Kamlesh Parmar v 127 Ladbroke Grove Limited

A demand for a service charge under section 20B(1) of the Landlord and Tenant Act 1985 must be contractually valid. Where a lease makes certification and a subsequent account conditions of final liability, an invalid certificate cannot support a valid demand.

The section 20B(2) exception requires written notification within 18 months that relevant costs have been incurred and that the tenant will later be required to contribute. A tribunal must identify and assess the document or documents relied on; it cannot infer compliant notification without evidence.

Section 20B limits recovery of otherwise payable charges. It does not alter the contractual balancing calculation or itself entitle a tenant to repayment of reasonable interim charges already paid.

The appellant leaseholder applied under section 27A of the Landlord and Tenant Act 1985 for determination of service charges for 2014 to 2018. His lease required the final annual charge to be certified by the lessor’s auditors and followed by an account crediting interim payments.

The First-tier Tribunal decided that the disputed expenditure was reasonable and conditionally payable once proper certification occurred. It rejected the appellant’s reliance on section 20B, despite identifying no compliant written notification under subsection (2). The appellant also sought repayment of interim charges for 2014 to 2016, which had been determined by a county court judgment.

The central issues were whether section 20B(2) notification had been established, and whether the statutory time limit entitled the appellant to reimbursement of interim payments.

1. Appeal allowed in part. The Tribunal set aside the First-tier Tribunal’s finding that notification satisfying section 20B(2) had been given. It determined that no further service charges were payable for 2014 to 2018, apart from the interim charges for 2014 to 2016 determined by the county court.

2. Under the lease, certification by the lessor’s auditors was critical to ascertain the annual service charge. The June 2019 document was not signed by an auditor and did not state the appellant’s charge or its calculation. It was therefore not a valid certificate. No account under clause 3(2)(h) had been furnished, so no final liability, balancing charge, credit or repayment obligation had been triggered.

3. Following Brent London Borough Council v Shulem B Association Ltd [2011] EWHC 1663 (Ch), as approved by the Court of Appeal in No. 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2021] EWCA Civ 1119, a demand for section 20B(1) purposes presupposes a valid contractual demand. Since there was no valid certification, section 20B(1) had not been satisfied.

4. The section 20B(2) exception required written notice, within 18 months, both that costs had been incurred and that the appellant would subsequently be required to contribute. The First-tier Tribunal identified no compliant document and could not assume that an unspecified document, or combination of documents, supplied the required information. Any future demand after valid certification would require the respondent to establish reliance on subsection (2).

5. Section 20B restricts recovery of charges otherwise due; it does not treat incurred costs as unincurred or rewrite the contractual accounting mechanism. It did not require repayment of the reasonable interim charges. In any event, the county court judgment and section 27A(4)(b) prevented the First-tier Tribunal from reconsidering those interim charges.

• Upper Tribunal (Lands Chamber): Allowed the appeal in part and set aside the First-tier Tribunal’s finding that section 20B(2) notification had been established.
• First-tier Tribunal (Property Chamber): Decision dated 27 September 2021. It held the disputed charges reasonable and conditionally payable upon proper certification, and rejected the section 20B argument.