Amanda McNeil and Hollie Jordan-Wright of Howard Kennedy recently acted for the successful Appellants in the case of Dell -v- 89 Holland Park Management Limited [2022] UKUT 169 (LC).
The Appeal related to service charge demands made of an individual leaseholder in the sum of £430,411.50. It is believed to be the single largest reported service charge amount demanded in respect of an individual flat.
Mr and Mrs Dell are the leaseholders of a flat in a resident-owned freehold building. The landlord was involved in a dispute with its neighbour, architect Sophie Hicks, concerning restrictive covenants over the neighbouring land, and sought to recover the legal costs and planning costs incurred in that dispute (costing an extraordinary £2.7m) from the lessees via the service charge.
The landlord relied on two main clauses in the lease:
“to employ all such surveyors builders architects engineers tradesmen solicitors accountants or other professional persons as may be necessary or desirable for the proper maintenance safety and administration of the Building”
and
“to do or cause to be done all such works installations acts matters and things as in the reasonable discretion of the Lessor may be considered necessary or advisable for the proper maintenance safety amenity and administration of the Building”.
The landlord contended that in defending claims brought by Ms Hicks, it was securing the safety of the building, referenced in the sweeper clause.
In September 2021, the First-tier Tribunal (Property Chamber) found that the landlord could recover the costs under the lease covenants.
The FTT decision was overturned by Judge Cooke in July 2022 who found that to include such charges within the lease did not make commercial sense, stating "The existence of such obligations would not make commercial sense because they would make the lease and freehold unmarketable" and that "It is most unlikely that the original parties intended this, and if they did they would have made express provision."
The decision reinforces the well-established view that service charge costs are only recoverable to the extent that they are clearly provided for in the lease.
Mark Loveday and Mattie Green of Tanfield Chambers were instructed by Howard Kennedy on this matter.
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