Tribunal Judge H LedermanMs T WongP Cliffe-Roberts FRICSDate 16 October 2025Hearing 2025-07-02Property: 20 Beacon Court 25 Beacon Drive Highcliffe BH23 5BY (“the premises”)Type of application: service charges are payable and if so are reasonable in amount Section 27A Landlord and Tenant Act 1985
DECISION
[4]a. the Applicant is liable to pay service charges for repairs to the structure of Block D at Beacon Court, being the building in which Flat 20 is located under clause 2(4) and the Fifth Schedule of the Lease of the premises dated 28th November 2003 (“the Lease”) but is not liable to contribute by way of service charges to the costs of repair of the structure (as so defined) of other blocks of Flats at Beacon Court.[5]b. No determination is made about the Applicant’s liability for service charge years 2024 or other future service charge years.[6]c. None of the costs of these proceedings shall be treated as relevant costs for the purpose of calculating service charges payable by the Applicant under section 20C of the Landlord and Tenant Act 1985 (“the 1985 Act”).[7]d. Upon the Respondent indicating that no claim for litigation costs will be made against the Applicant arising from any of the issues determined in this application, an order is made that no litigation costs associated with this application may be charged to the Applicant under paragraph 5A of Schedule 11 to the Commonhold and Leasehold Reform Act 2002.[8]e. The Respondent shall reimburse the Applicant £300.00£320.00 for hearing and application fees paid to the Tribunal within 14 days of receipt of this Decision.
REASONS
[1]The Applicant, as Leaseholder of the flat known as 20 Beacon Court, makes an application for determination of her liability to contribute to the costs of repairs to the structure of all four Blocks in the development known as Beacon Court (described by her as blocks A, B, C and D) and whether her liability to contribute for the cost of such repairs under the Lease dated 28th November 2023 (“the Lease”) is limited to those repairs for her block described by her as Block D. Structure of these reasons[2]In these Reasons where narrative, facts or descriptions are recited, they should be treated as the Tribunal’s findings of fact unless stated otherwise. These reasons address in summary form the key issues which the Tribunal considers it necessary to determine consistently with the overriding objective. The leasehold structure[3]It is common ground the development known as Beacon Court comprises 24 flats contained in 4 materially identical blocks each containing 6 flats. The Lease of the premises incorporated the terms of an earlier lease of 12th August 1970 of the flat (“the original lease”) and a separate Lease of 12th August 1970 of Garage 20. The Lease is for a term of 999 years from 24th June 2003. It was common ground that each of the relevant leases at the development are in materially identical form and terms to that of the Lease. The witness statement of Keith Lawrence (of the 22nd May 2025) a director of the Respondent who attended the hearing, proceeds on that basis – see Paragraph 9 on page 67 of the hearing bundle.[4]The application form referred to two specific items namely a “section 20 notice of 9th July 2024” and a “budget plan 2026” on pages 10 and 11 of the hearing bundle. Neither document was in the hearing bundle. It was common ground however that the underlying key issue is whether the Lease requires the Applicant to contribute to the cost of structural repairs to all four blocks at the development, or just those of Block D. The Applicant accepts that the effect of the Lease is to make her liable to contribute by way of service charge for some of the cost of relating to the development but not those relating to structure of other blocks as defined in clause 4(4)and the Fifth Schedule to the Lease.[5]At the date of the application the Respondent was a company owned and controlled by leaseholders at the development. The 1970 Leases (including the original Lease) were drafted and prepared when the landlord appears to have been a commercial entity, possibly a builder and/or developer. By the date of the application the Respondent was a company owned and controlled by leaseholders at the development.[6]At the date of the Lease, the earlier Leases for a term of 99 years were surrendered and regranted for a term of 999 years. As is common when such transactions take place, the opportunity was taken to make amendments to the earlier leases to be incorporated into the Leases granting the 999 year terms to each of the leaseholders. Those amendments are found in the Schedule to the Lease. Of particular note is the amendment to clause 4 (4), the effect of which was to extend the landlord’s repairing obligations in respect of the main structure of “the Building” (as defined) under that covenant to the foundations, as well as the other items previously included namely the roof gutters rainwater pipes and window frames. This in turn extended the service charge liability of individual leaseholders to fund those costs. The Applicant’s position and relevant lease provisions[7]In her Position Statement, correspondence and evidence, the Applicant