Sale of block of flats — Tenants forming company and acquiring — Sale agreement providing for apportionment of current management and service charges — Vendor claiming substantial sum following completion — Claim based on National Conditions of Sale — Whether sum claimed inconsistent with express terms of agreement
The respondents were the owners of a block of flats in Sutton Lane, Chiswick, W4. Some of the flats were freehold and others were let on a mixture of short-term and long leases, the leases placing repairing obligations on the landlords. In turn the landlords could recover management and repair expenses by way of service charges. The flats fell into a bad state of repair and the tenants formed themselves into a company, the appellants in this appeal. In 1986 the company purchased the flats from the respondents. Clause 22 of the agreement for sale made specific provision for the payment and apportionment of current debts, managing agents’ fees and other outgoings: “… as soon as possible following completion the vendor shall prepare an account showing the total expenditure incurred and sums received from the tenants for the period from 1st January 1986 to the actual completion date and shall provide a summary of the share of such total expenditure attributable to each flat in the property …”. In accordance with this clause, the managing agents prepared a statement, agreed to by the parties, dealing with the various sums and service charges payable at completion. Shortly after completion, the respondent vendors claimed £6,125 for various sums, including professional fees, that fell within clause 22 but which they alleged they were entitled to under condition 6(5) of the National Conditions of Sale: “… Service charges under leases, in the absence of known or readily ascertainable amounts, shall be apportioned according to the best estimate available at the time of completion and, unless otherwise agreed, the vendor and the purchaser shall be and remain mutually bound after completion to account for and pay or allow to each other … any balances or excesses due.”
The appellants appealed the decision in the county court that this sum was not inconsistent with clause 22 and they were obliged to pay it.
Held The appeal was allowed. Condition 6(5) of the National Conditions of Sale was inconsistent with clause 22 of the sale agreement between the parties. They had expressly agreed how the outgoings and service charges would be apportioned, and they agreed the sum determined by the managing agents. The vendors could not seek to recover the disputed charges after completion date as they were clearly within clause 22.
William Hunter (instructed by Rodgers Horsley & Burton) appeared for the appellants; and David Grant (instructed by Julian Holy) appeared for the respondents.
