Q&A - Service Charge & Forfeiture proceedings

QUESTION  Outstanding Service Charge, Forfeiture Proceedings, Recoverable ?

Our service charge is collected monthly through standing order but we have a lessee, who persistently does not pay this and is 18 months in arrears. He does not live in the property but rents it out to his son and tells me it is his son’s responsibility. I have written to the son but he has not paid any money either and ignores me. It is further complicated by the fact that the lessee’s company went into liquidation last year and although we have found an address it turns out that the house is owned by his son. We sued him through the small claims court in 2006, only to find when bailiffs went to the address the property had been demolished! Please advise how we should now proceed.
Name withheld

ANSWER
It sounds as if forfeiture proceedings are the way forward, based upon the arrears of ground rent. The outstanding service charges can be claimed in the same proceedings but there are a number of problems with claiming service charges. Service charges can no longer be relied on in forfeiture proceedings as a ground for forfeiture unless they are agreed or they have been determined by an Arbitral tribunal (the LVT). Service charges claimed as a debt, as opposed to giving rise to forfeiture, are subject to the usual costs rules – if they are less than £5,000 costs will not be recoverable. This rule does not affect forfeiture proceedings, where the value of the ground rent outstanding can be low without being treated as a small claim matter (one is in truth claiming the value of the property)
Given that one cannot rely on service charges anymore as a ground for forfeiture, there is no longer any reasons for mortgage companies to pay outstanding service charges, although some still do. The clause you refer to is not the relevant clause in the lease. The clause should say something like “The parties agree that all notices relating to this lease, including all notices in proceedings are validly served if addressed to the Lessee at the premises...”
Maurice Evans, Wilson Barca LLP