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Southwark Council (202001796)

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REPORT

COMPLAINT 202001796

Southwark Council

7 April 2021


Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme (the Scheme). The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

  1. The resident has complained that the landlord has allocated a service charge refund to outstanding invoices that they have repeatedly disputed.

Background

  1. There is a long history of service charge discussion and disputes associated with this case. The landlord has acknowledged that sums have been misallocated at times.
  2. The information provided has been reviewed as background to this case. However the Housing Ombudsman Service asks that complaints, where possible, are made within 6 months of an issue occurring, and that complaints are referred to our Service within 12 months of the landlord’s final response.
  3. There was a meeting in 2015 where the resident believed the various accounts and debits had been clarified and cleared with a single payment. However the resident continued to receive letters about debits on the account and raised this since 2015. We have seen the more recent correspondence from the resident in February and April 2018 onwards. The resident believes they are due a refund of £308.06 for 2017/18, however this has been used to make up the debits on the disputed accounts.
  4. The accounts where the £308.06 was used were:
    1. £185.28 for 2013/14 revenue service charge
    2. £87.99 for 2010/11 service charge
    3. £34.79 for 2019/20 revenue service charge
  5. The landlord’s initial formal response to the complaint (January 2020) was handled through its advocacy process. This is a process for handling disputes from leaseholders. The response addressed the disputed 2013/14 and 2010/11 charge:
    1. It is agreed the resident paid 21 payments of £185.28 in 2013/14 when only 20 were due. The landlord stated that the extra payment was cleared by an ‘credit transfer–in following actualisation’ in September 2015. However the landlord then also included this figure in a separate direct refund of £811.90 in November 2015. Therefore it believed this figure had been both transferred as an account credit and paid direct to the resident. The landlord explained one of these doubled payments needed to be repaid by the resident, which was the reason the £308.06 refund was in part used for this.
    2. The landlord explained that part of an account credit was used to pay the 2010/11 invoice in April 2017. However later that month £87.99 of this credit was reallocated and used to pay a different invoice. As such this amount remained to be paid on the 2010/11 invoice.
    3. The response accepted the landlord should have notified the resident earlier of the discrepancies, and that there had been other miss-allocated payments that had confused matters.
  6. The landlord’s final response in April 2020 did not add anything to the response. It explained how the collections team had no further information to add to that given in the advocacy response.
  7. The resident’s explanation to the Housing Ombudsman Service sets out:
    1. They believed they were due £308.06 for 2017/18. This is agreed by the landlord. However, instead of a direct payment to the resident the amount had been used to clear the disputed debits.
    2. The resident paid £996.21 in December 2014 to clear any outstanding debits and agreed a quarterly (as opposed to monthly) payment schedule with the landlord. As this schedule has been maintained the resident believes there should be no debits.
    3. For the £185.28 (from 2013/14) – The landlord’s November 2015 refund to the resident did not correspondence to previous correspondence and was supported by a ‘cocktail’ of unclear invoices.
    4. For the £87.99 (from 2010/11) – The resident has raised that they do not have access to the invoices that support this debit and they have not been able to track the amount across their service charge statements.
    5. For the £34.79 (from 2019/20) – the resident has complained this disputed charge has not been responded to.
    6. The resident has also queried where small payments allocated to their 2012/13 account came from, and why a March 2014 payment does not correspond to the amount they paid from their bank to the landlord. This issue was not part of the complaint that was investigated through the landlord’s procedures and so cannot be considered in this report. If the resident would like to pursue this issue they would need to seek independent advice about how to do so.

Assessment and findings

  1. It is not disputed that the resident was due a refund of £308.06 from the actualisation of the 2017/18 account. Instead the dispute is over how this amount has been allocated to other, disputed, debits. Therefore this assessment will consider the information provided by the landlord to support each of these amounts and how it has responded to the queries posed by the resident.

