The leaseholders of a flat in a separate wing of a country house have succeeded in their appeal against a determination that they were liable to pay service charges in respect of the common parts of the house.
The leaseholders had purchased the flat in 2020. The flat was in the north wing of a country house that was divided into 14 flats. It was separated from the main house by a party wall and had its own separate entrance. The freeholder, which had acquired the house in 2018, demanded service charges from the leaseholders in respect of the common parts inside the main house. The previous freeholders had not made such demands, and the leaseholders claimed that they were not liable for the charges under their lease. They applied to the First-tier Tribunal (FTT) for a determination of their liability to pay the charges. After the FTT found that most of the charges were payable, the leaseholders appealed to the Upper Tribunal (UT).
The FTT had found that electricity costs for both the communal hall and the exterior were payable because they were ‘outgoings’ under the lease. However, the UT noted that clauses requiring payment of rates, taxes and outgoings, such as that found in the leaseholders’ lease, were common in leases. The word ‘outgoings’ took its meaning from the other words and meant charges imposed from outside, such as Council Tax, not those incurred in providing a service. Furthermore, the lease of a flat in the main house obliged the freeholder to provide lighting in the common parts and specifically required the lessee to contribute to the cost of such lighting. Only the lessees in the main house were entitled to lighting in the common parts and only they paid for them. The UT also found that charges relating to electrical installations were not payable, except insofar as they related to the repair or renewal of wires and cables. If the freeholder had repaired lights outside the leaseholders’ flat, it was not obliged to do so under the lease.
The FTT had also decided that charges relating to an asbestos survey, a fire risk assessment and fire equipment were payable as outgoings. Overturning that decision, the UT observed that, as the word ‘outgoings’ meant charges imposed by external authorities, it could not justify a charge in respect of the main house, for which no provision was made in the leaseholders’ lease. The UT also concluded that charges for CCTV signs, and for cleaning and checking the lighting in the common parts, were not payable.
The appeal was upheld. The FTT’s decision was set aside so far as it imposed any liability to pay for services and installations inside the main house, or for electrical installations outside.