Cases - The Mayor and Commonalty and Citizens of the City of London v Various Leaseholders of Great Arthur House

Record details

Name
The Mayor and Commonalty and Citizens of the City of London v Various Leaseholders of Great Arthur House
Date
[2019]
Citation
UKUT 341 (LC)
Legislation
Keywords
Service charges – costs of structural defects – interpretation of terms in standard ‘right to buy’ leases
Summary

The appellant long lessees had purchased their flats under the Right to Buy scheme. The appellants’ leases were drafted in accordance with the Right to Buy provisions of the Housing Acts 1980 and 1985. They were standard form long leases and in substantially identical terms.

The respondent landlord sought to recover the sum of £72,000 from each tenant through the service charge. The tenants contended that their leases did permit the landlord to recover through the service charge the costs of works related to the making good of structural defects if carried out for the purpose of repairing the structure and exterior of the building in which their flats were contained.

The landlord had a statutory implied obligation ‘to keep in repair the structure and exterior’ of the building. Under clause 4(3) of the appellants’ leases, the lessees had covenanted throughout the term to pay the landlord ‘… a reasonable part of the costs of carrying out specified repairs’. ‘Specified repairs’ was defined in the leases as ‘…repairs carried out (i) to keep in repair the structure and exterior of…the building… not amounting to the making good of structural defects; (ii) to make good any structural defect of whose existence the Corporation has notified the tenant…’.

The dispute concerned whether works that were repairs and made good structural defects could fall within paragraph 4(3)(i) and if so, in what circumstances. The landlord argued that such works fell within the ambit of paragraph 4(3)(i) if they were repairs and were carried out for repairing the structure and exterior of the building. The tenants argued to the contrary. The tenants argued that works that amounted to the making good of structural defects could only fall within paragraph (ii). The First-tier Tribunal (FTT) agreed with the lessees.

The Upper Tribunal (Lands Chamber) (UT) had regard to the purpose of the statutory provisions. The UT noted that they were intended to afford former council tenants protection from substantial and unexpected service charges upon their acquisition of a long leasehold interest in their flats.

The purpose was that works of repair to the structure and exterior of the building would be chargeable to the lessees, but the substantial costs associated with remedying structural defects could not, unless the lessees were notified of the same at the time they purchased their flats or the defect was discovered within a number of years into the term of their leases. That objective was more likely to be realised if the costs of unforeseen works that had the effect of remedying a structural defect were excluded rather than included in the service charge.

Accordingly, works of repair to the structure and exterior of the building did not fall within paragraph (i) of the definition of ‘specified repairs’ if the effect of the works was to make good a structural defect. The costs of works that did have the effect of making good a structural defect were only recoverable if they fell within paragraph (ii).