£87.99 (from 2010/11 account)

  1. The landlord has provided the service charge accounts for the periods relevant to this charge. The accounts show a £92.27 credit to the 2010/11 account. They also show an immediate transfer of £87.99 to pay a debit on a different invoice (the 2014/15 estimated charge). This was the explanation given in the advocacy response and the figures can be followed through the accounts.
  2. The landlord’s response does not explain however:
    1. Why was this credit used to pay a different invoice without consulting the resident (as opposed to simply paying the invoice it had originally been allocated to).
    2. The invoice it was used for (the 2014/15) had reached £0 due, however there were then two transfers out. This resulted in a debit returning and as such requiring a transfer-in. There is no evidence the landlord consulted with the resident about transferring these amounts out in November 2015. This is
  3. The Housing Ombudsman Service cannot determine whether a service charge is reasonable and therefore how much is due to be paid. Furthermore, regardless of the landlord and resident’s actions, under the leasehold agreement the charges continue to be due from the resident. Therefore as the landlord has provided evidence of a debit for this charge it does appear that a payment was due.
  4. However, the reasons for the debit appearing, together with the other transfers-in and out of the accounts without consultation, show that the landlord’s communication with the resident about the handling of the accounts was inadequate. If any accounts were in debit this should have been communicated with the resident, as opposed to clearing some debits by creating others.
  5. Therefore while this amount does appear to have been due, the landlord has not sufficiently addressed how the amount came to be or how it was then managed/communicated with the resident.

£185.28 (from 2013/14 account)

  1. The landlord’s explanation in the advocacy response does not follow through.
  2. The resident owns two properties and pays service charges for them both. It is agreed by both parties that 20 payments of £185.28 were due in 2013/14 (10 for each property) however 21 payments were made to the landlord. It is noted that this additional payment was not a failure of the landlord however. The resident has stated the error came from their side, their bank, making an extra incorrect payment.
  3. The landlord has evidence that 12 payments were allocated to one property and 9 to another. To rectify this the landlord transferred one of the payment from the account of one property to another. This is as explained in the advocacy response and supported by the service charge statement.
  4. This will have still left 11 payments against one property, having brought the other property up to the correct 10 allocated payments. Therefore a refund of one lot of £185.28 was due in some way. The landlord has stated that one payment of £185.28 was included in the November 2015 refund of £811.90.
  5. However the landlord has gone on to justify is claim for £185.28 to be paid back by saying this was a double payment – i.e. that only one of either the transfer to the other property or the refund in the November 2015 should have happened. This is incorrect. To resolve the accounts both of these payments were needed. To bring the account with 12 allocated payments down to the correct 10 the landlord needed to move two lots of £185.28 – one to the other property and one as a refund payment to the resident.
  6. Therefore based on the information and explanation provided by the landlord the £308.06 should not have been used to pay £185.28 to the landlord.

£34.79 (from 2019/20 account)

  1. The landlord’s advocacy and final responses do not respond to the resident’s dispute about this figure.
  2. The actual figure was not challenged in the resident’s emails during 2018/19 when the other charges were challenged across multiple emails. However the resident did ask for a copy of the invoices to support the £34.79 charge and it does not appear they were sent.
  3. The resident has explained to the Ombudsman that they do not have the invoices to support this charge. As the charge related to an estimated service charge it may be that this charge would be clarified (and amended) as part of the actualisation process. However the resident had also highlighted the fact they believed they had arranged a quarterly payment schedule with the landlord that would meet the estimated charges for the properties.
  4. The Housing Ombudsman Service cannot investigate issues which have not first been investigated and responded to by the landlord. As this charge has not had a specific challenge raised against it, it is a complaint that first needs investigation by the landlord. However the landlord should have already provided the supporting invoices as requested in September 2019. As there is no clear correspondence on file to show these were sent this was a failure in the landlord’s handling of the queries.

Determination (decision)

  1. I can confirm in accordance with paragraph 54 of the Housing Ombudsman Service Scheme there was maladministration by the landlord in its handling of the complaint about the allocation of the refund against other invoices.

Reasons

  1. The landlord’s explanation and supporting information does not support the use of the £308.06 to pay for a £158.28 debit.
  2. The landlord has not responded to the request for supporting information for the £34.79 debit.
  3. The landlord has acknowledged the management of the accounts (including the repeated use of unclear transfers-in and out) and its lack of communication about the status of the accounts was inadequate. However it has not offered any redress for the distress of repeatedly receiving payment due letters for disputed amounts; or for the inconvenience of having to repeatedly pursue the matter.

Orders and recommendations

  1. As a result of the determination above I have ordered that, within 4 weeks the landlord will:
    1. Pay the resident the £185.28 element of the service charge refund.
    2. Pay the resident £200 to acknowledge the distress and inconvenience of having to repeatedly pursue the issue.
    3. Respond to the complaint about the £34.79, including a clear, evidenced explanation as to why this amount is due.