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Tenants paying disputed service charges should make it clear at the time that they do not agree those charges

Tenants wishing to challenge service charges should expressly say so when paying those charges, to avoid the inference that payment amounts to agreeing the charges or an admission they are valid. They should bring a claim for payment without delay.

In 2002, a new tenant asked the landlord for more information about service charges but paid them from 2003/4 to 2013/4. However, in 2014 he went to court claiming that seven elements of the service charges for those years were not reasonable and the apportionment of the charges between tenants was flawed. He asked for repayment of a proportion of the service charges for those years.

The landlord argued that the tenant’s payment of the service charges in the past implied that it agreed them, or was an admission they were valid.

The Upper Tribunal ruled that paying service charges on one occasion only would never amount to agreement or an admission that those service charges were valid unless:

  • the tenant indicated that it did, or
  • the circumstances in which the payment was made implied or inferred the tenant’s agreement or admission

However, if more than one payment was made, and the tenant did not say (or otherwise indicate):

  • that he disagreed with the charges, or
  • that his payment of the charges was not an admission that they were reasonable

then those payments could amount to an agreement or admission that the charges are valid.

This is an important point because a tenant who withholds payment of service charges because it disagrees with them may find the lease can be forfeited by the landlord. Therefore, payment under protest is often their only option, pending bringing legal proceedings to challenge the charges.

Operative date

  • Now

Recommendation

  • Tenants wishing to challenge service charges should expressly say so when paying those charges, to avoid the inference that, by paying, they are agreeing the charges or admitting they are valid – and should bring a claim for payment without delay

Case ref: Peter Cain v Mayor and Burgesses of the London Borough of Islington [2015] UKUT 542 (LC)

26 January 2016

Alex Cook is a Director at Helix. Alex initially trained academically as an unregistered barrister and was a Partner and Head of Civil Litigation at a large firm based in the South East before joining Helix Law. As well as focussing on expanding Helix, Alex specialises in commercial and property related litigation and he has acted for a broad range of clients including offshore property investment funds, small businesses and individual property owners.

Helix work with our clients to understand their business and the challenges faced. From partnership disputes to unpaid invoices to problem employees we have it covered. We work to help reduce the risk to your business when challenges inevitably arise. It’s why at Helix you’ll hear us say that we enjoy working together, with you. It’s what we’re all about.

This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of  this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice. 

Contact Helix Law on 01273 761 990 or email: [email protected]