Landlord and tenant – Service charges – Sheltered housing scheme – Landlord maintaining grounds of property although not required to do so under lease – Appellant housing association taking over as landlord and seeking to impose charge for grounds maintenance – Issue arising as to proper construction of tenancy agreement – Whether appellant entitled to add and charge for grounds maintenance as “extra” service despite maintenance already being provided – Appeal allowed
The respondent held 30 Sherwood Close, Keynsham, Bristol, upon a weekly assured tenancy which arose pursuant to a tenancy agreement dated 18 August 2008. The property was a self-contained one-bedroom bungalow within a sheltered housing scheme for older persons and persons with disabilities which had open grounds including areas of lawn with mature trees.
The landlord under the tenancy agreement was SHT. The appellant was a housing association formed in 2012 following the amalgamation of three housing associations including SHT. In January 2017, the appellant gave a written notice to the respondent, seeking to add grounds maintenance to the services under the tenancy agreement for which it could charge, and to charge £77.98 per annum for grounds maintenance for 2017/18.
The respondent argued that the appellant, or its predecessor, as landlord was already carrying out grounds maintenance; there was no obligation to do so; the landlord had no right to charge the cost of grounds maintenance through the service charge; for tenancies granted from 2010 onwards the wording was changed to require tenants to pay a contribution by way of service charge towards grounds maintenance; no change was made for existing tenants (such as the respondent) so that they continued not to pay any service charge in respect of grounds maintenance.
The First-tier Tribunal (FTT) decided that the appellant as landlord was not entitled to recover the extra charge since “extra” services meant services from which tenants had not previously benefited. The FTT considered that a reasonable person would struggle with the notion that a service that had been provided for years without charge was an “extra” service because it had been added to the list of services for which there would in future be a charge.
The Upper Tribunal dismissed the appellant’s appeal against that decision: [2019] UKUT 130 (LC); [2019] PLSCS 73. The appellant appealed to the Court of Appeal.
Held: The appeal was allowed.
(1) The only way in which the appellant could charge for grounds maintenance was if it was entitled pursuant to clause 2.10.1 of the tenancy agreement to add grounds maintenance to the list of services to be charge for. The words “extra services” in clause 2.10.1(iii) were governed by the opening words of clause 2.10.1: “The trust agrees to provide the services (if any) listed in the tenancy agreement and for which you pay a service charge.” The services contemplated by clause 2.10.1(iii) were those which were extra to the services listed in the tenancy agreement. There was no reference in clause 2.10.1 of the agreement to services that were in fact provided by the landlord, as opposed to those that were listed in the agreement.
The appellant could only operate clause 2.10.1(iii) for the purpose it sought if grounds maintenance could properly be said to be extra services which would be useful. It was inescapable that clause 2.10.1(iii) had to be read consistently with sub-paragraphs (i) and (ii). Sub-paragraph (i) provided that the landlord “may stop providing any of the services if it reasonably believes it is no longer practicable to do so”, while sub-paragraph (ii) provided that it might “provide the same service in a different manner”. Those sub-paragraphs referred back to the services “listed in the tenancy agreement” and entitled the landlord, subject to consultation with the tenants, to vary the tenancy agreement in those ways. Likewise, sub-paragraph (iii) entitled the landlord to vary the agreement by adding services if it believed that would be useful. They were all means whereby the landlord’s obligations as regards the provision of services might be varied, and varied without the consent of the tenants, albeit subject to prior consultation with them.
(2) Under clause 2.10.1, the landlord’s belief that the provision of the extra service would be useful had to be genuine, and there had to be genuine and prior consultation with tenants. The belief also had to be rational and made after consideration of all obviously relevant considerations and the exclusion of all irrelevant considerations. Additional protection was provided by the landlord’s statutory status as a registered provider of social housing, the internal complaints procedure and the right to take complaints to an ombudsman: Braganza v BP Shipping Ltd [2015] UKSC 17; [2015] 1 WLR 1661 considered.
By adding grounds maintenance as an extra service under sub-paragraph (iii), the appellant became contractually bound to provide it, unless and until it reasonably believed that it was no longer practicable to do so under sub-paragraph (i). Sub-paragraph (iii) stated that “it may provide extra services if this would be useful”. “Services” was plural so, as a matter of grammar, “this” could not refer to the extra services but to the provision of the extra services under the agreement in accordance with sub-paragraph (iii), which thereby became part of the landlord’s obligations.
(3) There was provision in the agreement entitling the appellant to charge for extra services. Clause 1.5.1 provided that the annual service charge was to be based on the landlord’s estimate of the amount it was likely to spend “during the year to provide the services to you”, with balancing payments after the end of the year once the costs actually incurred were known. Once it was accepted that, by operating clause 2.10.1, the landlord could add extra services to those that it was obliged to provide, it followed that they would be included in “the services” by reference to which the annual service charge was to be calculated. The effect of clause 6.3.1 was that changes in rent and service charges might be made without the tenants’ agreement.
Christopher Baker (instructed by Anthony Collins Solicitors LLP of Birmingham) appeared for the appellant; Justin Bates and Miriam Seitler (instructed by South West Law of Bristol) appeared for the respondent.
Eileen O’Grady, barrister
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