This section of our Case Law Library looks at cases related to:
- Understanding the meaning of the provisions of a Lease
- The circumstances under which Courts and Tribunals should interpret Leases as though they contained alternative wording
Interpreting Service Charge provisions:
Decision by the Court of Appeal that there is no rule in Law which presumes that a Landlord will recover all their expenditure in connection with fulfilling their obligations under a Lease.
The Court decided that a Lease only allows a recovery of a cost if the wording of that Lease clearly provides authority for a Landlord to make a demand for payment of that cost.
In this case the Upper Tribunal decided that a Leaseholder was not liable for a Service Charge for insurance because the insurance policy was not in the joint names of the Leaseholder and Landlord as required by Lease.
In this case the Court of Appeal decided that a sweeper clause could not be relied upon as authority to make a charge for a particular type of repair because elsewhere in the Lease there were a number of other clauses which referred (in detail) to the types of repairs for which the Landlord could charge.
Definition of the Common Parts (the areas to which the Service Charge relates):
This case involved a Leaseholder with their own separate entrance to their flat who was required to pay for the decoration of internal common parts to which they had no access. This case is very well known and has wider implications around the issues of how to interpret a lease, as well as the more specific issue how the wording of a lease is the most important factor in deciding what a Leaseholder is, and is not, required to pay for through their Service Charge.
Decision by the Upper Tribunal that in certain circumstances, the common parts for which a service charge is payable may be larger than the areas specifically referred to in a lease as comprising the lessor’s estate.
This Court of Appeal case involved the issue of whether a Residents’ Association was entitled to claim cost of managing the property, even though the Leases in question did not give the Resident’s Association the authority to make such a charge. Because the responsibilities for management of the property, but not the right to receive the ground rent, had been transferred to the Residents’ Association by the freeholder after the individual leases had been granted, the Court of Appeal decided that these individual leases should be interpreted as though they gave a right to charge to the Residents’ Association. The reasoning was that this was required in order to give proper effect to the transfer of responsibilities to manage from freeholder to Residents’ Association.
The Upper Tribunal decided that the Local Authority Landlord was entitled to charge a management fee. Although the Lease did not mention a management fee it did refer to recharging the Council’s costs incurred in fulfilling it repair and maintenance obligations. The Tribunal did though make it specific that the management fee could only relate to these obligations and not other functions that the Local Authority might carry out.
In this case the Upper Tribunal decided that the Local Authority Landlord was not permitted under terms of the Lease to charge the Leaseholder a management fee in those years where no services were provided.
This case deals with the interpretation of a Lease sold under the Right to Buy Scheme. It also deals with the meaning of the term ‘structure and exterior’ if it appears within a Lease.
Decision by the Upper Tribunal to uphold the terms of a compromise agreement made between landlord and leaseholder, and to disallow the landlord from seeking recovery of service charge arrears due under the terms of the lease in so far as those sums were referred to as part of the compromise agreement.
Substitution of wording by Courts and Tribunals interpreting Leases:
This case was an Appeal against an earlier decision by the High Court that a Lease should be interpreted as though it contained other wording than that which was actually written. The England and Wales Court of Appeal overturned the decision of the High Court and set out very clear guidance on when a Court or Tribunal is entitled to interpret a Lease as though it contained wording other than that written in the Lease.
Decision by the Supreme Court that Courts and Tribunals must not allow considerations of fairness or commercial common sense to interfere with the understanding of the meaning of the terms of a Lease. The natural meaning of clauses within a Lease should be upheld in so far that meaning can be ascertained.
Service Charge obligations under short leases (Tenant Service Charges):
Court of Appeal decision that the landlord was responsible for maintaining steps leading up to the building and a paved area in front of those steps under section 11 of the Landlord and Tenant Act 1985. Although this case was concerned with a disrepair claim it also has implications for the types of cost which may be included in a Service Charge payable by a tenant on a short lease.