In a claim for unpaid service charges a tenant must expressly plead the reasonableness of the service charges claimed if they seek the protection afforded by section 19 of the Landlord and Tenant Act 1985. Gell v 32 St John’s Road (Eastbourne) Management Co Ltd [2021] EWCA Civ 789; [2021] PLSCS 97 serves as a useful reminder of what may appear to be a simple principle.
Keith Vernon Gell was a long leaseholder of a flat in St John’s Road, Eastbourne. Under the terms of his lease Gell was required to pay his landlord 22.5% of the total “maintenance charge” payable by all the tenants of the flats. Gell’s landlord claimed he owed £73,163.98 in unpaid “maintenance charges” for the period 2013 to 2016, mostly arising from the anticipated costs of major works to the block.
In Gell’s defence and counterclaim he pleaded that he entered into a deed of surrender that varied the terms of his lease under duress and fraud committed by his landlord. By way of his counterclaim he argued that his landlord had failed to comply with sections 21 and 22 of the 1985 Act, but these sections did not give rise to any civil remedy.
At first instance, Gell’s defence and counterclaim was struck out as an abuse of process. The judge found that during a dispute with his landlord for unpaid pre-2013 service charges, Gell had failed to plead that he had signed the deed under duress or that it was obtained by fraud. Yet, due to concerns over the amount of service charge claimed the judge listed the matter for a disposal hearing. At that hearing the judge ordered the matter be transferred to the First-tier Tribunal to determine the reasonableness of the amount of the service charges.
The landlord appealed on the basis that Gell’s defence failed to plead that the service charges were unreasonable. Additionally, he did not rely on section 19. If the matter was transferred to the FTT, it would give Gell the opportunity to argue reasonableness in circumstances when his defence was silent on the issue and the same had already been struck out. The appeal judge agreed and judgment was entered for the specified sum. Gell appealed.
The Court of Appeal stressed that in a claim for unpaid service charges a tenant who sought to challenge the reasonableness of any service charge had to expressly plead it in the defence. It could not be raised subsequently, especially when the defence had been struck out.
It was not a reasonable adjustment to require the court to investigate whether service charges were reasonable in amount just because a tenant was undefended or suffered from a disability. This would be procedurally unfair. Further, if the defence failed to put the question of the reasonableness of the service charges in issue, the court did not have jurisdiction to transfer the matter to the FTT because there was no issue for it to determine.
Finally, the Court of Appeal observed that section 19 adjusted the contractual rights arising under a tenancy as between the parties. It prevented a landlord from demanding unreasonable service charges under a provision in the lease, but it did not mandate how the court would adjudicate the issue if raised.
Elizabeth Dwomoh is a barrister at Lamb Chambers
