Cases - Frobisher (Second Investments) Ltd v Kiloran Trust Co Ltd
Record details
- Name
- Frobisher (Second Investments) Ltd v Kiloran Trust Co Ltd
- Date
- [1980]; [1980]; [1979]
- Citation
- 1 WLR 425; 1 AII ER 488; 253 EG 1231, ChD
- Legislation
- Keywords
- Commercial property - landlord and tenant – lease provided for payment of interim sums – validity - finance charges – implied terms – whether the lease was valid – whether the landlord was entitled to the administration charges incurred by borrowing money to manage and maintain the property – whether a term could be implied into the lease that the tenant was to pay interest – the Housing Finance Act 1972, section 91A(1)(b)
- Summary
-
A lease provided for payment in advance of interim sums on account of service charges that were paid into a separate bank account maintained by the landlord's managing agents.
It was held that the interim sums were a service charge to which section 91A(1)(b) of the Housing Finance Act 1972 applied. This provides that a service charge is only recoverable from a tenant once the landlord has defrayed the cost, or at least incurred liability for the cost, of the chargeable item. It therefore followed that the landlord was not entitled to require the interim payments to be made in advance on account of estimated or proposed expenditure.
Deprived of the ability to collect payment in advance, the landlord sought to recover the cost of borrowing money to meet its obligations under the lease.
It was held that the fees payable to the landlord's managing agents were paid for carrying out the general management and administration of the property, which, on the true construction of the leases, could not include interest paid on money borrowed. Nor could a term be implied in the lease as a matter of necessary implication that, in the event of supervening legislation rendering the payment of the service charge in advance unlawful, the tenant was to pay interest. The doctrine of implying a term to give efficacy to an agreement did not apply where there had been a disturbance to the contractual arrangement resulting from statute: then it must be left to the statute to say what is to happen consequentially on its intervention, and one cannot foist on the parties what some outside body thinks would have been what they would have agreed to in circumstances which neither of them can possibly have contemplated under any circumstances.