The Court of Appeal today backed long leaseholders in a dispute over service charges.
The court ruled that long leaseholder Mark Skelton isn’t liable to pay a service charge demanded by the company owning the freehold of his home because the company sent him the estimated costs more than 18 months after the expenses had been incurred.
The case overturns a closely-followed ruling from the Upper Tribunal (Lands Chamber) in which the judge dismissed claims brought by multiple leaseholders. Skelton was the only claimant to appeal, and he has now won.
Under the Landlord and Tenant Act of 1985, leaseholders who are obliged to pay ground rent and service charges need to be served with both a “charge notice” and an estimated bill by the freeholder. That service must be within 18 months of freeholder incurring the costs that are being charged.
In this case, in March 2011 the freeholder served Skelton with a notice that he was obliged to pay a service charge for 2011-2012. The notice didn’t include an estimate of the cost.
The freeholder gave Skelton the estimate in April 2014, and in doing so validated the March 2011 notice.
However the court ruled today that, although the March 2011 notice had been validated by the estimate, the tenant should have “proper demand” for the service charge within 18 months.
Proper demand wasn’t received until the estimate was received two years after the costs were incurred, and therefore Skelton isn’t liable for the service charge.
“If in the situation in this case, the tenant receives a windfall, that is the result of the landlord not having complied with the terms of the lease for service of a valid demand,” appeal judge Lady Justice Arden wrote in the ruling.
Mark Skelton v DBS Homes (Kings Hill) Limited Court of Appeal (Arden LJ, Richards LJ) 27 July 2017
Amanda Gourlay (instructed on a public access basis) for the appellant. The respondent was not represented and did not appear.
