Quadron Investments Limited v Patrick Philpotts & Anor [2026] UKUT 229 (LC)

[2026] UKUT 229 (LC)Case No LC-2026-000047
IN THE UPPER TRIBUNAL (LANDS CHAMBER)
AN APPEAL AGAINST A DECISION OF THE FIRST-TIER PROPERTY CHAMBER
Case Ref: LON/00BG/LSC/2024/0228; LON/00BG/LSC/2023/0435
Venue Royal Courts of Justice, Strand, London, WC2A 2LL
Between
QUADRON INVESTMENTS LIMITEDAppellantPATRICK PHILPOTTSRespondentROY RENWICKRespondent
18 June 2026
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – service charges – ad hoc demand - validity
Flats 4 & 5, 94 Bromley High Street, Bow,London E3 3EGHis Honour Judge Neil CadwalladerDetermination on written representations© CROWN COPYRIGHT 2026The following cases were referred to in this decision:Arnold v Britton[2015] UKSC 36Daiches v Bluelake Investments (1985) 17 H.L.R. 543Southwark LBC v Woelke[2013] UKUT 349 (LC)Date 2026-06-18

Introduction

[1]The respondents were leaseholders of Flats 4 & 5 respectively at 94 Bromley High Street, Bow, London E3 3EG. They had let out their properties. They held their properties under 125-year leases dating from 1991. Their immediate landlord was the appellant. The appellant’s agent was Salter Rex.[2]The respondents brought challenges under s. 27A Landlord and Tenant Act 1985 as to whether certain service charges of which the appellant had demanded payment were payable. By its decision dated 6 November 2025 the First-tier Tribunal (“the FTT”) determined that the following (“the Interim Charges”) were not payable.(1) £4568.14 for internal repairs and decorations, demanded on 10 November 2020(2) £8810.10 for major works, demanded on 3 March 2022(3) £7201.64 for external emergency works, demanded on 26 November 2024. It did so on the basis that those sums had not been demanded in accordance with the terms of the leases in question.[3]On 12 November 2025 the FTT gave permission to appeal on the ground that there was a realistic prospect of success as to whether those sums were not payable for that reason.

The covenant

[4]The leases contain the following identical covenant at clause 4(b):
“[to] contribute and pay a sixth proportionate part of the costs expenses outgoings and matters mentioned in the Fourth Schedule hereto such contribution being paid by half yearly instalments on the Twenty-fifth December and Twenty-fourth June.”
The Fourth Schedule listed a series of costs, expenses, outgoings and other matters in respect of which the lessee was to contribute.

The FTT’s reasons

[5]The reasons for the FTT’s decision on this point were given in the following terms. “20. In this case the Applicants made regular service charge constributions [sic] in accordance with the lease. They were also asked to pay additional sums for the major works when there does not appear to be a provision allowing collection outside the mechanism stated above. If this is right the additional major works sums are not payable under the lease if they were charged outside of the two dates mentioned above.21. This was raised briefly at the hearing. We invited further submissions on the point. The Respondents said that clause 4(b) related solely to the payment and demands could be made at any time as long as they were paid on the dates in 4(b). The Applicants who instructed solicitors to make submissions for this purpose said that the major works sums were not payablke [sic] as they were not demanded in accordance with Clause 4(b).22. It is common ground that the demands were not made on either date in clause 4(b). It is also clear that the major works sums were not demanded by reference to the two payment dates. They were in effect immediate demands for payment. Leaseholders are entitled to some clarity in the interpretation of the lease by their landlord. Here it is suggested that the lease was being operated but in a flexible manner where the payment dates remained the same. This is post event rationalisation. The Respondents behaved as if they were entitled to the sums immediately without any reference to the operative dates. We consider therefore that the sums demanded from the two applicants for the major works [i.e. the Interim Charges]… are not payable.” major works when there does not appear to be a provision allowing collection outside the mechanism stated above. If this is right the additional major works sums are not payable under the lease if they were charged outside of the two

