Southwark Council (202003038)

REPORT

COMPLAINT 202003038

Southwark Council

17 November 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 complains about:
   1. damage to the property caused by work in 2017.
   2. the landlord’s movement of funds on his service charge accounts.
   3. the landlord’s handling of his concerns that an invoice was issued in error.

Jurisdiction

2. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
3. After carefully considering all the evidence, in accordance with paragraph 39d of the Housing Ombudsman Scheme, which states ‘The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion were brought to the Ombudsman’s attention normally more than 12 months after they exhausted the member’s complaints procedure’, the resident’s complaint about damage  to the property caused by work in 2017 is outside of the Ombudsman’s jurisdiction.
4. The resident complained about damage to the property following works carried out in 2017. The landlord provided its final response on 4 September 2018 and directed the resident to contact the Housing Ombudsman if he remained dissatisfied. The resident failed to do so until July 2020. This was more than 12 months after the landlord’s final response and therefore not within the Ombudsman’s jurisdiction to consider further.

Background and summary of events

Background

5. The resident is a leaseholder of the property which is a one-bedroom flat arranged over the ground/lower ground floors. The lease commenced in March 2014.
6. The Right to Buy Section 125 offer gave a maximum amount the resident could be recharged during the first 5 years of ownership, starting from the date of completion of sale. The resident’s service charges for repair costs were to be limited to those items included in the Appendix B of the s125 Notice and only up to the amount specified, plus an allowance for inflation.
7. The lease at the Third Schedule- Annual Service Charge notes the landlord shall make a reasonable estimate of the amount which will be payable by the tenant by way of Service charge in that year and shall notify the tenant of the estimate. The tenant shall pay to the landlord in advance on account o service charge the amount of such estimates by equal payments.

Summary of events

8. Following requests for payment of service charges for 2015/16 and 2016/17, the landlord claimed for payment of £5,516.66 for service charge debt plus additional fees. The court issued the judgment in April 2017 for a total of £6.538.87. Following non payment the landlord approached the resident’s mortgage lender and in July 2017 the lender made payment of £6.538.87. The landlord applied this to the service charge account.
9. In February 2018 the landlord sent an invoice for major works totalling £7,750.
10. In March 2018 the resident queried this, and the landlord agreed that it had erroneously invoiced the resident £7,750 for major works as he had previously paid service charge up to the amount stipulated by the Section 125 offer. It noted that this would be recredited on account once the actual service charge account was raised and no payment was due.
11. In February 2019 the landlord’s enforcement team noted internally that it was unable to close the previous court claim as payment had not been made for the attributed fees. It was noted that invoices had not been raised for the fees and the lenders payment had been allocated to other outstanding service charge debts. The landlord corrected this error and closed the court file. This resulted in service charge debts again being due and the landlord informing the resident accordingly.
12. In May 2019, the resident complained about the movement of funds on his service charge account. The landlord responded noting the above.
13. In January 2020, the landlord sent a letter of claim for outstanding service charges for 2017/18. The resident complained to the landlord about the erroneous service charge invoice raised in 2018 and the reallocation of funds from his service charge account, which resulted in the letter of claim being issued for the invoice due, and that which he previously believed had been settled.
14. The landlord responded in February 2020 reiterating that the erroneous service charge had been placed on hold and would be cleared once the actual accounts were raised. It referred the resident to its previous email dated March 2018 and apologised for the inconvenience caused. It noted that this sum would continue to show until the accounts were settled. It also reconfirmed the error made following the resident’s mortgage lender paying the amount due post the court claim. It explained that that once this had been rectified it resulted in other invoices showing as outstanding and it had urged the resident to settle this and continued to do so. It provided a copy of its response sent in May 2019.
15. The resident remained dissatisfied and escalated the complaint noting that on both issues he had had to bring these to the landlord’s attention.
16. The landlord sent its final decision in May 2020. It apologised again for the incorrect allocation of funds to a service charge invoice following receipt of payment by the lender and reiterated the previous advice given. It noted that the current outstanding debt was not new debt and whilst it acknowledged its errors, the resident was still liable for the overdue payment. It reconfirmed that the resident was not being charged for the erroneous service charge invoice and this would be cleared from his account once the final accounts were settled. It advised the resident to contact this service should he remain dissatisfied.

Assessment and findings

Movement of funds on service charge account

17. Following the court awarding judgment to the landlord it received payment from the resident’s mortgage lender. The landlord then applied these incorrectly as the arrears were cleared, but the amount for court fees had been added to the resident’s account and paid to another service charge invoice owed. As the landlord sought to close the court claim on its systems, it pursued payment of the outstanding fees and became aware that the payment received by the lender had been incorrectly allocated. The landlord accepted its mistake, reversed the payment, and applied it to the court fees. However, this meant that the invoice it had originally paid became due.
18. The landlord has adequately explained to the resident that there was an error in the administration of the service charge account. Whilst this error has resulted in overdue service charges being outstanding, the resident remains liable for the service charge. There is no evidence that the resident did not receive the estimated service charge invoice for the charges which now remain due. As the resident had not made any payments towards these charges as per the lease, but they appeared as paid, he could have enquired with the landlord sooner. The landlord has also provided records showing which service charges the outstanding amount relates to and has appropriately advised the resident of this in accordance with his obligations under the lease.
19. Whilst the Ombudsman appreciates the resident’s frustration resulting from this error, the landlord’s actions and response has been reasonable in the circumstances.

Handling of concerns of invoice issued in error

20. The landlord has accepted that the resident was afforded the benefit of the section 125 offer, which meant the service charge for the first 5 years of the lease was limited to a set amount. Following the resident raising issue surrounding an invoice request of £7.750, the landlord accepted that the invoice had been issued in error as the previous invoices had amounted to the set limit for the 5 years.
21. The landlord apologised and retracted the invoice. This was done almost immediately after the resident raised the matter. It adequately explained that whilst the resident’s service account noted the amount aforementioned this was not payable and would be removed once the service charge accounts were settled. The landlord provided the resident with this information in a reasonable period of time. Additionally, as payment had not been demanded by the landlord the resident was not out of pocket. The action the landlord took in explaining its position was clear and in line with legislation and policies in place.

Determination (Decision)

22. In accordance with paragraph 39d of the Housing Ombudsman Scheme, the complaint about damage to the property caused by work in 2017 is outside of the Ombudsman’s jurisdiction.
23. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of the movement of funds on the service charge account.
24. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its handling of concerns that an invoice had been issued in error.

Reasons

25. The resident brought his concerns to the Ombudsman relating to the damage to the property over 12 months after the issue.
26. The landlord correctly issued service charge invoices to the resident. It then incorrectly applied funds to the account and upon realising this moved the funds to the correct invoice and informed the resident of the outstanding amount. It apologised for the error, but at all material times the resident was liable to pay the service charge and had not.
27. The resident queried an invoice which had been raised and the landlord took immediate action. It correctly suspended the invoice, apologised to the resident, and explained how this would be removed from his account.