A year ago I wrote an article for Flat Living about the case of Tedworth North Management Limited & Anor v Miller & Ors [2016] UKUT 0522 (LC), in which the First Tier Tribunal, and subsequently the Upper Tribunal on appeal, held that notwithstanding the benefits provided by double-glazing windows for all of the leaseholders in the landlord’s building, the replacement of existing window frames with new and improved windows did not constitute repair (as per the landlord’s repairing covenant in the leases) and so the costs of such work could not be charged by the landlord to all leaseholders by way of service charges.
By way of a follow-up to that article, I now consider and comment below on the case of London Borough of Southwark v Michelle Baharier [2019] UKUT 0073 (LC) (“Southwark v Baharier”), which also went to appeal before the Upper Tribunal.
Facts
Southwark v Baharier concerned the terms of Ms Baharier’s (“the Tenant”) long residential lease for 37 Gilesmead, 79 Camberwell Church Street, London E5 (“the Lease”), which was one of 40 flats and maisonettes making up a low-rise block of flats (“Gilesmead”), with the London Borough of Southwark as the Tenant’s local authority landlord (“the Landlord”).
Gilesmead had been built in 1968 and all of the flats and maisonettes were served by the original out-dated communal central heating and hot water system. Further, and with the existing the communal central heating and hot water system being no longer considered fit for purpose, the Landlord proposed replacing the same with a new replacement communal central heating and hot water system, because the installation of individual boilers in each flat and maisonette was discounted not being technically feasible.
The anticipated overall cost of the new communal central heating and hot water system was £800,000 and the Tenant’s proposed contribution to this cost was estimated to be £24,486.88, which the Landlord sought from the Tenant as an advance service charge under the terms of the Lease.
First-tier Tribunal (“F-tT”) Decision
When the case was heard by the F-tT, the Tenant did not dispute that the original communal central heating and hot water system at Gilesmead did not comply with modern standards, and in 2012 she described the same as “extremely expensive” and “completely ineffective”, with the need for her to supplement the system by using electric heaters.
However, what the Tenant did seek to argue was that the Landlord’s proposed costs for replacing the communal central heating and hot water system related to an “improvement” and not a “repair”, and therefore was not a recoverable service charge under the terms of the Lease.
Neither party was professionally represented before the F-tT, with the F-tT finding that:
The Landlord’s proposed works to replace the communal central heating and hot water system at Gilesmead were an “improvement” and not a “repair”; and
Accordingly, the costs of the same were irrecoverable by the Landlord from the Tenant under the terms of the Lease.
The Landlord appealed to the Upper Tribunal.
Appeal to the Upper Tribunal
At the appeal the Upper Tribunal held that:
The issue was not whether the proposed replacement of the communal heating and hot water system at Gilesmead was an “improvement” rather than a “repair”; and
The Lease contained a covenant which required the Landlord to provide certain services, including space heating and hot water, and to ensure that, insofar as practicable, the services were maintained to a reasonable level.
Therefore, and based on the above, the Upper Tribunal concluded that the Landlord’s costs of replacing the communal heating and hot water system at Gilesmead were costs of providing the service; consequently, the Tenant was required to pay her proposed contribution towards the costs and expenses of, or incidental to, providing the services through the replacement of the communal heating and hot water system.
Lessons to Learn
The outcome of this case turned on the requirement in the Lease for the Landlord to provide a particular service rather than just to maintain the existing communal heating and hot water system at Gilesmead. The issue of “improvement” as compared to “repair” was ultimately a red-herring.
In any event, my words of warning for landlords and tenants alike remain to always carefully consider the wording of any covenants which require the landlord to maintain, repair or provide services and/or the tenant to pay service charges.
This case is a clear example that just because one set of costs could be discounted from one covenant, they may nonetheless be recoverable under other lease provisions. Therefore, if in doubt, tenants and landlord alike should seek suitable legal advice before pursuing lengthy and costly disputes.
