The facts

In July 2023 Ms Syed applied to the FTT for a determination of her liability to pay service charges in relation to each of the nine years since she acquired her lease.

By the time she made her FTT application, Ms Syed had paid all of the service charges which had been demanded by her landlord. However, since at least 2017 she had been making it clear to him that she was dissatisfied with the management of the building and the information she received to support the service charge demands.

Section 27A of the 1985 Act allows parties to long residential leases to apply to the FTT for a determination in relation to the payability and reasonableness of service charges.

Sections 27A(4)(a) and (5) contain the following limitations on making applications under section 27A:

• (4) No application under subsection (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.

Mr Webber argued that Ms Syed should be treated as having agreed all of the service charges because she had paid them all, after subjecting him to rigorous questioning about what they were for and why they were said to be justified.

The FTT did not accept Mr Webber’s argument. It stated:

“Whilst she may not have used the words ‘without prejudice’ or ‘payment under protest’ it is clear that Ms Syed has protested the service charges at every turn and frequently referred to past protests or disputes. The Tribunal finds that she continued to dispute the charges whilst making payment and therefore cannot be said to have admitted the charges were reasonable.”

The Upper Tribunal’s decision

The Upper Tribunal referred to email communications including several threats by Mr Webber that, if payment was not received, he would commence proceedings to forfeit Ms Syed’s lease. Ms Syed’s evidence was she had paid in response to Mr Webber’s threats.

The Upper Tribunal referred to its decision in Cain v London Borough of Islington [2015] UKUT 542 (LC), where it had held that, notwithstanding section 27A(5), a Tribunal was entitled to infer a service charge has been admitted or agreed from a pattern of payment without any challenge. It also noted in G & A Gorrara Ltd v Kenilworth Court Block E RTM Co Ltd [2024] UKUT 81 (LC) it had emphasised an agreement or admission cannot be inferred from payment alone and that something more than just payment is required. It added that Cain established that something which invited the inference of agreement was that the tenant had waited six years after making the last of the payments before challenging the charges.

Following that analysis, the Upper Tribunal held that the payments made by Ms Syed did not signify agreement to the service charges’ reasonableness and it upheld the FTT’s decision.

Conclusion

This decision provides further guidance on whether payment of service charges by tenants can be said to amount to an admission that those charges are reasonable.

If a tenant has paid service charges without challenge, then that, on its own, does not mean the tenant has admitted the reasonableness of the charges – there would need to be something in addition to that, such as the tenant waiting 6 years after paying the charges before challenging them, as in the Cain decision.

Our team of experts can support you in relation to any concerns you may have about your duties as a landlord or manager of a residential block. Please get in touch with Pawan Pandit and Karl Anders.