Can residential park owners charge electricity administration charges?

The issue of whether a residential park owner can lawfully charge residents the cost of “administration” in respect of their electricity supply continues to come before the Tribunal, despite a recent Upper Tribunal decision ruling on this point.

In Britanniacrest – Broadfields Park (2013), the Upper Tribunal ruled that a monthly “administration charge” which the park had been charging residents, in addition to the cost of the electricity which they had actually used, was unlawful. The “administration charge” was intended to cover the time and cost incurred by the park owner in administering the residents’ electricity accounts, such as reading meters and preparing bills for the residents.

The Upper Tribunal reached this decision by examining the express terms of the written statements provided to the park’s residents, and found that unless the written statement contained an express term allowing the park to make a separate administration charge to residents for the costs involved in administering their electricity accounts, these matters were deemed to be covered by the general pitch fee and therefore could not be passed on to residents as an additional charge.

However, two subsequent First Tier Tribunal decisions (Silk Tree Properties and East Sussex Mobile Homes Limited) have confirmed the Upper Tribunal’s view that where the written statement expressly allows the park owner to charge residents an administration fee for the management of their electricity accounts, this charge is lawful and may be passed on, provided the amounts are reasonable.

The most recent First Tier case (Grimwood –v- Vellam: 2015) involved a resident seeking a determination as to whether she was liable to pay a quarterly “administration charge” in respect of her electricity account, arguing that such a charge would be unlawful in light of the Britanniacrest decision. Her written statement had the same wording as that in Britanniacrest, and did not contain any express term allowing the park to charge her for the administration of her electricity account.

The park owners had been charging this “administration charge” of £6 per quarter since 2006, and all of the residents had been paying it without objection until 2014. However, at that stage the Applicant sought to query the legal basis for this charge, and applied to the Tribunal for a determination.

The park owner argued that despite the Britanniacrest decision the residents should have to pay the administration charge because they had paid it without protest for over eight years and that this amounted to an agreement, albeit an informal one, by the residents that they would pay it. They argued that this informal agreement had altered the express terms of the written statement.

The Tribunal disagreed, and found in favour of the Applicant. The Tribunal held that without a clear express term in the written statement, the only legal way that an administration charge could be justified is if it could be established that there was a separate contract, outside the terms of the written statement, which allowed for such an administration charge. The Tribunal also said that even that would probably be unlawful as it would contravene both the express terms of the existing contract and the 1983 Act. It also expressed doubt as to how such a separate contract could be valid, as there would be difficulty in showing what consideration the park would be providing in return for the administration charge.

As a result, the Tribunal held that the administration charge was unlawful and could no longer be charged. The Tribunal did not order the park to refund the charges which the residents had paid since 2006, arguing that the objections “should have been raised at an earlier stage”, but they did indicate that the residents affected could seek to bring a claim against the park owner in the County Court for a refund of any overpaid administration charges “if they feel strongly enough”.

The moral of this story is don’t try to charge your residents for something unless the written statement clearly says you can!