“20. In the current case I do not think that it is necessary or desirable to try and determine whether costs are incurred when an invoice or certificate is served or when payment is made. (I am not necessarily equating an invoice and a certificate; different considerations may well apply to them.) I do not get much help from dictionary definitions of ‘incurred’. It is of greater assistance to recall that the statute declares that it is ‘costs’ that are ‘incurred’ which are relevant. In the present case it is sufficient to say that the costs were not incurred when the gas was used. I appreciate that the liability to pay somebody something may have been incurred at that point, but the use of the word ‘costs’ is significant. As the President pointed out, it is the cost that must be incurred. A liability does not become a cost until it is made concrete, either by being met or paid or possibly by being set down in an invoice or certificate under a building contract. 21. I do not see that there is any tension between the decisions of the President in Hyams v Wilfred and Jean-Paul v LBSouthwark. Each was decided on its own facts. In neither case was it necessary to distinguish between the issue of a certificate or invoice under a works contract and payment of it, nor was it suggested there was any gap between demand and payment that was of significance. The crucial and helpful point was the drawing by the President of the distinction between incurring a liability and incurring a cost. I am happy to adopt the formulation of HHJ Baker QC in Capital & Counties Trust that costs will be incurred when they are ‘expended ‘ or ‘become payable.’ The submissions recorded in LB Brent v Shulem, which seem to have earned at least the tacit approval of Morgan J, are consistent with that. 22. I have not been shown any authority that suggests that the ‘cost’ is incurred when the ‘liability’ is incurred. A cost and a liability are separate things and Parliament chose to use the word ‘cost’ in section 20B. If the intention of Parliament is clear from the words it used, considerations of the policy Parliament may have had in mind must take a back seat. But in any event the judge's comments in Gilje were not made about a situation where the landlord (or management company) could not warn the tenant to set aside provision because the landlord did not appreciate that the costs were likely to be incurred. The landlord can only give “sufficient warning” or “adequate prior notice” of something of which he is aware. I cannot read Etherton J's words as giving any support for the proposition that the 18 months limit is an absolute cut-off point that operates regardless of any fault on the landlord's behalf. 23. In my judgement the true answer is that as a matter of the interpretation of section 20B ‘costs’ are ‘incurred’ on the presentation of an invoice or on payment; but whether a particular cost is incurred on the presentation of an invoice or on payment may depend upon the facts of the particular case. It is possible to foresee that where, for example, payment on an invoice has been long delayed, the decision as to when the cost was actually occurred might be different depending on the circumstances; it might be relevant to decide whether the payment was delayed because there was a justified dispute over the amount of the invoice or whether the delay was a mere evasion or device of some sort. In the former case the tribunal of fact might find that the costs were not incurred until a genuine dispute was settled and the bill paid. In the latter case the tribunal might be very reluctant to allow deliberate prevarication to postpone the running of the time limit imposed by section 20B. That is the sort of factual matter that the LVT is well placed to decide. 24. In this case, however, such a point did not arise. The LVT erred in law. The cost of the gas was not ‘incurred’ at least until Total presented the bill in November 2007. It was included in the service charge demanded in April 2008, well within the time limit set by section 20B. The appeal is allowed. ”
“27. Finally, I agree with Ms Eilledge that, so far as discernible, the policy behind section 20B of the Act is that the tenant should not be faced with a bill for expenditure, of which he or she was not sufficiently warned to set aside provision. It is not directed at preventing the lessor from recovering any expenditure on matters, and to the extent, of which there was adequate prior notice. This does not leave the tenant without a remedy for the failure of the lessor to prepare a final account. In the event of wrongful delay by the lessor, the tenant can apply to the court for the taking of an account and, if the lessor's delay is culpable, the lessor will have to pay the costs.”