Landlord and tenant – Service charge – Section 20B of Landlord and Tenant Act 1985 – Respondent landlord including costs of window refurbishment in service charge for financial year – Costs reallocated to correct mistake – Accountant’s certificate at end of following year including further sum for windows in appellant tenant’s service charge – That sum covered by advance payments and reserve fund so that appellant not liable for further amount – Whether sum to be disallowed as having been incurred more than 18 months before relevant demand – Appeal dismissed
The respondent was the landlord of an estate comprising six blocks of flats. The appellant and his wife occupied one of the flats under a lease granted in 1982. The leases of all the flats provided for the payment of an annual service charge in quarterly instalments in advance, in such sum as the landlord determined as being a fair and reasonable interim payment. As soon as practicable after the end of the financial year in December, the amount of the annual service charge was to be determined by an independent accountant, which was to prepare a certificate containing a summary of the costs, expenses and outgoings that made up that charge. Once that was provided, tenants would pay any balance due or, in the event of any overpayment, the landlord would hold those sums in reserve for future expenses.
In 2006, the respondent engaged a contractor to refurbish the windows of all the blocks; the works were completed in June 2006. The accountant’s certificate for the year ending December 2006 included a contribution towards the cost of the refurbishment.
It later emerged that the division of that cost of between the blocks had been calculated on the basis of an incorrect count of the windows; one block had borne a disproportionate amount, necessitating a reallocation of the cost to the others. Accordingly, the accountant’s next certificate, issued in June 2008 for the year ending December 2007, reallocated the costs and attributed a further £825 to the appellant’s flat in respect of the windows. That sum, together with the remainder of the appellant’s service charge contribution for that year, was covered by his advance interim payments and the reserve fund.
In an application to the leasehold valuation tribunal (LVT) under section 27A of the Landlord and Tenant Act 1985, the appellant disputed his liability for the additional £825. He contended that recovery of that sum was excluded under section 20B of the 1985 Act since the relevant costs had been incurred more than 18 months before the demand for payment had been served. The LVT dismissed that application and the appellant appealed. He contended that the relevant demand was the June 2008 certificate.
Held: The appeal was dismissed.
Section 20B, on its clear wording, was concerned only with circumstances in which a demand for payment had been served on a tenant in respect of service charges incurred more than 18 months previously. The Act distinguished between payment made on a demand after costs were incurred and payment made before the relevant costs were incurred but where a subsequent adjustment was to be made. The provision of the accountant’s certificate under the terms of the appellant’s lease could not be regarded as a demand for payment. Section 20B did not apply where payments on account were made to the lessor in respect of service charges, the actual expenditure did not exceed those payments on account and no request for further payment needed to be, or was, made: Gilje v Charlegrove Securities Ltd (No 2) [2003] EWHC 1284 (Ch); [2003] 3 EGLR 9; [2003] 36 EG 110 applied.
The appellant appeared in person; Dan McCourt Fritz (instructed by Forsters LLP) appeared for the respondent.
Sally Dobson, barrister
