Service Charge Demand
Landlord and Tenant
In the case of OM Property Management v Burr [2012] a management company had been paying the wrong gas provider for over 6 years between 2001 and 2007 to heat a swimming pool. The management company had been undercharged and when the correct gas provider submitted an invoice it was for £135,000 (reduced to £100,000). The management company then demanded this amount from the tenants. The tenant Mr Burr was asked to pay £313.90.
The Upper Tribunal (Lands Chamber) held that Mr Burr was liable to pay. Tenants under long leases are not liable to pay service charges if the costs were incurred more than 18 months before the demand is made. The cost of the gas had not been incurred until the bill was presented in 2007. This therefore fell well within the 18 month period.
The main issue here was the interpretation of ‘costs incurred’. A cost and a liability are separate things. A liability occurred when the gas was used. However the cost was incurred when the actual invoice was presented for payment.
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