Aviva Investors Ground Rent GP Ltd and another v Williams and others
[2023] UKSC 6
Fitzroy Place Residential Limited & Ors v Angus Lovitt & Ors
19 March 2024
[2024] UKUT 63 (LC)
Upper Tribunal
A landlord tried to change how service charges were split between tenants in a fancy apartment building, claiming their lease allowed it. The court said no, the lease only allowed changes for specific costs, not a complete overhaul of the system. The landlord's appeal was rejected.
Key Facts
- •Appeal concerning the apportionment of service charges in a large London development with residential and commercial premises.
- •Disagreement between residential leaseholders and appellants (freeholder, head-leaseholder, and management company).
- •Standard form lease with a clause (6.2) allowing discretion in calculating service charge proportions.
- •FTT determined that the lease contained an 'error' and substituted 'gross internal area' for 'net internal area' in the calculation.
- •Management company used a different method than the one suggested by the FTT interpretation, and also different than the one stipulated in the lease.
- •The FTT ruled that the management company's method wasn't permitted under the lease.
Legal Principles
Contractual interpretation requires considering the whole clause in its context.
EMFC Loan Syndications LLP v The Resort Group Plc [2021] EWCA Civ 844
Court identifies parties' intention by reference to what a reasonable person would understand.
EMFC Loan Syndications LLP v The Resort Group Plc [2021] EWCA Civ 844
Courts should be slow to reject the natural meaning of a provision simply because it appears imprudent.
EMFC Loan Syndications LLP v The Resort Group Plc [2021] EWCA Civ 844
Outcomes
Appeal dismissed.
The FTT correctly interpreted clause 6.2 as limiting the discretion to ad hoc changes for particular expenditure items, not a blanket change of the apportionment basis.
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