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Service charges: Importance of freeholder's compliance with terms of lease to recover from lessee

The decision of the Upper Tribunal (Lands Chamber) in Akorita v Marina Heights (St. Leonards) Limited [2011] UKUT 255 (LC) emphasises the need for freeholders to comply fully with the provisions of a lease in order to ensure recovery of service charges from their leaseholders.

The Respondent (M) was the freeholder of a residential block of flats. The Appellant (A) held a long lease of one of the flats. A applied to the LVT under s. 27A of the Landlord and Tenant Act 1985 to determine the recoverability of service charges for the years 2002-2008.

The lease stated that the service charge was to be "...due and payable on demand and the amount of the Service Charge to be ascertained and certified by the Lessor's Surveyor acting as an expert and not as an arbitrator once a year..."

A argued that obtaining a surveyor's certificate was a condition precedent to her liability to pay the service charge and that, since there was no evidence that such a certificate had been obtained, she was not liable to make payment.

The LVT proceeded on the basis that a surveyor's certificate was a condition precedent to liability but held that an accountant's certificate in relation to M's accounts was sufficient evidence of compliance, since the service charge element of the accounts would have been prepared and certified by M's surveyor. A appealed to the Upper Tribunal (HHJ Huskinson) who heard the appeal by way of re-hearing.

The Judge held that on the proper construction of the lease a surveyor's certificate was a condition precedent to any liability on A's part to make payment of the service charge. He rejected the LVT's conclusion that the accountant's certificate was evidence that a surveyor had certified the service charges and concluded that nothing was payable as the condition precedent had not been fulfilled. He left open the question of whether M would now be entitled to obtain surveyor's certificates for the relevant years and to make fresh demands and whether s. 20B(2) would apply so as to allow M to avoid the bar to such a course of action that would otherwise arise under s. 20B(1).

Winston Jacob / 1st Oct 2011


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