Residential Administration charge right to challenge ousted?

Importance of a tenant not inadvertently excluding the right to challenge a residential administration charge by saying too much

A warning for residential tenants not to exclude their right to challenge administration charges by saying too much following a recent Upper Tribunal (Lands Chamber) decision and in particular to be clear regarding making any protest against an administration charge.

In Avon Freeholds Ltd v Garnier [2016] UKUT 477 (LC), the Upper Tribunal held that the tenant had not acted under duress by accepting payment of a residential administration charge and had instead as a result of its actions waived the First-tier Tribunal’s jurisdiction to determine the amount of such a charge.

This case has significant implications for residential tenants and highlights the need to have particular regard on how to protest the amount of an administration charge, in order to avoid excluding a right to challenge an administration charge through the First-tier Tribunal’s jurisdiction to determine the reasonableness of the amount charged.

The Facts

The case was an appeal from the landlord of a flat, against the decision of the First-tier Tribunal to reduce the sum payable by a former tenant of an administration charge for retrospective consent to alteration, in order for the tenant to complete the sale of his flat. The tenant protested the amount of the administration charge initially, on the basis that it had not been reasonably and properly incurred, but later said he would “make the payment now, that’s fine”.

The First-tier Tribunal held that no genuine agreement about the appropriate administration charge was reached. Further, the fact that the tenant had sought legal advice in connection with the matter showed the tenant’s dissatisfaction and the tenant also made an application to the Tribunal very soon after. Both of these factors indicated to the First-tier Tribunal that the tenant never accepted validity of the payment, and had made the payment under duress.

The Decision

The Upper Tribunal confirmed that under the Commonhold and Leasehold Reform Act 2002, a tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment, something more is required to demonstrate agreement.

However, the Upper Tribunal held that there was no duress. The landlord had not applied wrongful or illegitimate threat or other form of pressure upon the tenant. Consequently, the First-tier Tribunal had no jurisdiction to determine the amount payable.

Instead, the tenant could have reserved his right to challenge the administration charge by carrying out one of the following steps:

1. Solely making the payment without saying anything at all;
2. making the payment under protest and/or expressly reserving the right to invoke the jurisdiction of the First-tier Tribunal.

The Upper-Tribunal stressed the tenant’s use of the word ‘fine’ in its decision and held that this amounted to an agreement to pay. As a result, the landlord issued the retrospective consent under a false understanding as to the tenant’s acceptability of payment.

The case highlights the steps tenants should take to ensure they do not preclude their right of recovery of the unreasonable amount charged by a landlord. Further, tenants should be aware of making payment under protest or not saying anything at all that could constitute consent.

For further information regarding this topic or any other property and construction dispute, please contact Shams Rahman or any member of Edwin Coe Property Litigation team.

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