Cases - London Borough of Southwark v Michelle Baharier

Record details

Name
London Borough of Southwark v Michelle Baharier
Date
[2019]
Citation
UKUT 73 (LC)
Keywords
Service charges – whether costs are recoverable as the cost of providing a service- whether irrecoverable as a cost of improvement rather than repair
Summary

The appeal concerned the tenant’s liability for a contribution towards the estimated cost of replacing an old central heating and hot water system serving the block of flats in which her flat was contained.

The appellant landlord covenanted to ’provide the services [...] set out under the definition of “services” to or for the flat and to ensure so far as practicable that they are maintained at a reasonable level and to keep in repair any installation connected with the provision of those services…’

In turn, the tenant covenanted to pay through the service charge ‘the costs and expenses of or incidental to’ the provision of those services.

The First-tier Tribunal (FTT), in agreement with the parties, expressed a preliminary view that the service charge provisions of the lease allowed the landlord to levy a service charge for ‘repairs’ to the district central heating system but not for ’improvements’ to it. The FTT found that the work carried out by the landlord amounted to improvement rather than repair of the original system, and that the terms of the tenant’s lease did not require her to contribute towards it.

The landlord appealed, arguing that:

  1. because the relevant covenant was a covenant to provide services, the distinction between repair and improvement in this context was irrelevant;
  2. the FTT’s evaluation of the differences between the original and replacement systems was flawed and;
  3. the FTT’s conclusion that nothing was payable by the tenant because the work went beyond repair was irrational.

The Upper Tribunal (Lands Chamber) (UT) determined that under the lease the landlord was obliged to provide services that included the provision of space heating and hot water. The landlord was also required to ensure, so far as practicable, that they were maintained at a reasonable level.

The UT noted that a covenant to provide services was not the same as a covenant to repair. It imposed a wider and potentially more onerous obligation. Contractually, it was for the landlord to decide how to supply heating/hot water service and it applies equally to the covenant to provide a service. The distinction between repairs and improvements was irrelevant in this case because a covenant to provide a service of heating and hot water imposed an obligation to take whatever steps were required to achieve that outcome.

In allowing the appeal, the UT found that the FTT had misdirected itself. The questions it should have asked was whether the costs of the replacement system were costs and expenses of or incidental to the costs of providing the services of heating and hot water, or of ensuring so far as practicable that those services were maintained at a reasonable level.