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Case law: 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.

Legal Alert

This update was published in Legal Alert - January 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

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

Recommendations

  • 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)

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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