not provided sufficient explanation, justification or evidence to support its claim for the remaining sum. An order was made preventing the landlord from recovering the costs of the proceedings through the service charge. The landlord appealed on a number of points, including whether the FTT was correct in its approach to considering the burden of proof in relation to the reasonableness of service charges.

The decision

The Upper Tribunal set aside the FTT’s decision, finding in favour of the landlord. The tenant’s application to the FTT had not contained any further evidence to support the dispute, namely to state that services charged for had not been delivered or had been delivered to a poor standard. The Upper Tribunal considered the landlord’s charges not to be unduly high to lead to a verdict that they were unreasonable.

The burden of proof was on the tenant to evidence its case, not solely relying on its application paperwork but establishing grounds to support a claim that sums were unreasonable or had otherwise not been incurred by the landlord. The UT allowed the landlord’s appeal to succeed, finding that the tenant was liable for all sums demanded save for reductions to heating and lighting for two years.

Advice and action

This case provides useful commentary on the FTT’s approach when considering burden of proof. Even though the tenant in Enterprise was self-represented during proceedings, there was nevertheless a requirement for him to evidence his case and establish grounds that demonstrated why he considered the service charges demanded to be unreasonable.

The decision will support landlords whose tenants make FTT applications, ensuring that procedure is followed and that answerable cases are presented.