Paying Service Charges Under Protest

Service charges can be paid and then challenged later. Or can they? The right to challenge after payment is found in the Landlord & Tenant Act 1985. That Act says that service charges cannot be challenged in the courts if the  lessee has admitted that they are payable.  But s.27A (5) adds that the lessee ‘’ is not to be taken to have agreed or admitted any matter by reason only of having made any payment”. 


So I can pay and worry about the matter later?  Not quite.  


A recent case in the Upper Tribunal, Marlborough Park Services Ltd v Micha Leitner [2018] UKUT 230 (LC)   shows that that if you are going to pay a service charge which you think that you might one day challenge, then you ought to make it as plain as you possibly can that you ARE PAYING UNDER PROTEST AS YOU DO NOT ACCEPT THAT THE SERVICE CHARGES ARE PAYABLE. 


Mr Leitner had paid service charges for 10 years but sought to challenge them under s.27A of the above Act.  The FTT had dismissed the freeholder’s contention that the payment had amounted to an admission. But the Upper Tribunal decided that the FTT was wrong. Although the lessee did not say that the service charges were payable, his actions relating to service charge demands from 2007 to 2012  would lead a reasonable person to that conclusion. The Upper Tribunal referred to   Cain v Islington BC  [2015] UKUT 542 (LC) which distinguished what one can infer from a person making a single  payment to what we can infer when a person has made  a number of payments over a period of time.   


Whilst it would generally be inappropriate to make such an implication or inference from a single payment because it could not be said that the conduct of the [lessee]  was sufficiently clear, where there have been repeated payments over a period of time of sums demanded, there may come a time when such an implication or inference is irresistible


To deny that inference, said the Upper Tribunal,   would ‘offend common sense.’  


In the present case, however, the Upper Tribunal found for Mr Leitner in respect of service charge demands after March 2013. It looked at the correspondence and noted that he had asked for an up-to-date statement and, even though in the same letter he had promised the freeholder’s solicitors a cheque by return, it decided that the letter contained no express or implied admission that the sum was actually owing. Accordingly, the right to challenge the service charge in the courts remained open to Mr Leitner. 


Comment

The case points to the importance of understanding actions – including the making of statements -  in  context. Paying one service charge demand without protest differs from  paying a third or fourth   without protest.  In the case of the latter, the court may infer agreement.  It also suggests that if you think that you might one day contest a service charge, then explain, in capital letters and green ink if you like, THAT YOU DO NOT AGREE BUT ARE PAYING UNDER PROTEST.