"Pay to the Lessor by way of additional rent the service rent hereinafter defined in Clause 4 within fourteen days of written demand after the accounting date as hereinafter defined in each and every year of the term PROVIDED ALWAYS that the tenant shall pay to the Lessor on each of the accounting dates in every year during the term such sum or sums as the Lessor may reasonably require on account of the said service charge and any such payment to be credited to the tenant against payment of the services as certified to be due from it (as hereinafter provided) by the certificate issued next after the making of such demand and in default of such payment by the Lessee…"
"The service rent hereinbefore covenanted to be paid by the Lessee shall be a fair and equitable proportion determined from time to time by the Lessor and such sum shall be ascertained by a certificate given by the Lessor or its managing agents and certified by them to be the aggregate of the sums actually expended on the liabilities incurred by the Lessor in any period ending on the thirty first day of December or such other date as the Lessor may in its discretion determine (hereinafter called "the accounting date") during the term hereby created in connection with the management and maintenance of the Estate and the provisions of such services as herein described and in particular without limiting the generality of the foregoing shall include the cost of the matters referred to in the Schedule 3 hereto."
"(iii) As soon as practicable after the accounting date in each year throughout the term the Lessor will submit to the Lessee a statement certified by the Lessor's agent to show the computation of the said sums expended and the liabilities incurred (hereinafter called "the annual service cost") for the preceding year and the Lessee shall be entitled within fourteen days of receipt of such statement to inspect the vouchers and receipts of all items included in such statement."
"SCHEDULE 3 “1. To pay all rates and other charges upon the Estate or any part thereof other than those properties specifically demised to third parties. 2. The erection and maintenance of suitable notice boards on the Estate. 3. The maintenance operation and cleaning of soil and drainage pipes and other conducting media conduits and channels and pumps in relation thereto. 4. The provision and maintenance of fire fighting equipment. 5. The cutting and mowing of grass lopping pruning and felling of trees on the Estate. 6. Management of the Estate and its appurtenances including where applicable the charges wages pensions contributions insurance and provision of uniforms and working clothes of any staff employed by the Lessee and the provision of telephones (if any) and also the cost of providing tools appliances cleaning and other materials bins receptacles together with any amounts of fees paid to architects agents surveyors and solicitors employed by the Lessor in regard to the management of the Estate. 7. Repairing renewing rebuilding decorating cleaning and maintaining those parts of the Estate (which include an amenity centre if any) used in common with other lessees including without prejudice to the generality of the foregoing the footpaths roadways and car park on the Estate. 8. A management charge of five per centum (5%) of the total cost of the items referred to in this Schedule."
“Limitation of service charges: reasonableness Relevant costs shall be taken into account in determining the amount of a service charge payable for a period— (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly.” and the amount payable shall be limited accordingly.”
“In section 20 and in this section—“qualifying works” means works on a building or any other premises”
"For the purposes of subsection (3) of section 20 the appropriate amount is an amount which results in the relevant contribution of any tenant being more than£250 ."
“1. - (1) The landlord shall give notice in writing of his intention to carry out qualifying works - (a) to each tenant; and (b) where a recognised tenants' association represents some or all of the tenants, to the association. (2) The notice shall - (a) describe, in general terms, the works proposed to be carried out or specify the place and hours at which a description of the proposed works may be inspected; (b) state the landlord's reasons for considering it necessary to carry out the proposed works; (c) invite the making, in writing, of observations in relation to the proposed works; and (d) specify - (i) the address to which such observations may be sent; (ii) that they must be delivered within the relevant period; and (iii) the date on which the relevant period ends. (3) The notice shall also invite each tenant and the association (if any) to propose, within the relevant period, the name of a person from whom the landlord should try to obtain an estimate for the carrying out of the proposed works.”
“341. In my judgment a commonsense approach to construction needs to be taken and in view of the fact that it acts as a trigger for the protection afforded by consultation. If the threshold were too low and all minor or non permanent works covered, the result would be commercially unmanageable to the detriment of both lessor and lessee. The phrase building works use to describe significant works with a permanent effect by way of modification of what was there before. Whether works are indeed qualifying works, is a question of fact having regard to the nature and extent of the works in question.”