makes the the following points by reference to the clauses and provisions of the Lease of the flat at the premises dated 12th August 1970 incorporated into the Lease (“the original Lease”). In addition, the Tribunal refers to other relevant provisions as follows:a. A. Recital(1) refers to and describes the four blocks of 6 flats and the land forming the site and curtilage as “the Development”;b. B. Recital(2) reiterates the phrase “the Development” for the purpose of expressing an intention that the covenants in every lease should be enforceable by other leaseholders at the Developmentc. C. The leaseholder’s principal repairing covenant in clause 2(1) of the Lease is framed as an obligation to put keep and maintain in good and tenantable repair all such parts of the block of flats in which the flat is situated hereinafter called the building save and except the outside main walls roof and external parts. The applicant emphasises that the individual block of flats in this clause is described as “the building”.d. D. Recital(3) expresses the intention to grant the original lease of the premises described as “the Flat” in that recital and in the First schedule to that original lease. The First Schedule at page 22 of the hearing bundle is part of a document that would have been inserted into the other leases at the development, with certain sections deleted as appropriate. Thus for ground floor flats numbered 1, 2, 7, 8, 13, 14, 19 and 20 the applicable part of the First schedule described the demised premises as “ALL THAT flat numbered…. on the ground floor of the building marked…. as the same is delineated on the said plan marked “A” and thereon coloured pink”. Plan “A” at page 30 of the hearing bundle depicts 4 separate blocks but does not specify a letter or other notation for each separate block ” (emphasis added).e. E. The leaseholder’s service charge covenant at clause 2(4)(A) of the Original Lease requires payment of a proportionate share of cost expenses and outgoings incurred or to be incurred by the landlord in respect of the items mentioned in the Fifth Schedule.f. F. Paragraph 1 of the Fifth Schedule at page 27 of the hearing bundle requires the leaseholder to pay a service charge contribution in respect of the costs of a number of separate items. These are listed as (a) the main structure including the roof gutters rain water pipes and window frames of the Building (b) the gas and water pipes drains and electric cables and wires and the communal television aerial in under or upon the Building and enjoyed or used by the leaseholder in common with the owners and tenants of other parts of the Building and (c) the main entrances passages landings staircases and all such other internal parts of the Building as are enjoyed or used by [the leaseholder] in common with others as aforesaid” (emphasis in italics added).g. G. In contrast, paragraph 2 of the Fifth Schedule at page 27 of the hearing bundle, requires the leaseholder to pay a service charge contribution towards “The cost of cultivating repairing and maintaining the lawns gardens access ways paths and forecourts forming the garden and grounds appurtenant to the Development so enjoyed or used by [the leaseholder] in common with others as aforesaid” (emphasis added). (This is an example of the cost of the development as a whole which the Applicant accepts as a leaseholder she is required to contribute towards by way of service charge).h. H. Paragraph 3 of the Fifth Schedule refers to the cost of cleaning and lighting passages landings and staircases and other parts of the Building so enjoyed or used by [the leaseholder] in common with others as aforesaid” (emphasis added).i. I. Paragraph 4 of the Fifth Schedule refers to the cost of decorating the Building (emphasis added).j. J. Paragraph 5 of the Fifth Schedule refers to rates taxes and outgoings if any payable by the [landlord] in respect of the whole or any parts or parts of the Building (emphasis added).k. K. Paragraph 6 of the Fifth Schedule refers to the cost of keeping the Building insured (emphasis added).l. L. In contradistinction paragraph 8 of the Fifth Schedule requires the leaseholder to contribute to “Costs and expenses incurred by [the landlord] in the general management of the Development … Including the expenses of collecting service charges and generally performing its obligations or exercising its powers hereunder or under any other lease of or including any part or parts of the Development”.m. M. Likewise, paragraph 9 of the Fifth Schedule requires the leaseholder to contribute to “Costs and expenses incurred by [the landlord] not falling under any of the preceding heads of or incidental to the performance of its obligations or the exercise of its powers hereunder or under any other leases of or including any part or parts of the Development” (emphasis added)[8]The Respondent’s position 8.1 The phrase “the Development” in the Lease is descriptive of the site and four blocks not liability for service charge contributions; 8.2. Use of the term “the Building” throughout the Lease “merely distinguishes between the structures of the flats separate from the grounds and garages”: see Respondent’s position statement paragraph 2 page 49 of the hearing bundle; 8.3. Clause 2(4)(A) of the original Lease (the Leaseholder’s obligation to contribute to service charges) provides that the payable proportions are “at the discretion of the manager”: see Respondent’s position statement paragraph 2 page 49 of the hearing bundle 8.4. When the original lease was drafted it was the intention that service charge costs be spread across all 24 flats; that has been the position since “inception and over the period of 54 years that the development has existed”. 