Service charge accounts
An interview with Andrew Bond, partner at Smith & Williamson. Andrew's work covers a range of assurance related issues such...
The Upper Tribunal decision of Cain v Islington Borough Council  UKUT 542 (LC) dealt with a leaseholder’s application to decide whether service charges were reasonable, including those dating from twelve years ago.
The leaseholder bought a lease of a one-bedroom flat in 2002. The freeholder was the London Borough of Islington. In July 2014 he applied to the First-tier Tribunal (Property Chamber) to decide the reasonableness of the service charges raised for the twelve-year period from 2002 to 2013.
The tribunal decided that he could not challenge service charges from more than six years ago, as he had agreed or admitted to them. He had paid them, and also waited for a very long period before challenging them. Under the Landlord and Tenant Act 1985 no application may be made to decide liability to pay service charges where they have been agreed or admitted by the leaseholder.
The leaseholder appealed to the Upper Tribunal and his appeal was dismissed.
The Upper Tribunal concluded that an agreement or admission for the purposes of the 1985 Act may be clear-cut, or objectively understood from the facts and circumstances. The making of a single payment on its own is not enough to prove agreement or admission. But making multiple payments over time might be enough, especially if they were a series of payments of service charges, and the payments were made without complaint.
Each case depends on the facts.
From the facts and circumstances in this case, the Upper Tribunal decided the First-tier Tribunal was entitled to conclude that the leaseholder had agreed or admitted the charges for the years 2001/02 to 2007. There had been a series of payments made in response to service charge demands throughout the six-year period and a long period of time had passed before the first challenge was made.
Our advice to leaseholders paying a service charge demand that they wish to dispute is to make it clear to the landlord or managing agent that payment is made without prejudice to their right to challenge the charge later. The leaseholder should not unduly delay pursuing their challenge of those charges.