Cases - St Mary's Mansions Ltd v Limegate Investments Co Ltd
Record details
- Name
- St Mary's Mansions Ltd v Limegate Investments Co Ltd
- Date
- [2002]
- Citation
- EWCA Civ 1492
- Legislation
- Keywords
- Landlord and tenant – service charge – service charge included ‘a sum or sums by way of reasonable provision for anticipated expenditure’ - reserve fund – whether funds paid into a reserve fund were repayable to the lessors
- Summary
-
Leases of a block of flats provided for the service charge to include, inter alia, 'a sum or sums by way of reasonable provision for anticipated expenditure in respect ... as the lessor or its accountants or managing agents (as the case may be) may in their discretion allocate to the year in question as being fair and reasonable in the circumstances'.
In addition to sums relating to specific major projects, surplus payments into the service charge account were also transferred to the reserve fund. The reserve fund held a figure approaching £1m.
It was held that, while the leases entitled the landlord to establish and maintain a reserve fund, the landlord was entitled to apply to the reserve fund only such reasonable expenses, outgoings and other expenditure that were of a periodically recurring nature, including the provision for anticipated expenditure provided that:
- allocation to the year in question was fair and reasonable, and
- sufficient description of the future project and the amount set aside for it was provided.
Any sums held in the reserve fund for periodically recurring expenditure, properly allocated and certified would not to be repayable to the occupational lessees but any surplus in the service charge account was to be repaid or credited to the individual lessees at the end of each year and should not be transferred to the reserve fund.