RTMs, Service Charges and Estate Management February 2015 Update

Gater v Wellington Real Estate Ltd [2014] UKUT 561 (LC)

Summary: A clause in a head lease which provided that the apportionment of expenditure was to be determined by the Landlord or its surveyor was rendered void by s.27A(6) of the 1985 Act.  Accordingly, the residential tenants were entitled to make an application challenging the apportionment under the head lease, notwithstanding the fact that they were not parties to the head lease. 

Facts: Telegraph House is the former home of the Sheffield Telegraph and Star newspaper which now houses shops, offices and flats on basement, ground and four upper floors.  The shops on the ground floor were let to three commercial tenants, while the first and second floors were let to a firm of solicitors.  The basement has not been let but the freeholder (“Wellington”) has permitted the solicitor tenants of the first and second floors to use it for the storage of documents.  In 2004 a lease of the third and fourth floors (“the head lease”) was granted to a developer.  The permitted use of the demised premises was as eight residential private dwellings each for the occupation of one family only.   

The contribution payable by the tenant under the head lease is “… a due and fair proportion of the Service Cost (such proportion to be determined by the Landlord or its surveyor (in each case acting reasonably) and taking into account the relevant floor areas within the Building or other reasonable factors in making the determination.”