Cain v Islington LBC [2015] UKUT 542 (LC): Payments Made Without Protest Infer Agreement

Summary:  A tribunal could infer from a series of payments made without protest that the tenant had agreed that the amount claimed was the amount properly payable. The longer the period over which payments had been made, the more readily a tribunal would find that the tenant agreed that which had been demanded. The tenant was barred by s.27A(4) from proceeding with the application.

Facts: The appellant acquired the lease of his flat in 2002. In 2014, he issued his application challenging the reasonableness of the service charge under s.27A of the 1985 Act for a period of 12 years from the service charge year 2002/2003 up until 2012/2013. In respect of each year, the lessee paid most if not all of the total service charge claimed without any specific provision or retention or qualification in respect of any sums and continued to make sometimes quite large service charge payments, the last one being for more than £890 paid in respect of the 2012/13 service charge year.

Decision At First Instance: The FTT determined, as a preliminary issue, that the lessee should be prevented from challenging the reasonableness of any service charges for periods more than 6 years ago. It found that the lessee was to be treated as having agreed or admitted each of the elements of the service charge by virtue of s.27A(4) and notwithstanding sub-section (5) , the material sub-sections of which are as follows:
“(4) No application under section (1) or (3) may be made in respect of a matter which –
(a) Has been agreed or admitted by the tenant…
(5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.”

On Appeal: The lessee submitted that there was insufficient evidence to found any agreement or admission, in particular, no specific date or act or failure to act was identified by the FTT so that, on analysis, all that was left was payment which, by virtue of s.27A(5), cannot found an admission or agreement. Further, as a matter of law, an admission or agreement cannot be inferred from a lessee’s conduct under s.27A(5).

Decision: The UT (HHJ Gerald) held, dismissing the appeal, an agreement or admission for the purposes of s.27A(4) may be express, or implied or inferred from the facts and circumstances. An agreement or admission may be inferred by mere inaction on the part of the tenant over a long period of time. The effect of s.27A(5) is that the making of a single payment on its own, or without more, will never be sufficient; there must always be other circumstances from which agreement or admission can be implied or inferred. Those circumstances may be a series of unqualified payments over a period of time which, depending upon the circumstances, could be quite short. It is a question of fact and degree in every case. Accordingly, in the instant case, the FTT was entitled to conclude that the lessee had agreed or admitted the service charge.

Comment: This is yet another missed opportunity (following Parissis v Blair Court (St John’s Wood) Management Ltd [2014] UKUT 503 (LC)) to determine whether or not any limitation periods apply to applications made under s.27A.  It is, however, a very useful case for landlords in circumstances where the tenant seeks, for the first time, to challenge service charges that were paid in full many years ago.

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