Landlord and tenant – Service charge – Application to first-tier tribunal – Appellant applying under section 27A of Landlord and Tenant Act 1985 for determination of whether service charges reasonable – Items challenged including charges dating back 12 years – FTT holding that charges demanded and paid more than six years before application no longer capable of challenge – Whether such charges agreed or admitted within section 27A(4) – Whether challenge barred on other grounds – Appeal dismissed
In 2002, the appellant acquired a lease of a one-bedroom flat in London N1 of which the respondent council was the landlord. Shortly thereafter, the appellant began to seek information about the service charge payable under the lease. In July 2014, he applied to the first-tier tribunal (FTT), under section 27A of the Landlord and Tenant Act 1985, to determine the reasonableness of the service charges levied over a period of 12 years spanning 2002 to 2013.
One of the appellant’s grounds of challenge concerned the manner of apportionment of the service charge, an issue which remained outstanding following the compromise of separate FTT proceedings between the parties on a referral from the county court; the Upper Tribunal had previously decided that, in light of that compromise, it had no jurisdiction to resolve the apportionment issue: see [2015] UKUT 0117 (LC); [2015] PLSCS 111. The other main issue concerned seven specific items that were included in the service charges for the six years to 2007, including charges for repairs, maintenance and management.
The FTT determined, as a preliminary issue, that the appellant could not challenge the reasonableness of any service charges for periods more than six years ago since he had agreed or admitted the relevant charges within the meaning of section 27A(4). In that regard, the FTT took into account that the appellant had paid the charges, and that while, by virtue of section 27A(5), payment alone should not be taken as showing admission or agreement, the appellant had also waited a very long time to challenge the charges, during which time there had been other cases involving the same parties and the appellant’s communications with the respondents on the matters now challenged had largely been limited to requests for information.
The FTT further found that the appellant’s challenge was statute-barred, as a restitutionary claim for repayment of a service charge to which a six-year limitation period applied, or was barred on the ground of laches; alternatively, that it was appropriate for the FTT to exclude the years in question in the exercise of its case management powers. The appellant appealed.
Held: The appeal was dismissed.
(1) An agreement or admission for the purposes of section 27A(4) could be express, or implied or inferred from the facts and circumstances, although it had to be clear and based on the objectively ascertained intention of the tenant. Usually it would be based on an act or a series of acts, or inaction in the face of specific circumstances over a long period of time, or a combination of the two. What was required was some conduct which gave rise to the clear implication or inference that the sum demanded was agreed or admitted by the tenant. The FTT might find that a charge was agreed or admitted even where there had been no payment, if there were other facts and circumstances clearly indicating that the tenant had agreed or admitted the amounts claimed.
So far as section 27A(5) precluded the FTT from making finding an agreement or admission by reason “only” of the tenant having made “any payment”, the effect was that the making of a single payment on its own, and without more, would never be sufficient to make a finding of agreement or admission; there always had to be other circumstances from which agreement or admission could be implied or inferred. However, the making of multiple payments of different amounts over a period of time might suffice. The relevant circumstances might be a series of unqualified payments over a period of time which, depending on the circumstances, might be quite short. It would always be a question of fact and degree in every case.
The reason for that position was that the making of a single payment on its own, or without more, would often be insufficiently clear to show the necessary intention; in the area of landlord and tenant, it was common for tenants to pay service charges, even where these were disputed, so as to avoid the risk of forfeiture and preserve their home and the value of their lease. However, a series of unqualified payments of demanded service charges might suffice because the natural implication or inference from such payments was that the tenant agreed or admitted that which was being demanded. People did not generally pay money without protest unless they accepted that it was properly due and owing, and certainly did not do so regularly over a period of time. It was the absence of protest or qualification which provided the additional evidence from which agreement or admission could be implied or inferred. The longer the period over which payments had been made, the more readily the court or tribunal would hold that the tenant had agreed or admitted the sum paid: Shersby v Greenhurst Park Residents Co Ltd [2009] UKUT 241 (LC) applied.
(2) In the instant case, there were facts and circumstances from which the FTT could properly find that the appellant had agreed or admitted the service charge items in respect of the 2001 to 2007 period which he now sought to challenge. The FTT was entitled to make that finding based purely on the series of payment in respect of the demanded service charge throughout that six-year period, and subsequently, without reservation, qualification or other challenge or protest. That finding was reinforced by the sheer length of time which had elapsed before the challenge was first made. While distinctions could be made between the nature of the different service charge items being challenged, the FTT was entitled to look at matters in the round and find that, where there had been substantial delay in making any challenges to the items now in dispute, and where most if not all had long since been paid, the tenant had agreed or admitted the amounts claimed. The fact that no particular act or date could be identified was not a bar to such a finding. It was inherent in the nature of the facts and circumstances, namely inactivity and payment without qualification for a long time, that no particular date could be pinpointed on which the agreement or admission was, or should be treated as having been, made.
(3) However, the FTT had erred in holding that the appellant’s application was statute-barred. An application under section 27A of the 1985 Act would, if successful, result in a determination as to the reasonableness of the amounts claimed and nothing more. It was not a claim for repayment of service charge to which a six-year limitation period applied under the Limitation Act 1980 might apply. Similarly, the FTT had erred in holding that the application was barred by laches, since the doctrine of laches applied only to equitable claims, such as restitution, where no period of limitation was provided. The appellant’s application was claim not an equitable claim but a claim to determination of the reasonableness of the amounts claimed by way of service charge under statute.
(4) The FTT had also erred in its approach to case management. The case management powers of the FTT, and indeed of the court, could not properly be used to prevent litigants from pursuing what the FTT or the court might regard as stale claims. The purpose of case management powers was to manage litigation once commenced and make its management proportionate, not to, effectively, strike out a claim because it was too old or the costs of litigating far exceeded the amount at stake.
Amanda Gourlay (instructed by direct access) appeared for the appellant; Nicolette Karmel, senior solicitor at Islington London borough council, appeared for the respondents.
Sally Dobson, barrister
