P R Hardman & Partners v Greenwood & anr [2017]:

Whether occupiers of caravan park pitches were liable for owners’ costs of providing utilities

The background

P R Hardman, respondents in this appeal, owned a caravan park on which Greenwood and others were occupiers of pitches. The applicants occupied their pitches as permanent residences. The caravan park was a protected site under the Mobile Homes Act 1983, applying to agreements under which occupiers were entitled to establish and occupy a mobile home as a main residence.

The applicants agreed under their contracts to:

“pay…an annual pitch fee…

(b) to pay and discharge all general and/or water rates…and charges in respect of electricity gas water telephone and other services.”

Liquid Petroleum Gas (LPG) was pumped to each pitch from a bulk tank on the park which was filled by an independent supplier. The respondents paid for the costs of the LPG, including renting the LPG tank. LPG supply to each pitch was metered and the respondents passed on the usage costs to each occupier quarterly. The set rate was calculated to include a contribution towards the costs of supplying LPG to communal areas and the costs of the respondents in reading meters, rental and maintenance of the LPG tank and pipework, interest and an administration fee. These additional charges were considered substantial as a proportion of the cost of the actual LPG. The occupiers disputed payment of some of the additional charges.

The law

At first instance, the First-tier Tribunal (Property Chamber) held that additional ‘service’ charges were excluded from the cost of supplying LPG to each pitch, restricting the amounts the respondents were able to recover to just the cost of LPG from the independent supplier. Further, the respondents could not recover the costs of operation of the park’s private sewerage system, nor could it recover administrative costs in the supply of utilities.

On appeal, the Upper Tribunal rejected the respondents’ argument that pitch occupiers were liable to pay a general service charge, concluding that the agreements between the parties related only to specific outgoings to third-party providers.

The Court of Appeal was asked to consider whether the occupiers were liable under their agreements for costs, expense and trouble in the provision, maintenance and administration of supplying utilities, requiring assessment and construction of specific terminology within the agreements. The respondents argued that the wording allowed it to demand a service charge for the supply of utilities, including the maintenance and administration of that supply; the wording did not limit recovery only to liabilities owed to third parties and the agreement did not contain any express exceptions for services provided by the respondents.

The decision

The Court of Appeal dismissed the appeal. Water rates, and general rates, were third party liabilities. Further utilities specified in the agreements were also generally supplied by third parties, and further construction of the agreements held that the wording was restricted to utilities and work supplied by third parties; utilities and services supplied by or on behalf of the park owners was not encompassed by the agreements’ wording.

On consideration of the language used in the agreements, it was held that there was no separate, defined obligation for the occupiers to pay costs and expenses incurred by the respondents. There were no restrictions on service charges set out, and no express provision to limit amounts recoverable by service charge in terms of reasonableness.

JB Leitch comments on the decision:

“This case highlights the importance of clarity in respect of lease terms. It is important first of all that landlords understand all the costs they are likely to incur in the operation and management of a development and secondly to then ensure that the lease in question allows them to fully recover these.”