Mark Loveday appears in “single largest service charge claim” appeal: Dell v 89 Holland Park Management Ltd

Tanfield’s Mark Loveday acted for the successful Appellants in Dell v 89 Holland Park Management Ltd [2022] UKUT 169 (LC). The appeal involved charges of £430,411.50 demanded from the leaseholder of a flat in Holland Park. It is believed to involve the largest reported service charge bill demanded for an individual flat.

The 11 disputed demands sought a contribution towards the £2.7 million legal fees and planning costs incurred by a resident-owned freehold company in disputes with its neighbour, the celebrity architect, Sophie Hicks. Judge Cooke, in the Upper Tribunal, described the costs of the disputes with Ms Hicks as “eye watering”. They dwarfed expenditure on the routine running and maintenance for the building, so that in one year the landlord spent over 40 times as much on legal costs as on regular expenditure.

In September 2021, the First-tier Tribunal (Property Chamber) decided the landlord could recover the charges under two covenants of the flat lease, including a widely worded so-called “sweeper” provision. These clauses related to the landlord’s obligations “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 a clause enabling a landlord “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 argued the legal claims involving Ms Hicks secured the “safety” of the building, and that planning disputes secured the “amenity” of the property.

In her decision, Judge Cooke overturned the decision of the First-tier Tribunal. She considered and approved a line of caselaw which stressed the need for clarity before a particular item would be found to be recoverable under such clauses, emphasising that “those dicta have not been overruled or disapproved”. The judge described it as “implausible” that the landlord and lessees would have intended what she described as “an extraordinary commitment to potentially ruinous costs”.

Mark Loveday, editor of Tanfield on Service Charges & Management (5^th Ed) commented:

“This case limits the extent of general words and sweeping up clauses in service charges. These kinds of provisions are not apt to cover every item of expenditure that a landlord thinks should go onto the leaseholder’s service charge bill. The appeal re-asserts the traditional view that service charge costs can only be recovered if they are clearly spelt out in the lease.”

Mark was instructed by Howard Kennedy LLP. A case report will follow.