Philipp Stampfer v Avon Ground Rents Ltd

For a long residential lease, service of a notice under the Commonhold and Leasehold Reform Act 2002, section 166, makes rent payable on the date specified. It is a logically prior step to collecting rent, not collection itself. A lease term allowing a reasonable fee for attending to rent collection therefore does not, without suitable wording, authorise a charge for preparing and serving the notice. Express provision for recovery of costs relating to a different statutory notice, and the protective purpose of section 166, supported that construction. The court did not decide whether such a charge would be reasonable if contractually authorised.

Under a long residential lease, Avon charged a £36 ground rent collection fee twice yearly. The First-tier Tribunal held that the fee was authorised by the lease and reasonable. The Upper Tribunal allowed Mr Stampfer’s appeal, holding that the lease did not authorise a charge for preparing and serving a section 166 notice: [2022] UKUT 68 (LC). Avon appealed to the Court of Appeal. The appeal was confined to construction. The reasonableness of the fee was not in issue.

Appeal dismissed. Lord Justice Nugee gave the reasons, with Lord Justices Phillips and Bean agreeing.

1. Effect of section 166. Section 166 of the Commonhold and Leasehold Reform Act 2002 makes a tenant under a long residential lease liable for rent only after the landlord has given the prescribed notice. Rent becomes due on the date specified in that notice. Without the notice, the tenant’s liability remains potential or inchoate and rent cannot be collected.
2. Construction of the lease. Preparing and serving the notice is a necessary prerequisite to collecting rent, but it is not itself collection. The notice makes rent collectable; it does not collect it. A clause permitting a reasonable deemed fee for attending to the collection of rents therefore did not cover the preparation and service of a section 166 notice.
3. Context. The lease expressly addressed costs relating to a notice under section 146 of the Law of Property Act 1925, but contained no comparable provision for section 166 notices. That omission, together with the protective purpose of section 166, supported the conclusion that landlords wishing to pass on such costs should use express wording.
4. Reasonableness. The court made no decision on whether a section 166 notice fee would be reasonable if authorised. It observed that any deemed cost would be assessed for the whole batch of notices rather than necessarily for each notice, and would remain subject to the requirements of reasonableness and the independent-agent ceiling. Evidence of the work actually undertaken would be relevant.

The appeal was dismissed.

1. Court of Appeal (Civil Division) dismissed Avon’s second appeal on 24 October 2022.
2. Upper Tribunal (Lands Chamber) allowed Mr Stampfer’s appeal on the construction issue, holding that the rent-collection clause did not authorise a fee for preparing and serving a section 166 notice: [2022] UKUT 68 (LC).
3. First-tier Tribunal held on 26 February 2021 that the work associated with serving the notice was part of collecting rent and that the £30 plus VAT fee was reasonable.