Wednesday, 3 October 2018

Service Charges: How To Pay AND Challenge

You love those service charges for your flat or (sometimes) your house, don't you? Almost as much as a bellyache or dentist's drill without an injection. You can have a go at challenging them to a first-tier tribunal. That's under section 27A of the Landlord and Tenant Act 1985 and if you take a look at http://www.breakinglaw.co.uk/2018/07/service-charge-challenges-avoiding.html you will see how it works and how it has worked very well indeed for a number of lessees who have had a go although, as I have explained, there could be a danger for you on costs if your challenge is unsuccessful.

But say you have already paid or admitted that you are liable for the service charge demand you have grown to hate? You are precluded from a tribunal challenge if you admitted you owed the service charge or if the court (it will almost certainly be the county court) has given judgment against you for the service charge about which you are arguing. But you will not be treated as having admitted the charge simply because you paid it. There will need to be some evidence other than payment to show you agreed it.

There are lessons to be learnt about how you,  a lessee, should play things,  from a tribunal appeal in Marlborough Park Services Ltd v Leitner [2018] UKUT 230 (LC) where judgment has very recently been given. 

First, if you have a court judgment against you for the service charge and it was obtained by default - you failed to put in a defence and so there was no hearing about the merits of the claim - then apply to the court for the judgment to be set side. If the judgment is set aside, the probability is that the issue about the reasonableness of the service charge will be transferred to the tribunal. Then the way will be clear for your challenge as the court judgment will have gone.

Second, if you want to pay the service charge despite intending to challenge it - you  might be under some pressure from your mortgage lender to pay because forfeiture proceedings are threatened by the lessor if the service charge is not settled - then either wait until you have issued a tribunal application before settlement or make it abundantly clear to the lessor when settling that you dispute liability for the charge. 'This charge is an affront to decency. It is exorbitant, unreasonable and a disgrace. I challenge every new and old pence of it with every fibre of my body and will be taking my challenge to the first-tier tribunal (property chamber). I am paying strictly without prejudice and my action is not and is not to be taken as an agreement to or admission of the charge for the purpose of section 27A(4) of the Landlord and Tenant Act 1985.' That should do!

Must go. the dentist's receptionist has called me.