Debt Co pursuing Excessive late payment charges

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    Debt Co pursuing Excessive late payment charges

    Sorry if this is in the wrong section of your forum
    We are the owner of a leasehold flat, the bi-annual service charges for the property are paid by us, as Property owner, We recently moved head office premises and our letter to the Service charge Company never arrived, so they continued to bill our charges to an address that we couldn't access.
    They employed a recovery firm to get the money back for them, who did a Co search and sent the Invoice to our new Registered office address. We paid the bill within 48 hours of receiving it, but they are now pursuing c£650 of recovery and late payment fees, which we deem to be excessive and have told them so, but they are undeterred and still maintain the whole of their £650 is to be paid, else they intend to issue a S146 notice.
    Any advice please, as to whether we are likely to have any success getting these charges reduced, or if we 'd end up incurring the same amount in our own legal fees as we would just settling the bill?

    #2
    I am assuming that your lease allows the Company to demand administration charges from you and that the proper notice of tenants rights and obligations has been supplied to you.

    The charges are unreasonable and you should be able to get them reduced by applying to the First Tier Tribunal. You do not need legal representation at the Tribunal hearing.

    Comment


      #3
      They can't issue a section 146 notice without first getting confirmation of the breach from the FTT, so you could counter with a request for confirmation of reasonableness at that point. You should pay what you believe are their reasonable costs, as you were clearly at fault in failing to realise that you hadn't received a demand.

      How overdue was the payment, and did the company have the correct registered office address at Companies House when the payment first went overdue?

      Comment


        #4
        If you have evidence of a letter being sent to the management company, that should be sufficient to avoid any recovery costs. I would not pay any of the costs but you should consider making an offer "without prejudice save as to costs". I agree that you should prepare to explain why you did not notice that service charge demands had not been received.

        Comment


          #5
          I don't know if there are any special rules for service charges, but, given that the OP is a company, this sounds like a commercial debt to me, even though costs are being addressed through the leasehold route. For commercial debts there are standard default interest rate, and the debtor can be charged from £40 up to the reasonable costs of chasing the debt (assuming this debt is less than £1,000. That's even without court action, and they apply even though not in the contract. This still shouldn't get close to £650. £650 sounds like several man hours of legal expertise has been thrown in.

          (There are some additional details about when the statutory provisions kick in, which may be somewhat complicated where there is a payment on account.)

          Comment


            #6
            Thanks for the replies everyone.
            Yes the flat is owned by a Company.
            The original invoice would have been received early March, we moved our Company reg'd office in mid April, which is the same date we sold the building, so there was no delay in updating the Co House register.
            I have a copy of the letter that was sent to them, but no proof of posting. They have also stated it was our responsibility to notice that we hadn't paid their invoices. As a Co we do not chase our suppliers to get them to send their invoices in to us, but I understand this would not be a line of defence. Also of note, we have had periods during the ownership of this building whereby we have not had to pay service charges for the 6 month period, as there is sufficient funds held to cover expected costs at their end, so we do not receive bills from them every 6 months. Usually we do, but sometimes we don't....

            Can we make an offer "without prejudice save as to costs" and state that this is our offer, otherwise we will make an application to the FTT to establish if their costs are deemed to be reasonable - is that how it works?

            Thanks again

            Comment


              #7
              You are are required to accept service of documents at the old registered office for 14 days after you notify Companies House of your new address, so, if the escalation process started at that point, they may have passed the point of serving notice at the registered office with no success, which could explain why it was escalated to a higher level.

              I would have expected one reminder to the address on file, then a reminder to the registered office. After that, I would expect them to incur the cost of preparing to take court action.

              Service charges would be considered priority debts for individuals, and I don't think it is wise to not chase the production of invoices for them. At one time rent didn't have to be demanded. I think that is still the case for commercial property.

              Comment


                #8
                It's not the service Co that are chasing the debt, I would guess they sent their reminder to our old address and then passed our unpaid debt on to a debt recovery Company, which is where we are now.

                The day after we were notified of our debt we paid the amount due in full. This was not for rent, but was for service charges, which as I have mentioned, we do not always receive an Invoice for these charges if they have enough funds in their accounts to cover future expected bills.

                They have sent us one letter to our registered office, which was then paid within 48 hours - this does not represent £650 worth of costs??

                Comment


                  #9
                  Although I can't see how £650 can be justified, the point at which they handed over to the debt collection company is probably where the costs shot up. At that point, they probably become committed to paying a large fee to the debt collector. The issues would be whether they stopped chasing it themselves too soon, and whether they chose a debt collector who charged a reasonable price for the required service.

                  Comment


                    #10
                    I would have thought that the the request for a ruling on reasonableness could be conditional on their making a request under Commonhold and Leasehold Reform Act 2002, s 168, for a ruling that there was a breach, although you should warn of that intention, so that any extra expenditure is more difficult to justify.

                    Comment


                      #11
                      Originally posted by Pancake View Post

                      Can we make an offer "without prejudice save as to costs" and state that this is our offer, otherwise we will make an application to the FTT to establish if their costs are deemed to be reasonable - is that how it works?
                      Yes, that is how it works.

                      Comment


                        #12
                        I would investigate thoroughly the “debt recovery” company. The £650 cannot be justified, they probably used a standard letter held on a word processor.

                        A copy of your letter should suffice if you do not have proof of posting, which would have been preferable.

                        Did you not arrange for mail to be forwarded from your previous address?

                        If you are only one service charge in arrears, it would be premature to take legal action and alternative options should have been considered first.

                        Comment


                          #13
                          Originally posted by eagle2 View Post

                          Yes, that is how it works.
                          Thank you, I think this is most likely the route we are going to take.
                          We don't dispute that our payment was late, but it wasn't £650 worth of recovery fees late

                          Comment

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