Avon Freeholders Ltd v Garnier [2016]:

Whether a tenant can argue against administration charges on reasonableness grounds

The background

The respondent occupied a property owned by the appellant, and carried out some bathroom and plumbing works. The respondent did not obtain consent of the appellant to the works, assuming that it was not required, but sought retrospective consent several months later when required in order to sell his lease of the property.

The appellant felt that the respondent’s works had breached an absolute covenant contained in the lease preventing the respondent from ‘cutting, maiming or injuring, or making any breach in any part of the structure of the flat’. Alternatively, it claimed that the tenant had breached the lease covenant preventing alterations to the flat without landlord’s consent.

In progressing the respondent’s retrospective application for consent, the appellant informed the respondent that a non-refundable consultation fee of £500 plus VAT would be payable, to which the respondent agreed. Payment of this fee did not guarantee consent.

The respondent was under pressure to exchange and complete the sale of his flat, and the appellant subsequently requested further sums of £1,000 plus VAT in respect of legal costs and a £5,000 consent fee. The respondent agreed to pay such sums in order to secure his sale.

At First-tier Tribunal, the court was asked whether an administration charge could be payable and, if so, how much this should be.

The FTT’s decision

The FTT concluded that the respondent had agreed to payment of the sums under duress; the fact that he had paid them did not constitute agreement or admission.

Having decided that it had jurisdiction to do so, the FTT then addressed the issue of reasonableness. It was held that a reasonable amount payable was £1,500 plus VAT, rather than the £6,500 plus VAT charged by the appellant.

The appellant took the appeal to the Upper Tribunal.

The Upper Tribunal’s decision

The Upper Tribunal held that the FTT had applied the law incorrectly, determining that the appellant had not applied ‘any wrongful or illegitimate threat’ against the respondent. It was within the respondent’s capabilities to have requested and obtained consent to the works before he carried them out instead of leaving it until he was under pressure to complete the sale of the property.

The respondent had agreed in writing by email with the appellant to the charges and he was therefore unable to successfully argue against these on the grounds of reasonableness later on. The FTT did not have jurisdiction to determine the reasonableness of the sum as being £1,500 plus VAT.

The appellant’s appeal was therefore allowed.

JB Leitch’s Phil Parkinson comments:

“This decision highlights the importance of clear communication between landlord and tenant, and demonstrates that a court will strictly interpret the terms of any written exchange between parties. The respondent’s payment did not in itself admit any liability for the payment or its reasonableness, but his correspondence indicated that he agreed to it. At no point did he stress that the sum was disputed. The case may give landlords confidence in charging tenants more where it is reasonable to do so in cases where consents are retrospective and/or required urgently.”