Philipp Stampfer v Avon Ground Rents Ltd

A covenant permitting recovery of the landlord’s deemed costs for collecting rents does not, without more, permit a separate charge for serving a notice under section 166 of the Commonhold and Leasehold Reform Act 2002. Rent cannot be collected until it is due, whereas the notice is given to make it due. A charge for serving such a notice requires express wording or, at least, wording extending to ancillary or incidental costs.

The appellant held a long lease of a flat from the respondent freeholder. The lease permitted a reasonable deemed fee for the landlord’s collection of rents. The freeholder charged a fee twice yearly for preparing and serving notices under section 166 of the Commonhold and Leasehold Reform Act 2002.

The First-tier Tribunal held that serving the notices was part of collecting the rent and that the charge was payable and reasonable. The appeal concerned whether the lease authorised that charge.

1. Appeal allowed. The Upper Tribunal held that the First-tier Tribunal had decided the charge was for giving the section 166 notices, rather than for an inseverable package of wider rent-collection work.
2. The relevant lease covenant deemed a reasonable fee to be incurred where the landlord attended to “the collection of rents from the Building”. It contained no reference to notices or to incidental or ancillary costs. The lease used wider wording elsewhere for costs connected with section 146 notices, making the omission significant.
3. Rent could not be collected until it was due. A section 166 notice was required to make the ground rent due and therefore was not itself the collection of rent. The covenant did not authorise recovery of the notice fee.
4. The First-tier Tribunal had been led astray by Newton House, which concerned a materially different covenant expressly referring to legal, administration and ancillary costs incurred in collecting sums due under the lease. That decision shed no light on the construction of the present covenant.
5. The fee demanded in July 2019 and January 2020 was therefore not payable under the lease.

• Upper Tribunal (Lands Chamber): allowed the appeal against the First-tier Tribunal’s decision that the administration charge was payable.