Gas Bill Victory a Warning for Property Managers

A mix-up over the gas bill relating to the swimming pool of a residential estate led to a case reaching the Upper Tribunal.

The swimming pool was heated by gas. The property management company paid the gas bills, which were raised by the gas supplier EDF. Six years later, however, the management company was shocked to discover that the gas was actually supplied by Total Gas and Power. Furthermore, the meter had been misread and so EDF had substantially undercharged for the gas used.

The result was a bill for more than £135,000. After the payments to EDF had been refunded and a discount negotiated with Total Gas and Power, an amount exceeding £100,000 was still outstanding. The management company paid the sum owing and raised a bill on each tenant for their share.

One of the tenants paid part of the sum due but objected to paying the balance. He claimed that the management company had been negligent in the way it dealt with the gas readings and that the time limit between the cost having been incurred and demanding reimbursement from the tenants was too long as a management company is required to notify its tenants within 18 months of incurring a cost, otherwise it loses the right to recover the sum paid.  

The case turned on the question of when the cost was incurred. Was it when the gas was actually used or when the invoice for it was received?

The Upper Tribunal took the view that the management company ‘incurred’ the cost when the gas was supplied to it, because this was the point at which it became liable to pay for it. Accordingly, the tenants were not liable to pay for gas supplied to the management company more than 18 months before they were given notice that the cost had been incurred.

Property managers should take note of the implications of this case. We can advise you on all aspects of landlord and tenant law.