Discussion

[6]The question what is required for the making of a valid service charge demand is essentially one of the true construction of the lease. Applying the principles in Arnold v Britton [2015] UKSC 36, the natural meaning of clause 4(b) is that contributions become payable by half-yearly instalments.[7]The appellant submits that charges may be demanded at any time, and that Clause 4(b) of the leases only fixes when they must be paid. It is true (and the respondents accept) that charges under that Clause 4(b) may be demanded at any time. The demands did not need to be made on 24 June or 25 December or at any other particular time. But Clause 4(b) governs how and when service charge payments fall due. The critical question is not whether the landlord could demand sums at any time, but whether those sums were ever rendered payable in accordance with the mechanism prescribed by clause 4(b).[8]In Southwark LBC v Woelke [2013] UKUT 349 (LC) this Tribunal stated at para.40:
“Where a contract lays down a process giving one party the right to trigger a liability of the other party, such as the payment of a sum of money in response to a demand, it is a question of construction of the contract whether the steps in the process are essential to the creation of the liability, or whether the process may unilaterally be varied or departed from without invalidating the demand. Where issues such as those in this appeal arise, it is necessary to identify the minimum requirements laid down by the lease before the obligation to pay the service charge will be created, and then to consider whether the circumstances of the case satisfy those minimum requirements. In considering each of those matters it is not appropriate to adopt a technical or legalistic approach. The service charge provisions of leases are practical arrangements which should be interpreted and applied in a businesslike way. On the other hand, precisely because the payment of service charges is a matter of routine, a businesslike approach to construction is unlikely to permit very much deviation from the relatively simple and readily understandable structure of annual accounting, regular payments on account and final balancing calculations with which residential leaseholders are very familiar. When entering into long residential leases the parties must be taken to intend that the service charge will be operated in accordance with the terms they have agreed. Leaseholders should be able to work out for themselves whether a sum is due to be paid by reading the lease and comparing the process it describes with the information provided in support of the demand by the landlord, without the involvement of lawyers or other advisers.”
[9]In para. 62 it stated:
“…where the appellant adopts such an ad hoc approach without prior agreement it runs the risk, illustrated by this case, that an individual leaseholder may use the failure to conform with the minimum contractual requirements as a defence to liability.”
A failure to conform with the minimum contractual requirements will be a defence to liability.[10]Nothing in the leases make express provision for ad hoc or interim service charges. The court will not readily imply a term for ad hoc or interim service charges: Daiches v Bluelake Investments (1985) 17 H.L.R. 543 at 548-549 at per Harman J; and see Service Charges and Management 5th ed., 2-34. There is no basis upon which to do so in the present case.[11]In this case the demands in question were for a sixth proportionate part of costs expenses outgoings and matters mentioned in the Fourth Schedule, but the appellant treated them as immediate liabilities (and recorded and pursued them as such) rather than as contributions payable under Clause 4(b) by half yearly instalments on the contractually due dates.[12]The sums claimed were never incorporated into the half-yearly service charge machinery. They were treated as a separate liability from that under Clause 4(b). In other words, the demands were not for sums due under Clause 4(b).[13]In the case of the demand made on 3 March 2022, demand was made before the expenditure had been incurred. The lease does not provide for that.[14]The appellant submits that the tenants could have worked out what sum was due and by when by using simple arithmetic and reading the terms of the lease. That submission does not assist the appellant because the demands were not for sums due under Clause 4(b). It overlooks that the contractual machinery requires the landlord to render the sums payable in the prescribed manner. It is not the function of the tenant to reconstruct the demand.[15]The Tribunal accepts that clause 4(b) is concerned with timing of payment. However, a demand which is inconsistent with that timing, and is made as if the sum demanded were immediately payable in full, cannot give rise to liability under that clause.[16]The suggestion that because rent is payable without demand, service charge demands need not meet the requirements of the lease is mistaken. The law as to the need for rent to be demanded has a long and technical history and is not of general application. The provisions in the leases for the payment of rent are entirely separate and different from the provisions relating to service charges. The one does not assist in understanding the other.[17]Since the appellant failed to conform with the minimum contractual requirements, and the sums demanded were not due and payable under Clause 4(b) of the leases, the demands did not give rise to any liability. That is not to say that effective demands could not have been made subsequently – but they were not.

Conclusion

[18]For these reasons, the FTT was entitled to conclude that the interim charges were not rendered payable under the leases. The appeal must therefore be dismissed. His Honour Judge Neil Cadwallader 18 June 2026 Right of appeal Any party has a right of appeal to the Court of Appeal on any point of law arising from this decision. The right of appeal may be exercised only with permission. An application for permission to appeal to the Court of Appeal must be sent or delivered to the Tribunal so that it is received within 1 month after the date on which this decision is sent to the parties (unless an application for costs is made within 14 days of the decision being sent to the parties, in which case an application for permission to appeal must be made within 1 month of the date on which the Tribunal’s decision on costs is sent to the parties). An application for permission to appeal must identify the decision of the Tribunal to which it relates, identify the alleged error or errors of law in the decision, and state the result the party making the application is seeking. If the Tribunal refuses permission to appeal a further application may then be made to the Court of Appeal for permission.