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What is ‘Early Neutral Evaluation’?

Early Neutral Evaluation is an assessment of the issues in dispute, designed to serve as a basis for further negotiations and to avoid the time, expense and anxiety caused by unnecessary litigation. An independent expert expresses an opinion on the merits of the issues raised by the parties. The opinion is not binding but gives you an unbiased evaluation of the relative strengths of the parties’ cases, and guidance as to the possible outcome if the matter proceeds to the First-tier Tribunal (Property Chamber) (F-t T).

What is the evaluator’s role?

The evaluator can only give his or her independent view about the prospect of success in the F-t T but the evaluator cannot make binding decisions or rulings.

The evaluator needs your help in order to form a view on the matters in dispute. By presenting your dispute properly you will clarify your case for the evaluator. This guide is to help leaseholders and landlords get their statements ready for evaluation and save time, money and anxiety for everyone involved.

You can use the online Early Neutral Evaluation form to find out if the other party to the dispute would like to participate.

The guide is split into three sections:

Section 1    What an evaluator looks for.

Section 2    gives an example of a leaseholder’s statement.

Section 3      gives an example of a landlord’s statement.

Who will see the information you give us?

What an evaluator looks for

An evaluator can only give a view that is based on the information with which he or she is provided, and generally will not contact the parties for follow-up information or supporting information.

The evaluator needs to know what the dispute is about and how much is being disputed. So it is worth taking time to state your case properly so that the evaluator is not in any doubt about what the dispute is about.

You may wish to include such information as:

When reviewing your statement, the evaluator will usually ask him or herself these questions:

The evaluator can only work with the information submitted. He or she knows nothing about the dispute except what the parties send in. Therefore, it is important that you state your case clearly. Evaluators will generally not contact landlords or leaseholders to ask them for missing information.

Step 1: Outline the dispute

What is being disputed and how much is being disputed?

Give a brief explanation of the items in dispute, and how much is disputed.  For example:

 

Cleaning £243
Major works £450
Gardening £80
Total £773

Check you have totalled the amount in dispute correctly.

Explain your dispute:

  1. If you are disputing several service charge items, it is helpful to give a breakdown of the amount disputed for each item, and some details of what each dispute is about.
  2. Explain why you think you are entitled not to pay the amount disputed.
  3. Think about the questions that the evaluator will be asking at this stage:
    • What are the leaseholder’s obligations?
    • What are the landlord’s obligations and did the landlord comply with them?

It is essential that you give a breakdown of each disputed charge if there is more than one item in a service charge bill. So, for example, if the service charge totals £300, but was made up of different services (e.g. cleaning £75, gardening £25, management fee £200), spell this out.

Do not:

  1. Expect the evaluator to work out what you are disputing or how much you are disputing for each item. When you come to explain your dispute in more detail (see Step 2) you can give a breakdown of the individual items.
  2. Forget about the rest of the service charge. Do you agree that the rest of the service charge is payable?  If yes, say so.

Do:

  1. Try and agree with the other side, before you apply for evaluation, what the dispute is about and how much of the service charge is in dispute.
  2. Subtotal your dispute in your submission. For example:
    • If there are several items of service charge, add them up and put in the total disputed as not payable in the figures boxes on the Evaluation Application or Evaluation Response;
    • If you have, for example, several invoices for cleaning, add them together and state the total disputed for and the amount not disputed.

Step 2: Support your explanation with relevant information

In many disputes, the landlord and the leaseholder do not agree about the facts. The evaluator will not usually form a view one way or the other if there is no supporting information. But keep your supporting information to what is relevant and essential to the dispute.

The evaluator will not go looking for information:

Some examples of information that you may want to send to the evaluator:

The lease shows what the leaseholder and the landlord agree to do
The service charge demand shows the amount requested to be paid
Service charge statement shows what the leaseholder paid and what is owed
Estimates show the approximate cost of carrying out work/services
Quotes show the quoted cost of carrying out work/services
Invoices show the cost paid/to be paid for carrying out work/services
A photo of the building and a statement of the number of units in it Shows the building as it is currently and helps the evaluator to understand the context of the dispute.

Send copies of correspondence only if it will help the evaluator to decide:

  1. what is being disputed
  2. how much is being disputed
  3. why you think it is payable/not payable
  4. that the amount you are claiming or disputing is justified
Top tips

The evaluator does not need a detailed account of everything that happened during the dispute. Large amounts of emails/correspondence obscure the relevant facts and bury the important information. Submit only key documents.

Sending information that is not relevant could delay the progress of your evaluation or make evaluation inappropriate.

Stick to the facts. The evaluator will not take suspicions or unsupported opinions or unsupported allegations into account.

Make sure your information is RELEVANT: it’s the quality – not the quantity – that matters

Information will be relevant if it shows why the service charge is payable/not payable.

