Leaseholder request for written summary of relevant costs incurred - Section 21 of the Landlord and Tenant Act 1985

*Source - http://www.lease-advice.org.uk/leaseholder-request-for-summary-of-service-charges-accounts.docx

Disclaimer

This disclaimer governs the use of this document. By using this document, you accept this disclaimer in full.

The information is not advice, and should not be treated as such. You must not rely on the information in the document as an alternative to legal advice from an appropriately qualified professional. If you have any specific questions about any legal matter you should consult an appropriately qualified professional.

To the maximum extent permitted by applicable law, we exclude all representations, warranties, undertakings and guarantees relating to this document.

Without prejudice to the generality of the foregoing, we do not represent, warrant, undertake or guarantee:

that the information in the document is correct, accurate, complete or non-misleading;
that the use of guidance in the document will lead to any particular outcome or result.

Limitations and exclusions of liability

The limitations and exclusions of liability set out in this disclaimer govern all liabilities arising under the disclaimer or in relation to the document, including liabilities arising in contract, in tort (including negligence) and for breach of statutory duty. We will not be liable to you in respect of any losses arising out of any event or events beyond our reasonable control. We will not be liable to you in respect of any business losses, including without limitation loss of or damage to profits, income, revenue, use, production, anticipated savings, business, contracts, commercial opportunities or goodwill. We will not be liable to you in respect of any loss or corruption of any data, database or software. We will not be liable to you in respect of any special, indirect or consequential loss or damage.

Exceptions

Nothing in this disclaimer shall: limit or exclude our liability for death or personal injury resulting from negligence; limit or exclude our liability for fraud or fraudulent misrepresentation; limit any of our liabilities in any way that is not permitted under applicable law; or exclude any of our liabilities that may not be excluded under applicable law.

To: [insert name of landlord, or the agent, or the person who receives rent]

Property address: [Insert address of flat or house]

I am/we are the leaseholder(s) of the above property.

OR

I am the secretary of [name of recognised tenants’ association]

This is a recognised tenants’ association for [name of the Estate]

The leaseholder(s) of the above property within the Estate has/have consented to this request.

I/we make this request of the landlord in accordance with Section 21 of the Landlord and Tenant Act 1985.

As the landlord of the property you are required to comply with the requirements of paragraphs 4 and 5 below.

OR

2. As the agent of the landlord named as such in the rent book or similar document, under Section 21(3) of the Landlord and Tenant Act 1985 you are obliged to forward this request to the landlord as soon as may be.

OR

3. As the person who receives the rent on behalf of the landlord, under Section 21(3) of the Landlord and Tenant Act 1985 you are obliged to forward this request to the landlord as soon as may be. [THIS SECTION SHOULD ONLY BE USED BY RESIDENTS PAYING RENT TO A HOUSING ASSOCIATION]

4. I/we require you to provide me/us with a written summary of the relevant costs incurred in respect of the above property.

-If the relevant accounts are made up for periods of twelve months, in the last such period ending not later than the date of this request or

-If the accounts are not so made up, in the period of twelve months ending with the date of this request.

5. You are required to supply me/us with the written summary within 1 month from the date of this request, or within six months from the end of the period referred to in paragraph 4 above, whichever is the later.

A person who, without reasonable excuse, fails to perform a duty imposed on them under Section 21 of the Landlord and Tenant Act 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale.

The local housing authority has the power to bring a prosecution, as well as a recognized residents association as a class action.

Signed: [signature of the person(s) giving the request]

Address: [Give the address for future correspondence about this request]

Date:

*Source - http://gdknowledge.co.uk/challenging-residential-service-charge-should-tenants-pay-first-dispute-later/

Challenging a residential service charge – should tenants pay first and dispute later?

Ellie Spencer
Solicitor

Introduction

Residential tenants who wish to challenge a service charge when it is demanded are faced with an awkward decision. They can either withhold payment of a service charge from the landlord whilst they try to resolve the matter, or choose to make the payment anyway and then challenge it afterwards. As unpalatable as it may be for a tenant to make a payment for something which they do not believe to be reasonable, the “pay now, challenge later” option is often considered to be less risky. This is because withholding payment of a service charge from the landlord could potentially expose a tenant to a forfeiture claim, and/or lead to other charges being levied where the lease so permits (such as the landlord’s costs of recovery).

