H Stain v Richmond

H Stain v Richmond

Key Contact: Jennifer Butcher

Author: Hugo Hiley

Summary

The case concerns a demand for service charge on behalf of the appellant landlord. It was held by Martin Rodger QC in the Upper Tribunal (Lands Chamber) (“UT”) that the service charge demand issued to the residential leaseholder was invalid on the grounds that insufficient notice was given and therefore that the tenant was not liable for the sums demanded.

Background

The relevant clause in the lease (clause 3(6)) was as follows:

“The Tenant shall pay to the Landlord upon demand a rateable or due proportion … of such sums as may be incurred or provided for by the landlord in accordance with the covenants on that behalf hereinafter contained for the maintenance and repair for those parts of the building and the block not forming part of this demise but of which the Tenant has the benefit and use thereof in common with the Landlord and other owners or occupiers thereof and any other parts of the building and block used in connection with or supporting and protecting the flat including if so required a contribution in advance and/or to a sinking fund on account of expense and payment anticipated Provided that if the tenant so requires the amount of any such contribution is certified as being fair and reasonable by the Landlord’s chartered accountant and that not less than one month’s notice of such advance payment or contribution is given to the Tenant.”

The landlord’s managing agent served on the tenant a demand for £2,255.77, stating that it was ‘due 30 days after date of demand, arrears by return’. The parties were in dispute over the maintenance of the building and the tenant did not pay the sum demanded by the invoice.

Landlord’s Case

Counsel for the landlord tried to rely on the judgment in Mannai Investments Co Ltd v Eagle Star Assurance [1997] UKHL 19, so as to say that a reasonable recipient of the invoice would understand that clause 3(6) entitled them to a full month’s time to pay, despite the invoice specifying 30 days.

Counsel for the landlord also submitted that the clause did not require the demand for payment to specify when payment was due, stating that “the tenant can work that out for herself when reading the lease”. Counsel also argued that if clause 3(6) required the landlord to give the tenant one month’s notice to pay, the consequence of its failure to do so was not that the demand was invalid but that the tenant would not be liable to pay until one month after the demand rather than on the date specified.

Judgment

Martin Rodger QC held:

“On its best case, allowing for the time taken for postal delivery, the landlord only gave 29 days’ notice of its demand; but it may have been less. Accordingly, the essential pre-requisite for demanding these estimated service charges was not met and that failure cannot be saved by the application of the Mannai ‘reasonable recipient’ test.”

It was concluded that giving notice is a condition of liability and it requires a particular step to be taken by the landlord to inform the tenant not only of the amount which must be paid, but the date on which it must be paid. As less than one month’s notice had been given, the UT held that the demand was invalid.

Conclusion

This UT decision may come as a surprise to landlords who may not have previously given due consideration to or been overly concerned by the notice periods stipulated by leases when issuing service charge demands. The court’s lack of mercy for the landlord in H Stain v Richmond demonstrates the purpose and importance of notice periods in leases and serves as a stark warning sign for landlords to pay attention to the detail in a lease and to avoid cutting corners.

A requirement to give one month’s notice means one calendar month. 30 days’ notice may be adequate in some months but not in all.

For more information relating to this case and how we can assist you in relation to any of the topics discussed in this article, please get in touch with our Litigation team.

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