Information will not usually be relevant if it simply duplicates something you have already submitted and/or:

  1. cannot be linked to the disputed service charge;
  2. does not prove anything;

The evaluator will not take into account information that is illegible or photos that are unclear.

 

An example of a leaseholder’s statement

Details of the dispute
How much is the total service charge? (What period?) £1,000 (eg 1 April 2015 to 31 March 2016) )
How much of it is disputed? £700
Breakdown of disputed charges?
Cleaning £243
Common parts redecoration £150
Gardening £107
Management Fee £200
Other (please specify) £0
TOTAL £700

 

  1. Cleaning
    Clause 3.4 of the lease (page 3 of the documents submitted) sets out the landlord’s cleaning obligations for the building’s common parts; and clause 4.4 my payment obligation. Page 2 of the documents submitted with the statement is a bill for cleaning from the contractors to the landlord for the relevant period, ie January to December 2015. The total is £2,430 (incl VAT) and the amount demanded as service charge, £243, is the due apportionment for the flat (10%). The cleaning bill is disputed as follows:

    • Carpet cleaning: £65, this service has not been provided
    • Cleaning products: £15, cannot be reasonable if the service was never provided
    • Purchase of a vacuum cleaner for the building: £163, never used during the year
  2. RedecorationClause 3.8 of the lease requires the landlord to redecorate the common parts every three years; and clause 4.8 my payment obligation. On page 4 of the documents submitted is a bill for common parts redecoration, an advance payment, for a service that has yet to be provided. The cost is over £100 and there was no statutory consultation for what is a service based on an agreement for over 12 months.  As a result, £150 is disputed.
  3. GardeningClause 3.9 of the lease (page 5 of the documents submitted) sets out the landlord’s obligations to maintain the front and rear gardens to the building; and clause 4.9 my payment obligation. On page 7 and 8 of the documents submitted are time stamped and dated photos of the garden covering January to December 2015. These pictures show that there has been no grass cutting, weeding or hedge trimming during the year. In addition, leaves that accumulated in October can still be seen against the boundary wall in December. The entire gardening cost is therefore disputed.

Please Note: this is only a guide to presenting a statement; the arguments are not necessarily valid.

An example of a landlord’s statement

Details of the dispute
How much is the total service charge? (What period?) £1,000 (eg  1 April 2015 to 31 March 2016)
How much of it is conceded? £0
Breakdown of disputed charges?
Cleaning £243
Common parts redecoration £250
Gardening £107
Management Fee £200
Electricity to common parts £200
  1. Cleaning
    Clause 3.4 of the lease states that the common parts are to be kept clean. This should be at a reasonable standard, and we contract for a weekly clean of the common parts. The applicant wishes to have the premises cleaned on a daily basis, but that would increase the cost unreasonably in our view. In response to each point raised:

    • Carpet cleaning: this is done every 6 months and we are satisfied that the service has been provided. No other complaint has been received.
    • Cleaning products: purchased out of necessity for the service provided, and we are satisfied that the cost is reasonable.
    • Purchase of a vacuum cleaner: this was done to ensure that the premises have a weekly vacuum as the common parts are all carpeted. Without this reliance was placed on the contractor’s own – overused – vacuum being fit for purpose and this was felt an undue risk.
  2. Redecoration
    On page 3 of the documents submitted is a copy of the Section 20 consultation document – notice of intention – sent to the applicant. On page 4 is the summary of the observations received from 6 of the 10 leaseholders; and page 5 sets out the nominated contractor to undertake the redecoration. The contract entered into is not a qualifying long term agreement and since the amount payable by any leaseholder did not exceed £250, statutory consultation was not required. At the time of writing, the contractor is due to start in two weeks.
  3. Gardening
    The front and rear gardens have been maintained throughout the year. Indeed, the garden in the rear had its grass cut shortly before the Bank Holiday celebration for the Queen’s 70-year reign. Whilst the photos show various images of alleged inactivity, they are snapshots in time and essentially in between the monthly visits. The charges are reasonable and payable.
  4. Management Fee
    Clause 8 of the lease sets out the basis for the service charges. It includes, at sub-clause ‘a’, an amount to meet the landlord’s costs of engaging management services. Management services have been provided throughout the year and at reasonable cost ensuring that the building has been insured, electricity provided to the common parts, redecorated cyclically and kept clean. The amount is a market rate and a copy of the current management agreement has been provided.
  5. Electricity to common parts
    At sub-clause 8(h) of the lease the service charge includes the cost of electricity to the common parts. As mentioned above, electricity has been provided for the common parts throughout the year (light and sockets for cleaning) and no complaint has been received from any leaseholder, including the applicant, about this cost. Page 8 of the documents submitted is a copy of a bill to the landlord from the electricity providers. The amount is due and reasonable and therefore payable.
 

Summary

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