Deepesh Kapadia & Ors v The Church Commissioners for England

Where a lease requires an estimate by the landlord’s “Surveyor” but specifies no qualification or specialism, the landlord may appoint a person with relevant experience for the task, provided that person falls within the broad meaning of surveyor. A balancing charge requires certified actual costs and the estimate to relate to the same service-charge period. A period change must be clearly notified prospectively. An agreed fixed percentage is not replaced by a “fair proportion” term unless the ordinary requirements for implying a term in fact are met. Legal costs for which a leaseholder is directly liable under an indemnity, and which the lease excludes from service-charge recovery, cannot be shifted to other leaseholders merely because they remain unrecovered.

Five leaseholders of flats on the Water Gardens Estate, owned by the Church Commissioners, applied to the First-tier Tribunal (Property Chamber) for a determination under section 27A of the Landlord and Tenant Act 1985 of their liability for service charges for the year ending 25 March 2021. Two leases were Type 1 and three were Type 2. The FTT’s decision of 7 July 2025 reduced three charges and confirmed most of the others.

The leaseholders appealed on four contested issues: whether an estimate under the Type 1 leases had to be made by a professionally qualified surveyor; whether a balancing charge could be based on accounts for a different period from the estimate; whether fixed contribution percentages should be varied by an implied term; and whether legal costs from disputes with individual leaseholders could be recovered through the service charge. A fifth issue concerning insurance commission was resolved by agreement. The central questions were how the leases allocated those costs and what conditions had to be satisfied before further charges became payable.

1. Surveyor. The Type 1 leases did not require a Chartered Surveyor or a person with a particular formal qualification. The landlord’s choice was limited to a surveyor in the broad sense, but suitability depended on the task assigned. William Bell’s experience and professional setting made him appropriate to estimate annual expenditure. The authorities, including Jacey Property Co Ltd v De Sousa [2003] EWCA Civ 510, established that a landlord could not substitute someone outside the contractual category, but did not determine the qualifications required by these leases. The Tribunal also observed that different people, or more than one person, could fulfil different Surveyor functions. Its further suggestion that Knight Frank might itself constitute the Commissioners’ surveyors was not argued and was not relied upon.

2. Service-charge period. A balancing payment depended on certified actual costs for the same period as the Surveyor’s estimate. If actual costs for that period did not exceed the estimate, no balancing payment was due; a credit could instead arise. A change to the Service Charge Period Date had to be clearly notified and made prospectively, no later than the estimate for the forthcoming period. Accounts drawn up to a different date did not change the period retrospectively. No balancing charge was yet due for 2020–21, although the leaseholders were not relieved of liability for the year: liability could arise once accounts for the correct period were prepared.

3. Implied term. The proposed fair-proportion term was a term to be implied into particular contracts, not a term imposed by law on the landlord-and-tenant relationship. The Tribunal applied the criteria in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 52 ALJR 20; [1977] UKPC 13, as restated in Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd [2015] UKSC 72. The evidence did not establish the assumptions or basis behind the varying fixed percentages, and the proposed trigger for changing them was uncertain and changed during argument. The leases’ limited reapportionment power and the mechanism in Part IV of the Landlord and Tenant Act 1987 also weighed against implying the suggested term. H Waites Ltd v Hambledon Court Ltd [2014] EWHC 651 (Ch) and Vectis Property Co Ltd v Cambrai Court Management Co Ltd [2022] UKUT 42 (LC) were examples applying the ordinary criteria, not rules of general application. No term was implied.

4. Legal costs and disposal. Under the leases, a leaseholder’s indemnity liability arose when the Commissioners incurred an expense arising from that leaseholder’s act or breach. Costs for which a tenant was directly liable were excluded from recovery through the service charge, regardless of whether a court had determined liability or the Commissioners had recovered the costs. The more general provisions could not override that specific exclusion. The disputed £45,747.32 was therefore not payable through the service charge. The FTT’s contrary insurance-commission determination was set aside by agreement. The appeal was allowed on issues 2 and 4 and dismissed on issues 1 and 3; costs-protection applications were left for later determination.

1. Upper Tribunal (Lands Chamber) — Appeal allowed in part on issues 2 and 4 and dismissed on issues 1 and 3; the insurance-commission determination was set aside by agreement: [2026] UKUT 220 (LC) .
2. First-tier Tribunal (Property Chamber) — By decision dated 7 July 2025, determined liability under 59 service-charge headings, reducing three charges and otherwise confirming the disputed sums as reasonable and payable. Reference: LON/00BK/LSC/2023/0354.