Landlord and tenant – Alterations – Consent – Commonhold and Leasehold Reform Act 2002 – Respondent tenant seeking retrospective consent of appellant landlord for alterations to flat – Consent issue holding up agreed sale of flat – Respondent agreeing to pay sum demanded by appellant for consent – Whether first-tier tribunal having jurisdiction to determine reasonableness of charge under Schedule 11 to 2002 Act – Whether amount of charge a matter “agreed or admitted” by respondent within meaning of para 5(4) of Schedule 11 – Appeal allowed
The respondent paid the non-refundable fee of £600 requested by the appellant for considering the grant of consent. He subsequently chased the appellant for a response, and, a few days before Christmas 2015, informed it that the consent issue was putting a sale of his flat in jeopardy and that his buyers were threatening to pull out if no response was received that day. The appellant replied by demanding a further payment of £6,200 for the grant of consent.
The respondent disputed whether any further charge could properly be levied. The appellant responded that it wanted to seek legal advice on the matter but that the solicitors’ firm that it used was closed until the New Year. The respondent thereupon indicated that it was “fine” and that he would pay the sum demanded since the matter needed to be dealt with that day. He accordingly paid a further £6,200 and a deed of consent was duly executed.
In proceedings between the parties, the first-tier tribunal (FTT) subsequently found that the payment for consent was an administration charge within the meaning of para 1(1) of Schedule 11 to the Commonhold and Leasehold Reform Act 2002, which was therefore payable only to the extent that it was reasonable. It determined that a reasonable payment was £1,500 plus VAT. It rejected the appellant’s contention that the payment was “agreed or admitted” by the respondent, within the meaning of para 5(4) of Schedule 11, so as to oust FTT’s jurisdiction in respect of it. It held that, in the very particular circumstances of the case, where the respondent was under pressure to compete the sale of the property, he had made the payment under duress and there was no genuine agreement about the appropriate administration charge.
The appellant appealed. The respondent cross-appealed against the finding that £1,500 plus VAT was payable.
Held: The appeal was allowed; the cross-appeal was dismissed.
The statute made it clear that a tenant was not to be taken to have agreed or admitted any matter by reason only of having made any payment: see para 5|(5) of schedule 11 to the 2002 Act. Something more was required. In the instant case, that something was the respondent’s indication, in the email exchange in December 2015, that he agreed to make the payment demanded by the appellant in exchange for the grant of consent to the works.
The FTT had erred in law in finding that the respondent made the payment under duress. As a matter of law, there was no wrongful or illegitimate threat or other form of pressure applied to the respondent, and he was left with practical alternatives to agreeing the £6,200 payment. Historically, the respondent could have chosen to apply for the appellant’s consent to the relevant works before he embarked on them, or once he had completed them. Instead, he elected to wait until a time when he was in the course of selling his flat. Any degree of urgency in obtaining the consent was therefore self-inflicted. The appellant was under no obligation to give its retrospective consent to the works under the terms of the lease. The qualified covenant against alterations required the landlord’s previous consent in writing to non-structural works falling outside the scope of the absolute prohibition in the lease. The landlord was therefore entitled to impose a charge for such a retrospective consent although, as an amount payable in connection with an alleged breach of a covenant in the lease, any such charge was an “administration charge” within the meaning of para 1(1) of Schedule 11 to the 2002 Act, and thus payable only to the extent that the amount was reasonable.
The respondent had various courses open to him on receiving the appellant’s email stating that it wished to take legal advice. He could simply have made the payment, which, by virtue of para 5(5) of Schedule 11, would not have been taken as constituting any agreement or admission in respect of the payment. Alternatively, he could have made the payment expressly under protest and/or expressly reserving the right to invoke the jurisdiction of the FTT under Schedule 11 to the 2002 Act. Had he take either of those courses, the appellant would have been able to take a view on whether to prepare and enter into the deed of consent in the knowledge that the respondent would be entitled to invoke the machinery under Schedule 11 to the 2002 Act to challenge the amount of the payment. Instead, the respondent had simply said that the payment was “fine”, thereby agreeing to it. As a result, the appellant issued the retrospective consent under a false understanding as to the acceptability to the respondent of the £6,200 payment.
It followed that the respondent was bound by his agreement to accept the amount of the payment. He had agreed to pay a total sum of £6,800 for the retrospective consent within the meaning, and for the purposes, of para 5(4) of Schedule 11 to the 2002 Act. The FTT therefore had no jurisdiction to determine that the sum of £1,500 plus VAT was payable by the respondent in respect of an administration charge for retrospective consent to works.
The appeal was determined on the written representations of the parties. Justin Bates (instructed by Scott Cohen Solicitors, of Henley-on-Thames) made submissions for the appellant; the respondent made submissions on his own behalf.
Sally Dobson, barrister