"I readily agree that a common-sense approach is appropriate and necessary upon this point. I would also agree, if such were Mr Lewison's submission, that parliament has not made it entirely clear how one batch of qualifying works is to be divided from another. The definition of "qualifying works" indicates what their quality is but not how one batch is to be divided from another. It seems to me, on what is I hope a common-sense approach, that it is significant that the surveyor and the builder evidently regarded the additional work as a variation of the original contract. The judge himself found that some of the "
“35. The distinction between that case and this is the change in the legislation. The limit then was by reference to the cost of the works; the limit now is by reference to the amount of the contribution. The consultation requirements then were the provision to the tenants of at least two estimates of the cost of the works; now it is a notice by the landlord to the tenants of his intention to carry out qualifying works and to describe them in general terms. Thus the emphasis has shifted from identifying and costing the works before they start to notifying an intention to carry out the works and limiting the amount of the individual contributions sought to pay for them after their completion. Accordingly, I see nothing in the present legislation which requires the identification of one or more sets of qualifying works. If the works are qualifying works it will be for the landlord to assess whether they will be on such a scale as to necessitate complying with the consultation requirements or face the consequence that he may not recoup the cost from the tenants' contributions. As the contributions are payable on an annual basis then the limit is applied to the proportion of the qualifying works carried out in that year. Under this legislation there is no 'triviality threshold' in relation to qualifying works; all the qualifying works must be entered into the calculation unless the landlord is prepared to carry any excess cost himself.”
“36. In my view the legislation in point on this appeal entitles me to construe it in the foregoing manner unconstrained by the conclusion of the Court of Appeal in Martin v Maryland Estates, save in its reference to the need to use common sense. In addition such a construction conforms more closely to the ongoing works of repair and maintenance likely to be necessary on an estate in multiple occupation. They are unlikely to be identified as parts of a complete set of works which can be costed at the outset. In the normal way they will be carried out as and when required. The need for some limitation on an obligation to contribute is at least as necessary with sporadic works of that nature as with a redevelopment plan conceived and carried out as a whole. 37. Accordingly, in my judgment the judge applied the wrong tests when seeking to apply the 1985 Act. It is not disputed that all the works he considered in paragraphs 361 to 367 were qualifying works within the statutory definition. Accordingly, all of them should be brought into the account for computing the contribution and then applying the limit. It may be that they should be spread over more than one year thereby introducing another limit. With that exception, the provisions relating to this service charge do not require any identification of 'sets of qualifying works' or the avoidance of 'excessive fragmentation'.”
“357. It was the Defendant’s vision that the site should be the subject of an extensive upgrading exercise. As progression of this there have been certain specific defined and separate programmes of work, such as to the banks and, as proposed, to the amenity centre and also range of very different tranches/pieces of work to different parts of the site undertaken at different times and as the need or idea arose. I cannot accept, as a matter of fact that they were ever one scheme, or could properly ever be viewed objectively using a commonsense test as such. It is to be remembered that the aim is protection through consultation. That requires a clearly identified set of works which can be set out and considered. Apart from certain aspects of the work, which were in fact mentioned in advance, I find as fact that Mr and Mrs Francis did not themselves ever plan or in any way tie all the disparate pieces of work together. It was not until the beginning of 2009 that there was any structure to the planning of the revision of the site, that being to the extent referred to at paragraph 237 above. 358. Having heard Mr Francis and considered the nature of the works I was never at any stage attracted to Mr Stoners’ primary submission. It was simply not the way that Mr Francis operated. Although Mr Stoner Q.C. said that he relied upon what they said in evidence, neither Mr or Mrs Francis gave evidence that it was a single set of works. The only acceptance of any coordinated approach was in 2009. Before that and contrary to Mr Stoner’s submission it was Mr Francis’ evidence that, in effect, “one job creates another”
“18. Paragraph 6 of Schedule 3 entitles the Lessor to reimbursement by the service charge of both the pay and expenses of "staff employed" and "fees paid" to "architects agents surveyors and solicitors" employed in regard to the management of the Estate. The context in which the word "agent" is used is by reference to the provision of some professional service required in connection with the management of the Estate. That is to be distinguished from the general management of the Estate. No doubt the professional agent may be a company in which the Lessor is interested, see Skilleter v Charles[1992] 1 EGLR 73 , but the power to recover charges contained in paragraph 6 does not extend to non-professional management services provided by the Lessors either personally or through their management company. 19. Accordingly, in my judgment, the appropriate limitation to prevent the double recovery which both parties agree cannot have been intended is to recognise that the "fees paid" referred to in paragraph 6 are limited to those charged to the Lessors by professional agents. As such they do not include the wages of£95,000 paid to Mr and Mrs Francis in the year ended31st December 2009 specified in the accountants' certificate referred to in paragraph 4 above because they could not employ themselves. Nor do they include payment for work of a non-professional nature charged by any agent, particularly one in which Mr and Mrs Francis are interested. Accordingly, in my judgment, the judge was wrong when in paragraph 154, quoted in paragraph 12 above, he concluded that the "fees paid" included those paid to one in "the general category of "agent"". The extension to the general category appears to me to ignore the context. I also disagree with his conclusion in paragraph 155 that the Lessors may employ an agent generally in the management of the Estate and recover his fees under paragraph 6. In my view the words "in regard to the management of the Estate" in the context of paragraph 6 as a whole are more limited than a power to appoint an 'agent to manage' the Estate, that is recognised by paragraph 8 as the function of the owners. Accordingly, I would give permission to appeal on this issue and allow the appeal. I would invite counsel to agree a form of order to give effect to these conclusions.”