Mark Skelton v Dbs Homes (Kings Hill) Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Richards |
| Judgment Date | 27 July 2017 |
| Neutral Citation | [2017] EWCA Civ 1139 |
| Docket Number | Case No: C3/2015/3161 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 July 2017 |
[2017] EWCA Civ 1139
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
UPPER TRIBUNAL (LANDS CHAMBER)
HIS HONOUR JUDGE HUSKINSON
[2015] UKUT 379 (LC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
and
Lord Justice David Richards
Case No: C3/2015/3161
Ms Amanda Gourlay (instructed on a public access basis) for the appellant
The respondent was not represented and did not appear.
Hearing dates: 13 July 2017
Approved Judgment
This appeal is brought by Mr Mark Skelton from the order of the Upper Tribunal (Lands Chamber) (HHJ Huskinson) dated 6 July 2015. Mr Skelton holds a long lease ("the lease") at Flat 4, Burton Pynsent House, West Common Road, Hayes, Kent BR2 7BY. The lease is dated 4 February 2011 and is for a term of 125 years from 29 September 2008. Mr Skelton contends that the Upper Tribunal erred in holding him liable to pay service charges in the events described below and that by virtue of section 20B of the Landlord and Tenant Act 1985 ("the 1985 Act") (sometimes called "the 18 months' rule") he has no such liability. Mr Skelton is represented by Ms Amanda Gourlay. The respondent is now in liquidation and does not appear. Accordingly, Ms Gourlay has had to draw to our attention any relevant legislation or authority which supports the respondent's case and is or may be inconsistent with her submissions.
The lease
Clause 5 of the lease requires the lessee to pay ground rent and service charges. Clause 6 sets out the landlord's covenants with the lessee, including covenants to insure and provide services. Schedule 6 contains provisions relating to the service charge. Critically, the machinery for payment involves service of a demand and an "estimate". Schedule 6, paragraph 2 defines "estimate" as an estimate prepared under the provisions of paragraph 3.1 of this schedule.
Under Schedule 6, paragraph 3, the lessee's liability to pay does not arise until the landlord has fulfilled the obligations described in that paragraph to prepare estimates containing a summary of the estimated costs and to serve them on the tenant, together with a statement showing the service charge payable by the tenant on account of those service costs. The exact terms of paragraph 3 are as follows:-
3.1 On or before (or, if that shall be impractical, then as soon as practicable after) each Accounting Date the Landlord shall prepare an Estimate in writing of the Service Costs which it expects to incur or charge during or in respect of the Accounting Period commencing immediately after that Accounting Date.
3.2 The Estimate shall contain a summary of those estimated Service Costs.
3.3 Within 14 days after preparation, a copy of each Estimate shall be served by the Landlord on the Tenant together with a statement showing the Service Charge payable by the Tenant on account of those estimated Service Costs.
Schedule 6, paragraph 4.1 provides:
The Service Charge for each Accounting Period (together with VAT, if payable) shall be paid by the Tenant by two equal instalments on the Payment Days during that Accounting Period.
Schedule 6, paragraph 4.2 allows the landlord to raise the demand for a "Supplemental Charge" if in the course of a service charge year the on account provisions are insufficient to discharge all of the landlord's service provisions liabilities.
Schedule 6, paragraph 5, provides that the landlord must reconcile the accounts as soon as practicable after the end of the service charge year and prepare a certificate and serve that certificate on the lessee.
Schedule 6 contains no provision enabling the landlord to recover balancing charges if the cost he incurs in any year exceeds the amount of the estimated costs for that year.
Background
On 30 March 2011, the landlord served a service charge notice for the first of two equal on-account payments in respect of the 2011–2012 service charge. No estimate was enclosed. The demand for the on-account payments for the 2012–2013 year was dated 1 April 2012. The demand for the on-account payment for the 2013–2014 year was dated 1 April 2013. None of these demands were served with an estimate. The estimate for all of the relevant years was finally provided in April 2014. No balancing charge was raised for any of the three years. Nor did Mr Skelton make any application to the First-tier Tribunal ("the FTT") for an account.
Mr Skelton applied to the FTT under section 27A of the 1985 Act for a determination of his liability to pay service charges for 2010–2011 and the three succeeding years. The FTT rejected Mr Skelton's argument that he was not liable to pay any service charges for those years on the ground that the landlord had not complied with the terms of the lease and his liability to pay was not therefore engaged. The Upper Tribunal also rejected Mr Skelton's argument on further appeal to it.
Application of sections 18 to 27 of the 1985 Act
The relevant provisions of the 1985 Act, which concern service charges, apply to most residential premises held on a long tenancy, and the lease falls within its provisions.
A "service charge" includes an amount which the tenant agrees to pay in addition to rent for costs incurred, or to be incurred, by the landlord (see section 18 of the 1985 Act).
Section 20B of the 1985 Act ("the 18 months' rule")
This section provides:
20B Limitation of service charges: time limit on making demands
(1) If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for...
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...February 2006 was not a valid demand for service charge under clause 2(6) of the leases.” 28 In Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139, [2018] 1 WLR 362, (“ Skelton”) this court (Arden and David Richards LJJ) approved and applied the principle which had been stated by M......
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Did You See? You May Have Missed' No. 1 West India Quay (Residential) Ltd V East Tower Apartments Ltd [2021] EWCA Civ 1119
...B Association Ltd [2011] EWHC 1663 (Ch); [2011] 1 WLR 3014 and its own previous decision in Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139; [2018] 1 W.L.R. The Court also rejected the Landlord's various arguments in respect of recovery of its legal costs of the proceedings from t......
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Did You See? You May Have Missed' No. 1 West India Quay (Residential) Ltd V East Tower Apartments Ltd [2021] EWCA Civ 1119
...B Association Ltd [2011] EWHC 1663 (Ch); [2011] 1 WLR 3014 and its own previous decision in Skelton v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139; [2018] 1 W.L.R. The Court also rejected the Landlord's various arguments in respect of recovery of its legal costs of the proceedings from t......