8.5 Clause 2(4)(A) of the original Lease (the Leaseholder’s obligation to contribute to service charges) provides that the proportion is expressed in the singular with reference to all the matters in the Fifth Schedule. This is consistent with the leaseholder paying a single 24th proportion: see the statement of Keith Lawrence paragraph 14 page 67 hearing bundle. 8.6. If the term “the Building” throughout the Lease is a separate or singular proportion referring solely to one block, this could result in a shortfall or a greater percentage than 100% of the actual costs, which Mr. Lawrence would describe as a defect which could not have been intended: see statement of Keith Lawrence paragraph 15B page 68 of the hearing bundle. 8.7. Paragraph 8 of the Fifth Schedule to the Lease permits the landlord to charge costs incurred under any other lease including any other part or parts of the Development. Keith Lawrence appears to be saying this that this clause would enable the landlord to charge the cost of structural repairs of other blocks to the leaseholder such as the applicant whose flat is not contained in that block - see the statement of Keith Lawrence paragraph 15F page 68 hearing bundle. A similar argument is made by him in respect of paragraph 9 of the Fifth Schedule to the Lease. 8.8. Keith Lawrence of the Respondent suggests paragraphs 8 and 9 of the Fifth Schedule are wide enough to incorporate all of the heads of expenditure incurred within a service charge year at the Development including any cost associated with the garages at paragraph 15B page 68 hearing bundle. 8.9 The Respondent and Keith Lawrence suggest that if the Lease is interpreted as requiring different parts of the development to be the subject of differing proportions of service charge contributions (cost centres) for structural repairs to each block at Beacon Court, this will increase the costs of management and in particular increase costs of consultation pursuant to section 20 of the Landlord and Tenant Act 1985. Interpretation of Leases[9]As explained in the hearing, Courts and Tribunals in the United Kingdom operate a system of precedent. Lower Courts and Tribunals are required to follow the decisions of the higher Courts such as the Supreme Court and the Court of Appeal which provide guidance as to how to approach legal issues such as the interpretation of Leases. One of the relevant decisions for the purpose of deciding how to interpret clauses such as those relating to the service charges in the Lease is Arnold v Britton [2015] A.C. 1619. That decision identified the following important principles which this Tribunal is required to apply. References to the Court should be taken to include the Tribunal: “The Court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. It does so by focusing on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of(i) the natural and ordinary meaning of the clause,(ii) any other relevant provisions of the lease,(iii) the overall purpose of the clause and the lease,(iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and(v) commercial common sense, but(vi) disregarding subjective evidence of any party’s intentions.”[10]The above passage can be described as referring to an “objective” test of what the Lease means.[11]In the same case Lord Hoffman made the following points which are recognised to be of importance in interpreting a Lease:a. “First, the reliance placed in some cases on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision.b. Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. ……………However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning. If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve.c. The third point ……is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. ……d. Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. ……Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.e. The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. ….f. Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention.”