News

Landlord entitled to more money after undercharging M&S

News

Roger Pearson

18 November 1998

West Midlands

The rights of landlords to ask tenants for more money if they have mistakenly charged too little were today clarified by the Court of Appeal.

The court ruled that the landlord of major retail premises in the heart of Telford, Shropshire, is entitled to a further payment, despite previous service-charge miscalculations.

Universities Superannuation Scheme Ltd (USS), landlord of premises in Telford Town Shopping Centre leased to Marks & Spencer, challenged a High Court ruling of July 1997 by Blackburn J in which he refused its claim against M&S for a further £214,074 under the lease.

Today, allowing USSs appeal against the High Court ruling, Mummery LJ said the court did not consider that there was any legal restriction on the landlords rights to recover the correct amount that the tenant should pay, even if a mistake had been made.

The claim arose from a mistake by USS in calculating the service charges on the premises for the years ending March 1992 and 1993. They had wrongly based their calculations on a rateable value figure of £348,600, instead of the correct figure of £848,600, in deciding M&Ss percentage of the total service charge expenditure.

USS claimed that although the account sent to M&S did not include all the arithmetical calculations and the error was not evident on the face of the account, the difference in liability was so huge £214,074 that it was unlikely to pass unnoticed by a tenant in M&Ss position.

However, Blackburn J ruled that, under the terms of the lease, USS was not entitled to re-open the service charges.

At the appeal, Timothy Fancourt, counsel for USS, argued that USS should not be prevented from recovering the true amount of the service charge.

However, John Furber QC, for M&S, argued that once payments had been made to meet the sums claimed, there was no basis in law for any other claim in relation to the service-charge year in question.

He said: “There is no provision in the lease or in the law generally enabling the landlord to ‘re-open’ the service charge account as sought, and if a mistake was made by USSs agents relating to rateable values as alleged and USS has suffered loss, then their claim should be against the agents and not M&S.”

Making an unsuccessful application for leave to appeal to the House of Lords, John Furber told the judges that the decision could encourage landlords to re-open the question of previously paid service-charge certificates later found to be erroneous.

Universities Superannuation Scheme Ltd v Marks & Spencer plc, Court of Appeal (Stuart-Smith, Thorpe and Mummery LJJ) November 18 1998

Timothy Fancourt (instructed by Lawrence Graham) appeared for the appellant; John Furber QC (instructed by SJ Berwin & Co) appeared for the respondent.

The rights of landlords to ask tenants for more money if they have mistakenly charged too little were today clarified by the Court of Appeal. The court ruled that the landlord of major retail premises in the heart of Telford, Shropshire, is entitled to a further payment, despite previous service-charge miscalculations. Universities Superannuation Scheme Ltd (USS), landlord of premises in Telford Town Shopping Centre leased to Marks & Spencer, challenged a High Court ruling of July 1997 by Blackburn J in which he refused its claim against M&S for a further £214,074 under the lease. Today, allowing USSs appeal against the High Court ruling, Mummery LJ said the court did not consider that there was any legal restriction on the landlords rights to recover the correct amount that the tenant should pay, even if a mistake had been made. The claim arose from a mistake by USS in calculating the service charges on the premises for the years ending March 1992 and 1993. They had wrongly based their calculations on a rateable value figure of £348,600, instead of the correct figure of £848,600, in deciding M&Ss percentage of the total service charge expenditure. USS claimed that although the account sent to M&S did not include all the arithmetical calculations and the error was not evident on the face of the account, the difference in liability was so huge £214,074 that it was unlikely to pass unnoticed by a tenant in M&Ss position. However, Blackburn J ruled that, under the terms of the lease, USS was not entitled to re-open the service charges. At the appeal, Timothy Fancourt, counsel for USS, argued that USS should not be prevented from recovering the true amount of the service charge. However, John Furber QC, for M&S, argued that once payments had been made to meet the sums claimed, there was no basis in law for any other claim in relation to the service-charge year in question. He said: “There is no provision in the lease or in the law generally enabling the landlord to ‘re-open’ the service charge account as sought, and if a mistake was made by USSs agents relating to rateable values as alleged and USS has suffered loss, then their claim should be against the agents and not M&S.” Making an unsuccessful application for leave to appeal to the House of Lords, John Furber told the judges that the decision could encourage landlords to re-open the question of previously paid service-charge certificates later found to be erroneous. Universities Superannuation Scheme Ltd v Marks & Spencer plc, Court of Appeal (Stuart-Smith, Thorpe and Mummery LJJ) November 18 1998 Timothy Fancourt (instructed by Lawrence Graham) appeared for the appellant; John Furber QC (instructed by SJ Berwin & Co) appeared for the respondent.