Fuel Rights Handbook 20th editionChapter 13: You, your landlord and fuel3. Resale of fuel by a landlord The landlord fails to pay bills
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The landlord fails to pay bills
If you pay for fuel with your rent, you can be disconnected if your landlord does not pay the bill. The supplier’s codes of practice should lay down a period during which disconnection action will not proceed in such circumstances. There are a number of legal remedies to deal with conflicts in this area (see Chapter 14).
Transferring the account
If your landlord consistently fails to pay bills, the simplest solution may be for you to open an account and get the supply in your own name (see Chapter 3).
Rewiring work might be necessary if a meter is moved or a new one installed. For example, in houses in multiple occupation, considerable work is needed to replace one main meter with separate meters for each tenant – in most cases, you would only have to pay for the costs of work to the premises you yourself occupy.
If a supply is being transferred because of a breach of the terms of the tenancy, you can claim the costs of the work as damages in a court action. Otherwise this work is an ‘improvement’ (see here).
The landlord is disconnected
Gas can only be disconnected at the premises for which there are arrears.1Sch 2B para 7(3) GA 1986 However, electricity can be disconnected at any premises which your landlord occupies and for which s/he is registered as the consumer (eg, at the landlord’s home or workplace) for failure to pay a bill incurred at other premises.2Sch 6 para 1(6) EA 1989 Your electricity supply may therefore be at risk of disconnection if your landlord has arrears elsewhere. This provision is more difficult to use if the two premises are supplied by different companies. Remember that the supplier may not be aware that your landlord is not the occupier unless you, as tenant, provide this information. Inform the supplier of the situation. Always press for disconnection of your landlord rather than you, if disconnection cannot be avoided, and attend any proceeding that comes to your attention to make representations.
Breach of quiet enjoyment
If you pay for fuel with rent, it is a term of your tenancy – implied (see here), if not written down – that your landlord maintains the supply. If your landlord fails to pay a bill and the supply is threatened or cut off, you could seek a court order by way of an injunction to restore the supply and for damages for loss and suffering (see Chapter 14). Where action or inaction (such as failing to pay a bill) by a landlord results in disconnection, the landlord is in breach of an implied covenant to ensure a supply of gas and electricity and for breach of the implied covenant for ‘quiet enjoyment’1See Perera v Vandiyar [1953] 1 All ER 1109; McCall v Abelesz [1976] 1 QB 585 Court of Appeal (in Scotland, for having been deprived of full possession).
The covenant of quiet enjoyment protects you against both wrongful acts by a landlord and also lawful acts of other persons claiming under the landlord, by way of entry, eviction or disruption of your peaceful enjoyment of the land. Interventions by fuel suppliers which have been caused by the landlord’s wrongful act or omission may count as breaches of quiet enjoyment or an easement in terms of the uninterrupted supply of electricity to the land.2Cardwell and others v Walker and another [2003] All ER (D) 395 (Dec) You can sue the landlord for breach of the implied term of contract that s/he would supply the fuel through the meters so long as the tenancy continued, and also for breach of the covenant of quiet enjoyment. This covenant is ‘not confined to direct physical interference by the landlord but extends to any conduct of the landlord or his agents which interferes with the tenant’s freedom of action in exercising his rights as tenant’. For example, if a fuel supplier takes lawful action to disconnect because of a bill which a landlord has failed to pay, a claim for breach of quiet enjoyment is sustainable against the landlord for having allowed the situation to arise. A claim for distress arising from disconnection may be included.3Per Lord Denning in McCall v Abelesz [1986] 1 QB 585 Such a claim may cover physical inconvenience and discomfort caused by the breach and mental distress directly related to that inconvenience and discomfort4Watts v Morrow [1991] 4 All ER 937; Halcyon House v Baines and others [2014] EWHC 2216 July 14 and, if the disconnection is deliberate, a claim for harassment may also be added. However, a claim for distress will not extend to periods where you are not in actual occupation or for when third parties (eg, family members or friends) may be in occupation instead of you.5Moorjani v Durban Estates Ltd [2015] EWCA (Civ) 1252
Protection of supply where a landlord is insolvent
If your landlord becomes bankrupt, the official receiver (or an insolvency practitioner) automatically becomes landlord of the property upon his/her appointment as trustee of your landlord’s estate. You must be notified of this in writing. Questions about the supply should be directed to the trustee.1Insolvency Service, Technical Manual, Chapter 33, Part 11 Your fuel supply should be protected under special rules.2ss233, 233A, 372 and 372A IA 1986; Sch 2 GA 1986; Insolvency (Protection of Essential Supplies) Order 2015 SI 989 Where you have an agreement on something such as the heating system, the official receiver should obtain all documents relating to that agreement and consider continuing the agreement if the cost of doing so is not prohibitive.
Where you have a long lease, the ‘leaseholders’ collective right of first refusal’ may arise.3Chapter 1 Part 1 Leasehold Reform, Housing and Urban Development Act 1993 This means that you have the right of first refusal and are given a chance to buy the property before it can be sold to a third party. This minimises the consequences of the landlord’s situation on you. Where the property contains two or more flats and you have a long lease, you have the power to serve notices on the official receiver requiring that certain actions are carried out.
The right of collective enfranchisement and the right to obtain a new lease are not exercisable by tenants with assured shorthold tenancies, but usually you are entitled to remain in the property if the fixed term has not yet expired. The trustee cannot force you out and a supplier should not disconnect supplies. However, a secured creditor (eg, a bank or lender who is mortgagee) may take its own possession action against you and the court may grant a possession order independently of the bankruptcy.
In Scotland, provision is made for the winding up of companies and registered social landlords under the Housing (Scotland) Act 2010 as amended by the Housing Amendment Scotland Act 2018.
Breach of trust
If two or more tenants contribute to the same costs by paying a variable service charge, the sums paid to the landlord are held ‘on trust’ by her/him. This imposes strict obligations on the landlord as ‘trustee’. Failure to pay fuel bills with this money is a ‘breach of trust’.