[12]In a more recent decision of the Supreme Court Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] 1 W.L.R. 575, Lord Hamblen summarised the principles as follows: “(1) The contract must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean. (2) The court must consider the contract as a whole and, depending on the nature, formality and quality of its drafting, give more or less weight to elements of the wider context in reaching its view as to its objective meaning. (3) Interpretation is a unitary exercise which involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its implications and consequences are investigated.” Analysis[13]The Tribunal has no hesitation in accepting the interpretation of the phrases “the Development” and “the Building”, in the Lease advanced by the Applicant. The ordinary and natural meaning of those phrases in the context of the recitals to the Lease, the leaseholder’s repairing covenants in clause 2 (read as a whole), the service charge covenant in clause 2 (4)(A) and the use of those different terms for different heads of cost within the Fifth schedule to the Original Lease, are clear and unequivocal. They all point in the direction of the leaseholders of each block of flats at Beacon Court being required to contribute by way of service charges to the cost of structural repairs to the individual block in which the flat is located. It is not relevant that this interpretation has not been followed previously or is considered inconvenient or administratively inconvenient by the current Board of directors of the Respondent.[14]The Lease of flat 20 only requires the leaseholder to contribute by way of service charge to the costs of maintaining repairing re decorating and renewing the main structure of the block of which that flat forms part of the Building, as that phrase is used throughout the Lease. There is no linguistic grammatical or other uncertainty about this. The use of the singular as opposed to the plural in relation to the term “the Building”, is not of any significance in the context of the Lease, read as a whole.[15]The Respondent has not referred to any a factual or other matrix at the date of grant of the Lease which might suggest that these terms or phrases need to be given a different or special meaning other than their ordinary and natural meaning. The amendment to clause 4(4) at the date of the surrender and re-grant of the Lease in 2003 would have been an opportunity to clarify or amend any uncertainty about this.[16]The references to other service charge costs relating to “the Development” in paragraphs 8 and 9 of the Fifth Schedule to the Lease, cannot realistically be regarded as covering costs referred to in earlier parts of that Schedule either in whole or in part. Paragraph 8 refers to costs and expenses incurred in general management. This is entirely different from the repairing covenants in paragraph one of the Fifth schedule. Paragraph 9 is restricted to those costs and expenses not falling within any of the preceding parts of the Fifth Schedule. Discretion to apportion costs[17]The Tribunal does not accept the Respondent’s contention that clause 4(4)(A) provides the Respondent landlord with a “discretion” to apportion or levy service charge contributions between heads of costs or between the individual blocks and the development, if that is what Respondent is suggesting. The language used is inconsistent with such a discretion. Costs of Tribunal proceedings as relevant cost to be taken into account to calculate service charge[18]The Applicant says the directors of the Respondent declined to accept her interpretation of the Lease and outvoted her when she was on the board of directors. Ultimately they excluded her from director’s meetings because of this and an unspecified use of confidential information following the disagreement. The letter of the 18th October 2024 from HPM Management on behalf of the Respondent at pages 64 - 65 of the bundle, bears out much of what the Applicant says about this.[19]The Applicant has been wholly successful in her contentions in relation to interpretation of the Lease. It would neither be just nor equitable for her to contribute to the costs of these Tribunal proceedings by way service charge.[20]The Tribunal does not make any determination upon whether any of the legal costs incurred in these proceedings fall within the service charge provisions of the Lease. Litigation costs and reimbursement of application and hearing fees[21]This was a case par excellence where neighbours in a continuing relationship had fallen into disagreement partly through difficulties in communicating with each other. Mediation is ideally suited to this kind of dispute.[22]The Respondent does not appear to have undertaken any steps to pursue alternative dispute resolution or to offer to bear the cost of determination of the legal issues. Such a resolution would clearly be in the interest of all leaseholders and the Respondent as freeholder.[23]The Tribunal bears in mind that freehold companies such as the Respondent have no assets of their own, apart from service charge. Despite that, it would not be just or equitable in view of the outcome that the Applicant should have to contribute to the legal and other costs of the Respondent contesting this case. Reimbursement of application and hearing fees[24]The Applicant has borne the burden of the Tribunal’s fees for the application and hearing. She has been successful in this application. It is just and equitable that the Respondent reimburse her for the £300.00£320.00 fees within 14 days of receipt of this Decision. This decision was amended by substitution of the figure of £320.00 for £300.00 for reimbursement of hearing and application fees pursuant to rule 50 of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (accidental slip or omission) on 16 October 2025.