… and, no, we’re not talking about meeting the in-laws; rather, we’ve *finally* got a High Court decision on the requirements of s.20B(2), Landlord and Tenant Act 1985. This, in short, requires landlords to either demand service charges within 18 months of incurring the same, or (again, within 18 months)to have notified the tenant that costs have been incurred and he will be required to pay them.
LB Brent v Shulem B Association Ltd [2011] EWHC 1663 (Ch) is an appeal from the county court. Brent was the freehold owner of five blocks of flats in Willesden, London. Schulem was the leaseholder of fifteen flats in those blocks. Under the terms of those leases, Schulem B had covenanted to pay service charges in respect of the usual landlord tasks (exterior repairs, cleaning, etc). In 2003, Brent started the process of carrying out major works to the flats and sent notification under s.20, Landlord and Tenant Act 1985 to the leaseholders. The leaseholders were told that the likely cost of the works would be £19,359.81. A contract with a chosen contractor was signed on or around May 24, 2004 and payments were made throughout the life of the works (which, for present purposes, was from July 2004 to April 2005).
In February 2006, an invoice was sent to the leaseholders, requiring payment of the sum originally claimed. In December 2006, a corrected invoice was sent for £15,794.99. When payment was not made, proceedings were issued. The lessee argued, inter alia, that the costs had been incurred more than 18 months before December 2006 and, hence, were statute barred by virtue of s.20B, Landlord and Tenant Act 1985.
Morgan J held:
(a) that the demand of February 2006 was not in accordance with the terms of the lease;
(b) accordingly, it was not a “demand” for the payment of a service charge within the meaning of s.20B(1), LTA 1985 – s.20B(1) required there to be a valid demand;
(c) nor was it notification for the purposes of s.20B(2); that required there to be written notification that costs in the sum of “£x” had actually been incurred by the landlord. It did not matter that “£x” was higher than the sum eventually recovered. There was no requirement that the personal liability of the leaseholder be specified. The February demand did not comply with these requirements as it did not state that works had been carried out nor that costs have been incurred.
Quite a useful (if slightly painful to read) judgment. We now know that demands for the purposes of s.20B(1), LTA 1985 must be contractually valid demands (query whether they also have to be accompanied by the prescribed details in e.g. ss.47 and 48, LTA 1987 and s.21B, LTA 1985) and, more importantly, that a notification under s.20B(2) must state a figure for costs that have been incurred by the landlord and must say that the tenant is required under the terms of his lease to contribute by payment of a service charge. There is no requirement to tell the tenant how much his contribution will be.