Westmark (Lettings) Limited v Elizabeth Peddle and others [2017] UKUT 449 (LC)

Here, the Upper Tribunal had to decide on the issue of when “relevant costs” are incurred for the purposes of Section 20(B)(1) of the Landlord and Tenant Act 1985 (“the Act”).

Section 20(B) imposes a time limit on residential service charge demands by preventing the tenant being liable for “relevant costs” which were incurred more than 18 months before a service charge demand was served on a tenant.

In this case, there was a residential block of flats which was subject to a complicated scheme of leasehold interests. In circumstances where a superior landlord incurs costs and these costs are passed down through intermediate landlords before payment by the residential tenants, the Upper Tribunal needed to adjudicate as to whether Section 20(B) imposes a single 18 month time limit from the date that the superior landlord actually incurred the costs or whether there are successive time limits for each time a demand is made to each interest down the chain.

The Upper Tribunal held that the 18 month period runs from the date that an invoice is received by each individual interest; not when the costs were actually incurred by the superior landlord.

Key points

  • In theory this decision could create uncertainty for tenants who could find themselves paying service charge incurred by their superior landlord many years earlier. However, this is arguably outweighed by the potential prejudice caused to intermediate landlords who could find themselves unable to recover charges due to delay on the part of their superior landlord to notify them of the charges.