Landlord and tenant – Service charges – Terms of lease providing for service charges to be certified by lessor’s surveyor – Leaseholder appealing against leasehold valuation tribunal’s determination of liability for service charges — Whether provision of such certificate a condition precedent to recovery of service charges – Whether such certificate provided on facts of case – Appeal allowed
The appellant held a long lease of one of seven flats in a block. The respondent company owned the freehold and managed the property on behalf of the leaseholders. The respondent was entitled to recover service charges from the leaseholders in accordance with the terms of their leases. These provided that the amount of the service charge was to be ascertained and certified by the lessor’s surveyor, acting as an expert not as an arbitrator, once a year for the period up to the end of June, with the ascertainment to be made, if not by the end of June, then as soon as possible thereafter. The leaseholders could be required to pay to the freeholder, along with each half-yearly payment of rent, such sum on account of the service charge as the lessor’s surveyor should certify.
The appellant applied to the leasehold valuation tribunal (LVT), under section 27A of the Landlord and Tenant Act 1985, for a determination as to the recoverability of service charges for the years 2002 to 2008. Her primary contention was that the respondent was not entitled to recover for those years because it had failed to comply with the requirement to have the amount certified by the lessor’s surveyor, which requirement was a condition precedent to sums becoming payable by way of service charge.
The LVT held that the provision of a certificate was a condition precedent but found that certificates provided by the respondent’s accountants were capable of amounting to surveyor’s certificates since that included sums in respect of the service charge component that would have been prepared by surveyors.
The appellant appealed; the appeal was conducted by way of a rehearing. The respondent disputed whether the requirement for a surveyor’s certificate was a condition precedent to the recovery of service charges. It contended that where the lease had been executed against the background of section 19(1) of the 1985 Act, which confined service charges to such amount as was reasonable, the parties should not be taken to have intended a protection for the tenant that went beyond that conferred by section 19.
Held: The appeal was allowed.
On the proper construction of the relevant lease clause, it was a condition precedent to any liability of the leaseholder to make payment of service charges, either on account of service charge or by way of final balancing service charge payment, that the respondent has obtained a surveyor’s certificate certifying the amount of the payment. That was what the clause plainly stated. Where a lease provided for the amount payable to be certified by the landlord’s surveyor or accountant, the issue of a valid certificate would usually be a condition precedent to the tenant’s liability to pay. The fact that the lease had been executed against the background of the existence of section 19(1) of the 1985 Act could not be a reason for concluding that the lease was intended to confer no greater protection on the tenant than that section conferred. Assuming that the parties had section 19 in mind when executing the lease, that they stipulated for greater protection for the tenant than provided by section provided was more likely to indicate that they truly intended the tenant to enjoy such greater protection.
The respondent had not indicated any document that could, even arguably, be regarded as a surveyor’s certificate in respect of any of the service charge years. No evidence had been called to show that a surveyor had addressed his mind to the amount of the “on account” demands or the final demands for service charge and certified them to be appropriate. The certificate provided by the accountants did not constitute a certificate by a surveyor “acting as an expert and not as an arbitrator”. The accountant’s certificate did not in certify the appropriateness of the amounts of service charge demanded, either on account or finally.
Consequently, the appellant was liable to pay nothing in respect of each of the service charge years to which the appeal related since the condition precedent to liability had not been fulfilled. If the respondent obtained a surveyor’s certificate for each of those years and made fresh demands based on it, then argument might arise as to whether service charges would become payable pursuant to those demands or whether the respondent would be unable to recover any payments by reason of, in particular, the time limit in section 20B of the 1985 Act.
Sophie Weller (instructed by Dodd Lewis) appeared for the appellant; the respondent did not appear and was not represented.
Sally Dobson, barrister
