Set-off against service charges & entitlement to interest

[SamAtkins]

In 2003 a Landlord exercises his right to enter upon his Leaseholder’s flat to repair and replace COMMUNAL water pipes running under the flat.

In doing so he pays for and replaces the water pipes but fails to carry out the reinstatement to the flat, and verbally tells the Leaseholder to do the redecorations and he will accept the reinstatement costs to a maximum of £5,000.

The Leaseholder completes the reinstatement for £4000, and sends the receipts to the Landlord as of June 2003.

The Landlord fails to pay and the Leaseholder withholds service charges from 2003.

To date the level of service charge arrears stands at £8500.

The Landlord wishes to do a set-off, so he will deduct £4000 from the £8500, and require the Leaseholder to pay £4500.

My question is if the Leaseholder is entitled to interest from 2003 to date on the amount he spent (i.e. £4000) even though he has withheld service charges from around that time?

By the way the Lease does not allow the Landlord to demand any interest for arrears of service charges.

[animal]

If there is no interest/penalty entitlement in the lease, then the lessor cannot charge interest/penalty. I am unsure if s69 cc act interest would apply in the case where the lease does not allow penalties. In any case that would be at the discretion of a judge, not the lessor.

You cannot arbitarily add interest either (where is the contract saying you can). If the matter proceeds to court, you could ask for interest under s69 cc act, and this would be at the discretion of the judge, and usually depends on how reasonable both parties have acted.

I am not a solicitor, but my best guess would be that no interest would be awarded to the lessee as he/she has not suffered a loss and indeed the judge may view the withholding of the service charge as unreasonable. If lessee had deducted £4000 from the service charge, then that may be reasonable, but twice the amount?