Challenging a service charge

Either the tenant or landlord may make an application under s27A of the Landlord and Tenant Act 1985 (“the Act”) to the First-Tier Tribunal (Property Chamber) (“the FTT”) for a determination as to whether a service charge is payable. The FTT can also be asked to determine:

– Who should pay the service charge;

– To whom the service charge should be paid;

– The amount which is payable;

– The date at or by which it is payable; and

– The manner in which it is payable.

The Act expressly states that the FTT can be asked to make such a determination, regardless of whether or not the disputed service charge has already been paid by the tenant.

Section 27A(4) of the Act includes certain situations where an application to the FTT may not be made. It is not possible to make an application in respect of a matter which has already been agreed or admitted by the tenant. However, under s27A(5), the Act makes it clear that the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment. This gives tenants the option to “pay now, challenge later”. The meaning and effect of s27A(5) of the Act has been considered in detail in the recent case of Peter Cain v Mayor and Burgesses of the London Borough of Islington [2015] UKUT 542 (LC).

Facts

The tenant, Mr Cain, acquired the lease of Number 46 Thornhill Houses in 2002. Soon after acquisition he started asking for further general information about the service charges from his landlord, who was the respondent in this case. However, it was not until 7 July 2014 that he issued an application challenging the reasonableness of the service charge under s27A of the Act. The application challenged the reasonableness of seven specific elements of the service charge, as well as the apportionment of the service charge between tenants. It covered service charges going back 12 years, from the service charge year 2002/2003 up to the service charge year 2012/2013. At first instance the FTT held that the tenant was barred from litigating in respect of service charges from the years preceding 2007/2008, on the basis that:

– The tenant was to be treated as having agreed or admitted each of the elements of the service charge and its apportionment and so by virtue of section 27A(4)(a) could no longer bring an application.

– The claim was statute barred under the Limitation Act 1980 and also prevented by the doctrine of laches.

– It would be disproportionate, unfair and unjust to now require a detailed examination of service charges going back so far.

There then followed an appeal to the Upper Tribunal, whose decision on each point was as follows:

Agreement or Admission

The Upper Tribunal upheld the FTT’s decision that the appellant had agreed or admitted the amounts due. It was recognised that undersection 27A(5), the making of a single payment on its own, or without any other indication of agreement or admission, will never be sufficient to show agreement or admission. There must always be further factors from which agreement or admission can be implied or inferred. However, a series of payments without any protest or qualification could be sufficient to constitute the further indication required.

Limitation/Laches

The case also provides useful guidance on the correct limitation period for applications for a determination as to the reasonableness of service charges. Under section 19 of the Limitation Act 1980, claims for the recovery of arrears of rent or damages in respect of arrears of rent (i.e. claims by the landlord) may not be brought more than six years after the date the arrears fell due. The FTT applied this to the tenant’s application and held that where it related to service charges from more than six years ago the claim was statute barred. This was overturned by the Upper Tribunal. An application to the FTT is a claim for a determination as to reasonableness of service charges and is not caught by section 19. The limitation period is therefore 12 years in accordance with section 8 of the Limitation Act. The doctrine of laches does not apply because the claim is not an equitable one.

Disproportionate

Given the findings above, the Upper Tribunal did not need to consider this last ground adopted by the FTT. However, by way of observation, it was commented that the FTT’s case management powers should not be used to prevent litigation where that is the function of the laws on limitation, laches or indeed, as in the present case, the provisions of the Act itself.

Practical Effect

The proviso in section 27A(5) of the Act which states that a tenant is not to be taken to have agreed or admitted any matter by reason only of having made a payment must be read literally. If all the tenant has done is only make one payment, he is not to be treated as having agreed it. However, if there are any other circumstances which point towards agreement or admission, then section 27A(5) may not always assist. In particular, a lengthy period of making payments without any protest may well lead a tribunal to infer acquiescence. A substantial delay in bringing a claim, as well as the failure to bring a claim when the opportunity presents itself, are further factors which may lead a Tribunal to disallow future claims.

The Upper Tribunal acknowledged that it will still be common for tenants to pay service charges “so as to avoid the risk of forfeiture and preserve their home and the value of their lease.” The advice to tenants may therefore remain to pay now and challenge later. However, tenants should be aware that this is not a stance which should be pursued for any length of time if, ultimately, the service charges are disputed and that any other sign of agreement or admission is likely to tip the balance out of their favour. Payment of a service charge which the tenant intends to challenge would certainly benefit from being accompanied by a qualification that payment is made without prejudice to the tenant’s right to challenge the service charge, and the exercise of that right should not be unduly delayed.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice.

