Recoverability of service charges paid under a mistake: Parissis v Blair Court St John’s Wood (Management) Ltd


HHJ Saggerson has given judgment on appeal, upholding the decision of the trial judge that a leaseholder’s claim for recovery of overpaid service charges was defeated by the management company’s good faith change of position and was in any event statute barred.

The claimant had been the leaseholder of two flats. Between 2000 and 2008 he paid service charges to the defendant management company until some of the other leaseholders completed an enfranchisement process. In 2010, the enfranchisement company’s managing agents discovered that some of the services that had been provided were not required under the terms of the lease and so the cost of them could not form part of the service charge.

In 2016, the claimant brought proceedings in the county court to recover the money that he had overpaid, claiming that the defendant was in breach of trust or had been unjustly enriched.

The trial judge held that he should have read the leases in 2007 when he was bring earlier proceedings in the leasehold valuation tribunal and so the limitation period for bringing the claim expired in 2013. She also held that there was no breach of trust, but even if there had been she would have granted relief under Trustee Act 1925, s.61. The judge went on to hold that as the money had been paid by the claimant under a mistake, there had been unjust enrichment, but the defendant management company had changed its position in reliance on the payments and so could rely upon the defence of good faith change of position.

The claimant was granted permission to appeal in respect of limitation and change of position, but on 6 December HHJ Saggerson dismissed the appeal. He held that the trial judge should not have treated any enrichment as unjust purely because it had been paid under a mistake. The trial judge had, however, been entitled to conclude that the management company had changed its position by relying upon the payments made by the claimant and he was not entitled to restitution of the money paid. HHJ Saggerson also held that the trial judge had been entitled to find that the claimant could, with reasonable diligence, have discovered the mistake in 2007 so that the claim was statute barred.

Robert Brown acted for the successful defendant/respondent.