Tingdene Holiday Parks Ltd v Cox [2011] UKUT 310

s.21B of the 1985 Act provides for notices to accompany demands for service charges:

(1) A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges.

(2) The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.

(3) A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand.

…

The Secretary of State duly made regulations: they are the imaginatively entitled the “Service Charges (Summary of Rights and Obligations, and Transitional Provisions) (England) Regulations 2007” (SI 2007/1257). Article 3 of the Regulations contains the text which must accompany service charge demands. It runs to some twelve paragraphs.

On 04 April 2008, the landlord, Tingdene Holiday Properties Ltd, sent to its tenant, Mr Cox, a statement of the estimated service charge for the year ending 31 December 2008 and a demand for payment of the first quarter’s charge. It was not accompanied by the summary of tenants’ rights and obligations.

Mr Cox pointed this out to his landlord, and on 15 April 2008, the landlord sent him a copy of the summary. Like the service charge demand, the summary travelled alone: the landlord did not re-serve the service charge demand with it.

On 01 July 2008, the landlord served a demand for payment of the third quarter’s service charge. Accompanying that demand was a full print out of the Queen’s Printer’s form of the Regulations.

Mr Cox’s case was that neither demand was valid. He withheld payment.

On its third attempt in November 2009, the landlord finally corrected its errors and omissions and served demands accompanied by the correct paperwork. By then however, it had already begun forfeiture proceedings in the county court founded on non-payment of the first two service charge demands.

The LVT held that the first two demands were invalid, but the third was valid.

In order to pursue its forfeiture claim, the landlord needed a finding that the first two demands were valid, and so appealed to the Lands Chamber. Unfortunately it did no better there than in the LVT. The President’s decision was clear – and against it.

On the first demand, he said “I do not see how a summary sent some 11 days after the demand to which it was intended to relate could be said to have accompanied the demand. It manifestly did not accompany it”.

On the second demand, he was equally straightforward: “What was required to be sent was a document with a specific title – “Service Charges – Summary of tenants’ rights and obligations” – and a specific text. The purpose is obvious: to ensure that the tenant, when he receives his demand, has clearly before him a statement of the rights and obligations that the Regulations set out”.

Therefore:

a)    the heading of the document is important in directing the tenant’s attention to what it contains, and

b)    since the statutory instrument itself has its own title and contains the text of regulations 1 and 2 before the requirement for the heading and the statement is set out in regulation 3, the statutory instrument clearly does not itself constitute the document that it prescribes and it does not fulfil the purpose that underlies the requirement.

This case might be said to be an archetypal example of the maxim “if at first you don’t succeed…”

When I first read the decision, I wondered why Mr Cox pointed out his landlord’s errors: service charge demands are broadly time-barred if not made within 18 months of the incurring of the costs in respect of which they are made. Surely if Mr Cox had said nothing to his landlord, he would have been able to escape liability to pay his service charges altogether?

On reflection however (and with a little prompting from my colleagues in chambers), I realised that, provided that a service charge demand covers the requirements of s.20B(2) of the 1985 Act – and one would generally expect it to do so if it is a demand for payment – time would stop running at the date of service of the demand.

On the subject of incurring costs and s.20B(2): in the last year there have been three cases grappling with the meaning of “incurring” in the context of service charges: Jean-Paul v Southwark LBC [2011] UKUT 178, OM Property Management Ltd v Burr [2012] UKUT 2 and Brent LBC v Shulem B Association Ltd [2011] EWHC 1663 (Ch). Aspects of Morgan J’s judgment in Shulem B are in my view little short of surreal.