*Source - http://www.icaew.com/en/archive/library/subject-gateways/law/legal-alert/2016--01/case-law-tenants-paying-disputed-service-charges-should-make-it-clear-at-the-time

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.

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)

Summaries of rights and obligations – Service Charges – England

Right to withhold

“A tenant may withhold payment of a service charge which has been demanded from him if (the requirement to provide the summary) is not complied with in relation to the demand.” “Where a tenant withholds a service charge under this section, any provisions of the lease in relation to non-payment or late payment of service charges do not have effect to the period for which he withholds it”

The content of the summary reflects the introduction of the First-tier Tribunal (Property Chamber) in substitution for the Leasehold Valuation Tribunal.

Service Charges – Summary of tenants’ rights and obligations

This summary, which briefly sets out your rights and obligations in relation to variable service charges, must by law accompany a demand for service charges. Unless a summary is sent to you with a demand, you may withhold the service charge. The summary does not give a full interpretation of the law and if you are in any doubt about your rights and obligations you should seek independent advice.
Your lease sets out your obligations to pay service charges to your landlord in addition to your rent. Service charges are amounts payable for services, repairs, maintenance, improvements, insurance or the landlord’s costs of management, to the extent that the costs have been reasonably incurred.
You have the right to ask the First-tier Tribunal to determine whether you are liable to pay service charges for services, repairs, maintenance, improvements, insurance or management. You may make a request before or after you have paid the service charge. If the tribunal determines that the service charge is payable, the tribunal may also determine-
- who should pay the service charge and who it should be paid to;
- the amount;
- the date it should be paid by; and
- how it should be paid.
However, you do not have these rights where-
- a matter has been agreed or admitted by you;
- a matter has already been, or is to be, referred to arbitration or has been determined by arbitration and you agreed to go to arbitration after the disagreement about the service charge or costs arose; or
- a matter has been decided by a court.
If your lease allows your landlord to recover costs incurred or that may be incurred in legal proceedings as service charges, you may ask the court or tribunal, before which those proceedings were brought, to rule that your landlord may not do so.
Where you seek a determination from the First-tier Tribunal , you will have to pay an application fee and, where the matter proceeds to an oral hearing, a hearing fee, unless you qualify for fee remission or exemption.. Making such an application may incur additional costs, such as professional fees, which you may have to pay.
The First-tier Tribunal and the Upper Tribunal (in determining an appeal against a decision of the First-tier Tribunal) have the power to award costs in accordance with Section 29 of the Tribunals, Courts and Enforcement Act 2007.
If your landlord –
- proposes works on a building or any other premises that will cost you or any other tenant more than £250, or
- proposes to enter into an agreement for works or services which will last for more than 12 months and will cost you or any other tenant more than £100 in any 12 month accounting period.
- Your contribution will be limited to these amounts unless your landlord has properly consulted on the proposed works or agreement or the First-tier Tribunal has agreed that consultation is not required.
You have the right to apply to the First-tier Tribunal to ask it to determine whether your lease should be varied on the grounds that it does not make satisfactory provision in respect of the calculation of a service charge payable under the lease.
You have the right to write to your landlord to request a written summary of the costs which make up the service charges. The summary must-
- cover the last 12 month period used for making up the accounts relating to the service charge ending no later than the date of your request, where the accounts are made up for 12 month periods; or
- cover the 12 month period ending with the date of your request, where the accounts are not made up for 12 month periods.
The summary must be given to you within 1 month of your request or 6 months of the end of the period to which the summary relates whichever is the later.
You have the right, within 6 months of receiving a written summary of costs, to require the landlord to provide you with reasonable facilities to inspect the accounts, receipts and other documents supporting the summary and for taking copies or extracts from them.
You have the right to ask an accountant or surveyor to carry out an audit of the financial management of the premises containing your dwelling, to establish the obligations of your landlord and the extent to which the service charges you pay are being used efficiently. It will depend on your circumstances whether you can exercise this right alone or only with the support of others living in the premises. You are strongly advised to seek independent advice before exercising this right.
Your lease may give your landlord a right of re-entry or forfeiture where you have failed to pay charges which are properly due under the lease. However, to exercise this right, the landlord must meet all the legal requirements and obtain a court order. A court order will only be granted if you have admitted you are liable to pay the amount or it is finally determined by a court, tribunal or by arbitration that the amount is due. The court has a wide discretion in granting such an order and it will take into account all the circumstances of the case.